Hardy City Council votes to increase A and P tax to better promote city

By: Tammy Curtis, Managing Editor

The Hardy City Council recently voted and passed Ordinance No. 2023-3 to levy the Hardy Advertising and Promotions collections by 1.125 percent to three percent. The increase, according to Hardy Mayor Ethan J. Barnes, will bring Hardy more in line with state averages in Hotel, Motel, and Restaurant (HMR) rates, or more commonly known as the Advertising and Promotions tax (A and P tax). This will enable the city to host more events, drawing more tourism to the city and increasing tax revenue to benefit Hardy’s full-time residents.

Barnes explained the increase was much needed as the rates have remained unchanged since 2001when the tax was first implemented by Ordinance No. 2001-15. A & P Taxes are collected and remitted to the City from businesses who sell prepared foods or have lodging facilities. Businesses that provide prepared foods to consumers from restaurant services, convenience stores that prepare foods, hotels and motels that offer lodging, and vacation rentals are included. Barnes said he spoke with several Hardy restaurant owners, including the owner of the longest running one in the city, Corner Booth, about the tax. Barnes said the owner, Diane Booth, was in agreement that the increased tax will help fund and promote tourism to the city, which in turn, will increase their business. This will create more tax revenue for the city to further grow and advance. Barnes said while the special called meeting was the first time the increase had been brought before council, he had been keeping close tabs on proposed state legislation that he said he believes would take the power away from local government. He called the meeting to discuss an Attorney General’s Opinion he sought regarding a council vacancy created after the election and explained the tax was only put on the agenda as secondary item. The tax rate was introduced 22 years ago in 2001. Barnes presented a handout of the presentation to the council which included research he conducted, indicating since the tax was established inflation had increased 69.55 per-cent. Barnes explained the City cannot continue to operate and promote the City with the outdated and low amount of revenue generated from the tax. The presentation also outlined history of the City of Hardy, inflation rates, problems identified, AR-DOT traffic studies of town and those who bypass Hardy,  inflation from the time the tax was originally implementer, a solution, and prior year’s 2018to 2022 tax collections. Statistics illustrated to the council that$6.44 million was spent in 2021 in the tourism related industry within the city limits. ARDot traffic studies indicated as many as 15,000 vehicles pass through the city during peak times and seasons. The mayor outlined how the City could have realized an additional $325,000 in funds since 2018 had the 1.875 percent  A and P Tax been increased by prior ad-ministrations. “We could have paid the civic center off a lot faster,” Mayor Barnes explained. The projected added revenue for the City, based on last year’s tourism collections, from the increase will be approximately $72,400per year with the three percent total HMR Tax. Barnes said of his visits with area restaurant and hotel owners. “She was supportive and said she realized it would help her community and that extra tax money would bring in extra revenue for the city,” said Diane Booth of the owner of Corner Booth  Laura Smith, owner of Main Street Bistro, who is also on Hardy City Council, said they were also in agreement with the need for the increased tax. Dewanna McIntosh with Hardy Sweet Shop was also sought about the proposed increase. “Her words were ‘Hardy is a big deal now.’” Bob Gilliland, who owns Bob and Sandy’s Beach Club Barbecue Restaurant, was the only restaurant owner who was opposed to the increase at the time of this interview. Gilliland was very unhappy with the council passing the tax without any public notice. He said his tax is already extremely high and he has struggled to not raise his food prices. Despite rising food costs and credit card processing costs. Gilliland said when the tax is implemented, his customers who pay with a debit or credit card will be paying 15percent with the credit card fees. The mayor also spoke with Renee Clay-Circle, owner of the Spring River Lodge. “She is not against it,” Barnes explained. Clay-Circle also owns the Spring River Dispensary which she worked diligently to get annexed into Hardy city limits so her hometown could reap the benefits from the taxes when Sharp County did not receive a dispensary permit. The dispensary generated nearly$61,000 from the one percent city tax it collects from general sales and use on medical marijuana for the city last year in 2022. Mayor Barnes explained how the in-creased revenue will be used to better promote the city.  With an Advertising and Promotions commission that is currently all volunteers, some who are retired and others who have jobs, hiring a full-time person is at the top of the list.  “Maybe we don’t have a person who is putting in 40hours a week in their job to bring tourism, conventions, concerts, and festivals to Hardy. Our vision is we would love to promote this area statewide and nationally and bring people here for events. By having somebody in a full-time position with this new revenue, we can afford someone to successfully promote Experience Hardy and that is where this goal is going. We want to people to come and use the Civic Center for events. The Elk’s Lodge is having their Fall Convention and we are going to have over 200 Elks in Hardy. That is the first big convention we are going to host, and this is a great practice run for us. We have wi-fi capability down there in that building, there is a sound system, lodging, beautiful hotels in this area people can stay at. We want someone to come in and promote the town and bring those things here so they spend money here at our lodges and hotels. That is the vision.” While the Mayor explained the need for the tax. When some residents learned of its passage in such a sudden fashion, they were upset about such an important issue being voted on during a special meeting that was called exactly two hours to the minute prior to being held.  Barnes explained, “I have to do what is in the best interest of the city. The legislature has preached for local control. Everyone of the republicans have always preached on that. House Bill1027 takes away local control from our government. As the CEO of this city, I realized what our legislature was about to do to local control, so I implemented in the amount of time we had to act. I realized as a city we were about to lose our ability to handle our local control. I have my eye on the Capitol. I have to do what is in the best interest of the city whether one person agrees with it or not. That is what I feel like is best. I did it legally. I was short staffed that day. Darlene was gone to Little Rock for a meeting. She would normally send our media announcement. This was the first occurrence where I had to notify the media and it was new tome. I had a phone call and I was stuck on it for 30-45 minutes before 2    o’clock or you all would have got it earlier. ”Barnes also explained the original intent of the Feb. 21Special Meeting was he had sought an Attorney General’s Opinion regarding a vacancy in election in a council seat that occurred after Jason Creasey withdrew from the November race after the certification of the ballot, yet still won the contest after his name remained on the early and absentee ballots. This created a vacancy in election. Mayor Barnes explained that he had received the opinion on how to legally fill the position. The opinion said despite Creasey’s withdrawal from the election, he felt vital to relay the information to the council prior to the next regular meeting and to fill the seat correctly and legally on council. Barnes also learned House Bill1027 could possibly be passed prior to the next regular business meeting and said he felt it was vital to also present the proposed HMR Tax proposal to the council at the special meeting. House Bill 1027, if passed would have taken away the right for a city council vote to set the HMR (A and P) tax and instead, put it in the hands of the public in a special or regular election. Barnes said, “This is the same public who elected us to the seats we are in, they should trust our vote.” The Bill passed the Senate on March2, just two weeks after the Hardy City Council voted to pass the in-creased tax to become effective May 1. About 20 minutes of discussion amongst council about the pas-sage of the tax took place prior to the vote. Penny Allen was said she wasn’t for raising taxes but felt it should be straight across the board, not just for restaurants and hotels. She said often times it is the wait staff or cashiers at restaurants who take the complaints from the taxes. Other council members reminded her Hardy was a tourist city and when people vacation, they are used to go going out to eat and staying in hotels and the tax is paid more by tourists than locals, like an increased sales tax would have caused.    Barnes explained that increased city, county, or state taxes must be put on a ballot and voted on by taxpayers. Councilman Mark Gordon, said, “People paying14 dollars for a mixed drink are not going to say too much about it.”  Gordon explained the tourist season is coming as well as, at that time the impending passage of House Bill 1027 so the city was on a time constraint. Other council agreed if the city doesn’t get in line and catch up with HMR tax rates that are much higher in other cities, they will never be able to. The council voted5-0 to pass the tax and read it the second and third time by title only, passing the emergency clause. The tax goes into effect in the city on May 1, 2023.

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