During a 25-minute State of the City Address Tuesday night, Blytheville Mayor James Sanders pitched the 15-month, 1-cent sales tax to pay the city's multimillion dollar Internal Revenue Service debt, arguing "it's not an easy way out, it's the most efficient way out."
Voters will go to the polls on March 13 for the special election.
"We're trying to solve problems and at the same time move forward," Sanders said. "I understand that asking citizens for the 1-cent sales tax would be something that might not be favorable, but at the same time if we were to utilize the funds of what the city has."
The mayor then hinted if the measure fails, the city might have to increase rates on water and garbage or cut back on services. Sanders said some of the people who actually paid the unremitted payroll taxes would be laid off.
He noted a 1/4-cent tax, even a 3/4-cent tax, would not generate enough to pay off the debt.
"It would allow us to move forward and still use and dedicate the funds that we have," Sanders said. "It would allow us to move the city forward without a loss of services. It allows us to be progressive, rather than always taking one step forward and three steps back."
He said the city is negotiating an offer in compromise with the IRS, which last week placed liens on city property.
Asked after the meeting what is Plan B if the tax fails, Sanders said: "One of the first things that we did was we presented the information about cut backs and the selling of the land."
The city has identified approximately 700 acres of farmland it could sell. Sanders said the city is working with ADEQ to potentially sell acreage with oxidation ponds, if necessary.
Along with selling the farmland, the IRS has requested the city close the golf course and use the course's losses to help pay the debt, though there is some debate whether the city could close Thunder Bayou Golf Links because of a federal grant.
While the actual payroll taxes tally about $2.4 million, the city is trying to abate penalties, Sanders said. Penalties and interest pile another $1 million onto the debt, the mayor said.
He added the city will show the IRS a profit and loss analysis as it tries to enter into an offer in compromise.
"All of these things are on the table," Sanders said. "We're doing this one stage at a time. We're not trying to confuse people. I don't mind identifying options that we might need to go, but I don't want to put too much on the table to confuse people that say are you going for the tax, are you trying to sell property? We still need to be diligent in pursuing those in order to try to remedy the tax."
Sanders pointed out those in surrounding areas, including Steele and Hayti, depend on Blytheville, shopping here.
He added some positives from 2011 are being overshadowed by the tax issue.
Sanders said the city didn't overspend in 2011 as it had previous years; it paid its payroll taxes and provided a level of service; the water department is now self-sufficient and projects a $1 million surplus this year; the city negotiated with ADEQ to trim $1 million off the Milestone Study; and the Council learned it could save some $300,000 by refinancing water bonds.
"It's not all doom and gloom," he said.
Some argue the city could use the water department surplus to pay the tax.
"We don't have that money yet," Sanders said.
Sanders emphasized the city owes the debt and there is a criminal justice process for those issues.
The mayor closed by saying he kept his only campaign promise -- to brag on Blytheville.
"We're going to make it," Sanders said.
mbrasfield@blythevillecourier.com