The referendum on divvying up the one percent sales and use tax 35% to Public Works, and 65% to the general fund, passed by a vote of 143 to 30.
The City had discovered that moneys from the sales and use tax had been illegally allocated because there had been no ordinance directing moneys into the general fund. The last time there had been a legal allocation, all moneys had gone to Public Works with the exception of 10% to Police and Fire maintenance and equipment.
According to our information, an on-point AR Supreme Court decision had been discovered quite by accident by City Hall, in trying to look up measures to defeat an alternative tax proposal. ES Folk itself accidentally ran across the opinion in trying to google the alternative tax proposal.
The Finance Director and the Mayor asked the Council to put the matter to referendum so that tax might be reallocated, and some of the sales and use tax go legally into the General Fund.
The Allocation Issue
In the past, the sales and use tax had been reallocated by ordinance so that the money would be more properly divided between Public Works, Police and Fire, and the General Fund. The problem was, past Councils had no authority to change the allocation by ordinance.
Under state law, tax reallocations must go to a vote of the people.
Not to do so would have subjected the City to a lawsuit on the part of a citizenry illegally taxed, as had been noted in the AR Supreme Court decision, in which a similar illegal taxation had the court saying assessment of what would have to be paid back to the citizenry would be forthcoming.
Responses to the Illegality
Amanda Banaczek had testified at the time that the current seated Council was to blame for the error, no matter how long ago the error had occured.
The error had been made 27 years ago, and had not been caught by any Councils, any Mayors, or even the current City Attorney who was also sitting in the past, in the intervening years.
In one of the local papers, the Mayor was quoted as saying correction of the problem was the only ethical thing to do.
We assume she also knew what ES Folk knew, that the issue was in fact financial, and a matter of legal liability had our citizens decided to sue.
The previous Eureka Springs tax allocation had been an illegal exaction.
Filed under: ES Folk | Tagged: Eureka Springs, Flimflammery, Mayor, Politics, Referendum
