Mayor Frank Scott proposes one cent sales tax hike to fund city priorities
February 10-16, 2020
Mayor Frank Scott proposes one cent sales tax hike to fund city priorities
‘Lift Little Rock’ initiative would raise $50 million annually
By Wesley Brown
Just over a year after voters elected him to the city’s top executive post, Mayor Frank Scott Jr. asked local citizens during his second State-of-the-City address on Friday (Jan. 31) to support a one penny tax hike to lift the city closer to its “true potential.”
In his speech before the Little Rock Board of Directors at the headquarters of Heifer International in downtown Little Rock, Scott said after hitting “the ground running” he is now ready to unify the city. He said a one cents sales tax would create new opportunities for residents following his historic November 2018 election.
“After 395 days on the job, I’m pleased to announce the State of our City is stronger than it was a year ago,” said Scott. “We are more financially stable, more organized, and more accountable to our residents. And, we are more unified, and on course to becoming a true catalyst for the New South.”
Scott then touted a long list of accomplishments the city has achieved under his one-year and one-month tenure. That list ranged from the hiring of new Police Chief Keith Humphrey and the creation of a citizen-led review board to the appointment of a new chief education officer and passing a balanced budget $274 million budget at the end of the year.
Scott also placed particular emphasis on his role as the city’s “Chief Growth Officer,” noting that he worked with local and state economic development officials to add 1,000 jobs. Those new workers will generate $54 million in new payroll and $174 million in new capital spending, he said.
“While this past year has been full of growth, it has not come without some difficult decisions. Last spring, we right-sized city government to align ongoing expenses with ongoing revenue. This was necessary for us to be good stewards of taxpayer dollars,” said Scott.
The 37-year old former banking executive also highlighted several new task force panels to study a wide range of issues, including a roundtable to coordinate the city’s educational efforts and make recommendations on everything from prenatal care and social services to literacy and workforce development.
Other key initiatives Scott mentioned now underway include an Opportunity Zone Task Force that has been meeting since October. That 20-member panel is seeking ways for the city to take advantage of a federal tax program passed by the Trump administration in the $1.8 trillion Tax Cut and Job Acts legislation. That group will soon begin holding community engagement meetings to discuss how to use federal tax credits to attract deep-pocket investors to bring economic development dollars to distressed urban areas of the city.
“And, because community engagement is top priority, I requested an anti-displacement plan to ensure Little Rock’s Opportunity Zone strategy is not happening to our communities, but, instead, with them,” he said.
Little Rock’s first millennial mayor also noted his effort to improve all areas of city government. He then highlighted a long list of accomplishments he has achieved by working with the city’s 10-person board of directors. Besides focusing on improving key municipal issues such as homelessness, tourism, quality of life, and diversity, equity and inclusion in the city’s workforce, Scott also revisited a campaign promise to change the Little Rock’s current form of government.
Following a recommendation by the city’s so-called Study Group task force, Little Rock’s mayor-council form of government would be revamped to give Scott more control and power. Among several proposals by the study group that first began meeting in April 2019, the mayor could hire or remove the city manager “without precondition,” although the city board would be able to override the removal with a two-thirds vote.
The panel also recommended that the mayor would be able to nominate and hire the city attorney upon confirmation by a majority of the city board. Lastly, the study group’s proposal recommended reducing the size of the city council to eight positions with six ward representatives and two from regional districts. That plan would eliminate the three at-large seats that have been a source of controversy in Little Rock for decades.
“Our City’s form of government should also foster the unity and the representation we all desire,” said Scott, who plans to present two ordinances to the city council immediately that would incorporate all the suggestions made by the 11-person study group. “In order to Lift Little Rock, our government must work for the people it represents, and this ordinance will better allow us to work for you.”
“Lift Little Rock” plan
For the city to take that next major step, however, Scott said the city must make a further investment in the future. He said his one cents “Lift Little Rock” tax plan will raise $50 million annually for “specific quality of life initiatives.”
Citing similar-sized southern metropolitan areas like Birmingham, Ala., and Arkansas cities with substantially higher sales tax rates, Scott said without dedicated funding and “intentional efforts” improve the city, “we cannot reach our full potential.”
“Without dedicated funding and intentional efforts to lift our city beyond the status quo, we cannot reach our full potential,” said Scott. “It’s time for us to learn from our neighbors and invest in our future so we, too, can thrive.”
Today, the minimum combined 2020 sales tax rate for Little Rock is 9%, combining the state, county and city sales tax rates. The Arkansas sales and use tax rate today is 6.5%, while Pulaski County and Little Rock is 1% and 1.5%, respectively. In the city’s last sales tax referendum during a special election in September 2011, local voters approved one penny tax increase that was then supported by former Mayor Mark Stodola, the Little Rock Chamber of Commerce and other business groups.
Under that decade-long plan, a permanent 5/8 cent “operations” tax increase and a 10-year temporary 3/8 cent “capital investment” tax hike went into effect in January 2012. It is expected to generate $45 million annually for the city, funding several mayoral priorities and capital improvement projects.
For example, the 5/8 cents tax supported the hiring of new police officers and firefighters, new transit routes, and set aside funds for youth prevention and intervention programs. On the other hand, the 3/8 cents capital improvement tax funded two new fire stations and two police substations, new ball fields for local sports programs and money for street, sidewalks, and drainage improvements.
That 3/8 cent tax also provided initial funding for two high profile capital improvement projects to expand the Little Rock Port and invest in the city’s first multistage technology research park. From that 2011 sales tax referendum, the Little Rock Tech Park Authority received $22.5 million from the city to accelerate the funding and construction of the six able to accelerate the development of the six-floor, 38,000 square foot project.
Phase I of the taxpayer-financed tech village – which includes a heavily-trafficked coffee bar, a spacious conference room, and tenant space to house companies of all sizes – was completed in March 2017. To date, the fully occupied Tech Park has received $13.76 million in sales tax proceed from the 2011 penny referendum. The five-person authority is now making plans for Phase II of the multistage downtown development that will cost an estimated $26 million.
“We are budgeted to get another $1 million (next month),” said Tech Park Executive Director Brent Birch. “The City only forecasts out current-year, so I am unsure on timing of remaining payments and how much.”
The 2011 sales tax initiative also set aside $10 million or the Little Rock Port Authority to expand its real estate holdings. Sales tax proceeds for both the Little Rock Tech Park and the city’s Port Authority will expire in 2021. Other projects from the 2011 sales tax wish list are soon to sunset or are just coming online, including the construction of a long-awaited $3.2 million fire station in the city’s Otter Creek is near completion.
Under the Lift Little Rock plan, Scott said the sales tax proceeds would also fund a variety of quality of life projects, including updating the budget-challenged Little Rock Zoo and adding amenities to the War Memorial and Hindman Parks. Last year, one of Scott’s first initiatives as mayor led to the closure of two 18-hole golf courses at the city-owned parks. However, the new one penny sales tax would fund open lawn entertainment, an indoor sports complex, soccer fields, and a new senior center at the parks, as well as improvements to the Jim Dailey Center, Rebsamen tennis courts, and a pool at West Central Community Center.
Scott said the penny sales tax would allow the city to invest long-term in public safety, providing adequate technology and other resources for police and fire departments to decrease response times and strategically address crime. The tax plan would also provide money for several key infrastructure projects and early childhood education programs, he said.
“For Little Rock to serve as a catalyst for the New South and reach its full potential, we can’t be afraid or apologetic about our bold future,” Scott appealed. “I’m unafraid and unapologetic about shooting for the moon. I hope you will join me for this moonshot.”