There is a lot of discussion about the 1% sales tax proposed to rebuild the infrastructure and to repay the $800K that has been loaned to water and sewer since 2013 for operation and maintenance. I have said it before and I am saying it again – our city did not get into this predicament overnight, it has taken several years to get in this shape.
I met with some citizens last week and they said even if the sales tax passes, we would still need to increase our water and sewer rates to meet the bond obligations. They wanted to know why this hasn’t been mentioned.
The bond obligation requiring the city to have 110% water revenue has been mentioned numerous times over the years (and during other administrations) and the fact is the city does not meet that obligation. This is not new information. In order to meet just that obligation, rates will have to be raised by 22.29%. This is to just meet the bond obligation.
My plan is, if the tax passes, to slowly raise the rates over the next 5 years to meet that obligation. And use the revenue from this new sales tax to pay for fixing the infrastructure and get water and sewer to become self-sufficient.
Someone said that if they had a water problem at their house, they would call an expert. Well, the city did just that, and McClelland Engineers completed a study and estimated the improvements needed for just the wastewater system will cost us between $4 and $5 million.
Arkansas Dept. of Environmental Quality will dictate what our main needs will be in the future. We know that any reduction in nutrient levels in our wastewater effluence will require at least a $1million investment to improve equalization and filter installation. Most of our 5- to 10-year goals include fixing sewer problems before we come under another consent order. The 5- to 10-year plan was not arrived at just by guessing. That plan is based on the McClelland report.
At this time, the city is in a better position to apply for and receive grants to help repair water and sewer and extend additional service to our area. This is something that we have never been able to accomplish. However, as with most grants, it requires matching funds from the city.
For example, Berryville recently received $18 million in grants and loans for water lines. Their match could be up to $1.8 million. There is no way we could even accept a grant like that because we wouldn’t be able to come up with the match.
Some people say, “Well, just raise the water and sewer rates.” OK, if this tax does not pass, we will have to raise the rates by more than 50%. Shouldn’t we pass along most of the expense to visitors to pay for improvements in a system needed to host over a million people each year?
Raising rates for residents means that if your water and sewer bill is now $54/month it will become $82/month. And if you have a small 2-3 unit B&B and your rates are now $120/month, it will be $180/month. If you own a larger multi-unit B&B and your rates are now $425/month, it will be $640/month.
Raising the water rates on citizens and businesses will mean the burden will be on locals. Waitresses, busboys and our older citizens on fixed incomes would be impacted more. I introduced this sales tax initiative because I felt it would put less of a burden on citizens who already have a hard time making ends meet.
Under the proposed sales tax structure, if your nightly room rate is $150, you will have to collect and additional $1.50 night. If your annual gross income is $40,000 from renting out rooms, the cost that all of your guests will have paid in a year’s time will be an extra $400.
If my wife and I eat out 3 times a week, 52 weeks a year and our average check is $50, we will pay an additional $78 a year in extra cost. Or my $8 burger or BBQ would increase by 8 pennies.
PLEASE REMEMBER, THIS PROPOSED TAX INCREASE HAS A SUNSET CLAUSE, SO AFTER 10 YEARS, IT WILL GO AWAY.
I read recently that this tax will put some folks out of business because we have a high tax rate already. I recently talked to visitors from Kansas, Iowa and North Little Rock about our upcoming referendum. Each one said that an additional 1¢ on a $1 purchase would not deter them from returning to Eureka Springs.
The proposed sales tax accomplishes:
- Repairs and replaces our infrastructure over a 10-year period.
- Places the Auditorium in the hands of a dedicated commission with a funding stream to allow it to once again thrive and remove it from the operating authority of the CAPC.
- Places the burden of the cost of both of these improvements across 1 million visitors and not solely on the 2,073 citizens of our city.
There are future requirements to remain in compliance that the water and sewer plant will need. Now is the time to start working toward that end. We cannot afford to continue operating in the same manner. Let’s take a proactive stance and start working on our system now so we won’t have to worry about the state mandating us to do something that we cannot afford.
There is no good to come from laying blame on previous administrations for not increasing water and sewer rates. We can’t do anything about the past, but we can and should do something to fix the problems now. We will have to pay – one way or the other. I still feel that the best way is for this sales tax to be passed and I am asking for your support when you cast your ballot.
Mayor Butch Berry