Tourism tax law change pulled to measure support (Updated)

Proposed legislation that would make it easier for cities to enact and control hospitality tax collections has been pulled from committee consideration until support for it can be measured.

Filed by Rep. Tommy Baker, D-Osceola, and co-sponsored by Rep. Beverly Pyle, R-Cedarville, HB 1317 would remove the 1,000-acre provision from a tax levy law, a move that would allow Fort Smith and other cities to enact a 1% hospitality tax without having to funnel the proceeds through an advertising and promotion commission.

Fort Smith board members and city staff have said they would only support an increase to the city’s hospitality tax if the city could control the funds. Presently, Fort Smith has a 3% tax on lodging that is collected and administered by the Fort Smith Advertising & Promotion Commission. Fort Smith is one of the few active tourism cities in Arkansas without a hospitality tax on restaurants and other prepared-food providers.

The bill was to be discussed in a Tuesday (Feb 3) meeting of the House City, County & Local Affairs Committee, but Rep. Baker pulled it after running into resistance from the Arkansas Hospitality Association.

“He (Rep. Baker) wanted us to take it back to the cities and other groups to see if they really wanted to push this,” explained Don Zimmerman, executive director of the Arkansas Municipal League.

The change to the hospitality law is a legislative priority for the AML and the city of Fort Smith.

UPDATED INFO: But the Arkansas Hospitality Association has another view of the bill.

"I hope it is history. I hope it is dead," AHA Executive Director Montine McNulty told The City Wire.

She said when the bill was filed, the AHA contacted "many people in the industry" and explained that if they wanted to see the bill die "they should call their legislators."

And they did, apparently.

Zimmerman said Thursday afternoon he is in the process of talking to mayors, city administrators and others to gauge the interest in pushing the bill. A decision to pursue or abandon the bill will be made by Wednesday (Feb. 11), he said.

A few mayors are eager to see the law changed, especially a mayor with nearby natural gas pipeline construction that brings many workers to the city’s hotels, Zimmerman said.

“He was hoping to use (the law change) to raise their hotel tax,” Zimmerman said. “Those dollars from the (pipeline) workers are out of state dollars, and that mayor was hoping to raise (the tax) while they are working on it.”

However, most city officials “say they are not really big on the issue,” according to results of Zimmerman’s early survey.

The future of HB 1317 has three options. It can be deferred indefinitely, placed back on the active list, or referred to an interim study.