SPRINGDALE — Springdale’s hotel and motel tax could increase in the future.
The City Council ordinance committee voted Monday to send a proposed raise of 0.5 percent to the council’s July 5 meeting. A tax increase, if approved, would boost the rate from 1.5 percent to 2 percent. A council vote is all that is required to increase the tax.
“That would make us the same as all the other large municipalities in Northwest Arkansas,” said Alderman Mike Overton.
“It will level the playing field,” said Alderwoman Kathy Jaycox.
Bentonville, Fayetteville and Rogers all have a 2 percent hotel-motel tax, said Mayor Doug Sprouse.
The committee also discussed adding a tax on restaurants but decided the idea needed more research.
“I’m not sure I could stomach passing two taxes at one time,” said Alderman Jeff Watson.
Hotel-motel taxes, as well as restaurant taxes, would go to the city’s Advertising and Promotion Commission by state law, said Jeff Harper, city attorney. The committee wanted any increase — projected to run between $50,000 and $67,000 per year — to be used on items now funded by the city’s general fund.
By state law, the money could be used for the maintenance of public recreational facilities. The city’s general fund now pays for park maintenance.
The council could ask for the money to be spent according to its request, but could not require the commission to do so, Harper said.
“So we’re asking to raise taxes so someone else can control it?” asked Alderman Brad Bruns.
“We can create the tax and we can take it away if it isn’t spent like we want it to,” said Alderman Jim Reed.
Hoteliers might be opposed to the tax if they feel the lower rate is a competitive advantage, said Lance Eads, city Chamber of Commerce vice president.
City visitors will pay the hotel-motel tax, Overton said. A restaurant tax would raise more money but would also be paid by city residents, he said.
“Anyone in the food industry would object to the tax,” Overton said. “Their sales would be available by figuring backwards from the tax they paid.”
Bentonville and Fayetteville levy restaurant taxes, Sprouse said. Rogers does not. A 2 percent restaurant tax in Springdale would bring in about $500,000, said Wyman Morgan, city director of administration and financial services.