Mountain Home, Arkansas

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The Advertising & Promotion Tax Issue

APRIL 18, 2005

MOUNTAIN HOME (AR) ADVERTISING & PROMOTION TAX

SPECIAL ELECTION RESULTS (unofficial)

Here's the whole Mountain Home A&P Tax story:

Despite repeated opposition from a number of citizens at two successive meetings (and dozens of Letters to the Editor in the local newspaper), the Mountain Home City Council (unanimously and in three consecutive readings) passed an Advertising & Promotion Tax on January 6, 2005. (What is an A&P Tax? Read the FAQs to find out!) 

As drafted, beginning April 1 within the Mountain Home city limits only, this tax would add 2% to every hotel stay and 1% to every restaurant bill, on top of the 10% and 8% respective sales and use taxes already in place.

Funds generated by this tax would be deposited into an A&P account (separate from city monies), and used by a newly appointed (not elected!) 7-member A&P Commission to advertise and promote the Mountain Home area, to "entice" more people to come here for business and recreational purposes.

Because of the way this ordinance was passed by the Council (without regard to the objections of the citizens of Mountain Home), a petition for referendum was circulated beginning January 13th. Our goal was to collect at least 644 signatures, the number required by state law to force a special election (15% of the total number of votes cast in the last mayoral election).

A team of 32 volunteer canvassers, ranging in age from 50-ish to near 90, held petition drives and went door-to-door in their own neighborhoods -- and gathered a total of 2131 signatures in less than 3 weeks. That number represents roughly 25% of the registered voters in Mountain Home. The completed petition was presented to the Mountain Home City Clerk on February 2, 2005.  

(Photo at right) BCFT Director Frank Kaye with Mountain Home City Clerk Cindy Wynn, who had just taken custody of petitions for referendum bearing 2131 signatures (Wednesday, February 2, 2005).  Photo by BCFT member John Beach.

City Clerk Cindy Wynn told reporters that she would begin checking the signatures against voter registration records the following morning, but didn't know how long it would take to complete the process, since a petition for referendum had never been circulated in Mountain Home before.

Ms. Wynn announced Monday, February 7th, that she had verified the accuracy and validity of 702 signatures, 58 more than were required by law to force the issue to a special election.  She faxed the information to the City Attorney, who began preparing an ordinance calling for the election.  This ordinance was presented to the City Council at its February 17th meeting, at which time the members approved the ordinance without discussion, and set the date for the election as Monday, April 18th. According to state law, this election must take place within 60 days of the date of the ordinance calling for it.

Until this issue is settled by the vote of the people, the proposed A&P Tax is to be placed on hold -- the tax will not be collected beginning April 1st. In addition, the A&P Commission (which was appointed by the Council at its February 3rd meeting) can make no official decisions or moves of any kind unless or until the tax survives the election.

 

 

Contrary to the belief of many people who want to keep the A&P Tax in Mountain Home, we are not opposed to progress. What we object to is the no-choice, fast-track, big-city way of thinking that put this tax on the books in the first place. Most of the people we talked to during the petition drive moved here because this area was unspoiled, uncrowded, had lower taxes and housing prices, a lower cost of living, and a slower-paced, peaceful, rural atmosphere. The A&P Tax will change all that, and more.

This tax is wrong on many different levels -- and the taxpayers know it.  These are some of the reasons they've given us for being opposed to the tax (in no particular order):

• It's yet another tax on top of all the rest, one which many of MH's residents feel they can't afford to pay

• It would make the taxpayers responsible for subsidizing the advertising costs of private businesses (The A&P Commission emphatically denies this, but the way we see it, even though private businesses would not have direct access to the A&P Tax money, the Commission would be advertising local hotels and restaurants in their promotional publications -- in effect, that is the same thing. Tourists will want to know ahead of time where they can stay and take their families out to eat, after all.)

• It's taxation without representation for Mountain Home residents who live outside the city limits, as well as the unsuspecting tourists who are expected to bear the brunt of it ... neither group has any say in the implementation or collection of the tax

• It's a special-interest tax -- only certain segments of the population are subject to it, only tourist-industry entrepreneurs will benefit from it

• Only city hotels/motels and restaurants would be expected to collect and remit the tax -- yet the resorts, trout docks, marinas and restaurants outside the city limits would benefit from the promotion efforts as well (in fact, one of the 7 new A&P Commissioners owns a resort on Lake Norfork, well outside MH city limits)

• The City Council didn't put the A&P Tax to a vote -- they just decided to pass the ordinance without listening to the people first (One Council Member was asked why constituents were not consulted on the issue before voting the ordinance in. The answer? Because Council doesn't have to ask the public's permission -- they were elected to "do what's best for the city," not what the people want)

• The increased advertising & promotion would cause the area to change in ways that many of its residents don't want to see happen (more people, more businesses & traffic; artificially inflated property values and property taxes, etc.)

• Young families would find it even more difficult than it already is to afford a decent home of their own (According to the recent article about Mountain Home in the Wall Street Journal [Feb. 14, 2005, page R-10], the per capita income of MH residents is $16,789 -- while the average cost of a 3-bedroom home is $118,921)

• The only new jobs generated would be of the minimum-wage service-industry variety

• The present infrastructure wouldn't be able to support the explosive growth that these changes would cause (more wear on roads, the need for more schools, fire & police protection, water/sewer services, etc., all of which are paid for with taxpayer dollars)

 

 

Since this issue began, we protestors been accused of many things: selfishness, stupidity, and intimidation, to name a few. We've been told (by an A&P Commissioner, no less) that the A&P Tax is a "voluntary" tax: if we don't want to pay it, then we shouldn't bother going out to eat any more (or we should go to a restaurant outside the city limits, where the tax wouldn't be collected). It's been suggested that because we're opposed to this tax, we're against change of any kind, taxwise or otherwise.

The truth of the matter is that very few of us think Mountain Home should simply be frozen in time and not grow or evolve at all. We don't mind paying reasonable taxes for the things that taxes are intended to support: the common defense (local government, police and fire protection), infrastructure (water, sewer), and education (libraries and schools).

We do object to this kind of tax, however, and the attitudes expressed by the City Council and the A&P Commission:

• "Everybody else is doing it, why shouldn't we?" and
• "Let's take this money from the tourists (and local folks who like to go out to eat) -- they'll never notice it."

 

Our parents worked long and hard to teach us as children that just because all our friends were doing something, it didn't necessarily mean it was the right thing to do. They taught us to ask permission before taking something that belonged to someone else. And -- maybe most importantly -- to recognize that just because we CAN do something, it doesn't mean we SHOULD.

 

What we think the people of Mountain Home are looking for is controlled, manageable growth (which has been occurring naturally in MH over the past 20 years; even the Mayor thinks so) -- and a solid, well-thought-out plan for the future, developed with the input of all the people who have chosen to live here.

In addition to this laundry list of objections, one further sticking point is that there are already 3 long-established levels of advertising and promotion agencies in place (two of which are taxpayer-funded):

• AR Department of Parks and Tourism (ADPT), which is funded by a 2% sales tax on tourist-related goods and services that went into effect in 1989 (Act 38). In 2003 19.9 million tourists spent $3.9 BILLION in Arkansas, leaving behind $221 million in state taxes and $83 million in local taxes. According to its own mission statement, the ADPT exists "to enrich the quality of life and improve the economy of Arkansas by generating travel and enhancing the image of the state."

• Ozark Mountain Region, one of the ADPT's 12 "regional tourism associations," all of which are funded, at least in part, by the ADPT. All are eligible for matching grant funds for projects, shows, travel, etc. Each RTA has its own A&P Committee, which includes 1 member from each county in the region. Our district is the 5-county Ozark Mountain Region, whose budget for 2004-05 is $85,729.41 (Baxter, Boone, Marion, Newton and Searcy Counties).

• Mountain Home Area Chamber of Commerce, whose funding comes primarily from membership dues and private sources.

All of these organizations have excellent promotional packages available free of charge, for the asking -- just make a toll-free telephone call or visit one of their web sites. (FYI -- In April 2005, the MH Area Chamber of Commerce received a total of 23,520 inquiries; of those, 20,374 came from their web site [Source: C of C May "Spirit" newsletter]).

In addition, an Internet search using one of the major search engines will bring up dozens of hits leading to businesses here in the area. Many of these also offer free information packets to out-of-state visitors.

There's a new advertising organization in town, too -- the Hometown Merchants Association. Endorsed by the Mountain Home Chamber of Commerce, the HMA was formed in mid-2004 to offer merchants the opportunity to join forces to advertise themselves on the local level (the Chamber only advertises outside the immediate area).

The point is: Opportunities abound -- all a business needs to do is take advantage of what is already available.

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