Sales Tax Issue Would Benefit Towns

Thursday, July 25, 2013
Elvis Chavez is pictured taking care of routine maintenance on the county's Case 721E loader Monday afternoon at the Eastern District shop at Piggott. The continued rising cost of repairing and replacing equipment is just one of the many reasons county officials are seeking a sales tax issue in October

A special committee is being formed by Clay County Quorum Court in an effort to relay information to voters encouraging support for a proposed one percent sales and use tax.

Justices approved a measure June 17, establishing a special election to be held Oct. 8, 2013. But garnering support for a tax of any kind in a stale economy is challenging.

"It's a necessary thing," said County Judge Gary Howell. "There will be some who don't support the tax. That's just the way it is. The tax is not just for county general, it provides many services such as Cooperative Extension, Veterans' Services, Health Department and many other important services."

The tax levy would be countywide on all items subject to the Arkansas Gross Receipts Tax Act of 1941.

Mayors of the three largest cities in Clay County--Corning, Piggott and Rector, have voiced support for such a tax. JP's also suspect mayors in the nine rural townships of Clay County would be in favor of the tax, which would generate new revenue for the cities.

The tax was proposed due to significant shortfalls in the County General budget, which has a much decreased carryover from previous years. Howell said that as of June 19, the budget was over $200,000 in the red.

"That's bad for being so early in the year," Howell explained. "We're normally a lot better off than that in June. We don't get in the red until the fall." By way of comparison, in July 2012 the budget was at $72,000 (to the good). Summer hasn't even begun and county government is dealing with negative funds. Trends in recent years show that it's traditionally August when the Fund begins going in the red.

Over the past decade, money generated from the county jail has helped keep the fund productive. It's been waning the past year and expected to be further reduced with the construction of new jails in surrounding areas that have utilized Clay County for housing prisoners. Those housing costs, along with state funds for holding prisoners who have been sentenced, helped keep the county afloat during difficult economic times. But justices have said, those times are nearing an end, and something has to be done."

JP's and County officials suggest getting the word out to voters about the importance of the tax and how services are affected.

"We all know how important some of these services are," Howell said. "For instance, County Extension is dependent upon the County General Fund. That's a huge benefit to farmers and others in the county."

Extension officers are located in Corning and Piggott and provide education and resources in agriculture, family and consumer sciences (nutrition, money and health), 4-H programs and community development.

Howell also pointed out the importance of Veteran's Service officers who provide assistance to veterans and eligible dependents in acquiring state and federal benefits. Each county has such an officer located in courthouses around the state.

The County General budget provides salaries for officials and employees outside the road department, health department costs and numerous other expenses considered essential to county government. Howell said that if the budget continues to operate in the red, changes would have to be made. He said he doesn't want services to be affected.

"We've just had several things go against us," Howell said. "We've suffered loss in manufacturing jobs and because of that, a loss in our population."

The 2010 census revealed a significant reduction in population, showing an 8 percent loss in the 10-year period between censuses. Corning suffered the most significant reduction, losing 300 residents, followed by Piggott with 45 and Rector with 40.

All total, Clay County dropped by 1,500 residents.

"People have to go where they can to find work," Howell said. "When we lost some of our plants, the workers went after work in other places and moved their families."

The drop also reduces turnback funds for cities and the county. Turnback funds are comprised of tax revenue from the state that returns back to cities based on population per capita. For a town the size of Corning and with a loss of 300 individuals, the city lost up to an estimated $25,000 in turnback funds alone.

Other cities and counties in Arkansas showed similar losses in the census data. Others, such as Greene County, reported gains.

But for Clay County, the news has not been good in recent years. Some job losses have shown recovery with new businesses emerging, but nowhere near making up for the losses created by large plant closures such as Harts and Basler in Corning or McGee and Wise companies in Piggott.

Howell said that along with population loss resulting in turnback money losses, there is the fact of rising costs in materials, fuels and just about everything else.

"Some things are three times higher than they were five years ago," Howell said. "Gas has steadily gone up and remained over $3 a gallon. Materials like steel that we use for building has gone way up."

It's a two-pronged issue with faltering population and rising costs.

"A tax is a last resort before making serious cuts," he said. "Something has to be done."

Clay County is one of only five in the state that does not currently have a County General sales tax.

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  • Not being a resident of Clay County anymore, but still having family there, I think a portion of any tax increase should be set aside to attract new industry. Whether tax abatements or general advertising could be used, anything would help. Get the people good manufacturing jobs and the tax base will increase as well as more dollars spent locally.

    Steve Hendon

    -- Posted by Arkypig on Fri, Jul 26, 2013, at 11:06 AM
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