January 17, 2018 Edition

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WR sales tax added to primary

Megan Heyl
Staff Writer

The Walnut Ridge City Council voted Monday night to call a special election to be held in conjunction with the May 22 primary election. The election will have two separate votes on a total of a one percent sales tax increase.

The sales tax was proposed as an alternative method to fund a new sewer treatment plant by the sewer upgrade committee. One tax would pay the bonds for the plant, while the other will cover the maintenance of the plant and pay for certain services currently being paid through the water bill.

The new plant is in response to mandated improvements required by the Arkansas Department of Environmental Quality. While the upgrades are estimated at $5 million, the bond issue will be set at a maximum of $6 million, as the actual preliminary figures will not be available until April.

Without the sales tax, residents would have to fund the upgrade through their water bill, which could have an average monthly increase in the range of $10 to $16.50 based on the most recent figures.

Mayor Charles Snapp said he was pleased that the election would take place during the primary instead of being held separately as more of the city's residents will vote in the primary election. "This will provide a true sampling of the city," Snapp said.

Three-eighths
percent tax

Originally proposed as a half-cent sales tax, the three-eighths percent "bond tax" will be solely to pay for the bonds issued to construct the new plant. The bond tax will expire once the bonds have been retired.

Bonds may not exceed the aggregate principal amount of $6 million.

Initially, this tax was also going to fund the maintenance of the plant, however one-eighth cent has been reallocated to the second sales tax for that purpose.

Snapp said the reason for this is due to the 40-year bond issue the city will have and wanting to make sure that the maintenance was covered for the full life of the bond. Snapp said if the bond tax passes and the sales tax collections stay in line with what has been recently collected, the retirement of the bonds could be accelerated as much as 20 years.

If both taxes pass, the bond tax could expire much earlier than the five-eighths tax, so the maintenance of the plant would continue to be funded after the plant is paid for. If the bond tax fails and the five-eighths tax passes, then the city is expected to take the full 40 years to pay the bonds with funds collected through the water bills, but the maintenance of the plant would be covered in the other sales tax for the life of the bonds. If the bond tax passes and the five-eighths tax fails, then residents should expect to pay an additional $2 to $3 dollars monthly through their water bills to cover the maintenance of the new plant.

Five-eighths
percent tax

In addition to 20 percent of this tax being dedicated to the maintenance of the new plant, this tax, if passed, would lower the residents’ current water bills.

After the first eighth-cent is taken for maintenance, money collected from this tax will be used to pay for sanitation and mosquito control, lowering the monthly water bill by $13.50.

Any funds still remaining after maintenance and trash and mosquito fees are paid will be allocated to street repairs.

This tax is set to expire on Sept. 30, 2060, which will span the full life of the 40-year bond required to build the plant.

The plant

City Water Works Manager Jon Kopp said the issue with the current plant is not only its age but also how it was built to begin with. Many parts were of inadequate size when it was constructed; additionally the treatment method the system uses, activated sludge, is one of the more costly ones to operate.

Kopp said that to repair the current plant would still cost millions and a new plant would function much better for the city.

Construction of the new plant is projected to start this year under a construction loan, which will be transferred to a bond after completion. Snapp said the city will use its own labor when possible and implement any cost savings methods they can during construction to keep the bond as low as possible.

"The crew we have now are willing to do anything they can to save for the city," Snapp said.

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