Highfill officials warn Senate bill’s sales-tax escrow could cripple city budget as airport detachment looms

A Senate committee heard competing testimony March 14 about provisions in Senate Bill 96 that would escrow sales-tax revenue tied to Northwest Arkansas National Airport (XNA) if a detachment from the City of Highfill proceeds, a change Highfill officials say would sharply reduce the city’s operating revenue.

The dispute in the Public Health, Welfare and Labor Committee centered on a default provision in the bill that airport and authority representatives said was included to protect bondholders; Highfill officials said the escrow language would leave their city without roughly $1.7 million in annual sales-tax receipts and could force cuts to police and fire services.

An airport authority representative told the committee the escrow language reflects the position of the bond counsel who drafted the bill. “Our intent was to have a level playing field so that we could have a conversation … and the reason the language is in there the way it is, is to protect the city's bond holders when those bonds are secured by sales tax revenue,” the airport representative said, adding the language is intended to avoid unconstitutionally impairing bond covenants.

Justin Allen, a Highfill city councilman, said the city first saw a written offer from the airport authority only days before the council considered it and described the proposal as fiscally unsustainable for Highfill. “The plan that was put before us on Tuesday as a city council will cripple us. We will go bankrupt. We will have to defund our police. We’d have to…