Little Rock city directors voted last week to put a 1% sales-tax rate increase on the Sept. 13 ballot to finance capital improvements and various city operations.
Mayor Mark Stodola had originally proposed a 1.5% hike in the city sales tax from the current 0.5% rate, but reduced the request after a series of public hearings.
The new 1.5% city tax would be on top of the state’s 6% sales tax and Pulaski County’s 1% tax. The city also levies a 2% sales tax on restaurant meals and hotel rooms.
The tax measure will include two parts that will be decided separately.
The operational portion is for a 0.625% tax hike to finance general government operations, including public safety salaries.
The tax is expected to generate more than $31 million a year.
A 0.375% increase would finance capital projects, including a new police station and a communications system to link police agencies and hospitals in Pulaski County.
The tax would generate an estimated $191 million over 10 years.
Revenues would provide $38 million for economic development efforts. Projects include $22 million to establish a research park, $10 million for improvements to the city’s port on the Arkansas River, and $6 million for infrastructure needed for businesses that would generate new jobs.
The capital improvement portion of the tax increase would expire after 10 years, although it could be renewed. The operational tax does not include a sunset provision.
After the election was set, trustees of the Little Rock Police Pension Fund suggested a 0.5% increase focused on funding public safety efforts would be more palatable to voters.
However, Stodola said the wording of the ballot measure became official when the city board voted to set the election and could not be changed.