Nevada County Picayune and Gurdon Times Newspaper Archive

City seeks to renew sales tax

Gurdon voters will be asked to go to the polls in July to approve a > cent sales tax.

If approved, the city will issue bonds to pay for an extensive street repaving program and the revenue from the sales tax will be used to repay the bonds. The Gurdon City Council met in a special session Thursday and, after hearing presentations from representatives of the law firm and financial firm handling the bond issue, voted unanimously to call for the election.

Ryan A. Bowman, an attorney with Friday, Eldridge and Clark of Little Rock, will be handling the legal portion of the transactions. Carey Smith, vice president of the public finance department for Stephens Inc. Investment Bankers will oversee the selling of the bonds. Both addressed the council Thursday.

The issue was discussed at length during the April city council meeting and the council gave Gurdon Mayor Clayton Franklin approval to pursue the bond issue. Thursday's special meeting was called to get the election process started.

The city currently collects 1 = cents. That figure represents one cent that was levied more than three decades ago for general use in the city, and = cent that was approved by voters in 1997 for use by the police and fire funds. An additional = cent has been collected for several years for streets, police and animal control, but that tax expired in 2003 and is no longer being collected.

During the initial discussions, Franklin said he would recommend a = cent sales tax to do the project. He said that he believed the people of Gurdon would approve the measure, based on the fact that the city recently stopped collecting = cent.

When the council met Thursday, the ordinance they were to consider called for > cent and council member Sally Tarpley questioned the additional amount, saying the people were going to be asked to approve an amount more than the tax that had recently expired.

"Yes, you are asking for an extra < cent to replace that = cent that came off the books," Franklin said.

But he pointed out that the extra collections will allow more streets to be paved and will pay off the bonds sooner.

Prescott recently passed a similar measure. They'd had a 1 cent tax that came off the books and sought a 1 3/8 tax to replace it, with their proceeds also to go to street improvements.

Franklin said Prescott touted the street improvement project instead of a sales tax, and said he plans to do the same.

"That's how they got theirs passed," he said.

Franklin said the = cent had been considered for Gurdon's project, but then it was discovered that the amount would have been less than was needed to complete the project.

Later, Franklin explained the thinking behind that decision.

"We could have (scaled down the project)," he said. "My thought was that I wanted the majority of the people in Gurdon to enjoy a good street by their home."

The ordinance passed by the Gurdon council allows for the city to issue up to $950,000 in bonds. Franklin told Smith he didn't expect that figure to be so high, but Smith said the amount represents the largest amount of bonds that can be issued.

Smith said the interest rate allowed on the bonds is capped by state law. Based on that, there could be some limitations on the amount of revenue that can be generated on the bonds. However, Smith said if the federal interest rate were to drop, the city could be in a position to issue more bonds and still pay those off in the same amount of time from revenues of the > cent sales tax. Smith said he expected the city to issue about $750,000 in bonds  enough to pay for the costs associated with the bond issue with $650,000 left for the project. But inflating that figure gives the city an option, should the interest rate fluctuate by that much.

"I don't expect that to happen," he said, referring to lower interest rates. "But you can't go back to the voters and ask them to approve a higher figure if it does."

The expected date of payoff for the bonds is 2012. Bowman said the intention is for the tax to be levied exclusively to pay for the bonds, and the tax will no longer be collected once the payoff is complete.

The ballot will not include language to indicate the tax includes a sunset clause or ending date, but the ordinance does. According to the ordinance, "If the bonds are approved, there will be levied within the city a new 0.75 percent sales and use tax, the net collections of which  shall be used solely to retire the bonds and obligations "

Franklin said he will begin working in the city to spread the word about the project and encourage voters to approve the sales tax.

"But we've got to clear up some misconceptions," he said.

One of those is the idea that the city has given up sales tax revenues to the county. The fact is that voters approved a county-wide sales tax several years ago with the proceeds to go to the county's general budget. Franklin said the cities within Clark County supported that tax because the county was in dire financial straits at the time.

"But the worm has turned," Franklin said.

He said the tax collected in excess of $2 million last year but the county has become accustomed to having the money and refused to give the cities a portion. That tax is collected by each city and turned over to the state for disbursement. Franklin said the cities do not get any revenue from that tax, even though there have been discussions among city governments and the county for some time.

Franklin said he believes the voters of Gurdon will approve the tax, once the issue has been presented to the people.

"I feel real good about it," he said.