City department heads submitted capital improvement requests totaling nearly $435,750 Tuesday as the El Dorado City Council Finance Committee reviewed 2017 budget numbers and preliminary budget trends for the new year.
City officials said that while they were encouraged by an increase in sales tax collections for the end of 2017 and year to date for 2018, they said the city should proceed cautiously because the trend may not hold up.
Capital spending was largely put on hold last year as the city worked its way through a revenue crunch that included a $1 million shortfall in the general fund.
The police, fire and public works departments were asked to strip their 2017 budgets to the bare bone.
A similar request was also made for 2018 as city officials noted that while 2017 budget numbers had improved from the previous year, they did not keep pace with 2015 income.
While reviewing the 2017 budget, the finance committee used 2015 numbers for comparison because the major revenue shortfall was reflected in the 2016 general fund.
The income drop was attributed to less consumer spending and the conclusion of several large industry projects — expansions for El Dorado Chemical and Clean Harbors and a turnaround for Lion Oil/Delek — that brought hundreds of contract workers into town for longterm stays.
On Tuesday, City Treasurer Bonnie Wyles walked the finance committee through tax revenue totals for 2017, as well as revenue that has come in so far this year.
Wyles reported that December 2017 revenue was 11.4 percent higher than the same month in 2015 and 11.5 percent higher than December 2016.
For the year, 2017 totals surpassed 2016 by 3.9 percent.
A month into the new year, the trend has continued, with double-digit increases in sales tax collections for each category:
• One-cent sales tax — 15.5 percent higher than January 2017 and 11.8 percent more than 2016.
• Quarter-cent sales tax — 24.1 percent than 2017 and 25.6 percent higher than 2016.
• Solid waste/capital improvement (which is split with Union County, 51 and 49 percent, respectively) — 11.8 percent higher than 2017 and 15.5 percent higher than 2016.
• El Dorado Works tax — 24 percent higher than 2017 and 25.5 percent higher than 2016.
“Those are some good numbers,” Alderman Billy Blann said.
Alderman Vance Williamson agreed, noting that the December and January revenue reflect the impact of the Murphy Arts District with sales tax payments on ticket sales and ongoing construction of MAD facilities.
The holiday shopping season also helped bolster the numbers, Williamson added.
“It’s a good thing, but I feel like it’s an anomaly. It won’t continue,” he cautioned.
Mayor Frank Hash said the city has been “marking time” with its revenue intake for the last three years.
“We’ve kind of flatlined, and we’re not gaining any traction,” the mayor said.
He referred to ongoing efforts by the Arkansas Legislature to draft and vote on a final bill to collect state and local taxes on internet sales.
“We’ve got to get our part of that sales tax, and it’s a matter of the state fixing that internet deal. The state is losing billions of dollars,” Hash said. “Despite what’s going on around us, we’re not seeing anything.”
Online retail giant Amazon is voluntarily paying sales tax on purchases made in Arkansas.
However, Blann explained that the collections apply to Amazon purchases but not third-party purchases that are processed through Amazon.
White said he wanted to table a request for five new patrol units and related equipment. He said one of the purchases would include a $6,000, auto insurance reimbursement/payment, to replace a unit that was recently totaled in an accident.
He reminded commissioners that the police department did not purchase new units last year, save two replacements that came with auto insurance reimbursements and another new unit that the finance committee approved as part of the police department’s overall, 2017 capital improvement “wish list.”
White said the cost to purchase and equip five new units would be $178,250.
“We have 12 patrol units that have well over 100,000 miles, and they’re constantly in the shop. And that’s going to deplete my maintenance line item,” White told city officials.
Mosby cited a quote of $110,000 to replace three cardiac monitors on three of the fire department’s front-line ambulances.
Should the city council agree to purchase the monitors, Mosby asked that the competitive bidding process be waived, explaining that of three companies that supplied the equipment, one has gone out of business.
“The other is one we deal with, and the third one, their quote came in significantly higher than $110,000,” Mosby said.
He said the EFD is still working with the manufacturer to assess how much, if any sales taxes, the fire department would have to pay on the purchases.
“We don’t know if we’d have to pay all of the tax or a portion of the tax,” Mosby said, adding that without tax included, the quote for the three monitors is just over $98,000.
He also asked the finance committee for $60,000 to purchase 45 new sets of protective gear.
A portion of the equipment is replaced each year, he said, but since capital purchases were put on hold for much of 2017, the EFD was not able to complete the specifications to put the purchase out for bid by the time the council approved $20,000 for 20 sets of gear at the end of the year.
Clean Harbors donated $10,000 toward the purchase for a total amount of $30,000, which rolled into the city’s reserve coffers because the money was not spent before Dec. 31, the fire chief said.
He explained that the total amount of the equipment would be $68,000, $8,000 of which would come from Act 833 funds that are administered by the Arkansas Department of Emergency Management and designated for training, fire fighting equipment, and initial capital construction or improvements of fire departments around the state.
Mosby gave city officials a heads-up on a forthcoming purchase of a new generator to address the outage of a heating and cooling unit at Central Fire Station.
“It’s not a problem right now because that building has four units on it, but as the cold weather leaves us, and it heats up, we don’t know if the air conditioner will work,” Mosby said.
He cited a cost of $7,500 for a generator, which, he said, is also designed to control the doors and overhead system at the fire station.
Edmonds requested the replacement of two service, pickup trucks for the street department for a total of $80,000.
“Right now, those two trucks have died,” Edmonds said, noting that one of the trucks is 18 years old and the other is 22 years old.
“That ‘96 model was bought used about 10 years ago,” he said.
Finance committee members said they would present the information to the full the council members for consideration. The council will meet at 5:30 p.m. Feb. 8.
City officials discussed tapping into the city’s reserve fund, which has a balance of about $8 million, more than double the amount of three months of operating expenses that the city is required to maintain.
“We don’t want to chip away at the reserve all willy-nilly, but we can’t keep getting behind on our capital equipment,” Hash said.
Alderman Willie McGhee agreed, adding, “That’s why the reserve is there, for us to spend it. We can’t keep holding onto it. We can’t spend all our time patching things up. On down the road, it’s going to put all our stuff out of whack.”
He then commended White, Mosby and Edmonds “holding their budgets down and being good stewards of taxpayers’ dollars.”
Tia Lyons may be contacted at 870-862-6611 or by email at firstname.lastname@example.org.