Council members split on advertising and promotion tax

“Any time we start talking taxes from a council and not an election, you really need to keep in mind, a tax is a tax is a tax — and I think we need to keep that in mind.”

—Pea Ridge council member Jeff Neil

PEA RIDGE — The city hasn’t decided to levy an advertising and promotion tax yet, but the subject is still being considered.

Opinions differed during the Feb. 21 City Council meeting and work session on the need to levy such a tax on restaurants and lodgings and to create an advertising and tourism promotion fund and commission for the city.

An initial ordinance to levy the tax failed by a tie vote with the mayor abstaining, thereby not breaking the tie. A second ordinance was adjusted to tax lodging only and not restaurants. That measure was tabled.

“I make a motion to table this so that we can at least talk about this at our next work session if it hasn’t gone through legislation,” council member Cody Keene said. “We need a little more time.”

“I have a lot of questions,” council member Nadine Telgemeier said.

“Thank you for the discussion and for having an open floor and that everyone felt comfortable to discuss,” Mayor Nathan See said, as the meeting adjourned.

There was lengthy discussion during both the work session and the City Council meeting.

Ray Easley spoke to the council during the work session opposing the tax.

“I don’t think we have any hotels, motels and … as far as I know, my wife and I have the only event center in town,” Easley said. “It’s nonprofit … it just covers costs. We don’t do children’s birthday parties — that’s very messy.”

He said the Pea Ridge trade area extends from Avoca to Longview and Powell, Mo., and he does not believe the city should tax those people.

“I don’t think we’re ready for it. I don’t think we’re a tourist destination. There are other things the money could be going for,” Easley said.

The mayor said the state legislature is considering a bill which would change advertising and promotion commissions and require the establishment of the advertising and promotion tax to be considered in a general election. He said the ones in existence would be grandfathered in.

“If you don’t have one and try to create one, it will have to go to a general election,” See said.

“Any time we start talking taxes from a council and not an election, you really need to keep in mind,” council member Jeff Neil said, “a tax is a tax is a tax — and I think we need to keep that in mind.”

Council member Ginger Larsen said she has looked into the issue “a lot” and said it sparks her interest. She spoke to the city attorney and questioned creating the commission and taxing only lodgings not restaurants.

“I am for lodging,” she said. “I don’t necessarily want to put a hamburger tax on the restaurants.”

“Do we have any Airbnb?” council member Steve Guthrie asked.

City building official Tony Townsend said there were several in town, but the city does not maintain a list of them.

“Where I struggle is that the people are constantly asking why we don’t have certain amenities. You’ve got to find a way to fund it. We are growing,” Telgemeier said. “People are always asking why we are behind. I struggle. This could be an option.”

“If we adopted the lodging side … we will collect because there are Airbnbs,” Larsen said. “It will be minimal, but it puts our foot in the door. … I think a business should have to pay a tax.”

She said the restaurant tax would affect the residents who live in the city and trade here more than it would people passing through.

“I think if you’re asking for a tax on the restaurant side, it’s different than on the lodging side,” Larsen said, adding that she truly believes Pea Ridge will eventually have a hotel.

Neil said, “You keep saying ‘behind’ — I don’t understand the ‘behind.’ What are we behind? We’re not going to generate enough off of that to do anything.”

Council member Merrill White said that the construction of a 300-acre compound on the east side of Bentonville by Walmart will affect Pea Ridge.

“Those people are going to have to go somewhere,” White said. “It’s on the east side. It puts them right here in our back yard. … I think everything here in Pea Ridge — police, fire, streets, water, housing — will see a difference.”

Neil said that if the council does not approve it, the voters of the city can enact it at a later date.

“At this stage, you have the ability to get out in front of it,” White said. “It’s not that you’re going to have a crystal ball and be able to see into the future, but we’ve got enough understanding of what’s going on in our communities and what could potentially come this way.

“In my world, we deal with this stuff every day. … Pea Ridge is the perfect anchor community,” White said. “I honestly believe that if the governing body ever had an inclination … your window of opportunity is closing.”

Asked about how much money a 1% tax on the restaurants would generate, City Clerk Sandy Button told council members she receives three checks a month from businesses that sell alcohol by the drink and the checks range from $120 to $180.

“One of the things a mayor is supposed to do is bring economic development to the city, and I think this helps, and I think it is a proactive stance,” Telgemeier said.

The ordinance was voted upon with Larsen, Telgemeier and Guthrie voting in favor of it and White, Keene and Neil opposed.

White asked about starting with just lodging, saying the restaurants in town would not generate much income. “I just don’t think the juice is worth the squeeze,” he said. “I don’t think we would receive enough revenue off it.”

“I think you will be getting more than you think, and some is better than nothing,” Larsen said.

“I think it needs to be on both,” Telgemeier said of taxing lodgings and restaurants. “I think we’re selling the restaurants short. Just to be ahead of ‘big brother.’”

“But we don’t want to become ‘big brother,’” Neil said.

“I want to control our own … you have to promote yourself,” Telgemeier said. “It’s hard. I can’t say this is an easy vote.”

Easley said, “Think about the hard-working people that live on very little money after they pay all their bills.”

“I’m a hard working person,” Larsen said. “I think it will affect every single person in this city whether we’re living a comfortable lifestyle or not. We get to choose.”

The new version of the ordinance taxing only lodging was read, then tabled.