Eureka Springs voters decide to retain hospitality taxes, tourism commission

Eureka Springs will retain its hospitality tax revenue and its adverting and promotion commission after 71.2% of voters in the tourism-focused city rejected a citizen initiative to put an end to the tax and the commission.

The final tally, according to the Carroll County Clerk’s office, had 839 votes against Issue 3 – the measure to remove the tax – and 339 votes for.

“It was the Eureka Springs business community that realized that the lifeblood of Eureka Springs is tourism. Without tourism, and without the promotion of tourism … the town could not exist. This was the business community and a tourism workforce of almost 3,000 people saying they wanted to keep this thing alive,” Mike Maloney, tourism director of the Eureka Springs City Advertising and Promotion Commission, told Talk Business & Politics.

A group of citizens unhappy with the Eureka Springs Advertising and Promotion Commission (CAPC) 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.

The city, one of Arkansas’ tourism hot spots, faced 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.

Maloney said in a a Talk Business & Politics interview earlier this year that he understood the frustration of those who supported the tax-ending effort. He said the commission has a troubled past, including a revolving door of leadership, a lack of transparency and questionable actions related to event promotion.

Maloney, who was the Eureka Springs CAPC tourism director between 2011 and 2019, was part of a public speaking circuit to talk about the need for the tax and steps the commission is doing to address past issues.

Tourism tax supporters argued that the tourism sector brings in roughly $80 million a year to the city and region, and the tax supports many events in the city. He said more than $250,000 a year to support local groups, festivals and fireworks shows also would come to an end.

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.