1% tax issues addressed at first of four forums (Updated)

story by Aric Mitchell
[email protected]

The 1% prepared food tax faced opposition at Wednesday night’s (Oct. 12) open forum hosted by the tax support group Forward Fort Smith. About 40 people attended the event held at the Elm Grove Community Center.

The tax, planned for the Nov. 8 election, will be used, according to Mayor Sandy Sanders, “100% for the support of the (Fort Smith) Convention Center.”

But not everyone was buying it.

NO THANK YOU
“You had the money in the general fund to do what needed to be done, and now you’re asking me and my family to pay for it? No thank you,” one detractor said. The man stormed out of the meeting without giving a name or a chance for rebuttal.

Former State Rep. Frank Glidewell, a leader of the 1% opposition effort, added: “If you look at the language, there is a stipulation that the tax can be raised to as much as 3%. It took being in effect two years in the hotel business before it was raised.”

One audience member wanted to know if there was anything in writing that says the 1% “forevermore” will go to the Convention Center and only the Convention Center.

Some were confused as to what the “prepared food tax” meant. A&P Executive Director Claude Legris said that to qualify, the tax would have to meet one of the following three options:
• Food that is heated by the seller;
• Food in which more than one ingredient is combined by the seller to make one item; and,
• Food that is accompanied by utensils (napkin, cup, straw, fork, spoon, etc.).

Both public and private educational institutions would be exempt. Hospital and nursing home cafeterias would likely be as well, since none of these options offer foods that are prepared for the general public.

LOSS LEADER
But most of the concerns came back to these two aspects of the tax: its ability to increase and the possibility of siphoning off funds for other projects, such as the planned Marshals Museum in downtown Fort Smith. Still, others were concerned the center would lose money, which no one denied.

However, supporter Jeff Smith called the Convention Center a valuable “loss leader” that would bring in far more ancillary revenues than it cost to operate. Using Microsoft as an example, he referred to how the company loses money on its popular Xbox 360 product, while making huge profits on the back end in game sales.

He also noted that Hot Springs’ Convention Center lost $2 million in 2010, and that the John Q. Hammons Convention Center in Rogers loses money each year.

“By itself, the John Q. Hammons Convention Center does not make money. What does make money is the hotel directly across the street, which is owned by, you guessed it, John Q. Hammons,” Smith, a financial advisor, said.

Smith continued: “That’s what we’re trying to do here. Make an investment in our city so restaurants on the approved catering list, hotels in the area, and other businesses and restaurants, can all make money. That’s what this is all about. It’s why our group is called Forward Fort Smith. We believe this will help the community move forward."

‘INVEST IN OURSELVES’
Should the measure fail, the City of Fort Smith would keep the center alive through the general fund, but it could limit the city’s ability to attract popular events as the center would have to compete with monies used for entities, such as the police and fire department, added City Administrator Ray Gosack.

“With how the economy has been going, we can’t afford not to invest in ourselves,” supporter Susan Krafft said. “I don’t want to go to Tulsa or Little Rock for the events that I want to see. I want them here in Fort Smith. If we vote no, the money will come from the general fund, and nothing will change. If we vote yes, we’ll improve our Convention Center and only pay half.”

By “only pay half,” Krafft was referencing an estimate from the Western Arkansas Planning and Development District that half the revenue raised from a 1% prepared food tax would come from “out-of-town money,” or people visiting the area for conventions, meetings and other events, who decide to lodge, eat and shop in Fort Smith. The study estimated that the so-called out-of-town money would inject close to $20 million into Fort Smith’s economy, including those from the surrounding area, who eat here on a regular basis. The $20 million economic impact estimate does not include revenue that would come from Fort Smith citizens.

If the tax is approved, the convention center would be managed by the Fort Smith Advertising and Promotion (A&P) Commission, consisting of Mayor Sandy Sanders, Fort Smith City Director Don Hutchings, and four members from the city’s hospitality industry and one at-large position.

“I understand everyone is tired of the people in Washington. I am, too. But these are people we know, who care about this community. Each and every one of our city directors can be contacted directly, so if I have a problem with something Andre (Good) has done, I can call him up and say, ‘Andre, why did you do that?’ It’s about having faith in the people of this community that we’ve chosen to represent us. I have faith in them,” Krafft told The City Wire following the event.

OTHER FORUMS
The next forum is set for 5:30 p.m., Thursday (Oct. 13) at the Riverfront Glass Pavilion in downtown Fort Smith. The forum is scheduled to end at 7:15 p.m. It is sponsored by the Leadership Fort Smith Alumni Association.

On Oct. 17, a debate-style forum is scheduled at the Southside Baptist Church beginning at 6:30 p.m..

Forward Fort Smith will conduct its second forum at 6 p.m., Oct. 19, at the Community Room of the main branch of the Fort Smith Public Library.