Written by Blake Matthews
On May 12, after most Harding students had left the campus and the city of Searcy behind for the summer, the Searcy City Council voted among themselves to levy a new tax on businesses in the city. It is officially referred to as the Advertising and Tourism Promotion tax, or A&P tax, though some concerned citizens and officials have called it a sign that the city council is ignoring public opinion and abusing its authority.
Now, a group of citizens is suing the city council to let the public vote on the A&P tax. One side is claiming disenfranchisement, the other legislative privilege. Meanwhile, the Harding student body has remained largely unaware of what the tax even is.
First proposed by the Parks and Recreation Commission in March, the A&P tax levies a 1 percent tax on businesses that deal in prepared food, such as restaurants, and a 3 percent tax on short-term rental accommodations, such as hotels and camp grounds.
The tax has been in effect since July 1, and the seven-member A&P commission told the Arkansas Democrat-Gazette in May that Searcy would see an additional $800,000 in tax revenue per year. City council member Jim Dixon said most of that money would be coming from out-of-towners. According to his “best estimate,” 50 percent of the revenue from the prepared food tax would come from non-residents.
Dixon said the commission had not earmarked any of the revenue yet, which Harding’s Dr. Budd Hebert, professor in the College of Business, said is an appealing position for a lawmaker to be in.
“As a person who oversees the budget, I love that because I can spend that money wherever I want to spend it,” Hebert said. “But as the guy who’s paying the tax, I don’t like that. Because you may want to spend it somewhere that I don’t want you to spend it.”
The fiercest negative reactions to the tax have not been out of economic frustration, however. The recent recession is undeniably a factor, Hebert said, but the public outcry against the A&P tax has been fueled more by the fear of power-hungry officials taking control away from the voters.
“There’s just stuff being thrown at us, and we don’t have control over the fact that this is being dumped on us [or] how this is being handled,” Hebert said.
According to state law, each city council has the right to decide how it taxes its city’s advertising and tourist promotion industries. Letting the public vote on the tax is optional, but council member Carl Nutter has pushed for a citizen vote since the tax’s proposal. According to records of council meetings, he has been defeated five votes to three every time.
The law gives the council the power to pass the A&P tax directly, but citizens also have the right to overrule the city council, if they go through the proper channels.
“On any sales tax, the citizens can form a referendum to dissolve a tax,” Dixon said. Forming a referendum requires a certain number of signatures from registered voters, but the signatures must be turned in a certain number of days after the tax is passed. The citizens organizing the petition had more than enough signatures, and, going by state statutes, they thought they had another week to gather more.
Petition organizer and former council member Kyle Reeves said he was listening to the radio when he found out he was past deadline. Searcy Mayor Belinda LaForce was conducting a radio interview about the A&P tax in which she announced that the petition had not been submitted within 30 days of the tax’s passage, and therefore would not be accepted.
Reeves said the petitioners were operating under the assumption that the state law giving them 30 to 90 days was in effect. The 30-day limit was from a Searcy ordinance passed in 1948. LaForce had not made a public statement about the old ordinance until the radio interview, Reeves said.
“How are we supposed to follow a law if that law is hidden in a book, buried until it’s convenient for the city?” Reeves said.
The use of the 1948 ordinance to deny the petition has become one of the focal points of the lawsuit brought against the city council. In 1969, the city ordinances for Searcy were overhauled and recompiled into “a new, original, comprehensive ordinance which shall supersede all other general and permanent ordinances of the City” passed before that date. Called ordinance #519, it did not contain any trace of the 1948 rule.
According to e-mails from LaForce’s office, which were obtained through the Freedom of Information Act and given to The Bison by Scott Biddle, one of the lawsuit’s plaintiffs, the mayor acknowledged that “there is nothing in that Code of Ordinances reflecting the City having a deadline on filing a referendum position.”
The released e-mails also contained a conversation in which City Clerk Peggy Meads, who is responsible for keeping minutes at council meetings, said that she was aware of neither the ordinance nor the 30-day limit until “shortly after the city council’s regular June meeting.” The meeting in question was heldJune 9, 29 days after the tax’s passage.
“They basically disenfranchised all the voters,” Reeves said.
The Bison could not independently confirm the authenticity of the e-mails, but for citizens like Reeves, the A&P tax has plenty of other faults. For example, Reeves said he believed the entire tax was a fundraising effort to build an aquatic center in Searcy.
“It’s not a ‘we need this tax to save this bridge,'” Reeves said. “It’s a ‘we need this tax so we can build a swimming pool and be like all the other cities.’ If the people want it and vote for it, let’s build it. But let the people vote on it.”
Dixon said that other cities in the area with A&P taxes had been looked at, but he mentioned nothing about an aquatic center. He defended the council’s decision to vote on the tax themselves because it was acting as the city’s elected representation.
“I think that, through our election process, we give each citizen the right to vote on the council,” Dixon said.
Hebert, who worked as a state legislator in New Mexico before coming to teach in Harding’s business department, said he had not seen any student awareness of the issue, but he was not interested in local politics when he was a student at Arizona State University, either.
Student ignorance of the tax is understandable, as Harding will be nearly unaffected by the increased taxes. In particular, students will not be charged 1 percent more for the prepared food they buy in the Student Center.
Judy Hart, Food Service Director for Aramark, said that Harding’s contract with Aramark is such that students using their DCB accounts to buy food are not charged any tax at all. Aramark does not incur any extra charges either, as the food it buys does not fall directly under the tax’s definition of “prepared.”
However, students or anyone other people who pay for food with cash or a non-DCB card will have to pay the A&P tax.
The hearing for the lawsuit of Scott Biddle, Randall Young, and Searcy Friends of the Voters vs. the City of Searcy, will be held Sept. 30.
