The need for additional revenue to meet the growing demands of an ever-growing population has prompted city leaders to discuss asking the voters for a one-cent city sales tax.
Pea Ridge voters approved the current 1% city sales tax in 1984 and the revenue is allocated in the resolution that authorized the tax.
Discussed for years by city officials, the question has been discussed in the February 2020 City Council meeting with Kevin Faught, senior vice president of Stephens Public Finance, presenting information to city officials, again in March at both a City Council meeting and a Council Committee of the Whole meeting.
Several other cities in Benton County collect a city sales tax with both Rogers and Bentonville collecting 2%.
The two questions city officials are proposing to present to voters are first, seeking a $5.8 million bond for street repairs and projects and secondly, a one-cent city sales tax to repay the bond and to fund Police and Fire department needs.
“In our last meeting when Kevin was here,” Mayor Jackie Crabtree said, “we talked about allocating one-quarter of the tax revenue… it would not be enough coverage for the $5.8 million, so we would have to use full 1 penny as coverage. A quarter would pay bond payments, but 1 cent would cover that, have to have so much coverage.”
City Clerk Sandy Button said when bond is paid in full, the revenue would be split three ways between the Street, Police and Fire Departments.
Button told city officials that if the bond is approved but the sales tax is not, the issue would be moot as there would be no collateral for the bonds.
It will be major hard to do major street projects, like we need to do, if “we have to wait for that money to come in,” Button explained.
“It’s kind of like they’re getting all of their money upfront,” Button said, explaining that the bond gives the Street Department the funds needed for projects.
Sitting in the audience, Jesse Fryer (who ran for council last November) asked: “To get the voters on board, have we considered trying to level out the amount of money … that’s going to different locations. I’m sitting between the two men (Police Chief Lynn Hahn and Fire Chief Jack Wassman) who will benefit.
“The last time I checked … I feel like you’re going to capture the voters’ support if you were to find a way to balance that in some form,” Fryer said, explaining that he believed the money should be better balanced between the fire and police departments off-setting the allocation from the 1984 sales tax. “Will also give an equal playing field for the city to say ‘we support the Fire Department’ so they can really, truly get their feet under them.”
“I think that personally would go so far with the voters,” Fryer said, saying that when we ran for election last fall, he heard voters say they didn’t think city officials were investing in the Fire Department.
Councilmember White said the current proposal divides the funds equally between the Police and Fire.
Fryer said that number should not be equal in order to offset the previous allocation.
“At the end of the day, the voters put that into play back then,” White said, referencing the 1984 city sales tax. “We can’t change what happened in 1984, but we can sure change moving forward.”
“I’ve heard exactly the same thing from very single person who has called me,” council member Ginger Larsen said. “It’s a relevant concern. I think that for me, it doesn’t make sense to put something in front of the people they won’t vote for. If you don’t get it right, they will fail it.
“I took five calls today … with exactly the same concern … they would feel better if the police and fire were evened out more, equally divided. They want to see them equal overall including the ancient sales tax,” Larsen said.
“If we leave it (the 1984 tax allocation) that way, there’s nothing that says we can’t adjust their budgets,” council member Cody Keene said.
“This is easy to digest the way it’s written,” city attorney Shane Perry said.
“You have to be able to understand it. It’s very complicated,” Larsen said. “I would like to have some public feedback on this they way it’s written. No matter how much you educate, I’m worried we’ll put time and money into it and it will be wasted. I have not gotten good feedback.”
“Are we good with him bringing us an ordinance?” Crabtree asked.
Keene made the motion to have an ordinance written to seek the vote; council member Merrill White seconded the motion.
White and Keene voted for the motion; Larsen voted against it. Councilmember Steve Guthrie was absent.
Larsen, after the meeting, she said she believed she needed more feedback from city voters, “I wanted to them to wait to come up with an ordinance until we have public feedback; since we didn’t’ have information to share. I didn’t feel comfortable voting without all the information out there.”
In addition to a portion of revenue from the county sales tax as needed and from impact fees, revenue is received in each of the departments from several souces, including:
Fire Dept.
• City Sales Tax*
^^5% to Fire
^^7% to Ambulance
• Fire Dues
• EMS Billing
• County EMS
• Football Standby
Police Dept.
• City Sales Tax* 24%
• Percentage of court fines received
• SRO Salary from school
Street Dept.
• Property Tax
• City Sales Tax* 40%
• State Turnback
- Percent of revenue from current 1-cent city sales tax (approved in 1984)
Funds sought for fire, police, street departments
1984 City sales tax revenue
Administration^10%
Police Dept.^24%
Fire Dept.^5%
Street Dept.^40%
Parks and Recreation^6%
Library^5%
Ambulance^7%
Court Administration^3%
• Information in city Resolution 105