JONESBORO — Some restaurant operators say a proposed 2 percent tax on the sale of prepared foods in Jonesboro will be an added hardship on the industry at a particularly bad time.
The city council on Monday will hear the first of three required readings of the proposed tax ordinance. If it gains final approval in November, the tax would go into effect in 2022.
Paul Bass, co-owner of Lazzari Italian Oven, said, “Now’s a horrible time to do anything like that.”
But Spencer Moore, owner of Demo’s Barbecue & Smokehouse, said that doesn’t mean he will oppose it.
The city’s Advertising & Promotion Commission voted Aug. 29 to ask for the tax to finance a multipurpose sports complex. Restaurant owners Dan Das, Tom Fielder, Bill Hurt and Tracy Owens serve on the commission and all voted and voiced support for the proposal. Under state law, the tax can only be used to promote tourism and pay for facilities such as those for parks and recreation.
“If it’s earmarked and used for that purpose, for the betterment of Jonesboro, I guess I’m for it,” Moore said Thursday. “But, if it goes into a general fund like it did last time, and they can use it on anything, I don’t agree with that.”
Moore was referring to the half-cent public safety tax voters approved in 2009 to prevent layoffs in the police and fire departments during the Great Recession. Instead of placing the tax proceeds into a special account for that purpose, city officials allowed the money to flow into the general fund. Critics said that move made it impossible to see exactly how the extra tax was spent and reduced public trust in city officials.
Moore said the proposed prepared food levy, commonly known as a hamburger tax, is a double-edged sword.
“If it’s earmarked for facilities for the betterment of Jonesboro, which is going to benefit the people of Jonesboro, I’m all for it, because it draws more people into Jonesboro, which means more people at my restaurants,” Moore explained. “But when you deal with government, and the past government we’ve had, you’re kind of gun shy.”
Bass admits he hasn’t followed the merits of the tax discussion lately, due to the birth a baby daughter.
However, he said adding 2 percent to the cost of a meal, on top of already escalating prices, will hurt.
“Costs of everything have been going up as it is now, because of shortages everywhere and labor and all that,” Bass said. “We try to keep everything affordable for our guests, too.”
“That’s probably my biggest concern right now, the timing of it,” he said.
The coronavirus pandemic in 2020 forced restaurants to close indoor dining and rely on takeout orders.
“A lot of restaurants didn’t know if they were going to make it or not,” Moore explained. “People are coming back in and now you’re talking about tax. People don’t want another tax.”
Moore said he hadn’t raised prices for four years until recently, when scarcity of labor, food and other supplies drastically raised their expenses to the point “we couldn’t swallow any more.”
Currently, restaurants and convenience stores in Jonesboro charge 8.5 percent in state, city and county sales taxes on prepared food. The A&P tax would raise that to 10.5 percent.
Fayetteville, Conway and Pine Bluff also have 2 percent prepared food taxes, while North Little Rock and Hot Springs charge 3 percent. Restaurants in those cities also collect more in general sales taxes than does Jonesboro, according to a survey by the A&P Commission.
If a family typically spent $100 at a local restaurant, that cost would rise to $102. The price of a $10 food item would go up by 20 cents.
The commission hasn’t drawn up specific plans for the proposed complex. Commissioners first plan to hire a consulting firm to determine the size and scope of the project. However, Parks Director Danny Kapales has given examples of complexes in other cities that house aquatic centers, multiple basketball and volleyball courts, kitchens and other amenities.
Some critics have said the commission should have a specific plan before raising the tax, while commissioners have said they can’t develop a plan without having a secure source of revenue.
The tax is expected to produce $2.9 million per year. Another part of the proposal would raise hotel occupancy tax from 3 percent to 4 percent, which could generate another quarter-million dollars per year.
Unlike a general sales tax, voter approval is not required.
A tax proposal to fund a multipurpose sports complex gained the endorsement of a Jonesboro City Council committee Tuesday and will advance next week to the full council.
The decision by the finance and administration committee followed more than an hour of discussion.
If approved by the full council, the tax measure would go into effect on Jan. 1. However, City Attorney Carol Duncan said collections probably won’t begin immediately, due to the need to develop guidelines and inform the businesses affected by the new measure.
Also scheduled for first reading is a proposed ordinance that would waive competitive bidding and approve a contract to purchase a payroll and human resources software package
Another would abandon a drainage easement on the south side of East Highland Drive and on the east side of Great Dane Lane at the request of the Northeast Arkansas Economic Development Commission. Proposed ordinances that would approve new private club alcohol permits are scheduled for their second readings.
Good Hope Hospitality, doing business as Pier 88 Boiling Seafood, seeks to operate at 2324 Red Wolf Blvd.
Rojo’s on Huntington, doing business as GrillZil, would operate from 601 W. Huntington Ave.
The council will hear the final reading and vote on a proposed ordinance that would create a property assessed clean energy (PACE) improvement district. Under the program, a property owner may finance an energy efficiency improvement, a renewable energy project or a water conservation project on a voluntary basis, with loan repayment tied to their property tax bills.
Resolutions on the agenda would:
Approve an agreement with City Water and Light for electric vehicle station equipment.
Purchase additional right of way along Creath Avenue and Bridge and South Fisher streets for road improvements.
Authorize applications and acceptance of a variety of grants.
The council normally meets on the first and third Tuesday of the month, but opted to reschedule next week’s meeting in order to observe National Night Out on Tuesday. The meeting will begin at 5:30 p.m. in Municipal Center, 300 S. Church St.
The council’s public works committee will meet at 5 p.m.