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Little Rock mayor outlines proposal for additional 1% sales tax, $600M in projects

Updated: Aug 4

by Scott Green, Central Arkansas Press

Little Rock Mayor Frank Scott Jr. addresses a crowd during a news conference at the Statehouse Convention Center in Little Rock in this June 13, 2023 file photo. (Arkansas Democrat-Gazette/Stephen Swofford)

Little Rock Mayor Frank Scott Jr. on Thursday publicly outlined his sales-tax proposal for the first time during a “working session” on the subject with members of the city’s Board of Directors.

As presented, Scott’s proposal would add 1 percentage point to the city’s sales-tax rate for 10 years. However, at the conclusion of the session, Scott indicated the proposal likely will be revised to remove the sunset date based on city directors’ feedback during the meeting.

Scott’s proposal contemplates spending $600 million over a 10-year period, with $371.5 million allocated for capital improvements and $228.5 million for new operating expenses.

The mayor needs to get the city board’s approval in order for officials to hold a Nov. 14 referendum on the tax.

The deadline to call the election is Sept. 5, and some city board members on Thursday expressed concerns about pursuing a fall referendum without securing the input and participation of residents.

Absent an emergency, the other future dates available for a Little Rock tax referendum are the March 5, 2024, primary election and the Nov. 5, 2024, general election.

If approved, the overall sales-tax rate on most purchases in Little Rock would rise to 9.625%. The current rate of 8.625% is composed of a 6.5% state tax, 1% Pulaski County tax and 1.125% city tax.

In terms of both capital and operating expenses, the largest spending categories under Scott’s proposal would be parks and quality of life (55%), public infrastructure (19%) and public safety (11%).

The other categories — port and economic development, information technology, homelessness, neighborhood programs and general capital improvements — would receive smaller shares of the money.

The proposal would fund the construction of an indoor-outdoor sports complex at War Memorial Park with a $128 million capital investment in addition to a $30 million combined capital investment in that park and Hindman Park over 10 years.

The complex would include facilities for soccer, softball, baseball and basketball and serve as a “regional draw” for youth sports competitions, according to Scott.

Youth sports is an $80 billion industry, he said. The complex would be privately managed by a contractor, Scott said at one point.

An additional capital investment of $20 million and new operating expenses of $16.5 million would fund improvements and maintenance at parks and trails across the city over 10 years.

The Little Rock Zoo would receive $30 million in capital investment to implement a master plan in addition to a $10 million increase for operations over the next decade.

Under the public safety category, the new revenue would be spent entirely on the operating expense side. The largest portion, or $37.25 million, would fund vehicle and apparatus replacement for first responders as well as code enforcement officers over 10 years.

A 10-year, $70 million capital investment under the public infrastructure category would fund “strategic infrastructure improvements” while another $5 million would bankroll infrastructure work tied to targeted community development.

An increase of $40.75 million in operating expenses would fund street resurfacing and sidewalk improvements over 10 years.

Economic development incentives as well as infrastructure work at the Little Rock Port would receive a 10-year total of $15 million, mostly on the capital investment side.

Efforts to address homelessness would receive $20 million over the next decade.

The proposal represents Scott’s second sustained push to have a sales-tax increase approved as mayor.

During his first term, Scott aimed to bring a new sales tax before voters in 2020, but abandoned the initiative in March of that year amid the covid-19 pandemic.

In 2021, Scott proposed a 1 percentage point sales-tax increase as a way to invest in a wide variety of city priorities. After some revisions to the package, city board members voted to call a September 2021 special election, but Little Rock voters rejected the proposed increase, 62%-38%.

At the time, officials estimated the tax would have generated approximately $530 million over its 10-year lifespan. In light of a separate, expiring sales tax, the net increase to the overall rate would have been five-eighths percent (0.625%).

In an August 2022 referendum, Little Rock voters authorized renewing a property tax at the existing rate of three mills and issuing bonds to pay for six categories of capital improvements.

Scott made public his plan to pursue another sales-tax increase during his 2023 State of the City address on March 6, but steps toward that goal were put on hold after a tornado struck the metro area on March 31, causing devastation in parts of Little Rock.

At the meeting Thursday, City Director Lance Hines of Ward 5 said there was not enough time for officials to campaign and hold community meetings in order to hold a November election.

“I think we’ve gotten the cart a little bit in front of the horse because we’ve come up with a plan without going and talking to our constituents and our voters,” Hines said.

He argued that following a series of community meetings across the city over the next several months, officials ought to put a proposal on the ballot next year.

Hines, who opposed the mayor’s 2021 proposal, on Thursday suggested an alternative structure for the proposal on the table, calling it “bad policy” to include operating expenses in a tax with a sunset date.

He proposed implementing a three-eighths percent (0.375%) tax with a 10-year sunset date along with a one-eighth to one-fourth percent (0.125-0.25%) permanent tax for street resurfacing and a one-eighth to one-fourth percent (0.125-0.25%) permanent tax for the replacement of police and fire apparatus.

In response to Hines, Scott said he had heard from many of the city board members that they wanted a sunset date, though he argued that polling indicates voters do not care whether a tax will sunset.

Officials recently held a “slew” of community meetings at which “residents said, ‘We want more, more, more, more,’” Scott recalled, referring to a series of discussions on the use of the capital-improvement bond proceeds. “And so again, we will have community meetings in the month of August. I don’t think it’s rushing it. We did have three months of a tornado, and so we had to focus on that.”

Vice Mayor Kathy Webb of Ward 3 said that during the 2022 capital improvement bond process, “it felt like we took our time and we did it properly, and I do feel very rushed on this.”

Residents have expressed to her a desire for a very narrow proposal, “and this is not as narrow as I would like to see,” Webb said.

City Director Capi Peck of Ward 4 noted that she supported the 2021 proposal, which was dubbed “Rebuild the Rock,” and supports the current proposal for the most part, albeit with some questions.

Nevertheless, “barreling down to August to get this done is not enough time,” Peck said. “Believe me, I understand how the tornado impacted a lot of things and we weren’t able to go out to the community before then.”

Citing the differences compared to the 2021 tax package, the current proposal was not “Rebuild the Rock 2.0,” Peck said, and predicted it would be more palatable to many people who did not support “Rebuild the Rock.”

“I’m just nervous that we cannot get enough buy-in and input from the community to get this on the ballot in November,” Peck said.

Peck said she agreed with Scott that a November referendum was preferable compared to holding one next March, but she did not want a proposal to fail again.

City Director Andrea Lewis of Ward 6 argued that city leaders should explain the need for the tax to their constituents and predicted residents would follow their lead, “or mine will, anyway.”

Lewis said that she was “ready to take action because I don’t like having to say, ‘Well, not yet,’ or, ‘No, we can’t.’ I don’t like the answer no. I just don’t.”

At-large City Director Dean Kumpuris encouraged Scott and City Manager Bruce Moore to aim for a November referendum, with the option of pivoting to a later date if city leaders ultimately believe they have not succeeded in educating the community ahead of a fall vote.

Additionally, he suggested officials examine the possibility of seeking separate votes for the two sides of the proposal: capital investment and operating expenses.

City Director Virgil Miller Jr. of Ward 1 said he has yet to talk to a community group that is not supportive of a sales tax, but he often hears from residents who say their requests for public works improvements linger for years without action.

He asked for a “big-picture look” at the public works projects that are underway as well as residents’ requests and how long they have been on the list.

Miller also asked for more detail on proposed spending, such as the funding earmarked for targeted community development infrastructure.

“I don’t want to have this pot of money that we say we’re gonna use for targeted community development and it’s not specific,” he said. “It needs to be specific for me.”

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