CBID endorses Fort Smith’s sales tax reallocation plan – Talk Business & Politics

The Fort Smith Central Business Improvement District (CBID) board of commissioners has taken an official stance to support a sales tax reallocation proposal the City of Fort Smith has put up for voter approval.

The May 13 election will include for Fort Smith residents ballot items to change the city’s sales tax uses to pay for $385 million in bonds to meet a federal mandate that requires the city to fix and maintain the city’s sewer system.

CBID members passed a resolution March 20 to endorse the ballot item and to write a letter officially endorsing the action.

“Reallocation of the 2% local sales tax will help fund the projects needed to help satisfy the EPA Consent Decree facing our city. It is our understanding that if this initiative fails our sewer utility rates are subject to extreme increases that will further burden the citizens of Fort Smith. A vote in favor of the three ballot measures on May 13 provides a path forward to address the Consent Decree without causing dire negative consequences that the Fort Smith Citizens will endure for years to come,” noted a letter written by commission Chair Bill Hanna.

The Fort Smith Board of Directors on Feb. 21 approved the following tax package for the May 13 ballot.
• Reauthorizing a 0.75% sales tax first approved by voters in 2022 to pay for consent decree work and to pay bonds, with 0.125% used for the Fort Smith Police Department

• Renewing the 1% street tax but reallocating 0.625% for streets, bridges and drainage work, with the remainder of the tax to fund consent decree work and bonds.

“The CBID hereby endorses the sales tax initiative proposed for the May 13 special election, and encourages the voters of Fort Smith to vote ‘yes’ on all three ballot measures,” noted the CBID letter of endorsement.

The Fort Smith Board rejected the option to not change the 1% street tax and instead asked voters for a new 0.375% sales tax to be used solely for consent decree work and to pay bonds. If approved by voters, taxes would be in place until 2059. The proposed tax changes do not raise the existing tax rate in the city.

“This is anticipated to be a 30-year obligation of the associated sales and use taxes,” Fort Smith Chief Financial Officer Andy Richards noted in a memo on the plan. “Recognizing that the city would not be able to issue all $360 million up front — there are 3-year spend down requirements and we couldn’t spend all $360 million that fast — it will likely be issued in two or three different series in two-year increments, and the sales tax authorization will need to recognize that the tax needs to last until 30 years after the final issue of bonds.”

After decades of failing to maintain water and sewer infrastructure to federal standards, the city entered into a consent decree with the U.S. Environmental Protection Agency and Department of Justice in late 2014. The consent decree, which began in January 2015, required the city to make an estimated $480 million worth of sewer upgrades in 12 years. That amount is now estimated to be as high as $800 million.

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