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Conway dealing with budget battles

Posted: April 16, 2014 - 6:40pm

At the last two Conway City Council work sessions, one held on April 1 and the other on Tuesday night, the council has heard from its department heads about what they need.

Generally speaking, they need to send their employees to other cities or states for training. They need to replace machinery and vehicles that break. They need more employees. The council heard all of these things at its last two work sessions.

However, these things — mostly costs that are unforeseeable but to be expected — are not budgeted for 2014.

In January, in the wake of the 2014 budget’s passage, the Conway Fire Department’s specialized air compressor for filling their SCBA bottles with compressed, breathable air, malfunctioned and compressed a bore-full of coolant water — which doesn’t compress. The out-of-warranty compressor block cracked, resulting in a total loss and a need to spend about $19,800 on a new unit. This was the first of the unforeseeable but expectable expenses.

Then, in February, the Conway City Council authorized about $130,000 for the also-un-budgeted replacement of most city computers still running the Windows XP operating system, most of them in the police department, because Microsoft ended its XP antivirus and support services.

Add in a handful of vehicle repairs and other costs and, as of Wednesday, the city has spent about $200,000 more than was budgeted.

Add to this city IT director Lloyd Hartzell’s presentation to the council on Tuesday night, in which he said that as much as $3 million could be spent to upgrade the city’s aging emergency radio communications infrastructure, and some in and around city hall are concerned.

Hartzell clarified that the $3 million figure represented a raw number to replace almost each and every component of a 10-year-old system that it nearing the end of its support from its maker, Motorola, and that after identifying which specific pieces of equipment strictly needed to be upgraded, the city’s cost would be less.

The city’s budget has been tight since around 2010, when several previous years’ worth of more-or-less steadily rising retail sales tax income started to falter. In 2011, the city started presuming a “flat,” or non-increasing, sales tax in its budget. Mostly that view was accurate through 2013.

“If all else stays the same,” Mayor Tab Townsell said on Wednesday, “we will eat into cash flow to the extent of $300,000” by year’s end.

The council voted to set aside $500,000 and the end of both 2012 and 2013, resulting in a still-untouched $1 million reserve.

Townsell said that the holding city’s current expenses at or under the city’s current revenue can reasonably be expected to get the city through what he compared to local and state economic “doldrums” — a word describing areas at sea where early sailing ships encountered little or no wind to move them — over the past three years.

Tapping reserves, he said, would be a “last resort.”

“Basically, we’re just not seeing any growth in revenue right now. We’re sitting on the starting line and we’re not getting the gas to fuel forward momentum. But we’re not going backwards. That’s the nature of our scarcity.

“It was previously a cash flow and reserve scarcity,” he continued, “which we fixed [with the creation of the $1 million reserve among other measures]. Now, with our general fund revenue flattening out in the past three years due to retail sales flattening, we can’t continue to keep up with the cost of growth and inflation — the growing need for police and firemen for example — and so our scarcities move to operations.”

When asked what the “tipping point” would be to either tap reserves or find new revenue, Townsell said that, “For my comfort level we are already past the tipping point, but certainly creating new sales tax opportunities are one thing.”

These new sales tax opportunities are hoped to come in the form of the Central Landing large-scale retail development of the current airport property, and also in a number of other retail projects that are in the works or in negotiations, Townsell said.

“But if our sales tax economy does not pick up,” he continued, “then certain parts of our city budget have to grow - and we either find ways to grow revenue or we find ways to cut expenses so those needs like adding police officers can be addressed.”

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MessiahAndrw 04/16/14 - 08:17 pm
I don't think the Central

I don't think the Central Landing will bring in much new tax revenue for the city. We have a market where most of what we want to buy, we can already buy in Conway. So a new store won't mean we will be spending more, just that we'll have more places to spend our money.

Basing a city around sales tax is really dumb - there's a Strong Towns article about it: http://www.strongtowns.org/journal/2014/4/16/the-problem-with-sales-tax.html

I'd love for a tax reform to move us off sales tax.

Raving Bear
Raving Bear 04/16/14 - 08:32 pm
The only real way to increase

The only real way to increase sales tax revenue is to go openly wet. It might also cut down on drunk driving since dry counties seem to have a higher incidence of it.

MarkVaught 04/16/14 - 09:25 pm

When revenue is short, cash is scarce, the future of the financial status of the city is bleak, we are given the dire circumstance that taxes must be raised or basic public safety services must be cut.


We never hear, "You taxpayers better get ready to pay higher property taxes and franchise fees, or WE'RE GOING TO QUIT BUYING $130,000 CHRISTMAS TREES!!!" And yes, I'm aware that A&P "fun money" isn't the same as General Fund money. Acutely.

But lots of folks don't understand that hamburger taxes can't buy cop cars or that certain fractions of a penny are earmarked only for streets while others are paying off short-term loans and still others are tied up for bonds for the next 20 years. Perception is reality, and the perception of this city's spending is that we have overspent on Christmas trees and new airports and now can't afford to pay our firefighters and police officers.

My humble observation and proposal: the city needs to do a better job making people believe it truly believes in the basic services cities should provide to their citizens. Therefore, let them lay down a proposal for something like a simple "1-for-1" basic services tax. One cent for one year with NO POSSIBILITY of renewal to be spent ONLY for immediate and pressing needs of basic city services. A $14 million shot-in-the-arm to the city's budget would certainly take care of all of the capital needs listed in this article, while at the same time giving the city the opportunity to show the citizens that they can be trusted to do the right thing with that kind of cash, even it it's only granted on a temporary basis.

No confusing bond issues "nickle and diming" us to death by tying up a quarter-cent here or a half-cent there for the next 20 years. Nope, this is a giant syringe of badly needed cash infused directly into the bloodstream of the city's General Fund that has a shelf-life of one year only, and then it's done. If the city can't show that it can properly address and rearrange its financial problems in that time, then there's your sign.

Would it hurt businesses in Conway? Doubtful, at least not in the long run. Yes, a few people will take their business out of town for that year, but by and large most won't. Most importantly, it's a proposal that has to be vetted and approved by voters, and one that has the added benefit of providing a good-faith handshake on the part of the city government and the taxpayers.

I'd vote for it.

Joe Lamb
Joe Lamb 04/17/14 - 03:13 pm
I've heard a number of ideas,

I've heard a number of ideas, but that's a new one.

At any rate, this is a conversation that needs to be happening.

conwayville 04/16/14 - 09:45 pm

Seems like we hear the same deal every year. Budget shortfall. Yet the city STILL manages to make money disappear on things that were not needed. Like Christmas trees, for example.

Does anyone on the council or even the mayor understand what wasting money like this does to the city's image? Now because of the "tree" (among other things) the city of Conway has a reputation; in some cases has become a laughing stock.

Making the city wet isn't solving the problem. If anything, it's creating problems. Like the need for more law enforcement for example. Is the cost of going wet going to offset the gains? I just can't see it being profitable. Maybe if the tax on alcohol is raised to astronomical levels-which wouldn't bother me one bit. Or better yet, make marijuana legal and tax it extremely heavily. I'm not a fan of legalizing pot, alcohol, crack, crank, or any other drug. But I understand why cities and states are doing it. Income-and no other reason. Why? Because 10% sales & use tax is high enough, and everyone knows that it's hard to pass another cent. So that leaves us to the other question. Since pot and booze aren't going to be legalized anytime soon; therefore tax revenue isn't going up, how does the city stay within budget?

Same principle as a household. If your wages don't increase but your costs do, you've got to cut something out. Like that vacation that you were going to take. Or that bonus that you were going to give your kid because he/she picked up the trash. Or perhaps we should've though about beautifying that flower garden, because now it takes more time and more importantly more money to maintain it. Or maybe we should've decided against re-routing the driveway so it left that precious garden in the middle, which needs attention as well. Anyone else get where this is going?

The city has issues and they are just now coming to light. Some of the issues could have been SOLVED before they became issues at all, but no....we had to have certain things done and in a certain way because it makes things prettier. And now we're paying for it. I know I'm just rambling but there are several points within and perhaps some of you can understand them.

jefferyjameshall 04/17/14 - 03:27 am
i stand with the mans decisions

right away i think when i read news like this of all places why ? well with cincideration of our economy around the glob im sure it isnt just conway struggling to maintain, full speed ahead. then i think well its alot better than the exsperiance of crossing the equator on davy joneses locker i tell yeah . our mayor does his job well and soo does our leaders all the way down to the city workers with both police and firemen. i support any decision ever was or will be made "i support this wonderfull city called conway".

ucantbserious 04/17/14 - 08:36 am

Try it sometime.

ucantbserious 04/17/14 - 08:41 am
SSDD - Same s...tuff, different day.

Sounds like the mayor is trying to butter up the citizens for another tax hike in order to subsidize bad planning. How many years in a row of frivolous spending in the midst of fiscal distress does it take until he acknowledges that this isn't working?

We need to clean house at city hall.

GM 04/17/14 - 10:05 am
I like Mr. Vaught's idea

A sunsetted, one year extra penny (or less) to make the purchase of the communication equipment (or whatever), then it's over. None would go to increasing permanent expenditures, like adding city personnel. You don't earmark one time sources of revenue for permanent, annual obligations.

That's exactly how Pulaski County built Alltel (now Verizon) Arena, largely free of debt. One penny, one year. Done. $30 million cash to build it rather than a 30 year obligation.

The City's practice of continuing to generate cash by re-dedicating sales taxes tied to bond issues for another 5, 10, 20 years has to stop.

If the City demonstrated responsibility in delivering what is promised relating to a "one and done," it would make it easier to sell some future project to voters.

Lilly03 04/17/14 - 10:54 am
The Christmas tree was exact

The Christmas tree was exact cost of replacing computers on XP
The tree, the fountain,the kid statues,uncessary travel, robbing from peter to pay paul (we'll build this, when that's built, then trade the money)Central Landing won't be open for 2 or 3 years, that will not help for quite some time.
As has been mentioned, we've heard this story for years. Most of the council and mayor have been around for years. Who truly creates the budget and mostly who babysits the budget?
If we have a $1MM reserve then that's what it's for. Why would you tax the people when you have $1MM to use first.

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