In a surprise move Monday evening, North Little Rock Mayor Joe Smith withdrew legislation to enact a 1 percentage point increase in the city's lodging tax that the City Council had been expected to approve at the meeting.
The lodging tax increase from 3 percent to 4 percent was tied to Smith's plans to create a downtown plaza on Main Street between Fifth and Sixth streets. Under the proposal, the North Little Rock Convention and Visitors Bureau would move its offices from Burns Park into a three-story building to be built on the plaza's east side. The bureau would then manage the plaza.
Smith explained after the council meeting that the city "did not get our numbers back on the construction of the building." Also, he said that implementing a lodging tax just before asking voters to approve a 1 percentage point increase in the city's sales tax could be confusing.
"I didn't feel like it was appropriate to approve a lodging tax before we knew we would build a building," Smith said after the council meeting. "So it's slowed things down. We'll wait and see."
The lodging tax would have come at a time when the City Council is already considering raising the city's sales tax from 1 percent to 2 percent. The council is scheduled to call for an Aug. 8 special election at its next meeting in two weeks to put the sales tax question before city voters.
The lodging tax increase isn't required to go before voters, needing only council approval.
The North Little Rock Advertising and Promotion Commission, which oversees the visitors bureau's operations, voted April 25 to support Smith's proposal to raise the lodging tax. Smith said at the time that both taxes "need to be addressed now" because of the upcoming projects and worrisome city budget projections.
In an interview Friday, Smith seemed positive about the lodging tax. The North Little Rock city attorney's office even prepared an amended version to clarify some language in the legislation Friday afternoon for the council to consider Monday.
"I don't know if it could be too confusing to have two issues out there at the same time," Smith said Monday evening. "When people are confused, either they don't vote or they vote no."
Bob Major, the Convention and Visitors Bureau's executive director, said Monday night that after discussions with the mayor on Monday that they decided to "kind of back-burner" the lodging tax plan. The two had talked earlier about the possibility of holding the tax measure, Major said, but because he was out of town last week, he didn't meet with Smith until Monday.
"Part of it is the plaza and what we can do there and how much money we might be able to get from the tax to help support the plaza," Major said. "We know how much that 1 percent [lodging tax] will generate, but we just kind of thought let's deal with one thing at a time for now.
"I think part of it is let's get [the sale tax issue] settled and move forward and then see," he added. "We may get back together, and it may be next month or it could be in a couple of months. At this time I really don't know. But it's definitely going to happen, because we really need to be downtown. That's a big part of it and then having the funds to help support the plaza and help support the hotels, which is another thing we want to be able to do."
Besides the visitors bureau, two private companies would also move into the planned building next to the plaza, Smith has said. One would be Taggart Architects of North Little Rock, the firm contracted to design the plaza and supervise its construction. The other tenant hasn't been announced. A stand-alone, private restaurant is also planned for the plaza's north side, Smith has said.
The proposed sales tax is needed because of the city's expenditures far outpacing its revenue, despite previous budget cuts, Smith has said. Without additional revenue, according to city projections, next year's general fund budget will have a $4.8 million shortfall.
If the City Council approves having the sales tax election, the 1 percent would be split two ways, if passed by voters: One-half of the sales tax would be permanent for general operations, while the other one-half percent would be dedicated for three capital improvement projects and end after five years. The projects include a new police and courts building and for improvements to streets and to city fire stations.
For now, an overnight stay in North Little Rock lodging has a 13.5 percent total tax rate: The existing 3 percent lodging tax, a 6.5 percent state sales tax, a 1 percent city sales tax, a 1 percent Pulaski County sales tax and a 2 percent state tourism tax. Little Rock's lodging tax is 4 percent, plus a 1.5 percent city sales tax and the same state and county taxes charged in North Little Rock.
Metro on 05/09/2017