DALLAS -- Little Rock voters have rejected a 1-cent sales tax plan that would have paid for the city's largest-ever capital program while giving budget writers $12 million a year in new revenue.
City Finance Director John Pryor said the rejection in a record voter turnout on Tuesday was a setback, but it will not stop the city from balancing its $71 million general fund budget for fiscal 1992, which begins Jan. 1.
"We'll have a balance budget, but it will just be smaller," he said yesterday. "It's not as though we have lost anything that we had already."
The city had planned to use up to $2 million of the $12 million expected to be generated by half of the tax for city operations next year. The rest of the funds eventually would have been used for expanded police and other programs.
Now, Mr. Pryor said, the money to balance the $71 million general fund budget will have to come from increases in some fees -- not taxes -- and from austerity.
"We might not have as big a pay raise as we planned before," he said. "Or, we might not have a pay raise at all."
The biggest defeat, however, was of a $112 million capital program that included 11 components that largely would have financed a sports and cultural center downtown, expanded the convention center, and added to the War Memorial Stadium.
Those proposals were the most costly sections of the proposal, with the proposed Diamond Center costing $42.1 million and the stadium and convention center expansions costing $15 million each. The big-ticket proposals were defeated by as much as 5% margins.
However, the least expensive parts of the capital package included street improvements and a plan to renovate the children's zoo. Both were narrowly defeated by 1% margins.
The projects would have been financed with 20-year bonds secured by the other half of the sales tax. If approved, the proposals would have added 1 cent to the 5.5% sales tax now imposed in Little Rock.
The city currently gets $19 million of its general fund money from a 1% sales tax imposed by the county and shared with local cities based on a formula that allocates funds based on population. With 175,000 residents, Little Rock represents about 40% of the county population.
Little Rock is rated AA-plus by Standard & Poor's Corp. and A1 by Moody's Investors Service. The city has about $33 million of outstanding general obligation debt and $70 million of water, sewer, and airport revenue bonds.
City officials attribute the rejection to a record special election turnout in which 44% of the registered voters cast ballots. That is nearly three times the voters who approved a $40 million bond issue in 1987, the city's last capital program.
"They are saying that it was an antitax sentiment that beat this," said Jim Lynch, a senior researcher at the Institute of Government at the University of Arkansas and a critic of the proposals. "This was the most people who ever turned out for one of these elections. I think that reflects an anti-dumb idea sentiment."
Mr. Lynch, a former city official and past budget director of Pulaski County, Ark., said some elements of the sale tax package were supported, though he believes some voters rejected it all because of the way it was presented.
"It all went down because they baited the trap with street, fire, and police programs, and what you really came away with was a sports palace," he said. "People are smart. They know they don't have to build a sports stadium to get a cop in their neighborhood."
Whether the Diamond Center project or other proposals will be revived is not certain. City officials are not certain of when they may again propose a capital bond program.
However, the Arkansas Gazette yesterday reported that a private developer has resumed plans to build a sports and cultural complex -- similar to the Diamond Center -- in North Little Rock. The plan could involve $70 million of public and private monies.
Mr. Lynch said voters might have supported mroe sales tax revenue of the city if Little Rock officials had asked for only a quarter-cent tax, which would have generated $6 million a year.
"The city never detailed what they were going to do with the $12 million, which amounts to a 16% increase for the budget," Mr. Lynch said. "They got greedy."
