Little Rock officials are looking at a proposal to raise the 0.5% sales tax after learning the city ended fiscal 2007 with a $3.2 million deficit.

The tax generated $23.7 million in fiscal 2007, with sales tax collections up 2.4% from 2006. The city expects a 2.24% increase in sales tax collections in fiscal 2008.

Neighboring North Little Rock generated $30 million last year from its 1% sales tax.

Little Rock covered its 2007 deficit by drawing on its $8.6 million budget stabilization fund, but directors said they want to avoid a similar situation at the end of fiscal 2009.

Officials are unsure about how sales tax revenue in 2008 and 2009 will be affected by a new state law that requires business to collect city and county sales taxes based on where the items will be delivered, not where the actual transaction occurs. The law went into effect Jan. 1, and the first revenue report will not be available until the end of March.

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