City mayor addresses county, city sales contracts

Posted on Tuesday, June 24, 2014 at 6:44 am

JOHN ED UNDERWOOD

mayor, city of fayetteville

 

On Jan. 14, 2014 the Mayor and Board of Alderman passed a motion to notify the Lincoln County Commission that on June 30, 2014 the sales tax agreement put in place on July 1, 2011 would not be renewed. Letters were sent to the County Mayor, Mayor Pro-tem and the Finance Director on Jan. 16, 2014, giving county government five and one-half months notice before their new budget would be put in place as of July 1, 2014. There are no automatic renewal clauses in the either the original two agreements or the July 1, 2011 agreement, and there are no requirements for any time of notice to be given either party.

The County Commission met on Jan. 20 in regular session and at that time the County Mayor stated publicly that she had not received the letter from the City of Fayetteville till that afternoon when in reality she was given the letter (hand delivered to her office) on Jan. 16. On this same date the Mayor Pro-tem called the City Administrator by phone asking what the city would be using this money for and stated he thought that trouble was about to start.

In mid-February the County Mayor and the County Finance Director met with the City Mayor, City Administrator and City Attorney in the City Mayor’s office to discuss the sale tax agreement in question. I (City Mayor Underwood) told County Mayor Bevels that if the County Commission did not have something else to offer to offset the amount generated by the present sales tax income, then I doubted that the City Board would change the motion.

The County Commission, at its Feb. 18 regular session, asked the County Mayor to request a meeting with the City Finance Committee and their Budget Committee. This meeting was scheduled on March 17, 2014 at the City Municipal Building and was well attended by commissioners and citizens. The county presented its concerns to the City Finance Committee as to how the withdrawing of the agreement might affect the relationship of the two governments, but no new proposal was mentioned as to keeping the agreement in place for another time period. At the County Commission meeting on April 15, 2014 a commissioner said that the meeting of March 17 was orchestrated solely for the media. I would disagree with this since only the newspaper was present as always. But as a side note to the commissioner’s comment, the City was called by the General Manager of FPU to ask if we needed to have the meeting broadcast by them and was told “no” because of limited space since we expected a good turn out of citizens. He said he would call the County Mayor, who had asked him to have it broadcast that the City stated no need.

As far as the City of Fayetteville is concerned, the Sales Tax agreement that was put in place on July 1, 2011 will expire on June 30, 2014.

Now, to try and clear up the misinformation that the citizens of Lincoln County have heard about these agreements that have been in place for over 44 years. About 1970 the county magistrates voted to build a new courthouse at cost of $615,000. They asked the citizens of Lincoln County to go to the election polls to vote by referendum their approval of an increase in the State sales tax by one-half of one percent. Then the City of Fayetteville was asked to forgo their portion of the one-half cent tax that was collected within the city limits to help the county pay off the indebtedness. This was put in place by both City and County governments to pay for the new courthouse. The $615,000 was paid off in July of 1991.

In 1990 another increase was asked by the Lincoln County Commission in the amount of one percent State sales tax (this also would be by referendum) for the county citizens to vote their approval. This increase in the State sales tax collection would be used to pay off the new jail that was constructed. Again the City of Fayetteville was asked by the County to forgo their increase that would be generated by this new one cent State sales tax. The City of Fayetteville agreed and signed a contract for a period 15 years to help the County pay for this expense incurred by the construction of the jail. It was the feeling of the City Board at that time this would be good for the County and City since the housing of City prisoners could use the new jail. Also remember the courthouse bonds were now paid off and this extra money could be applied against this new indebtedness that the County had incurred and help pay off this bond earlier.

These agreements or contracts had not received any official approval by the County or City for two years after the expiration date June 30, 2007, when the auditors for the County called it to the attention of the County Mayor. Once this was done, a new contract was put in place in 2009. Then in 2011 the City of Fayetteville requested that the County share a portion of the Hotel-Motel Tax the County receives since the new hotel was being constructed in the City Limits. The County concurred with this request, and the County and City approved and signed a new contract for the sales tax of one and half percent and the Hotel tax to be in place for a period of July 1, 2011 till June 30, 2014.

To Summarize:

  1. County of Lincoln asked the voters to approve a referendum to the State sales tax (local) by a half percent to help pay for the construction of a new County courthouse. County voters approved, and City of Fayetteville agrees to give up their share of this new tax that is collected in City limits to support the New Courthouse construction by signing a contract with County officials until paid off. (July 1, 1991).
  2. County of Lincoln asked the voters to approve a referendum to the State sales tax (local) by increasing the present by one (1%) percent for the construction of a New County Jail. County voters approved in November 1990. County officials ask the City to allow the new sales tax collected in the City limits of one percent to be assigned to the construction of County jail. This was agreed to by the City and County for a period of 15 years.
  3. These two increases in the State sales tax were approved by all the County voters at that time, and the County of Lincoln and the City of Fayetteville entered into two different contracts or agreements to help the county pay for the indebtedness incurred by the County of Lincoln.
  4. The State Sales Tax law allows each entity within that county (Petersburg, Fayetteville and Lincoln Co.) to keep the money that is collected within their boundaries for their individual use.
  5. The City of Fayetteville has entered into agreements or contracts with the County of Lincoln on two different construction programs that the County needed to accomplish in the past 44 years that amounts to over $15 million that the City of Fayetteville gave up to help the County of Lincoln.
  6. The Board of Mayor and Alderman of the City of Fayetteville on Jan. 14, 2014 felt that they should give the County of Lincoln enough notice to prepare for the closing out of this extra income that has been used to help meet their financial needs for the past 44 years.
  7. If in any of the meetings held during this time the County had mentioned the prospect of entering into an agreement with the City to pay back for the years (‘98-‘09) that the County collected (over $3 million) and used that was legally money that should have been sent to the City. Because there were no signed agreements for that period of time. Then the Board of the Mayor and Alderman might have considered renewing the agreement for another time period.

The City of Fayetteville believes that with the above explanation that the majority of Lincoln County voters will now have a better understanding of how this sales tax money has been spent by the City with the benefit going to improve the needs of our County of Lincoln. With many needs and expenses facing the City Board, it is now time for the benefits of the sales tax money collected within the city limits to be used to help the citizens who live and work here. All City residents are also County residents, and benefits of both entities are used and enjoyed by all who live in our county.

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