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More question Little Rock mayor on sales-tax proposal

by Joseph Flaherty | May 4, 2021 at 7:14 a.m.
FILE - Little Rock Mayor Frank Scott Jr. talks to a limited crowd during a virtual grand opening for the new Little Rock Southwest Magnet High School on Tuesday, July 28, 2020. (Arkansas Democrat-Gazette / Stephen Swofford)

John Burgess, chairman of the Little Rock Regional Chamber of Commerce, last week posed a long list of questions to Mayor Frank Scott Jr. on the mayor's proposed sales-tax increase, digging into subjects such as the lack of a sunset date for the capital-spending portion of the tax and the potential for diversion of the new funding.

Scott's proposal to add 1 percentage point to the city's sales-tax rate in order to fund a variety of quality-of-life improvements with $53 million in new annual revenue was unveiled during his 2021 State of the City broadcast in March.

The Little Rock Board of Directors will get a final look at the mayor's tax proposal at a meeting this evening, when they are expected to decide whether to call a July 13 special election for voters to approve or reject the tax.

Scott has described the sales-tax package as a potentially transformative investment in the city's future, but it remains unclear whether he can muster enough support from city directors to send the tax increase to the ballot.

Several members of the Little Rock Board of Directors raised concerns last week related to the current iteration of the proposal. Burgess' email signals significant questions exist within the business community, too.

In addition to his chairmanship at the chamber, Burgess serves as co-founder and president of Little Rock-based Mainstream Technologies. His email to Scott was obtained from the city through an Arkansas Freedom of Information Act request.

In the email to Scott on April 27, Burgess thanked the mayor for meeting on multiple occasions to discuss the "Rebuild the Rock" sales-tax package, noting that "we want to be supportive."

[DOCUMENT: Email from Little Rock Regional Chamber of Commerce chairman ​» arkansasonline.com/54email/]

Nevertheless, if the chamber opts to support the proposal, Burgess wrote that "failure is simply not an option and therefore, before giving said support, we are going to closely examine and discuss this until we have consensus that the proposal is sound and likely to survive detailed scrutiny from a questioning public and media."

What followed was a list of questions which Burgess said represented a summary of the queries he received from attendees of a meeting between Scott, the chamber's leadership and "Fifty for the Future" members held April 20.

Central to Scott's proposal is the decision to let an existing sales tax of three-eighths of a cent (0.375) for capital improvements sunset at the end of December after 10 years.

As a result, adding one percentage-point to the city's sales-tax rate would result in a net increase of five-eighths of a cent (0.625) and an overall local sales-tax rate of 9.625% when accounting for state and county taxes.

But in his email, Burgess suggested that the lack of a sunset date for the portion of the tax devoted to capital expenditures was "the biggest single issue with the proposal raised by our leadership group and it's the single biggest issue that gets mentioned by those in our social networks."

Describing the proposal as "a 40% increase to the city budget," Burgess questioned the optics of a permanent 40% increase versus a 20% increase over a period of time to invest in a defined set of improvements combined with an additional 20% boost to the budget.

"Other cities and counties around the state very successfully manage by funding capital expenditures through fixed-term (sunsetted) taxes," he wrote. "Why can't that portion of your proposal be converted to a 10-year sunset tax, as your proposal states that all the identified initiatives will be addressed within the first 10 years, anyway?"

Burgess also asked how the mayor will ensure that funding amounts laid out in the proposal are fully invested in their respective projects and not diverted to the city's general fund or other initiatives.

"Games like this have been played in the past (not by you, but if this is going to be in perpetuity we have to watch out for whoever comes next, whenever that may be)," Burgess wrote. "Having a defined list of capital projects with respective costs and timelines would give us, and voters, specific answers to many of our questions."

Burgess added that this approach was effective in overcoming voter objections when the three-eighths-cent sales tax was approved a decade ago.

The remainder of the questions posed by Burgess were grouped into 14 different categories.

He saved some of his most direct criticism for the mayor's proposed initiatives on early-childhood education (the description of the program from the city's chief education officer, Jay Barth, "has changed each time we've heard it," Burgess wrote), public safety ("the single largest issue in the minds of the voter but there is no identified funding for police officers") and homelessness ("a significant issue in the city but nothing to address or mitigate this chronic issue is present" in the tax package).

Burgess closed his email with a reference to the positive relationship between the city and the business group.

"As you can see, there are still some questions in the minds of our community," he wrote. "As we both have said, the relationship is strong between the City and the Chamber and again, I appreciate your willingness to provide us this avenue for weighing in on the Rebuild the Rock proposal."

According to a copy of his reply, on April 28, Scott asked city policy analyst James Owen to prepare a memo and work with other mayoral advisers to answer Burgess' questions.

On Monday, after being asked for comment on Burgess' email, Scott provided a memo that was addressed to Burgess and dated May 3.

In the memo, Scott responded to many of Burgess' questions. The memo compared the relatively low level of overall city spending in Little Rock with peer cities of a similar size -- "not even aspirational cities" -- such as Birmingham, Ala., and Amarillo, Texas.

[DOCUMENT: Memo from Little Rock mayor ​» arkansasonline.com/54memo/]

On the question of sunsetting the capital-spending portion of the tax, his memo said, "Our timeline for Little Rock's growth and greatness goes beyond 10 years," and noted that the city's previous "periods of investment tend to be followed by periods of stagnation."

Also according to the memo, accountability for spending will be ensured by a citizen-led committee and a reallocation measure that will go before the city board every 10 years based on the committee's recommendations.

Jay Chesshir, president and CEO of the Little Rock Regional Chamber of Commerce, said the group has not yet taken a position on Scott's proposal.

When asked about Burgess' list of questions, in an email to the Arkansas Democrat-Gazette on Friday, Chesshir wrote, "The Mayor met with a group of business leaders on April 20th. Following the meeting and after discussion within our leadership, John Burgess submitted a list of questions that many still wanted clarified."

Chesshir added, "The Mayor has indicated he will provide answers to those questions. Once we receive, consideration will be given and a decision will be made."

Because the mayor only votes in the event of a tie, Scott will need at least five of the 10 city directors to vote in favor of his proposal if he is to break the deadlock and send the package to the ballot.

So far, indications of support for the mayor's plan have come from only two city directors: at-large City Director Antwan Phillips and Ward 2 City Director Ken Richardson.

In her brief comments during a city board meeting last week, Ward 1 City Director Erma Hendrix seemed to side with the mayor against her colleagues who had raised numerous concerns during the tax debate, tying their concerns over the proposal to the mayor "being a Black male, and you've got a majority-Caucasian board."

Hendrix could not be reached for comment Monday.

Ward 6 City Director Doris Wright told the Democrat-Gazette on Monday that she plans to vote against the tax increase. Likewise, Vice Mayor Lance Hines and at-large City Director Joan Adcock have indicated they will vote against the current version of the mayor's proposal.

Assuming Phillips, Richardson and Hendrix vote yes, Scott will need to peel off at least two more directors from the "no" column to break the deadlock and send the tax to a citywide referendum.

But during the meeting last Tuesday, the remaining city leaders -- at-large City Director Dean Kumpuris, Ward 4 City Director Capi Peck, Ward 3 City Director Kathy Webb and Ward 7 City Director B.J. Wyrick -- raised questions about the spending package.

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