HOT SPRINGS -- The Hot Springs Board of Directors unanimously decided this week against levying ad valorem taxes for the general fund and the city's fire and police pension plans.
Resolutions presented to the board Tuesday night originally called for the levy of 1 mill of ad valorem taxes for the general fund and 0.4 mill each for the police and fire pension plans. Municipalities are allowed under state law to levy up to 5 mills of ad valorem taxes -- a property tax -- for the general fund and 1 mill each for police and fire pensions without a vote by the people.
Interim City Manager Bill Burrough had asked the Board of Directors to levy the taxes to help cover pension needs and pay for approved but unfunded projects. But opponents of the proposal said the city should live up to a promise made in 1988 and not impose the taxes.
In 1988, city voters passed a citywide 1 percent sales tax in return for the city dropping the ad valorem taxes, and the city board passed a resolution stating how the revenue would be used. Section 2 of the resolution requested that future city boards not reinstitute a millage without a vote by the people.
George Pritchett, a former Garland County justice of the peace, said recently that the ad valorem tax was not "the right thing to do" if the city was in need of more revenue.
"I think it's a mistake to do it the way they are, but I would support it if they put a millage on the ballot next November and let the people vote on it. If the people vote for it, I'd support it, but if not, the city would have to go back and find another way to do it," he said.
Bob Driggers, chairman of the Garland Good Government Group, said Tuesday that the city has too many projects and not enough money, yet is still spending millions of dollars on water and sewer projects and not enough on streets.
"You have too many studies and consultants and little moral concern for what your predecessors asked. Your budget is too high, and you have plenty of places you can cut," he said.
Others speaking against the proposed millage increase before Tuesday's vote included Pritchett, Renee Westfall and Dan Lewis, who all said the city needs to cut spending, live within its means and reduce its budget. Some of the speakers said the proposed millage was an attempt to balance the 2016 budget.
Burrough said the proposed millage was in no way an effort to balance the budget but to fund future projects that will be facing the city.
"This is only one option, and it may not be the best option, and when the door is closed on these, we'll start looking ahead at other options," he said.
District 4 Director Larry Williams suggested the city should start a process of looking at future project needs that could be paid for through temporary millage assessment, such as what was done for the Central Fire Station and other projects a few years ago.
The board unanimously passed resolutions levying zero mills for the pensions and general fund.
Burrough said last week that if the taxes had passed, they would generate $650,000 to $670,000 a year, about 85 percent of which likely would be collected.
"Currently, we're paying down the old fire and police pension funds. In 1988, when the sales tax was voted on by the people for public safety, the initiative provided that the city would continue funding at the then-current rate, which was $8.4 million. That has increased to $11.5 million, so the general fund dependency has grown over the years," he said.
Burrough said a large part of the sales tax pays for the police and fire retirement plan. The proposed 0.4 mills for the pension funds would reduce the money that has to be pulled from the general fund and allow the city to handle some of the additional unfunded projects.
Metro on 11/21/2015