3% cut on Fort Smith agenda to shore up 2 pensions’ funds

FORT SMITH — Fort Smith city directors are considering cuts in the general fund budget to come up with additional money to keep fire and police pension programs solvent.

Meeting in a study session earlier this week, two directors voted to put on the July 21 voting agenda a measure to cut 3 percent across the board from the general fund budget. If passed, it would cut $600,000 for the remainder of 2015.

Directors also could decide on other cost-cutting or revenue-raising measures July 21.

The general fund provides personnel and operating money for most of the city’s services, including fire and police, city parks, planning, engineering, finance and administration.

Fire Chief Mike Richards and Police Chief Kevin Lindsey said the services their departments provide would suffer if the directors approved the cut. They said their budgets have been shaved down in the past few years because of the economy, and there is nothing left that can be cut.

City Administrator Ray Gosack said that with the budget cutting over the past few years, personnel costs are the only areas available for reductions.

The directors have been wrestling for months with how to save the city’s Local Police and Fire Retirement System from running out of money by 2021. Revenue to meet the city’s contribution is falling short of what it pays out in pensions each year.

Earlier this month, the directors voted to cut the city’s contribution to the plan and use that money to offset part of the shortfall, but directors are still about $900,000 short of matching revenue with retirement expenditures this year.

They have to find that $900,000 to cover pensions for the rest of 2015.

In addition to the general fund budget cut, the directors also talked about adding new taxes.

City Director Tracy Pennartz said she liked the idea of asking voters to pass a prepared-food tax. If approved, she said, the convention center would get its own source of money from the tax, and the $777,000 subsidy the city is providing the convention center this year from the general fund could go to police and fire pensions.

Voters in 2011 rejected a proposal for a 1 percent prepared-food tax by a vote of 5,623 to 3,341. The tax was estimated to raise $1.8 million a year.

Directors also discussed a 1/8 percent sales tax that would generate an estimated $2.5 million a year. Directors suggested asking voters to approve a new tax or reallocate two existing 1/8 percent sales taxes they approved in 2012 for the fire and parks capital improvements.

City staff members also have presented the directors with other options, such as cutting $170,000 the city allocates to outside agencies, raising the city’s franchise fee, reinstituting a business license fee or trimming the city’s contribution rate to the nonuniformed employees retirement accounts.

NW News on 06/26/2015