City asks to shuffle sales tax

Plan would offset expiring 0.5% tax

Monday, June 9, 2014

JONESBORO -- Voters in Jonesboro will be asked in August to reallocate sales-tax money to help replace funds lost when a temporary tax expires at the end of the year.

The City Council approved calling for the special election Aug. 12, rather than holding it during the Nov. 4 general election, because it would give city financial leaders more time to draft a budget if the proposal fails, said Ben Barylske, chief financial officer for the city.

The proposal asks voters to reallocate the city's permanent half-percent sales tax from a fund devoted to paying for capital improvements to its general-revenue fund instead, he said. Voters approved the capital-improvements tax in 2000 to help pay for the construction of new fire stations, a new City Hall and roadwork.

Jonesboro residents also passed a temporary half-percent sales tax in 2010 that expires Dec. 31, 2014, and helps fund public safety salaries.

Each tax generates about $7.5 million annually, Mayor Harold Perrin said.

"When this [temporary] tax expires in December, we're going to be pulling $7.5 million out of the budget," Perrin said. "We've done most of our major capital improvements. We feel like we don't need to ask to extend that tax. But the other will go to help pay for police and fire salaries."

Currently, Jonesboro residents pay those two half-percent taxes and a 1 percent countywide sales tax.

Barylske said aldermen approved calling the special election because he needed time to prepare the city's 2015 budget of about $40 million, depending upon the election's outcome.

"If we waited until the general election, I'd have about two weeks to figure out our budget," he said.

If the tax fails, the city could be forced to lay off some of its employees, he said.

"I can't keep running at deficit spending if this fails," he said. "We have some surplus, but it won't last that long. This is a good proposal."

Barylske said he and Perrin discussed a proposal with other city leaders, school officials and business managers that would have asked for another half-percent sales tax to replace the expiring one, rather than reallocate money. He said the leaders felt there was only a 50 percent chance that it would pass.

"We asked them if they wanted to keep that extra tax and hold an election to pass a new one," he said. "But most felt it would be hard to get the public to vote on for it."

Perrin said he didn't favor calling for a new tax and, instead, said the city could thrive without it, if officials can reallocate the existing tax funds.

"We feel like we're doing OK, and we don't need another tax now," he said. "We're done with most of our capital improvements."

There is no organized opposition for the proposal.

Barylske has spoken to civic organizations about the tax, trying to drum up support. Perrin said he will also hold public meetings about it.

"We want to go out and educate the people," Perrin said. "This proposal will work. It's really just an accounting change for budgeting. We're not asking for more taxes."

Metro on 06/09/2014