The final report from a special commission studying Little Rock’s 2% tax on restaurant meals and hotel rooms found no reason to eliminate or increase the tax that benefits the city’s advertising and promotion commission.
The rate does not need to be increased because it brings in enough money to meet the commission’s annual budget, the commission said.
The levy cannot be lowered, the commission said, because the tax also supports $14 million of outstanding bonds issued in 1993 to build the Statehouse Convention Center. The panel recommended that city directors, commissioners, and hotel and restaurant owners should begin talks soon on whether the tax should be increased, lowered, or eliminated when the final bonds mature in 2015.
Bonds supported by Little Rock’s hotel and restaurant tax are rated A3 by Moody’s Investors Service.
The tax generates more than $9 million a year, with 80% of the revenue going to debt service and operations at several downtown parking garages.
Mayor Mark Stodola established the 15-member review committee in February.
The city began with a 1% tax on prepared foods and hotel rooms in 1970. The rate was raised to 2% in 1979.
