Alexander Mayor proposes plan to increase revenue and growth

City of Alexander Mayor Paul Mitchell proposed a four-part plan to council members that should increase revenue to the general fund and make the city more attractive to commercial and residential development. He presented his proposal during the April 17 council meeting.

The plan increases the city sales tax from two-cents to three, will reduce the property tax from five-mils to three, reduce the cost of a city business license, and have Alexander’s classification changed from class-2 to class-1. Three of the proposals can be approved by the council. Voters will have to decide on the sales tax increase.

“I am not a tax guy,” Mitchell said. But, he also, “Wants the city to grow.”

Mitchell says he wants to be able to provide the services residents have requested for several years; animal control, clean-up vacant lots and solving the city’s drainage problems were mentioned.

“The money has to come from somewhere,” he said.

The final 2016 budget shows revenue to the general fund at $300,000. In 2016 one-cent of sales tax in Alexander generated $432,225.

The current two-cent sales tax was approved by voters in two elections. The first referendum levied a one-cent tax to be given to the fire department. Voters then approved a second referendum which divided a one-cent sales tax among the fire department, police department, and parks and recreation. The fire department receives one-eighth-cent, the police department five-eighths and parks and recreation two-eighths.

If the city council agrees to hold a special election voters will be asked to approve a one-cent sales tax for the general fund. Mitchell noted this would put Alexander on par with Bryant, which also has a three-cent city sales tax. He added that anyone from outside the city, or driving on the interstate, who makes purchases in Alexander will also be paying the three cents the same as Alexander residents who shop in Bryant pay Bryant’s sales tax.

If voters approve the sale tax increase Mitchell wants to reduce the city property tax from five-mils to three-mils. Every year in September the city council votes on the millage rate for the next tax cycle. The maximum is five-mils. In 2016 property tax to the general fund brought in $14,000 from Pulaski County and $76,300 from Saline County.

“If you have a $750,000 home it would reduce your tax burden $300 a year,” he said. “I want to give back (if the tax increase passes).”

Mitchell also wants to reduce the cost of a business license to make the city more affordable to all types of businesses. Alexander is using the same fee structure used by Little Rock. The fees are based on the type of business and square footage of the building. Both Bryant and Benton base their business license fee on the number of employees.

“They’re outrageous and have been outrageous for years and years,” Mitchell said of the license fees. “What costs $200 here costs $45 in Bryant. We want to attract business.”

The final piece of Mitchell’s growth plan is to return Alexander to class-1 status. In 2011 the City of Alexander was automatically changed from its class-2 designation to class-1, by the Arkansas Secretary of State, when the 2010 census showed the city had exceeded the 2,500 residents needed to be a class-1 city.

In 2012 City Recorder Michelle Hobbs convinced council members Alexander couldn’t afford the requirements that come with being a class-1 city. They agreed to send a letter to the Secretary of State requesting Alexander be returned to the class-2 designation. One of the changes that occurs when moving from class-2 to class-1 is the loss of the elected position of city recorder. A class-1 city has a city clerk instead, which is also elected.

Benton and Bryant are the only class-1 cities in Saline County. Mitchell said when trying to attract commercial development it will put Alexander on an equal footing as being one of only three class-1 cities in Saline County.

“Being class-1 sounds better than class-2,” he said.

As a side note, Alexander would join five other class-1 cities in Pulaski County including its closest neighbor Little Rock. The City of Alexander sits in both Pulaski and Saline counties.

Mitchell said he didn’t want to proceed any further with his plans without knowing if council members were comfortable with his proposal. Council members gave Mitchell permission to explore the process of changing the city’s classification and how to place a sales tax referendum to voters.

The next regular meeting of the Alexander City Council is Monday, May 15. Meetings start at 6 PM and are held in the courtroom at the City of Alexander Municipal Complex. The public is invited to attend.