Fort Smith directors shorten proposed sales tax extension time

Fort Smith cuts proposed extension to 8 years, from 10

Fort Smith City offices are shown in this file photo. (NWA Democrat-Gazette file photo/David Gottschalk)

FORT SMITH -- City directors will ask voters to approve extending 1% in sales taxes at the May 24 election.

The proposal would extend 0.25% and 0.75% sales taxes for eight years, a reduction approved Tuesday from the original proposal of 10 years.

Voters originally approved the 0.25% and 0.75% sales taxes in March 2012. If approved, the 0.25% sales tax would be renewed for the Parks and Fire departments, and the 0.75% would fund the Police Department and repairs to the city's sewer system.

The Police Department would receive roughly 17% and the sewer about 83% of revenue generated by the 0.75% sales tax.

Fort Smith currently has a 9.5% sales tax rate, with 6.5% going to the state, 1% to Sebastian County, 1% for city streets and drainage, 0.25% split between the city's Fire and Parks departments and 0.75% split for city bonds and utilities.

The city entered into a consent decree in January 2015 with the U.S. Department of Justice, the Environmental Protection Agency and the Arkansas Division of Environmental Quality to repair and upgrade its sewer system after decades of runoff into local waterways, including the Arkansas River.

The city agreed to spend "more than $200 million over the next 12 years" to upgrade its sewer collection and treatment.

The original decree deadline was Jan. 2, 2027, but the city said it could not afford to do all of the work by that date. The city was granted a five-year extension, moving the deadline to 2032. City officials have said they intend to ask for another extension because of the impact of the 2019 flood, covid-19 and related supply chain issues.

Directors also passed an amendment Tuesday to have the Parks Department's share of the tax revenue used for capital projects, if approved by voters.

Ward 3 Director Lavon Morton said in a special meeting Monday he's heard feedback from the community in favor of shortening both taxes to a five-year term to hold directors accountable for where the money would be allocated. He said he liked the initial 10-year period because it lines up with the current 2032 deadline and would show the community's commitment to pay for the work.

At-large Director Kevin Settle said the tax should be for an even-numbered year so it lines up with a gubernatorial or presidential primary election. He said if the sales tax election fails, the city will have to find a way to force residents to pay for the consent decree.

Settle suggested a resident-led committee be organized to go over each department's spending and provide accountability if the taxes are approved. He also suggested directors pass an ordinance to freeze sewer rates for a few years, then cap rate increases at 3.5% annually until the sales tax expires.

Joey McCutchen, speaking on behalf of several groups Tuesday, said they all believe a five-year extension is reasonable considering the city is looking for grants and more time to pay the consent decree. He said in light of Settle's proposals, he wouldn't oppose an eight-year extension.

The amendments to shorten both the 0.25% and 0.75% sales tax extensions to eight years were approved in a 5-2 vote, with Directors George Catsavis, Robyn Dawson, Neal Martin, Morton and Settle voting in favor and Directors Jarred Rego and Andre' Good opposed. Both votes to hold the sales tax election on May 24 were approved unanimously.