Eureka Springs : Tax revenue down, city panel under fire
Posted on Sunday, July 2, 2006
EUREKA SPRINGS — Charlotte Buchanan arrived at last week’s Eureka Springs City Advertising and Promotion Commission meeting in an ape suit, then peeled off her gorilla mask in order to be heard.
Buchanan, who moved to moved to Eureka Springs four years ago and has become a frequent promoter of downtown street events, listed her complaints against the seven-member commission, better known as the CAPC.
She called the commission “a dinosaur with very little hustle and vision.” She said she practically begs the panel to promote her events.
Finally, she asked, “Are you somebody’s monkey ?”
Eureka Springs, the jagged little Ozarks town that relies on tourism dollars for survival, is engaged in a controversy that is dividing the merchants who operate a crazy quilt of theme roadside motels, art galleries and funky attractions.
The city is one of about 40 towns in Arkansas that collects a percentage of gross proceeds of hotels, motels, restaurants, gift and souvenir shops and attractions.
The 2-percent tax is used by the commission to market the city to tourists, support major music and street festivals and to operate The Auditorium, a 78-year-old downtown landmark.
The city’s advertising and promotion tax collections are heading south. Collections dropped 2. 5 percent from 2002 to 2003. In 2004, they dropped 3. 1 percent.
Last year, collections slid 3. 6 percent.
The tax generates about $ 1 million a year, according to Lynn Berry, executive director of the commission.
A growing number of residents are blaming the commission for the decline. A petition is circulating around town to rescind the sales tax and abolish the commission. The petition calls for the vote to be placed on the Nov. 7 general election ballot.
The commission has scheduled a town-hall meeting at 5: 30 p. m. July 18 in the Carroll County Western District Courthouse downtown.
“I think [a public forum ] is a great idea,” said Commissioner K. J. Zumwalt. “The town is ready for it.
“ Hopefully all the people who’ve been talking to me will show up.”
Susan Morrison, a local artist who owns a gallery on historic Spring Street, said the commission is being criticized by residents looking for a scapegoat. “If you don’t like the CAPC, then try to help them,” Morrison said. “Invest a little sweat equity in it. These are folks just living in Eureka trying to do the best they can. “ They are going to make mistakes. Don’t pull the rug out from under them.”
PROFESSIONALS WANTED The Eureka Springs mayor, with the City Council’s approval, appoints advertising and promotion commissioners to staggered four-year terms. As dictated by local ordinance, the commission consists of three members who are hotel or restaurant owners or managers, one member who manages a gift or souvenir shop, the mayor and two city council members.
Kim Ridenour, who lives just outside city limits but pays the sales tax when she dines and shops in Eureka Springs, criticizes the commission on her online bulletin board, Geekfest. com.
Ridenour doesn’t like the makeup of the commission, she said in a phone interview.
She would like to see the commission stocked with advertising and promotion professionals.
“If [the tax ] is going to be collected, I’d like to see it used wisely,” Ridenour said.
Local sales taxes typically pay for roads, jails, hospitals, sewers and development. Three dozen cities in Arkansas also levy an advertising and promotions sales tax to support efforts to draw in tourism.
In 1965, Hot Springs became the state’s first city to pass an advertising and promotion tax. Some of the cities approving such taxes in the past few years include White Hall, Stuttgart and Benton.
Eureka Springs, which passed its tax in 1972, first levied a 1-percent tax on hotel, motel and restaurant receipts. In 1985, the city raised the rate to 2 percent and extended the tax to gift shops.
The advertising and promotions tax pushes Eureka Springs’ overall sales tax rate to 10. 76 percent, among the highest in the state.
Advertising and promotion tax collections were up 3. 6 percent in April and May, compared with the same months in 2005, Berry said last week. But Eureka Springs is trailing year-to-year collections of the state’s lodging tax for the same months.
The state’s collections are up 8 percent this year, and Hot Springs’ lodging and restaurant tax collection has grown 6 percent.
In 2004, when Eureka Springs saw a drop in its sales tax receipts, the state reported its best tourism year since 2000 in terms of reported visits to the state.
The target audience of Arkansas’ tourism marketing is an egg-shaped region of surrounding states, dropping down into Louisiana and spreading north to Kansas City, Mo.
Eureka Springs follows a similar strategy, Berry said.
For 20 years, the city used most of its advertising and promotion budget to pay Little Rock-based Cranford Johnson Robinson Woods, which has the state’s tourism advertising and marketing account.
But in 2000, the commission followed the advice of former Mayor Beau Satori and stopped using Cranford Johnson Robinson Woods. The commission approved hiring a full-time staff to advertise and market the city.
The commission has started using an ad agency again: Little Rock’s Stone Ward. Satori said he isn’t happy with the decision because the city has been “overcharged” and “ripped off” by ad agencies in the past.
AUDITORIUM COSTS Berry said the commission would have more money to promote and advertise if it didn’t have to spend 35-40 percent of its budget on The Auditorium. The Auditorium has been transferred from the city’s operating budget to the advertising and promotion commission twice in its history, most recently in 2000.
“Just to open the doors and staff it costs $ 218, 000 a year,” Berry said. “We believe the city could at least split the costs.”
In addition to the community’s use of the building for theater productions and other events, the space serves as a central downtown venue for the many annual music festivals — folk, jazz, blues, classical and bluegrass.
The Auditorium, built in 1928, underwent a renovation that was completed in 2003. Satori said he worked to land matching grants to help pay for the $ 500, 000 facelift.
Satori said the impetus behind establishing the advertising and promotion tax in the early 1970 s was to save The Auditorium, which had fallen into disrepair.
Morrison, who’s lived in Eureka Springs since the late 1970 s, credits the advertising and promotion commission for restoring the auditorium.
She proudly took some guests to The Auditorium for the recent Blues Festival, Morrison said.
“It is so nice to take... visitors from out of town to that auditorium and not be embarrassed,” she said.
REVOLVING DOOR Berry is the commission’s fourth executive director since 2000. She was preceded by Jef Russell, who resigned in April 2002. Barbara King Dozier, who came to the commission with a background in advertising, succeeded Russell. Dozier helped the commission’s full-time staff of seven formulate a marketing plan, design its Web site and place ads in regional media outlets.
But Dozier lasted just a year before quitting because of conflict with commission members.
Berry, who joined the commission in 2000 as its marketing director, said there’s never been a chance to develop a long-term plan because of the constant leadership changes.
“There has been a bouncing ball, never allowing a plan to be followed for a length of time,” Berry said.
Satori, however, doesn’t think current commissioners are treating their volunteer jobs seriously. He called the commission “financially incompetent.”
“City money is going down the CAPC drain,” Satori said. “I want people who are responsible, who are dedicated. Everyone is anti-CAPC because they just squander the money. If I had my way, [current commissioners ] would go bye-bye.” Eureka Springs Mayor Kathy Harrison said the commission breezed through its two-year plan in 20 minutes in a workshop on June 21. The commission approved the plan with little comment at its meeting Wednesday night. Harrison said she’s looking forward to hearing input at the public forum in three weeks. “We’d be fools not to pay attention,” Harrison said. “You can’t keep doing this shotgun approach. We are a Victorian village. “ We are on the National Register of Historic Places. You can’t make that into Disneyland.”
To contact this reporter: cbranam@arkansasonline. com
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