The Fort Smith Board of Directors passed a business license fee Tuesday after having defeated it two weeks ago, largely to avoid cutting planned purchases for the Police Department.
With the exception of new businesses their first year, businesses will have to pay $100 a year for business licenses. Businesses already have to obtain business licenses, but there has not been a fee to do so since 1994 when voters decided to replace the fee with the one-cent sales tax.
The board originally voted 4-3 in favor of the fee, but, as city administration later learned, the ordinance needed five votes in favor to be adopted because of a state statute. Ward 1 Director Keith Lau, Ward 2 Director Andre Good, Ward 3 Director Mike Lorenz and Ward 4 Director George Catsavis had voted in favor while At-large Directors Kevin Settle, Don Hutchings and Tracy Pennartz had voted against. Pennartz switched her vote Tuesday from a "no" to a "yes," putting the ordinance at the five votes it needed to pass.
Pennartz told the Times Record that she primarily switched her vote because needs such as new equipment within the Police Department have already been delayed for too long.
The business license fee is projected to bring in more than $470,000 a year to the city's general fund, which means it can essentially go anywhere with board approval. However, about 70 percent of the general fund typically goes toward the police and fire departments.
The 2018 budget, which the board approved two weeks ago, includes $500,000 for Police Department equipment and training and $695,000 to unfreeze 13 police officer positions. The board was told that not approving the business license fee would likely mean cutting from these items, new personnel (some Police Department, some not) and/or the fleet leasing program (some Police Department, some not).
Finance Director Jennifer Walker pointed out that if the board were to defeat the business license and cut the approved budget, it would have to cut from the general fund, not other departments such as Sanitation or Utilities, because it is general fund revenue.
“The only reason I'm supporting this is to help support the Police Department,” Catsavis said.
Settle contended that the current board cannot be sure that future boards will ensure the money will go toward the Police Department.
Additionally, a franchise fee increase projected to bring in $550,000 a year to the city’s general fund survived its third and final reading after the directors approved it 4-3 two weeks ago, meaning it will go into effect in 30 days.