Future of Eureka Springs tourism agency, funding on the November ballot

Eureka Springs, one of Arkansas’ tourism hot spots, faces the possibility of losing more than $2 million a year in hospitality tax revenue that is used to promote the city, manage city tourism assets and support tourism events.

In 2023, the tax generated $2.05 million, down 1.4% compared with 2022 revenue.

A group of citizens unhappy with the Eureka Springs Advertising and Promotion Commission (CAPC) have managed to place an item on the November general election ballot to remove the city’s 3% hospitality tax on prepared food and on lodging. It only took 148 signatures in a town of around 2,500 to get the item on the ballot.

Mike Maloney, tourism director of the Eureka Springs City Advertising and Promotion Commission, understands why some would like to see the tax and the commission go away. He readily admits that the commission has a troubled past, including a revolving door of leadership, a lack of transparency and questionable actions related to event promotion.

For example, Scott Bardin, the former CAPC finance director, attempted to withhold tax revenue information from the media. It took a threat of legal action to get the information. Also, when Bardin exited the CAPC, he took actions to make it difficult for other CAPC officials to access some of the agency’s financial data.

“It’s fair to say it’s been a mess,” he said.

Maloney, who was the Eureka Springs CAPC tourism director between 2011 and 2019, has returned to try to right the ship. He has been and continues to be on a public speaking circuit to admit to the sins of the past and, ideally, address them in a way that creates a culture of renewed trust.

Scott Loftis, editor and publisher of Carroll County Community Media, which includes the Eureka Springs Times-Echo, has for years reported on the CAPC ups and downs. It’s likely his consistent reporting has fueled the frustration that resulted in the successful effort to place the tax removal item on the November ballot.

But, Loftis does not support removing the tax. He rarely issues an opinion from his editor’s post, but on this issue, he has encouraged citizens to vote against removing the hospitality tax.

“I think that’s the perfect way to describe it,” Loftis said when asked if those harboring a reasonable frustration with the CAPC are throwing the baby out with the bathwater. “That commission has a lot of issues. It really does. There is a long list of those [problems]. … But right now, they have a really good commission, and Mike is a really good director. And he’s trying to bring back some stability back to the commission.”

Loftis believes eliminating the tax could result in at least a 20% decline in the tourism economy for the city and region.

“It will be a disaster for Eureka Springs,” he said.

Maloney agrees, saying that the tourism sector brings in roughly $80 million a year to the city and region. He said some are upset with how the CAPC markets the city but believes they often forget that the tax revenue is used directly in the community.

“We’d have to close the [Eureka Springs] Auditorium. No more concerts. No more shows. Nothing,” Maloney said, adding that auditorium shows bring in thousands of people a year to the city who spend at least one night in town.

He said more than $250,000 a year to support local groups, festivals and fireworks shows also would come to an end.

“There will be no more marketing with Expedia or with state tourism publications. Who will be here to answer the phones … from tourists, from potential tourists? Nobody.”

The City of Eureka Springs recently passed a resolution to support continuation of the hospitality tax, according to the Times-Echo.

“Without the city advertising and promotion commission and taxes to encourage tourism, tourism will decline, which would adversely affect city revenues,” noted part of the resolution.

Loftis believes the effort to end the hospitality tax will fail at the ballot box. But he said anything is possible with elections in Eureka Springs.

“You never know what the voters here are going to do. That’s the scary part,” he said.