Budget March 12, 2009BUDGET COMMITTEE
MINUTES
FROM MEETING ON MARCH 12Tx
Attendance: Tracy Catt
James Pulliam
Lorraine Robinson
Willis Mondy
Taz Tyrone
Frank Martin
Press was absent but was notified of the meeting
The committee reviewed options available to cure the deficit and spent a
great deal of time discussing the possibility of proposing to the citizens a
reallocation from the current tax received within the street department.
We do not believe this would be sufficient to cure the deficit and felt the
citizens would not approve the reallocation.
Passed out the information received from the State of Arkansas concerning
the time frames and requirements for calling the election. Based on the
information received, the city would not start receiving any sales tax that
may be approved by the citizens until the 2nd quarter of 2010. You will
please find this info n attached.
Tracy C
Chairman
MunnGpq
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Eta p6
Local Sales
Tax Elections
Revised December 2007
Arkansas Municipal League
301 W. Second St.
North Little Rock, AR 72114
501-374-3484
Mailing Address
P.O. Box 38
North Little Rock, AR 72115-0038
www. arml. org
Introduction
The Arkansas General Assembly has enacted legislation authorizing the electorate of cities and towns to broaden the rev-
enue base with local sales tax levies. Other legislation authorizes countywide sales taxes by which each city or town in the
county receives its per capita share unless authorized by county voters to be used for a specific purpose. These tax sources
for Arkansas's local governments have created much discussion and planning among municipal officials.
Under state laws, the people of cities and towns are authorized to levy municipal sales taxes: see Authority for Local
Sales Tax, page 8, and Ordinance Forms, pages 11-12. If your city contemplates a bond issue, consult your bond attorney as
the first step. Counties are authorized to levy county sales taxes as described on pages 8 and 12.
This booklet should not be interpreted as an attempt to sell any city upon the undertaking of an election on behalf of
the sales tax. It is, however, intended to give ways and means by which such a campaign maybe made successful.
For cities and towns that will undertake sales tax elections, this booklet may serve as a useful handbook. It should not
be considered a complete campaign strategy or a plan for such a campaign because local situations vary so greatly that an
overall campaign plan for all cities of Arkansas would not be wise or feasible. By taking some of the information in this
report and by adding local modifications and improvements, however, a city may find this report a helpful resource.
Recognize also that there are good public relations and public information techniques that will be effective in a sales
tax campaign. This report outlines some techniques for waging a campaign. The report is based on a study of sales tax cam-
paigns-some successful and others unsuccessful.
Table of Contents
Organizing and Conducting a Sales Tax Campaign ......................................................................................................................2
Where Do We Go for Help? ........................................................................................................................................................2
General Strategy ..........................................................................................................................................................................2
Organization and Planning .........................................................................................................................................................2
Subcommittees Could Provide Grassroots Support ..................................................................................................................3
Checklist for a Campaign ...................................................................
.........................................................................................3
Beware of Pitfalls in a Sales Tax Campaign ...............................................................................................................................4
Questions and Answers About Public Relations ........................................................................................................................5
Advertising Media .......................................................................................................................................................................6
Radio ........................................................................................................................................................................................6
Newspapers ..............................................................................................................................................................................6
Television .................................................................................................................................................................................6
Brochures and Pamphlets .......................................................................................................................................................6
Summary ...................................................................................................................................................................................... 7
Authority for Local Sales Tax ..........................................................................................................................................................8
City Sales Taxes ............................................................................................................................................................................8
County Sales Taxes ......................................................................................................................................................................8
Multi-County Airport and Riverport Financing Act ................................................................................................................8
Mass Transit .................................................................................................................................................................................8
Further Information About Sales Tax Collections ........................................................................................................................8
Procedure for Sales Tax Election ....................................................................................................................................................9
Critical Timing Requirements-Checklist .......................
..........................................................................................................9
Rebates or Refunds of Additional Local Tax Paid .......................................................................................................................10
Sample Ordinances ........................................................................................................................................................................11
Operating Authorities-City ....................................................................................................................................................11
Operating Authorities-County ...............................................................................................................................................12
Where Do We Go for Help?
The Arkansas Municipal League serves as a clearinghouse
for information about sales tax elections, campaigns and
ideas. Contact the League office when questions arise
about local sales taxes.
This report suggests various sources of help and
information. In the earliest stages of a sales tax campaign,
cities should consider retaining professional public rela-
tions or advertising assistance to help organize the cam-
paign.
General Strategy
These suggestions will help begin a sales tax campaign:
• Keep the issue simple. The more complicated a tax
proposal, the more opportunity voters have to turn it
down from a lack of understanding. The issue of a sales
tax is simple, but it can be complicated by side issues.
• Organize early. The time to begin organizing is
now, long before the city council authorizes the election.
• Use your best sales people. City employees will ben-
efit from the new source of revenue. Make certain they
fully understand and support the issue. They can become
very effective grassroots advocates.
• Don't be sidetracked. One of the most effective tac-
tics against a tax proposal is for the opposition to argue
that another tax would be fairer or better. Address this
issue before it develops.
• Make sure your campaign organization raises
enough money to tell your story. Lack of promotional
money can seriously hamper such an effort. Be certain
you have a realistic budget for brochures, pamphlets,
radio and television announcements, newspaper advertis-
ing and miscellaneous expenditures. If you have advertis-
ing experts or public relations assistance, they can
estimate the cost of a campaign. Obtain contributions
early for effective planning.
• Involvement. Get many people to participate in the
campaign. The greater the community participation, the
more likely the sales tax proposal will pass.
• State your case clearly. No one likes higher taxes.
But an alternative to a tax increase is a decrease of city
services, which ~is not a popular choice.
Organization and Planning
The organization of a campaign to win support of a local
sales tax program must be established early to work effec-
tively.
Organizational Strategy. The most common strategy
is to establish at least two general committees of promo-
tion and public information.
The committees form the base for a speakers bureau,
radio and television interviews and other publicity strate-
gies. Representatives of the city government should serve
on committees, but they should not hold the key commit-
tee positions, such as chair or spokesperson.
The development plans may follow these steps:
1) Appoint a study committee to determine the
municipality's needs and the revenue sources to meet the
needs. The city administration will provide information,
but it may not want to make final recommendations. The
committee will identify needs for new revenue.
2) Form a group to promote the recommendations of
the study committee. This could be a new group or an
expanded study committee to at least twice the original
size.
3) Distribute throughout the voting area fact sheets
and question-and-answer brochures covering details of
the sales tax.
4) Mount an intense advertising and publicity surge
in the final days of the campaign.
The Study Committee. This committee may be the
campaign's most important committee. It will study the
needs of the city and determine what revenues are need-
ed. The scope of the study and the time to make it will
depend on the size of the city and its needs.
The city administration should know the needs. Why
appoint a committee to go over the same ground? People
are more apt to trust the judgment of people without an
immediate interest.
The size of the committee may vary, but it should be
composed of people who understand the operations of
the city and who can articulate the city's plight. It should
not be completely made up of people who are pro-city
administration. It is important to know the opposition's
views as early as possible. This permits time to convince
the opposition of the merits of a sales tax. Given the facts
and the proper orientation, most committees will con-
clude the tax is needed if one indeed is needed. The study
committee is a valuable resource. The ability of its mem-
bers to articulate the deliberations and findings can be
extremely beneficial during a tax campaign.
The Promotion Committee. The establishment of a
promotion committee as early as possible is an important
step. The group should be as widely representative of
community interest groups as possible. An effective mem-
bership may include a minister, a leading merchant, a rep-
resentative of the media and members of labor and civic
groups. This would be a working committee. It would
provide the leadership essential to a successful campaign.
Special Interest Groups. The coordinating commit-
tee should select from its membership a chair. The chair
would be the spokesperson for the group during the cam-
paign.
Chairs should be selected in each special interest sub-
committee. For example, a labor leader as a member of a
subcommittee would help publicize the sales tax proposal
among labor unions.
These subcommittees could
provide valuable grassroots support.
Publicity. The coordinating committee should have a
publicity chair whose primary function is to establish
coordination for publicity among the various phases of
the campaign that will follow. For example, when the
labor leader secures an endorsement from his con-
stituents, it is desirable to get this information to the
media in as complete a form and as quickly as possible.
The publicity chair would, in effect, be the liaison between
public relations and the coordinating committee.
The' committee function outlined above is meant to
provide the main leadership for the campaign. Small
committees may have specific purposes or handle
endorsements. They would be valuable, but it would be
the coordinating committee's function to be the overall
leadership pool.
The Citizens' Committee. This group or committee
may come from political organizations. Republican and
Democratic Committee women and men could get out
the vote. This committee's greater contribution could be
as a buffer group for publicity.
If opposition develops, this citizens' group could
effectively answer allegations and correct misinformation.
The committee would give the campaign the character of
a grassroots movement wanting to achieve reasonable
taxation.
The Speakers Bureau. This is an important part of
the campaign. The committee would select one or two of
the best speakers in the community and use them exclu-
sively. Their speeches could be prepared by the public
relations staff and the speeches should be short, not
longer than 10 minutes each. It would tell the need and
that the sales tax is a reasonable answer. A slide presenta-
tion could be used at the speaker's option.
The Office Volunteers. This group, a part of the citi-
zens' committee, would be responsible for addressing
mail, making phone calls and providing the secretarial
thrust necessary for a massive public information cam-
paign. The people who are involved in such work can
become most effective ambassadors-at-large.
Checklist fora .Campaign
Appoint Study Committee. Committee
should be free to discover the needs of the city.
/ Set up Coordinating Committee. Be certain
special interest groups are represented. This commit-
tee will bear a heavy burden and should be selected
`carefully.
/ 'Select chair.
/ If possible, seek public relations help.
/ Establish a budget and finance committee.
/ Form subcommittees forlabor, retail, etc.
Establish their plans of action.
(Note: All of the above work should be completed
before the election has :been set by the City Council.).
/ Set date -for election.
/ Begin intensive campaign by city adminis-
,tration on "Thee Needs of he City." Particular
..emphasis should be to get this message to city.
employees. Meetings should be held for city employ-
ees:-.Invite media coverage. If should be established
firmly that the city has a definite need for more rev-
.. enue.
/ Prepare: brochures and advertising for he
campaign.
Start the subcommittees' making public
appearances and seeking. endorsements from spe-
cial interest groups.
/ Sponsor media luncheon hosted by the coos-
dinating committee and give the media a briefing
on the needs as well as the municipal sales tax back-
ground.
/ Establish: speaker's bureau.
/ Sponsor mailings. This is a .good way to get.
information to people and should- be considered if
there is opposition to the.. proposal. Three mailings.:.
are preferred to a single mailing: It should be remem-
bered that the mailings should-be kept informative,
crisp and businesslike.
/ Paid advertising. This portion of the cam-
paign should take place in the 'last week. before the:
election. No public funds should be:used.
Beware of Pitfalls
in a Sales Tax Campaign
1) Keep the issue simple. In several cities where sales
tax campaigns failed, officials admitted that a major rea-
son for rejection was that the issue was too complex. It's
good to spread the sales tax program over a broad area of
public interest, but avoid giving all a piece of the pie for
their support.
2) Don't try for more tax money than is needed. If a
one percent tax provides more money than is immediate-
ly needed for operation and capital improvements, you
can propose a 1%, 3/4%, 1/2%, ll4%, 1/8% or make some
trade-offs by lowering or abolishing sanitation fees, sewer
service charges, property taxes, etc.
3) Establish grassroots support. Keep the city
administration from leading the sales tax campaign.
Obviously, city officials will have to be involved in the
promotion of the tax, but a committee made up of a wide
representation of the community should provide the
basic leadership in the campaign. The city administration
should be prepared with the information needed by the
committee.
4) Plan early to get out the vote. Plan as early as pos-
sible to get voters to the polls. As with all tax elections, the
nays will vote. Your challenge will be to get the ayes to the
polls. Generally, the heavier the vote on this issue, the bet-
ter the chance of passing the tax.
5) Be cautious about making commitments con-
cerning other sources of revenue. Almost all cities that
have considered a sales tax have proposed some tax or fee
reduction-such as the elimination of sanitation fees, low-
ering franchise fees and occupation taxes. Reform is gen-
erally anexcellent step, but it will not bring overwhelming
support for the new tax. In addition, the opposition in
several cities has suggested late in the campaign that this
is only a temporary move, with no guarantee the tax will
not be raised by a subsequent council soon after the sales
tax is imposed. Point out that a referendum would be pos-
sible if a future council reinstates a tax or fee that had
been lowered. We believe the trade-offs very effectively
give relief to lower income groups and counter the argu-
ment that a sales tax is regressive.
6) Lack of support from business. The support of
the business community in a sales tax campaign is
extremely important. Businesses will be directly involved
in collecting the tax and should be aware of all aspects of
the tax program. Detailed discussion of the city's needs
for a sales tax should be held with as many merchants and
early in the campaign as possible. Also, attempt to obtain
support from the business community. Early and infor-
mal discussions is one strategy.
7) Get support and help of city employees. Don't
assume that your city employees are with you. Make a
special effort to explain your program to them and elicit
their support. Stress the need for their explaining the pro-
gram to their relatives, friends and neighbors.
8) The sales tax is regressive. Some people will argue
that a local option sales tax is regressive-it hits the lower
income family harder than the higher income family. One
city helped solve this problem by answering, "Compared
to what?" Compared to the sanitation fees? No. Compared
to higher utility rates? No. Compared to higher license
fees? No. It is true that the sales tax is not as progressive as
a pure form of an income tax, but the chances of most
Arkansas cities' obtaining an income tax or an earnings
tax in time to solve city financial problems are extremely
slim.
9) Labor is opposed to the sales tax. Experience in
other cities has shown that labor organizations are not
flatly against a sales tax. Labor generally is against regres-
sive taxes since labor represents lower and middle income
groups, It is important that this group be contacted early
and be informed of the tax program. Some arguments
about the regressiveness of the sales tax can be explained
to labor groups.
10) Don't underestimate the opposition. Some tax
experts suggest that the country is experiencing a taxpay-
ers' revolt. Economic uncertainties have caused great con-
cern among taxpayers. However, a needed and well
documented tax program still will be accepted in
Arkansas cities. Experience indicates that opposition to
the sales tax can be well-financed. Most opposition's
information may mislead, oversimplify, be vague and take
the theme that more taxes are not needed. "All the city
needs to do is to tighten its spending belt" will appear. A
campaign for the sales tax should anticipate this opposi-
tion and be prepared early to answer the opposition's
questions and statements. Again, the answer will be better
received if it comes from someone not connected with the
city administration. Also, do not be sidetracked on issues
which have little relevance to the sales tax.
Questions and Answers
about Public Relations
Q: How important is public relations in a campaign like
this?
A: Extremely important! The public view of whether the
tax is necessary and fair will determine the outcome. Pres-
ent the city's case so that the public is sympathetic with its
objectives. This can usually be accomplished by the city's
simply stating the facts, being truthful and objective and
by keeping everlastingly at it. Remember that the people
in the campaign will lend their public images (either good
or bad) to the campaign. This can affect an issue greatly.
Q: What if reporters don't give the sales tax a fair shake?
A: Seriously think about this one. You are hardly in a posi-
tion to make an objective analysis of this once the cam-
paign starts. Ask your friends who are not as deeply
involved in the campaign as you. If you feel an injustice,
meet with the reporter. Discuss the situation. Never bait
the reporter. Never argue. Your best offense is to help the
reporter understand that you are sincere and that you
believe, for very good reasons, that the sales tax answers
the need.
Q: Is it good to offer a reporter an exclusive story now
and then? Doesn't that usually win them over to your
side?
A: No. If a reporter calls to check out a story and he or she
is given an answer, then a general release should not be
made of that answer. This can be considered an exclusive
to the inquiring reporter. It is assumed that the reporter
gathered this story from his or her own initiative and that
to make a general release of it would rob the reporter of
the fruits of the reporter's work. In cases where a news
release is made, distribute it to everyone. Don't play
favorites. If you think elephants have long memories, talk
to a reporter.
Q: What about your making "off the record" comments?
A: They are not recommended. The reporter makes his or
her living out of on-the-record comments. Reporters
commonly feel that people who speak off-the-record fre-
quently are hiding something. However, you may have
occasion to give background information to reporters to
help them prepare articles.
Q: What should people in the campaign do if they are
asked to comment on a story that is a surprise to them?
A: It is a good idea to ask a reporter for the deadline for
this particular story and ask for a few moments before
you respond. This will give time to form a clear answer.
Remember that you are obligated to call the reporter back
at the designated time. Remember that statements made
in haste can sound frightening on the radio or in print
later. Few reporters will resent your taking a moment to
think it through. jot down your thoughts and call them
back.
Q: How long should a news release be?
A: As short as it can be and still carry the meat of the story.
Any news release of more than one page should be stud-
ied for editing.
Q: Are endorsements valuable?
A: Extremely so. In advertising and selling, one of the
most effective devices is the establishing that other people
and other groups believe the proposition to be good. It
would be difficult to obtain too many endorsements.
Q: Is there such a thing as momentum? Can you peak too
soon?
A: Yes. The overall publicity for a campaign may be out-
lined: First, the city administration should establish the
need. This may not gain big headlines or enormous pub-
licity. However, through repetition and consistent presen-
tation, the point can be made. The next phase could
establish the committees and name certain people to cer-
tain jobs. The next step could be obtaining endorsements
and announcing that people not connected with the city
government speak in behalf of the tax proposal. The last
phase of the campaign would be paid advertising. The
advertising momentum would build toward election day.
Build slowly and allow the momentum to carry you
through election day. If saturation is achieved too quick-
ly, people will grow tired of the issue and become
annoyed. If the momentum is not built quickly enough,
people will tend not to get the full message or the full
understanding of the issues. It is a good idea to outline
before the campaign the type of momentum you will try
to achieve.
Advertising Media
Each mass communications device has its strong and weak points. The cost of each is alarming; however, remember that
major advertising takes your message to an enormous number of people.
It is possible to reach saturation in a few days through the proper use of mass media. It should be considered in your
budget and should, in the event of opposition, be a major portion of your effort. The following paragraphs briefly explain
radio, television, newspaper and print media.
• Radio
Generally, radio is inexpensive and flexible. Avoid using it
as an audible newspaper. It is a medium all of its own,
with its own peculiarities, problems and rewards. Radio
spot announcements commonly are of two types: satura-
tion and fixed time. Saturation may have 10 or more
announcements on a given day. They reach a broad spec-
trum of listeners. These announcements often are more
economical and are an excellent means to build momen-
tum. The length of the spot announcements can also be
a key to extra value. Many stations have a lower rate for
30-second spot announcements than for aone-minute
spot. If your message is less than a minute, then you can
stretch your radio budget. Many stations offer a very eco-
nomical rate on eight- or 10-second identification
announcements. This can make good sense, too.
• Newspapers
The newspaper is one of the most effective advertising
media. Among the media, it is more common for news-
papers to offer an endorsement to an issue, such as the
sales tax. If you see that an endorsement is possible, make
an early contact with the newspaper and follow through.
Publicity releases to the newspaper can be longer than
releases for radio or television. It is usually to your advan-
tage to use as many names as possible in a newspaper
release. Newspapers often are eager to print names of peo-
ple in the local area. The following is a guideline for the
preparation of a typed news release.
1) Use 8 1/2 x 11-inch white paper. Double space and
use one side.
2) Leave at least one-inch margins right and left.
3) In the upper right hand corner, type the name of
the committee and a spokesman or spokeswoman's name,
address and phone number so that someone can be
reached quickly if there are follow-up questions.
4) Start the story about one-third of the way down
the page to leave the editor space for editorial instructions
and headlines.
5) Indent each paragraph five spaces.
6) If your story runs longer than one page (this
should be very uncommon), type "more" at the bottom of
each page and number all pages after the first page.
7) Start each page with a new paragraph if possible.
8) After the final paragraph of your story, type the
pound sign (#) three times. This signifies the story's end.
9) If you send releases to more than one newspaper, sub-
mit aclean copy to each. Keep one copy for your records.
In newspaper advertising, a good deal of the impact will
be in the headline. Use as much copy as necessary for an
issue such as a sales tax. Explain thoroughly. It is more
important that the ad be businesslike and straightforward
than arty or glamorous in appearance.
• Television
If your city or neighboring city has a television station,
this can be an effective communication tool. The prime
night time hours will be, by far, the most expensive time
available. However, they may represent the best value! A
night time rate maybe twice as high as a daytime rate, but
the audience may be three to four times as large. There-
fore, the cost per viewer would be less in prime time.
Sixty-second spot announcements are extremely dif-
ficult to purchase on most television stations. The chain
break announcements that occur between television pro-
grams are the easiest to come by. These will generally run
20 to 30 seconds in length. It is also possible on some sta-
tions to purchase 120-second time segments.
Television production can be expensive. You have the
possibility of your using videotapes, 35mm slides, on-air
announcers, black and white or color photographs or
film. The answer to which of these devices would be most
effective can be determined usually by your budget.
All television stations in Arkansas are equipped with
videotaping facilities. Videotaping is more economical
than film. It may be the best answer for spot announce-
ments. Note that more people get their news information
from television than through any other medium. Even
though a television station may not be in your commu-
nity, atelevision station covers your area. Remember
them with your news releases.
• Brochures and Pamphlets
A brochure can boost your campaign. The brochure
should be neat and attractive and be loaded with factual
information.
The 12 points below give you copy ideas for a
brochure.
1) A sales tax falls about equally on all residents.
2) Cities need new sources of income. The sales tax
provides one. Property owners support many political
entities, including the school district and the county, in
addition to the city. Property taxes have been raised many
times in the past. It has become necessary now to search
for more flexible means of taxation.
3) The sales tax is painless to collect. It is collected by
the state through means already in place. No new expens-
es are needed to collect the tax.
4) It is cheap to collect. It is collected with other sales
taxes and the state remits 97 cents of each sales tax dollar
collected to the municipality.
5) It cannot be raised beyond the maximum amount
approved by the state legislature.
6) It will be paid in part by people not living in your
city-tourists, convention goers and visitors who use city
facilities without paying for them otherwise.
7) It will not be a drag on industrial expansion. Addi-
tionalproperty taxes discourage business while sales taxes
and the sound economy resulting from them attract
industry.
8) Ninety-seven percent of the counties in 2004 had a
local sales tax and more than 300 local taxes are in the
state; most cities and counties have local sales taxes.
9) More than 99.5 percent of all sales in Arkansas are
subject to a local sales tax.
10) Local sales taxes are used successfully in thou-
sands of other cities in our part of the country. More than
7,000 cities have a sales tax.
11) Cities in all the states around Arkansas heavily use
the sales tax. States surrounding Arkansas, Mississippi,
Louisiana, Texas, Oklahoma, Missouri and Tennessee-
permit their cities to have local sales taxes.
12) As a good revenue producer, it will grow with the
economy.
Summary
The image of the sales tax issue will determine whether
the vote will carry it. The public's opinion of the issue on
election day will determine whether a successful cam-
paign has been waged. Four major influences help estab-
lish animage.
An issue with prestige is an issue that is respected and
admired, has public acceptance and fills a social need that
is well defined and understood. It is a good thing to be for.
The second, affirmation, is a concise statement of the
municipal sales tax need in simple, sharp, easily under-
stood terms. Proof may not be necessary to present here.
The third influence, repetition, makes affirmation signifi-
cant. The sales tax story should be told from public plat-
forms, in small informal groups, byword-of-mouth, over
the back fence and by the mass media. It must be told
often. It must be told in precisely the same way each time.
A fourth influence is the bandwagon philosophy. It is
induced by testimonials, by the desire to be on the win-
ning side.
These four influences-prestige, affirmation, repeti-
tion and contagion-can form the base of your publicity
and advertising campaign. Make sure that the troops and
resources are available to make a big, strong finish. A say-
ing, you should come on strong, may not apply to sales
tax campaigns. Rather, wind up strong. It will be neces-
sary to bring the power of the entire campaign organiza-
tion and all of its communication facilities to bear on a
single concerted selling effort.
Use the powerful device of repetition. It will be
important not to be diverted by side issues or fall into a
trap of defending the sales tax or your position on it. It
will be important not to become cluttered with too many
issues and too much detail. It will be important to many
campaigns to sell on the basis of one theme, one slogan,
one proposition throughout the entire campaign.
Begin early. Successful campaigns begin early. Oppo-
nents need less time to organize than proponents. There-
fore, give yourself the advantage of plenty of planning and
organizational time. It can be the major element of your
success.
Authority for Local Sales Tax
Most all references are to 2007-2008 Handbook for
Arkansas Municipal Officials. Handbook section num-
bers are the same as section numbers in the official
Arkansas Code of 1987, as amended.
City Sales Taxes
Handbook Sections
First Operating Authority'
(may be used for general revenue, special revenue
(if ballot limits use) or pledged to bonds
if done by separate vote) ..................................26-75-201et seq.
Second Operating Authority'
(may be used for general revenue, special revenue
(if ballot limits use) or pledged to bonds
if done by separate vote) .................................26-75-301 et seq.
Capital Improvements (tax dedicated exclusively
for bond issue2) ......................................14-164-301 et seq.
24 Months Alternative to Bond Issue
(Pay as you go) .....................................14-164-338et seq.
36 Months Alternative to Bond Issue
(pay as you go)
(for criminal justice purposes only) ..............14-164-340et seq.
Alternative for Operation
or Maintenance ......................................26-73-113et seq.
Two-Year Tax for Parks' ..........................26-75-401 et seq.
Expiration Dates ...............
.....................14-164-301 et seq.
County Sales Taxes
Handbook Sections
First Operating Authority'
(may be used for general revenue, special revenue
(if ballot limits use) or pledged to bonds
if done by separate vote) .................................26-74-201 et seq.
Second Operating Authority'
(may be used for general revenue, special revenue
(if ballot limits use) or pledged to bonds
if done by separate vote) .................................26-74-301 et seq.
Capital Improvements (tax dedicated
exclusively for bond issue) ................14-164-301 et seq.
24 Months Alternative to Bond Issue
(pay as you go) ...............................................14-164-338
36 Months Alternative to Bond Issue
(pay as you go)
(for criminal justice purposes only) ........................14-164-340
Alternative for Operation or Maintenance ...26-73-113
Counties Without Existing Tax ..............26-74-401 et seq.
The use of city sales and use tax monies may be changed
with voter approval. See Act 1269 of 2005, amending
26-75-208(c) and 26-75-308(d).
Multi-County Airport
and Riverport Financing Act
One (1) Cent .............................................26-81-101 et seq.
Mass Transit
One Quarter (1 /4) Cent ...........................26-73-111 et seq.
1 The percentage authorized by statute are one-eighth percent
(.125%), one-fourth percent (0.25%), one-half (.5%) percent, three-
fourths percent (.75%), one percent (1%) or any combination of
these amounts. ACA 26-74-207(a).
2 One-eighth percent (.125%) increments up to one percent (1%).
3 One-half percent (0.5%) or one percent (1%).
Further Information
About Sales Tax Collections
The monthly issues of City er Town magazine, the official
publication of the Arkansas Municipal League, carry
updated maps of Arkansas showing the counties and
cities that have voted sales taxes and the cities that have
both county and city sales taxes and those cities that have
either two or three city penny sales taxes. This map also
shows the total local sales tax by month for the year to
date plus the results of the sales tax elections in the cur-
rent year. On the opposite page is the sales tax revenue
for the current month for the cities and counties with
sales taxes.
Ark. Code Ann. 26-73-115 allows a mayor or county
judge to obtain a quarterly report from the Arkansas
DF&A listing businesses remitting sales and use taxes in
the municipality or county. Also, information is available
that shows how sales tax receipts break down by the type
of business. Contact Melvin Johnson at 501-682-7118 at
DF&A and ask for the quarterly and NAICS (business
code) reports.
Procedure for City Sales Tax Election
Before Election
1) Ark. Code Ann. 26-25-107, mandates that any
2)
3)
ordinance levying a local sales and use tax, in a
special or general election, which is to be collect-
ed by the Director of the DF&A, shall be submit-
ted to the Director at least forty-five (45) days
prior to the election of the levy. The Director shall
review the ordinance in light of the statutory
requirements and limitations. Once reviewed, the
ordinance shall then either be approved or reject-
ed by written notice to the city within fifteen
(15) days of receipt of the ordinance, with an
explanation of the defects should the ordinance
be rejected. If the ordinance is rejected and the
city fails to correct the noted defects, the ordi-
nance shall be deemed defective and any tax
levied under it shall not be collected by the Direc-
tor. Further, if an, initiated measure is the catalyst
for the levy it shall be the responsibility of the
county board of election commissioners to sub-
mit the initiated measure to the Director. Upon
such submission the remainder of the statutory
requirements noted above must be complied
with. The Director may be contacted in the fol-
lowing manner: Department of Finance and
Administration, 401 DFA Bldg., Little Rock, AR
72201, 501-682-2242, or via the Internet:
http://www.arkansas.gov/dfa/).
Failure to submit the ordinance to the Director or
to use a sample form will not, in and of itself, ren-
der the ordinance invalid or constitute a cause of
action to invalidate the ordinance. Ark. Code
Ann. 26-25-107(d)
The Arkansas Municipal League and the DF&A
are authorized to jointly develop forms and
ordinances for levying sales and use taxes which
comply with all statutory limitations and require-
ments. Ark. Code Ann. 26-25-108. This booklet
has been reviewed and approved by~the DF&A.
4) Pass and publish an ordinance calling for a special
election levying Sales and Use Tax at least ninety
(90) days before the beginning of a quarter, i.e.,
January 1 ,April 1, July 1 or October 1. Because of
changes to the law during the 20071egislative ses-
sion the soonest a city or town can expect to have
the tax effective is two quarters from its passage,
publication and notice to the DF8zA. In all likeli-
hood, revenues will be received between six (6) to
eight (8) months from the date of receipt of the
proclamation by the DF&A (and any other docu-
ments requested by the DF&A). Previously, local
taxes could be implemented more rapidly; how-
ever, changes were recently incorporated into
Arkansas law as part of a nationwide effort to
streamline state and local sales taxes throughout
the country. These changes require that taxpayers
be provided with additional notice of a local sales
tax change before that tax will become effective.
5) The special election shall occur on the second
Tuesday of any month, unless it is held during a
month in which a presidential preferential pri-
mary election, preferential primary election, gen-
eral primary election, or general election is
scheduled to occur. The special election shall then
be held in conjunction with those other elections.
In the event the second Tuesday of a month is a
legal holiday, the special election shall be held on
the third Tuesday of that month. See Ark. Code
Ann. 7-5-103 (b), as well as 26-73-11 1, which pro-
vides for dealing with date conflicts and separate
ballots.
6) Any legal contest of a sales tax election must be
filed within thirty (30) days from the time the
election results have been published.
7) Prepare Official Ballot.
8) Notify County Board of Election Commissioners
that the measure has been referred to a vote, and
submit a copy of the ballot title to the board.
9
Critical Timing Requirements-
Check List
Prepare ordinances, official ballot and related docu-
ments.
Date of election (alternatives)
a. Second Tuesday of each month, or
b. Date of a presidential preferential primary, preferen-
tial primary, general election primary or general elec-
tion
Timing o,T f Adoption of Ordinance Calling Election
a. Primary or general election
The election shall be not less than 65 days after the
date the ordinance is adopted.
b. Special election (not primary or general election
date)
The election date must be not less than 50 days after
the date the ordinance is published. Therefore, more
than 50 days will be required following adoption of
the ordinance in order to provide adequate time for
publication. This may approximate a 65-day time
period similar to the one above for a primary or gen-
eral election.
The election must be held within one hundred twenty
(120) days of the ordinance calling for the election
ACA 26-75-208; 26-75-308.
Notify Coun Board of Election Commissioners that
measure has been referred to a vote and provide Board
with copies of ordinances and ballot.
Submission of Ordinance(s) to Arkansas DF&A for
approval-at least 45 days prior to the election
• Absentee Ballots-must be on file with the County
Clerk thirty-five (35) days prior to the election.
• Publication of Proclamation of Results -starts the 30
election challenge period.
• Submit proclamation to the DF&A as well as any other
information requested by the DF&A.
• Any election contest must be filed thirty (30) days from
publication date of election results.
• Effective Date of Tax
a. The ,first da;~of the calendar quarter following the
periods described below. This includes bond taxes
that previously would have been effective on the first
day of a month.
b. Periods that must expire before the effective date of a
new tax:
0 90 days following notice to DF&A after the election
(which means that a tax approved in one calendar
quarter will not be effective until the end of the fol-
lowing calendar quarter);
0 60 days' notice by DF&A to collectors of the sales
tax; and
0 30 days following the publication of the proclama-
tion of results (challenge period).
The latter 60 and 30 day time periods should expire
during the longer 90 day notice period to DF&A.
Rebates or Refunds
of Additional Local Tax Paid
Qualifying businesses (including cities and towns as
noted below) maybe eligible for a rebate or refund of the
additional local tax paid on qualifying purchases on pur-
chase invoices that exceed $2500.00. A qualifying pur-
chase means a purchase of tangible personal property or
a taxable service for which a business may claim a busi-
ness expense deduction or depreciation deduction for
federal income tax purposes. The purchase will be eligi-
ble even though the business purchaser may not be
required to file an income tax return. In addition,
municipalities and other governmental agencies (includ-
ing schools and colleges or universities) and non-profit
organizations (including churches) may apply for
rebates/refunds of additional local taxes paid.
Pursuant to Ark. Code Ann. 26-52-523 (a) (2) for pur-
poses of calculating the rebate or refund amount, a uni-
form single transaction definition has been adopted
effective January 1, 2008:
"Single transaction shall mean any sale of tangi-
ble personal property or taxable service reflected
on a single invoice, receipt, or statement for
which an aggregate sales or use tax amount has
been reported or remitted to the state for a single
local taxing jurisdiction."
There is a six (6) month time limit on requesting a
rebate which begins on the date o the purchase or from the
date of payment of the tax to the seller, whichever is later
For cities and towns that hold a sales and use tax per-
mit and file an Excise Tax Reporting Form rebates can be
claimed directly on that form and submitted to the Sales
and Use Tax Section of the DF&A as directed on the form.
For those cities and towns that do not hold a sales and use
tax permit refunds maybe obtained by filing a Claim for
Local Cap Rebate Form numbers ET-179A and B. In
addition to filling out those claim forms photocopies of
the invoices at issue should be attached to the form(s)
and mailed to:
DF&A Local Tax Rebate Unit
P. O. Box 3566
Little Rock, AR 72203
The Rebate Unit may be contacted at 501-682-7105,
and forms are available via the Internet at:
www. state. ar. us/salestax.
10
OPERATING AUTHORITIES-CITY
(MAY BE USED FOR GENERAL REVENUE, SPECIAL REVENUE (IF BALLOT
LIMITS USE] OR PLEDGED TO BONDS IF DONE BY SEPARATE VOTE)
LEVYING SALES AND USE TAX
ORDINANCE NO.
AN ORDINANCE PROVIDING FOR THE LEVY OF A
PERCENT SALES AND USE TAX WITHIN THE
CITY OF ,ARKANSAS; AND PRE-
SCRIBING OTHER MATTERS PERTAINING THERETO.
WHEREAS, the City Council of the City of ,Arkansas
(the "City"), has determined that there is a great need for immediate improve-
ment of municipal services and for a source of revenue to finance such servic-
es; and
WHEREAS, Title 26, Chapter 75, Subchapter 2 [or Subchapter 3 if the
second authority is to be used] of the Arkansas Code of 1987 Annotated (the
"Authorizing Legislation") provides for the levy of a _ percent (_,%)' citywide
sales and use tax;
NOW THEREFORE, BE IT ORDAINED by the City Council of the City of
Arkansas:
Section 1. Under the authority of the Authorizing Legislation, there is here-
by levied a _ percent (-_%) tax on the gross receipts from the sale at retail
within the City of all items which are subject to the Arkansas Gross Receipts
Act of 1941, as amended (A.C.A. §26-52-101, et seq.), and the imposition of
an excise (or use) tax on the storage, use, distribution or other consumption
within the City of tangible personal property subject to the Arkansas Compen-
sating Tax Act of 1949, as amended (A.C.A. §26-53-101, et seq, at a rate of
_ percent (_%) of the sale price of the property or, in the case of leases or
rentals, of the lease or rental price (collectively, the "Sales and Use Tax").
Section 2. That all ordinances and parts thereof in conflict herewith are
hereby repealed to the extent of such conflict.
Section 3. That this Ordinance shall not take effect until an election' is
held on the question of levying the Sales and Use Tax at which a majority of the
electors voting on the question shall have approved the levy of the Sales and
Use Tax.
PASSED: (MONTH, DAY, YEAR).
ATTEST: APPROVED:
City _
(SEAL)
Mayor
CALLING A SPECIAL ELECTION
ORDINANCE NO.
AN ORDINANCE CALLING A SPECIAL ELECTION IN
THE CITY OF ,ARKANSAS, ON THE
QUESTION OF LEVYING A _ PERCENT SALES AND
USE TAX WITHIN THE CITY OF ARKANSAS; PRE-
SCRIBING OTHER MATTERS PERTAINING THERETO;
AND DECLARING AN EMERGENCY.
WHEREAS, the City Council of the City of ,Arkansas
(the "City"), has passed on (month, day, year), Ordinance No. provid-
ing for the levy of a _ percent (,_%)' sales and use tax within the City (the
"Sales and Use Tax's; and
WHEREAS, the purpose of this Ordinance is to call a special election on
the question of the levy of the Sales and Use Tax.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of
Arkansas:
Section 1. That there be, and there is hereby called, a special election to
be held on (month, day, year), at which election there shall be submitted to the
electors of the City the question of the levy of the Sales and Use Tax.'
Section 2. That the question of levying the Sales and Use Tax shall be
placed on the ballot for the election in substantially the following form:
Vote on measure by placing an "X" in the square opposite the measure
either for or against: FOR adoption of a _% local sales and use tax within the
City of ,Arkansas AGAINST adoption of a _% local sales
and use tax within the City of ,Arkansas.'
Section 3. That the election shall be held and conducted and the vote
canvassed and the results declared under the law and in the manner now pro-
vided for municipal elections unless otherwise provided in Title 26, Chapter 75,
Subchapter 2 [or Subchapter 3 if the second authority is to be used) of the
Arkansas Code of 1987 Annotated (the "Authorizing Legislation") and only
qualified voters of the City shall have the right to vote at the election.
Section 4. That the results of the election shall be proclaimed by the
Mayor, and his Proclamation shall be published one time in a newspaper hav-
ing ageneral circulation in the City, which Proclamation shall advise that the
results as proclaimed shall be conclusive unless attacked in the courts within
thirty (30) days after the date of publication.
Section 5. That a copy of this Ordinance shall be given to the County
Board of Election Commissioners so that the necessary election officials and
supplies may be provided. A certified copy of this Ordinance shall also be pro-
vided to the Commissioner of Revenues of the State of Arkansas as soon as
practical.
Section 6. That the Mayor and City Clerk or Recorder, for and on behalf
of the City, be, and they are hereby authorized and directed to do any and all
things necessary to call and hold the special election as herein provided and, if
the levy of the Sales and Use Tax is approved by the electors, to cause the
Sales and Use Tax to be collected in accordance with the Authorizing Legisla-
tion, and to perform all acts of whatever nature necessary in a timely fashion to
carry out the authority conferred by this Ordinance.
Section 7. That all ordinances and parts thereof in conflict herewith are
hereby repealed to the extent of such conflict.
Section 8. It is hereby ascertained and declared that there is a great
need to establish a stable source of revenue to finance vital municipal services
in order to promote and protect the health, safety and welfare of the City and
its inhabitants. It is, therefore, declared that an emergency exists and this
Ordinance being necessary for the immediate preservation of public peace,
health and safety shall be in force and take effect immediately from and after its
passage.
PASSED: (MONTH, DAY, YEAR).
ATTEST: APPROVED:
City _
(SEAL)
Mayor
1 The percentages authored by statute are one-eighth (.125%), or one-fourth of one percent (.25%), one-haH o}
one percent (.5%), three-fourths of one percent (.75%), or one percent (1 %), or arty wmbination of these amounla.
AcA 25-7a-2o7(a).
2 The election must be held wfthin one hundred twenty (120) days of the ordinance calving for the election. ACA 2fi-
74-207(8).
3 The begot title rttsy also include an expiration data for the levy of the tax as specified in ACA 2E74-208.
11
OPERATING AUTHORITIES-COUNTY
(MAY BE USED FOR GENERAL REVENUE, SPECIAL REVENUE [IF BALLOT
LIMITS USE] OR PLEDGED TO BONDS IF DONE BY SEPARATE VOTE)
LEVYING SALES AND USE TAX
ORDINANCE NO.
AN ORDINANCE PROVIDING FOR THE LEVY OF A
PERCENT SALES AND USE TAX WITHIN
COUNTY, ARKANSAS; AND PRE-
SCRIBING OTHER MATTERS PERTAINING THERETO.
WHEREAS, the Quorum Court of County,
Arkansas (the "County', has determined that there is a great need for immedi-
ate improvement of County and municipal services and for a source of revenue
to finance such services; and
WHEREAS, Title 26, Chapter 74, Subchapter 2 [or Subchapter 3 if the
second authority is to be used) of the Arkansas Code of 1987 Annotated (the
"Authorizing Legislation") provides for the levy of a _ percent (._%)' county-
wide sales and use tax;
NOW, THEREFORE, BE IT ENACTED by the Quorum Court of
County, Arkansas;
Section 1. Under the authority of the Authorizing Legislation, there is here-
by levied a _ percent (.._%) tax on the gross receipts from the sale at retail
within County, all items which are subject to the
Arkansas Gross Receipts Act of 1941, as amended (A.C.A. §26-52-101, et
seq.), and the imposition of an excise (or use) tax on the storage, use,
distribution or other consumption within County, tan-
gible personal property subject to the Arkansas Compensating Tax Act of
1949, as amended (A.C.A. §26-53-101, et seq.), at a rate of _ percent
~%) of the sale price of the property or, in the case of leases or rentals, of
the lease or rental price (collectively, the "Sales and Use Tax").
Section 2. That all ordinances and parts thereof in conflict herewith are
hereby repealed to the extent of such conflict.
Section 3. That this Ordinance shall not take effect until an electionz is
held on the question of levying the Sales and Use Tax at which a majority of the
electors voting on the question shall have approved the levy of the Sales and
Use Tax.
PASSED: (MONTH, DAY, YEAR).
ATTEST: APPROVED:
County
(SEAL)
County Judge
CALLING A SPECIAL ELECTION
ORDINANCE NO.
AN ORDINANCE CALLING A SPECIAL ELECTION IN
COUNTY, ARKANSAS, ON THE
QUESTION OF LEVYING A PERCENT SALES
AND USE TAX WITHIN COUNTY,
ARKANSAS; PRESCRIBING OTHER MATTERS PER-
TAINING THERETO; AND DECLARING AN EMER-
GENCY.
WHEREAS, the Quorum Court of County,
Arkansas (the "County"), has passed on (month, day, year), Ordinance No.
providing for the levy of a _ percent (_%)' sales and use tax
within the County (the "Sales and Use Tax"); and
WHEREAS, the purpose of this Ordinance is to call a special election on
the question of the levy of the Sales and Use Tax.
NOW THEREFORE, BE IT ENACTED by the Quorum Court of
County, Arkansas:
Section 1. That there be, and there is hereby called, a special election to
be held on (month, day, year), at which election there shall be submitted to the
electors of the County the question of the levy of the Sales and Use Tax?
Section 2. That the question of the levying the Sales and Use Tax shall be
placed on the ballot for the election in substantially the following form:
Vote on the measure by placing an " X in the square opposite the meas-
ure either for or against:
FOR adoption of a _% local sales and use tax within (name of county)
AGAINST adoption of a _% local sales and use tax within (name of
county).'
Section 3. That the election shall be held and conducted and the vote
canvassed and the results declared under the law and in the manner now pro-
vided for county elections unless otherwise provided in Title 26, Chapter 74,
Subchapter 2 [or Subchapter 3 if the second authority is to be used) of the
Arkansas Code of 1987 Annotated (the "Authorizing Legislation") and only
qualified voters of the County shall have the right to vote at the election.
Section 4. That the results of the election shall be proclaimed by the
County Court, and this Proclamation shall be published one time in a newspa-
per having general circulation in the County.
Section 5. That a copy of this Ordinance shall be given to the (name of
county) County Board of Election Commissioners so that the necessary elec-
tion officials and supplies may be provided. A certified copy of this Ordinance
shall also be provided to the Commissioner of Revenues of the State of
Arkansas as soon as practical.
Section 6. That the County Judge and Quorum Court, for and on behalf
of the County, be, and they are hereby authorized and directed to do any and
all things necessary to call and hold the special election as herein provided and,
if the levy of the Sales and Use Tax is approved by the electors, to cause the
Sales and Use Tax to be collected in accordance with the Authorizing Legisla-
tion, and to perform all acts of whatever nature necessary in a timely fashion to
carry out the authority conferred by this Ordinance.
Section 7. That all ordinances and parts thereof in conflict herewith are
hereby repealed to the extent of such conflict.
Section 8. It is hereby ascertained and declared that there is a great need
to establish a stable source of revenue to finance vital county services in order
to promote and protect the health, safety and welfare of the County and its
inhabitants. It is, therefore, declared that an emergency exists and this Ordi-
nance being necessary for the immediate preservation of public peace, health
and safety shall be in force and take effect immediately from and after its
passage.
PASSED:
ATTEST:
County
(SEAL)
(MONTH, DAY, YEAR).
APPROVED:
County Judge
1 The percentages authorized by statute are one-eighth (.125%), or one-fourth of one percent (.25%), one-haH o1
one percent (.5%), three-fourths of one percent (.75%), or one percent (1 %), or any combination of these amounts.
ACA 26-74-207(a).
2 The election must be held within one hundred twenty (12D) days o(the ordinance caMinp for the election. ACA 26-
74-207(x).
8 The beAot title may also indude an expiration date for the levy of the tax as sped6ed in ACA 26-74-208.
12