A&P tax fight coming to Arkansas Senate

Officials in the Arkansas hospitality and tourism sector say two proposed bills in the Arkansas Senate would make it difficult if not impossible to be competitive with other states in the recruitment of tourists and conventions.

SB 180, sponsored by Sen. Johnny Key, R-Mountain Home, would effectively change Arkansas’ Advertising & Promotion laws to require an election to implement hospitality taxes. Existing law affords cities and counties the option of an election or enacting the taxes by ordinance.

The state’s A&P laws essentially allow for lodging (hotel) taxes and prepared food (restaurant) taxes to support tourism promotion efforts through advertising, marketing, management of convention centers and other activities. Hospitality taxes — hotel and restaurant taxes — must be administered through Advertising and Promotion Commissions that are established by a city or county.

SB 212, sponsored by Sen. Jonathan Dismang, R-Beebe, would require a renewal vote on hospitality taxes every four years.

Turmoil surrounding A&P taxes in Mountain Home, Searcy and Jacksonville is likely driving the efforts of Dismang and Key, said Maryl Koeth, executive director of the Van Buren Advertising and Promotion Commission.

In Mountain Home and Searcy, opposition to A&P taxes resulted in voters overturning the tax in a special election.

“That showed the system worked,” Koeth said. “That showed the system worked without having these bills (SB 180 and SB 212) that would instead take away the flexibility for cities, where there is consensus among voters for this to happen, and it will cost them to have an election.”

Dismang told The City Wire that both proposed laws “are good government” bills, and he said business leaders in Jacksonville “who don’t support the tax” asked him to push the legislation. Dismang also discounted the concerns of those in the A&P industry who say frequent elections and reduced flexibility will make it hard for tourism groups to compete with other states and support conventions that often book locations several years in advance.

“In the areas where people are doing things appropriately, this should not be a problem,” Dismang said of his legislation.

Dismang said he did not talk to tourism officials before filing his bill. He also said in a Feb. 4 interview that he had not yet heard from tourism officials opposed to his bill.

But he and Key should soon see and hear opposition.

The Arkansas Association of Convention & Visitors Bureaus sent an alert Feb. 4 to its members asking them to actively oppose SB 180 and SB 212.

Koeth, who is a past president of the AACVB, said she has been “flooded” with e-mails and other messages from people in the tourism industry who are eager to oppose the legislation. Koeth acknowledged that some cities have been clumsy in their A&P implementation and management, but said most operations are transparent and productive.

“What they (Dismang and Key) fail to recognize is that A&P’s do good work. … A&P Commissions, for many communities, are the only active economic development dollars they have. It is often the only dollars a community can spend to bring new dollars and new visitors to their areas,” Koeth explained.

She also said this happens almost every legislation session in which “political infighting in a community” results in an attempt for a blanket fix.

“Instead of trying to fix the local problem, they want to change state law to fix a local problem. And that’s why you end up with a nightmare of hodgepodge state laws,” Koeth said. “Someone in a city or county gets mad about something, and they call their legislator and say, ‘Hey, we need to fix this.’”

Dismang and Key aren’t likely to get support from at least one fellow Republican.

Sen. Jake Files, R-Fort Smith, serves on the Revenue and Tax committee to which the bills are now assigned. He said his concern is not necessarily with the pros and cons of A&P taxes, but more about taking local problems to the State Capitol.

“It appears that there are some local issues they are trying to address with the bill, and typically I don’t think that’s a good idea,” Files said, adding that the GOP “has to stick to the core belief that local control is better control.”

Files did add that there are “a lot of good things that are going on with A&P’s around the state,” and the proposed legislation could “be a detriment” to the tourism industry.