Some members of the Jonesboro City Council predict hard times ahead for the city, following a recent council decision to keep the city's millage rate set at zero.
On Monday, the Jonesboro City Council voted 4-2 against an ordinance to raise the city's taxation rate from zero mills to 2 mills. Councilmembers BobWiggins and Pat Sebo were the only ones to vote in favor of measure, which was recommended last month Sandra Meyers, the city's finance clerk.
Mayor Luther Maddox, who supported the millage hike, said the 2-mill increase would have generated an additional $185,000 in revenue for the city. He said the city has rolled back its millage rate to zero for the past three years, and cannot afford to keep the practice going.
"We can't keep using reserves to balance the budget," he said. "It's going to be a mighty lean budget this year for the City of Jonesboro. It we can't get the revenue, we will have to cut expenditures.
"There will be some hard decisions that have to be made the council," he added. "All of the departments will have to have some cutbacks. The bigger the department, the bigger the cuts will have to be."
Maddox said that the city may have to consider furloughs next year, if it isn't able to generate additional revenue.
With a $60,000 homestead exemption, the vast majority of the city's tax digest falls on the backs of commercial businesses and rental properties, according to Maddox.
Councilman Roger Grider, who voted against the millage increase, said an unexpected tax increase would be unfair to local business owners, and may drive many of them to leave the city, or shut down.
"It [the tax burden] fell solely on the businesses, and businesses are struggling so much right now," Grider said. "We had so many people tell us that if they were to have an additional tax, then they would just have to close their doors. I felt like we would lose more in business license revenue than we would gain in property taxes.
"They [businesses] are having to take money out of their pockets to just stay open," he continued. "Right now, we just need to work with our businesses."
Sebo, who voted in favor of the increase, argued that the city's historic, zero millage rate has not worked as an incentive to attract businesses. She said the council's decision Monday was "a bad move for the city."
"Approximately two years ago, the city was told the auditors that they couldn't continue with a zero millage rate," Sebo said. "In July of this year, the auditors said that we only had nine-to-10 months [worth of revenue] in reserve. You can't keep things at zero mills, and expect your city to run.
"Businesses have left the city with a zero millage rate," she added. "[The city] needs the additional revenue to promote the city the way it needs to be promoted, and [they need to] work hard to bring businesses here. We just can't depend on business to come here because we have a zero millage rate."