Senate City, County, and Local Affairs

Jan. 24, 2023

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Sen Flippo: All right, guys, I want to welcome everybody out to the City, County, Local Committee. I want to thank Senator Rice for stepping in for me last week and chairing. You did a phenomenal job, Senator, and I appreciate that. And with that, we’ve got a few bills on the agenda today. And Representative Tucker, I think we’ve got you up. Members that is House Bill 1100. All right. Senator Tucker, you are recognized to proceed with your bill.


HB 1100 Allows Cammack Village to provide drainage and other services

Sen Tucker: Thank you, Mr. Chair. Members, Senator Flippo made me promise before the session that I would only bring noncontroversial bills to this committee, and I’m keeping that promise. This is a bill that deals with urban service districts. And so just to set the context, an urban service– you can create a district for a variety of things in this state. I’m sure you all are familiar in cases with a water improvement district or a levee improvement district where it’s dealing with a specific issue as to that area that’s contained within the district. An urban service district, it really functions as a municipality. They can provide all the functions that a city or municipality can otherwise provide to the people who live in that area. There’s been only one urban service district created in the history of the state since this law was passed. It’s Cammack Village, which is contained really within the City of Little Rock. It’s in my district, which is why I’m presenting this bill. And so that’s basically the context. I’ve had several conversations this morning with Senator Payton, with Senator Bryant, and with a few others, and I want to kind of address some of the questions that have been presented to me and to Mr. John Wilkerson from the Municipal League. We had a conversation with Senator Payton this morning. I guess, first, I’ll just basically present what’s in the bill and I’ll kind of address some of the concerns that Senator Payton and others have raised with me. The reason for the bill is because there’s a piece of the code that enumerates the types of services that an urban service district can provide. And it’s what you would expect from a city, like emergency services, including ambulance and police, solid waste services, parking, recreation, neighborhood improvement services, and that sort of thing. And Cammack Village wants to add two new services to the code. One is drainage system maintenance, which makes sense that a municipality would want to be able to provide for its citizens, and then also sidewalk maintenance and redevelopment, including lighting, cleaning, and everything that goes with sidewalks.


Sen Tucker: The way these function, and the reason that an urban service district exists, is because it has no revenue base other than fees. Typically, municipalities have sales taxes or other revenue bases for their cities. And Cammack Village has no businesses in its area. It only has residential property. And so the only way for it to have any revenue is for it to charge a fee for some of the services it provides, like water, garbage, or sewer. Those are the types of services they can charge a fee for. When they get that revenue, they can spend it on the services that are enumerated in this section of code. Cammack Village is actually already providing the drainage and the sidewalk services to the people of Cammack Village, but they can’t spend their revenue that they get from their fees on it because those services are not enumerated in the code with these other services. So they have to come up with some other form of revenue to provide these services. So that’s really what the bill does. It’s just to help– and there is a mayor. There’s a city council in Cammack Village, so it’s to help the people of Cammack Village and their city government provide better service to their to their people. That’s it. That’s the entire bill. As I said, it’s the only urban service district that’s been created in the history of Arkansas. There’s another district that’s in Senator Payton’s Senate district that is structured entirely different than this one. They’re trying to basically– my understanding from my conversation with Senator Payton this morning is they’re trying to wind that down and they’re having a hard time doing it. The key distinction between what’s happening in his Senate district and in Cammack Village is– Cammack Village and any urban service district that exists under this code, it can only last for 10 years. The people in the area that live in the district, they have to reauthorize the urban service district once every 10 years, otherwise it automatically winds down on its own.


Sen Tucker: That’s why this is one of the conversations I was just having with Senator Bryant when the committee came to order. They can’t bond anything out for more than 10 years for that reason, because the urban service district only lasts for 10 years unless the people approve it. And the people in Cammack Village strongly want to remain their own entity. More than 50% of the electorate participates in the petition once every 10 years in order to re-up. Cammack Village, the people there support it, the government wants to be able to provide these services to its citizens. That’s really it on the bill. At the end of our conversation, my conversation with Senator Payton this morning, I said, what can I report back to the committee about your position on the bill. And he basically said he has concerns with just the existence of urban service districts generally. He doesn’t have an aversion to adding to the services in this bill. And Senator Flippo actually, I think, put it the best right before committee started. He may not be for it, but he ain’t ‘agin’ it. So he hasn’t committed to voting for the bill on the floor if the committee sees fit to pass it out today, but he’s not opposed to it because, again, it’s really a simple bill. All we’re doing is adding to the services that Cammack Village can provide to its citizens with the fees that it generates through its only revenue source. That said, with that, I’d be happy to take any questions, and I know John Wilkerson from the Municipal League is here with us, and he would be happy to help answer questions.


Sen Flippo: All right, are there any questions from the members of the committee? Senator Stubblefield, you are recognized.


Sen Stubblefield: Thank you, sir. Mr. Chairman. Senator, there’s no financial impact?


Sen Tucker: No, sir.


Sen Stubblefield: Okay.


Sen Flippo: All right, Senator Bryant, you’re recognized for a question.


Sen Bryant: So does Cammack Village participate in the government of Little Rock? It sits inside the boundaries of Little Rock, but is it in effect its own city?


Sen Tucker: Functionally, that’s what it is. The residents of Cammack Village can not vote in the Little Rock mayor’s race or a Little Rock city director race. It’s really a separate entity and Little Rock really grew around Cammack Village. But yes, it’s at this point, Cammack Village is entirely contained within the city of Little Rock, but it’s a separate entity and it functions entirely separately.


Sen Bryant: So does any of their property taxes or taxes they pay within their boundaries go into the Little Rock general revenue or does it stay within their fund?


Sen Tucker: Well, I think the property taxes, by and large, just go to the state. Mr. Wilkerson may be able to add information to that, but I’m not sure they generate any revenue from any property tax. It’s really just the fee-based services that they provide for water, sewer, garbage, that sort of thing.


Sen Bryant: So can they not decide to become their own city or town?


Sen Tucker: I don’t know the answer to that. Yeah, they might be able to, but they don’t need to given the existence of this law in there. They’re happy with the way things are, except for the fact that they want to do drainage and sidewalk improvements.


Sen Flippo: All right. Senator Tucker, I want to have Mr. Wilkerson join you, and John, we all know who you are, but go ahead and introduce yourself and who you’re with for the record and to be recognized to proceed to address Senator Bryant’s question.


Wilkerson (Municipal League): John Wilkerson, general counsel to the Municipal League. So Cammack is a city, but because, like Senator Tucker said, they have no tax base, they have to have some method to have money to do what they want to do. So again, Cammack is an autonomous city, kind of like the Vatican in Rome, I guess, who has been surrounded by Little Rock. And so they just have to create revenue to do the services that their city residents want. T urban service districts are sort of laid on top of the entire city. So it is a city, but functionally, revenue is urban service district.


Sen Bryant: Thank you. So if in 10 years, the majority of the electorate says, we’re tired of paying these extra fees for this urban service district, that city would still function, it just would have zero revenue to be able to do what cities do.


Wilkerson (Municipal League): Correct. They would have no revenue streams at all.


Sen Flippo: All right. Thank you, gentlemen. Senator Hammer, you’re recognized to proceed with a question.


Sen Hammer: Thank you, Mr. Chairman. So the services are currently being provided. This creates a pathway for you to be able to spend the money that you’re collecting in a manner which you can offset the cost to provide those services, correct?


Wilkerson (Municipal League): Correct.


Sen Hammer: Okay. Why would there need to be a fee increase if the cost of doing it is already being covered?


Wilkerson (Municipal League): Well, I’m not sure that necessarily would need to be a fee increase. I think the concern is that the law as written has a “but not limited to” language, as we were talking with Senator Payton. It makes us as lawyers uncomfortable to start providing services when it’s not specifically enumerated in the law. So because they’re already doing it, the city is already doing it, we want to make this clear that they had the legal authority to do that.


Sen Tucker: And as Senator Payton said, they can’t really go to a bank and say, hey, can we borrow money to provide these services. Because the banker is going to say, can you do this under the law, and you say, maybe. And this makes it clear. I’m not the city attorney for Cammack Village, but if I were, I would say I would be very careful in providing these services when they’re not enumerated under the law. Because there’s a rule of statutory construction, which I’m sure you’re familiar with, and that we’re taught in law school, which is that if there’s a list and a statute, and what you want to do is not on the list, then you’re really in murky territory.


Sen Hammer: So what this will actually do is open up the possibility for them to be able to maybe go secure bonds if they need to do a bonding program for improvements or anything like that. It creates that pathway forward to giving that latitude.


Wilkerson (Municipal League): Correct.


Sen Tucker: That’s right. For these specific services that we’re adding in this bill, yes, sir.


Sen Hammer: And then the last question is this. Anything in the way of fee increases that this will create the opportunity for the city government of Cammack Village to be able to do, that is through the normal processes of the people having a chance to vote on that or the city, I mean, just through normal channels that any other city would have to operate under?


Wilkerson (Municipal League): Well, just to be clear, this urban service district, the fees are established by petition of the electorate, so 25% of the electorate has to sign the petition. Cammack has historically gotten 50%. That’s their internal threshold, and then the city council would say, okay, this is what we can do. This is what we’re going to do with that authority.


Sen Hammer: Okay. All right. Thank you.


Sen Flippo: Thank you, Senator. All right, members, are there any more questions from the committee? All right, seeing none, we do have somebody to speak up for the bill. Okay, good. Is there anybody to speak against it? Don’t see anybody. All right, with that, Senator Tucker, you are recognized to close for your bill.


Sen Tucker: I’m closed for the bill. I’d appreciate a good vote.


Sen Flippo: Members, do I have a motion? Got a motion. Got a second by Senator Bryant. All in favor signify by saying aye. Opposed? Congratulations, Senator, your bill passes.


Sen Tucker: Thank you, Mr. Chair. Thank you, members.


HB 1024 Detangling A&P taxes and entertainment districts

Sen Flippo: All right. Senator McKee. Now Senator, is it correct this is your first bill that you’ve carried during the 94th?


Sen McKee: Yeah, don’t take my speech.


Sen Flippo: Okay, okay. All right, well we’re setting the bar high for you, Matt.


Sen McKee: Yes. I want to thank the committee for allowing me to have this opportunity. It is my first bill, and as members of the committee can attest, I’ve only picked the most controversial bills to start with. That’s usually not your intention, but I like to jump in and get my feet wet right off the bat. So this bill is a bill to do away with the requirement for cities and municipalities to have an A&P tax.


Sen Flippo: One second, Senator McKee. Members, that is House Bill 1024, I’m sorry. Go ahead.


Sen McKee: To do away with the requirement that those localities require an A&P tax in order to form those entertainment districts. So I went back and tried to read, and I know that there was lots of controversy when it started. This wasn’t intended to change entertainment districts at all. It doesn’t change how they operate or anything. This bill was intended to restore a little bit of local autonomy and local control, let those local communities decide what’s best for them. And we’re going to hear that it’s going to expand public drinking. I don’t think that that will be the case. When that concern was brought up to me, I did go reach out to law enforcement agencies within the state that have entertainment districts. And they had told me that they did not see an increase in public intoxication or any other problems when these entertainment districts were introduced. So, any questions?


Sen Flippo: All right. Members, are there any questions from the committee? Senator Bryant and Senator Hammer. Senator Bryant, you are recognized to proceed.


Sen Bryant: Mr. Chair, I’ve got questions, but it’s probably for Mr. Wilkerson. If he can come to the table or do you want to wait and see if he’s got comments?


Sen Flippo: I’m sorry, Senator. What’d you say?


Sen Bryant: So I’ve got questions, but they’re probably to be addressed to Mr. Wilkerson.


Sen Flippo: Okay, yeah. Mr. Wilkerson, you want to come up to the table? Great. If you’ll introduce yourself again and who you’re with, and Senator Bryant, you will be recognized to proceed.


Wilkerson (Municipal League): John Wilkerson, general counsel to the Arkansas Municipal League.


Sen Bryant: Can you give us or give me a general review of how we got to where we got wet counties with dry areas, dry counties with wet areas, all wet and all dry counties, and their jurisdiction over what happens within their county? 

Wilkerson (Municipal League): Yeah, so in 2019, the entertainment district bill passed, and we talked about this in the House committee. I’m not sure why there was a connection to the A&P commissions. We kind of presume, and Ms. Chandler at ABC kind of had the same hypothesis, which is maybe A&P commissioned cities were just more interested at the time. So originally it was A&P district cities in wet counties get to have an entertainment district. Then Senator Davis passed in 2021 the bill that allowed entertainment districts in dry counties. And then now Representative Ray mentioned to us a few months ago that he would like to get rid of that entanglement between A&P commissions and A&P taxes and entertainment districts and to which we, of course, support. It makes sense to untangle those two things, because cities and towns, we don’t think have to have an A&P Commission to have an entertainment district. One kind of goes to the other. Sometimes if a city chooses to, but the tax does not have to be entangled with the entertainment district. As far as how they work, the city passes regulation, reasonable regulations to deal with this sort of thing. You and I talked about cups. I double checked that with folks back in my office. And I think it’s up to each city how it exactly works. But typically, a restaurant will give you the blue cup and the blue cup can then be– you can go from restaurant to restaurant, at least the outdoor portions of a restaurant to restaurant. And as long as you have your alcoholic beverage in that cup, you can just sort of traverse the entertainment district. We’ve seen a lot of success with these with revitalizing downtowns, and so hopefully that answered your question. I’m trying to give you as broad of an answer as I can.


Sen Bryant: Yeah, that’ll be fine. I probably have more, but I’ll yield to Senator Hammer.


Wilkerson (Municipal League): Okay.


Sen Flippo: Senator Hammer.


Sen Hammer: Would you just go back and give me the layman’s interpretation of what this is doing, just really the condensed version? Are you trying to– and let me ask you, are you trying to take the A&P tax or the tax that’s associated through the A&P away from the entertainment district, or would you just give me a high-level quick summary?


Wilkerson (Municipal League): Just saying that if you’re a city and you don’t want to have to impose a tax, an A&P tax on your citizens to have entertainment districts, you can do it.


Sen McKee: Senator Hammer, right now we’re requiring them to have a tax. This bill just says that they don’t have to have a tax in order to have the district.


Sen Hammer: All right, so if you’ve got an entertainment district within your city and an event occurs and there is– and I’m going to say liquor or whatever– it doesn’t matter, I guess, does it, what’s being sold within that– for that event that’s occurring within that district, there are going to be no taxes charged on it. Is that what you’re after?


Wilkerson (Municipal League): No A&P, no hamburger tax. We call it the hamburger tax. So A&P commissions– cities can set up and pass a tax that assess a– I think it’s up to 3%, I believe is the number, tax on food and hotels, food and drink and hotels. And so in an entertainment district, if this bill passes, the city does not have to pass that extra tax on the food and liquor inside that entertainment district, or really in the city at all. So there’s no extra tax. A city can say, we don’t want to have an extra tax on this. And so we’re not going to have an extra tax on food and wine or food and beer or liquor.


Sen Hammer: Okay, so say you got an entertainment district, and you got a hamburger joint just one side of the street that’s not in the entertainment district. You’ve got a hamburger joint that’s on the inside of the entertainment district. Is the hamburger joint on the outside going to have to collect it where is the hamburger joint on the inside is not going to have to collect it? Or how is that–


Wilkerson (Municipal League): No, there’s no differentiation between where the businesses are. North Little Rock, where we work, Argenta has an entertainment district. And Little Rock has an A&P tax. So the A&P tax is levied inside the entertainment district is the same that’s levied outside of the entertainment district. What this bill says is if North Little Rock did not want to have an A&P commission at all, did not want to have an A&P tax, North Little Rock could still have the entertainment district in Argenta.


Sen Hammer: Okay. All right. Thank you.


Sen Flippo: All right. Senator Bryant, you are recognized for a question.


Sen Bryant: So following on that, is it possible for a city, after this passed in 2019 up until we’re trying to amend it today, could have formed an A&P commission and just chose not to tax it and still meet the bounds of the law to have an entertainment district?


Wilkerson (Municipal League): I believe you asked– I’m sorry, can I– yeah, no, this is tax specific. So an A&P commission with the tax, yes.


Sen Flippo: All right. Members are there any other questions from the committee?


Sen Flippo: All right. Seeing no more questions, we do have a few people that have signed up to speak against this.


Sen McKee: Yes, sir.


Sen Flippo: We’ve got Larry Page. Is Larry here? All right, Larry, come down and introduce yourself. Tell us who you’re with and you’ll be recognized to proceed.


Arkansas Faith and Ethics Council speaking against HB 1024

Page: So I got to lower this a little bit. I’m Larry Page with the Arkansas Faith and Ethics Council, and I appreciate this time to address this issue with you. I want to concede as I have all along that I don’t think the intent of this bill is to increase public drinking, but that will be the inevitable result. And no one can deny that because it will dramatically increase the numbers of entertainment districts in the state. Many will be in dry counties. Many will be in small towns, and they simply won’t be regulated or enforced the way they should be. Now this bill is cast as a fairness in tax issue. And it does have that element, but it’s not as simple as that. It’s much, much bigger than that. I’d like to develop that with you, as well as I can, as briefly as I can, and honor your time.


Page: I do want to correct a couple of things. At the outset of this, it was said that this would only affect– an entertainment district could only be placed in wet areas. That’s not true. The entertainment districts can be placed in any dry county that’s got a drinking establishment in it. So that clearly was erroneous. It’s also been said that if this bill passes the result will be that there won’t be more places where people can drink. My goodness, it will. They’ll be able to drink in public. And that right now is not done except in a very limited number of areas that do, in fact, have entertainment districts. Listen, we’ve always been concerned about public drinking. We make no apologies for that, but you know what? We’re in pretty good company. I mean, it’s been over a half a century, I think, that Arkansas has had a law against public drinking. Where has been the hue and cry where those years to your predecessor, “Give us a law that allows public drinking”? Where have the rallies been on the state capitol steps or in the rotunda? My point is this: it’s a pretty fair inference to draw that most Arkansans are happy with not having drinking in public. Probably many don’t want to see their children witness that. And so we’re really in good company. Also, ask any law enforcement officer in Arkansas what they think about public drinking, I think you know what their response will be. As a former prosecutor and then someone who’s had family members in law enforcement, I guarantee you, public drinking is not a popular prospect. They’ve got enough to do without having to police that.


Page: Now we’ve gone without public drinking in Arkansas until 2019 when the first entertainment district bill was passed. But my point to you is this: it was a very narrowly drawn bill. It wasn’t just open the floodgates. And I think I would just ask you to consider why it was narrowly drawn before you make a decision about this. In a previous hearing, three individuals who spoke in favor of this bill was asked, why was an A& P tax imposed in the first place? None of them could answer that. Well, I will answer that for you. I think it’s pretty obvious if you recall the testimony back in 2019 and some of the other things that were said and done, that the sponsors of that bill had a better idea. And it was this– and by the way, did they throw the A&P tax requirement in just willy-nilly, or was there rhyme and reason to what they did? I think there was rhyme and reason. I think that there was a good reason. And here’s what it is: they knew that a city or town that imposes an A&P tax is probably got some concerns about the overall quality of that city, about its tourism draws, about the things it could do to bring people in. If they just wanted a public drinking district, they wouldn’t have included an A&P tax. There’s going to be a reason for that. And I really think that you should consider that significantly here. I think they knew that that kind of city was going to have better attractions, be more concerned about the quality of life in the city.


Page: Let me just share briefly some of the uses that A&P tax is put to, all right? Advertising and promotion of the city, construction, improvement, maintenance, and operation of the convention center, operation of tourist promotion facilities in the city or county, funding for the arts, operation of tourist-oriented facilities, including but not limited to theme parks and other family entertainment facilities. Obviously, it had a great deal to do with tourism and the overall attractiveness and appeal of cities that want to bring people in and increase the economic vibrancy of their city or town. They’re basically two kinds of cities that want an entertainment district. One may just want public drinking for the sake of that alone. Another wants it, again, to enhance its overall appearance and its attractiveness to people who they might want to bring in. Now the other city, the other of those two cities is one that wants to do what is done with the A&P tax. Now I would ask you, which of those two cities is going to best have good police presence? Going to have good code enforcement? Going to regulate the area as they should? I think it’s clear it’s that second city or town that imposes that A&P tax. They want more than just a public drinking district. They want to do something that overall increases the quality of their community.


Page: That’s why requiring an A&P tax is the eminently sensible and logical thing to do. Otherwise, you open the floodgates with public drinking that will be really pretty significant in time. So yes, this bill will increase public drinking. I don’t think some of that will end well in some of the communities that will establish an entertainment district without an A&P tax, so I would respectfully ask you to reject this bill. Leave the status quo as it is. We’ve only had four years of experience with this. Let’s don’t make wholesale changes every two years. Let’s see how it operates, how it’s done, and encourage our cities to do the right thing. Thank you. I’ll be glad to take any questions.


Sen Flippo: All right. Senator Hammer, you are recognized for a question.


Sen Hammer: Thank you. So is this about opening up the channels for people to have the opportunity to drink in an entertainment district, or is this about just removing the tax of those that already have an entertainment district and taking the tax off of it? Because I was listening to your testimony, and I was just trying to distinguish the difference based on your testimony.


Page: Well, I think the A&P tax can be imposed with or without bringing in an entertainment district. It can be retained. That’s not the purpose of– what we see the purpose of the bill being. And I take the sponsors at their word. This is about fairness with tax, but we have to look at the unintended consequences. I mean, there are a whole great number of counties that are dry that have one or more private clubs. The folks in those counties that voted, that voted, literally voted to be dry, and hold their nose and tolerate the private clubs, if this law passes, they will see people walking around in that town and city, in their dry county, drinking alcohol. I just submit to you that’s a bridge too far.


Sen Hammer: Okay. Let me ask you though, because I’m trying to differentiate–


Page: I’m sorry.


Sen Hammer: No, that’s all right. I’m trying to differentiate and understand. I’m interpreting this that it just deals with whether you’re going to collect the tax on it or not versus whether you’re going to open up to more drinking or more permits are going to be issued or more in entertainment districts are going to be established. Because the way I read this, unless I’m wrong, and that’s why I’m asking is my interpretation correct, we’re just talking about the tax. We’re not talking about all this other stuff. We’re just talking about whether you collect the tax or not.


Page: It does remove the requirement for an A&P tax. Our point is that with that requirement, some cities and towns that probably aren’t going to be good sites for entertainment districts will bring those in. And that’s why we think the public drinking in time will increase dramatically.


Sen Hammer: But if those are brought in, it’s going to be at the vote of the people. It’s going to be at the vote of the city council. It’s going to be through a vote that those districts actually get put in place. It’s not going to be because– I think I understand your philosophy is, you take the tax off, it’s going to make it easier to get entertainment districts in places because they won’t be collecting taxes. But yet at the same time, for an entertainment district to actually come into existence, that’s going to have to be run through the channels of the vote of the people or the vote of cities.


Page: Oh, clearly an ordinance will have to be passed. No question about that.


Sen Hammer: Okay. All right. Thank you.


Sen Flippo: Thanks, Senator. All right, members, are there any more questions for Mr. Page? All right. Senator Bryant, you’re recognized for a question, sir.


Sen Bryant: I don’t know if it’s really directed at you, but I’ll ask you and maybe others can weigh in. Entertainment districts still do not permit people to be drunk in public. Is that correct? Like if I carry–


Page: We still have a law against public intoxication.


Sen Bryant: Public intoxication. That doesn’t change. So if I have an– if I am walking around with an open container, and I’m not drunk, is that currently against the law outside of entertainment districts?


Page: Public intoxication’s against the law. Now I will tell you that in entertainment districts, there’s nothing to prevent me as a 21-year-old going into Bob’s Bar, buying a drink, bringing it out to my 19-year-old date and going in another bar and buying mine. I mean, that would be possible, clearly, because there will be lack of enforcement. Right now, if that 19-year-old date of mine goes into the bar to buy a drink, that bartender, if he’s half worth his weight, will ask her for ID. But with the entertainment district, she’ll be free to drink outside because I’ve given her the drink, and nobody’s probably going to check with it. So my point is this: there are problems with the entertainment district. That’s why they should be limited. I think requiring an A&P tax is a good way to limit it. It’s a speed bump other than just opening it up willy-nilly,


Sen Flippo: Mr. Page– Senator Bryant, are you finished? Have you talked to any local elected officials, any mayors or city councils in this state that have told you that they would move forward with an entertainment district should we do away with the mandatory A&P tax?


Page: Okay. I’m sorry. My hearing is–


Sen Flippo: You said earlier, when you’ve been stressing this point– you’ve been stressing this point, sir, that it’s likely that other cities are going to– they are going to implement entertainment districts if we do away with this A&P tax. And I just wondered have you had any conversations with any mayors and any city councils that have told you specifically if we do this, this is what their intent is going to be?


Page: No, I have not.


Sen Flippo: Okay. Thank you, sir.  All right. Members, are there any– Senator Hammer?


Sen Hammer: Mr. Chair, can I ask the sponsor a question?


Sen Flippo: Yeah.


Sen Hammer: Okay. So my question based on all testimony we just heard is this: by doing this, is it going to create any kind of disadvantage that the hamburger tax would continue to be collected on others unless they’re inside the entertainment district? Is it going to create a disparity that some will still have to have the A&P tax collected while those within the entertainment district would not have the tax collected?


Sen McKee: So an A&P tax is a municipal tax that is collected throughout the city, not just in the entertainment district. So the A&P tax is paid by the entire city and collected in the entire city. Being inside the entertainment district does not exempt you from that. What this bill does is say that currently you are required to implement an A&P tax in order to have an entertainment district. This bill eliminates that requirement and says that you can have an entertainment district without an A&P tax. It does not really affect existing entertainment districts and A&P taxes.


Sen Hammer: Okay. All right. Thank you.


Individual speaking against HB 1024 

Sen Flippo: All right. Thank you, Senator. All right. Let’s see here. Theresa Belew, I believe, is signed up to speak against this. And members, there’s going to be a handout here that Staff is going to be passing out. So I’m going to allow for a few seconds for them to get that out. This is against. We’ve only had people against that have signed up.


Sen Flippo: All right, Miss Belew, if you’d introduce yourself and tell us who you’re with, and you’ll be recognized to proceed with your comments.


Belew: Good morning. My name is Theresa Belew. Thank you for the opportunity to speak with you today about House Bill 1024. I am the chairman of the board for Speakup About Drugs, former executive director of Mothers Against Drunk Driving, former chief of Injury and Violence Prevention for the state of Arkansas, and a graduate of the Johns Hopkins Institute on Injury and Violence prevention. I am also a 75-year-old great-grandmother and was around when the original concept of entertainment district was brought to the legislature. And I can tell you that at that time one of the assurances that we were given was that the protective factors of an A&P commission and the tax that would be collected in order to help defray the cost to cities was one of the assurances that we were given originally. I do understand that things change, but there was a good reason for that. You see, with their entertainment districts, the bars and clubs and restaurants are responsible for their internal security and police, but when there’s an entertainment district in the city, the city, when that goes out into the streets and into the public, needs to be the one who police and also provide sanitation for that as well as provide the oversight for people who may be intoxicated in public.


Belew: I would like to refer you to– and thank you for allowing these handouts. I thought that you might want to see this is the most current information that I was able to find. This is from the ABC. And this is the list of dry and wet counties in Arkansas. I like to say that there are dry, wet, and damp counties in Arkansas. And I thought that you might want to take a look at this. And then the second list that you were handed does show the dry and damp Arkansas counties. As you can see– first of all, please note this: in wet counties, any city, town, or municipality can have an entertainment district if it is approved by the city board or quorum court. That speaks to what you were asking about, Senator Hammer. But it also allows for or shows that cities where there is a 2% A&P tax being collected, the neighboring city will not have to be collecting that. Therefore, there will be a disparity in the prices that will be charged for people who choose to go from one entertainment district to another. As you can see from this dry and damp list that I provided to you, there are 42 wet counties, there are 23 damp counties, which means private clubs only, and 10 that are considered dry. And currently with the best information that I found, and that’s based on the Arkansas Business list of private clubs in Arkansas, there are 100 total private club permits in those dry counties. So that could potentially increase the number of entertainment districts by a pretty substantial number.


Belew: Also just the last thing that I would like to talk to you about, as it turns out yesterday, the Walton College of Business released a report. They titled it A Tale of Two Businesses: Arkansas’ Bars and Liquor Stores During COVID-19. It’s quite an interesting article. And one of the things that they talk about is the difference between how liquor stores have fared versus restaurant/bars during COVID and where they are now. They reported that liquor store sales have experienced phenomenal growth, and we do know that there’s been a huge increase in alcohol sales overall in Arkansas. Liquor store sales have seen a phenomenal growth, and bars, restaurants, on the other hand, have struggled as their sales have declined drastically. Sales tax revenue from liquor stores grew by 27%. Bars in the same areas saw a steep decline of 33% in sales tax revenues. Liquor stores saw their revenue grow 35% during the most recent data through November, and bars experienced decline in sales tax revenue of 29%.


Belew: So we can already see that our restaurants and bars that exist are having a problem and struggling to get back to where they need to be. And Walton School of Business, in this section, which is The Road Forward, recommends that even though the state has already provided COVID funds and grants to help small businesses, they state that additional direct grants for bars will be needed, and it is essential for these small businesses to continue to deal with their declining revenue. So it’s an interesting read and certainly something for policymakers to take into consideration because this change in the tax will make a difference between just the cost of goods sold between the cities that have an A&P tax and the cities that don’t. So in closing, what I’d like for you to do is, if you don’t mind, is to look at the list of counties that I handed out to you. And I want you, if you would, think of your constituents and all of the city boards and the quorum courts that are in your districts. Making the path shorter, which is what this does, to the creation of entertainment districts, removes important protective factors that help keep you, your friends and neighbors safer in the communities where they live, work and play. And because of that, I would ask that you vote no on House Bill 1024.


Sen Flippo: Thank you, Miss Belew. Members, are there any questions for Miss Belew? All right. Thank you very much for your testimony, ma’am. All right. And we’ve got one more to signed up to speak against this, and this is going to be Luke McCoy from Family Council. Luke, if you will introduce yourself to us, tell us who you’re with, you’d be recognized to proceed with your testimony.


Family Council speaking against HB 1024 

McCoy: Thank you, Chairman. Luke McCoy with Family Council. Appreciate your time today. As I mentioned over in House Rules speaking against this bill, I first want to concede that my friend, Matt McKee, who I’ve known for– I was counting the years back, since about 2007 or so when we were part of Young Republicans. We’re almost out of that age range, so we’re middle aged now. But anyways, nonetheless, appreciate Senator McKee. I want to agree wholeheartedly with Mr. Page and Mrs. Belew. We are opposed to this bill for all of the similar reasons as well. I do want to mention a couple of new things that maybe I don’t think have been mentioned or I want to put a twist on, nonetheless, as I think both Larry and Teresa started to allude to, consider your counties that are considered those that are dry with private clubs, those cities that do not levy an A&P tax. Some of you all live in districts or you have districts where there’s quite a few number of cities with very small populations and so on that would have an entertainment district. Also, I heard it mentioned earlier that it makes sense to untangle these two. Well, I think it doesn’t make sense to do that at the expense of expanding alcohol and public drinking. Anyways, Family Council is opposed to this bill. We would encourage you to not support it. Thank you.


Sen Flippo: All right. Members, are there any questions for Mr. McCoy? All right. Thank you very much, Mr. McCoy. All right. I don’t have anybody else that has signed up to speak for or against this bill. So with that, Senator McKee, you’ll be recognized to close for your bill.


Sen McKee: Thank you, Mr. Chairman.


Sen Flippo: Hang on, do you have–?


Sen McKee: Yeah. I think–


Sen Flippo: Senator Bryant, do you have a–?


Sen Bryant: Yeah. I generated some more questions. Before he closes, I want to make sure–


Sen Flippo: Okay. Yeah. This would be the appropriate time. Senator Bryant, you’d be recognized with that.


Sen Bryant: I want to get a couple of questions just to go back for entertainment districts as a whole, just to make sure I’m understanding. Within an entertainment district, I have the ability to purchase a cup or just a wristband. It gives me permission to stay within the boundaries of that district. Do I have permission to be drunk in public in that district?


Sen McKee: Never.


Sen Bryant: Okay. And then can the entertainment district encompass a whole city? I mean, if I’m in a dry county and I’m in a large town and I just want it to be able to sell when I want to sell–


Sen McKee: It’s my understanding that it is a limited area surrounding a certain number of restaurants, art galleries, bars, things like that, clubs, things like that.


Sen Bryant: Okay. Thank you.


Sen Flippo: Thank you. Senator Petty, you’re recognized for your question, sir.


Sen Petty: My apologies for being late here. I got tied up in another meeting. So for me, just to clarify, this is an amendment to the existing entertainment laws, correct? .


Sen McKee: That’s what this is. And this is not changing any of the local control and establishing these and it eliminates the requirement that they impose an A&P tax. So they’re not forcing you– in order to have an entertainment district, it forces you currently–


Sen Petty: To impose the tax.


Sen McKee: –to impose the tax. This does not–


Sen Petty: Which would be citywide.


Sen McKee: But the local control does remain in effect.


Sen Petty: We’re giving them more local control.


Sen Flippo: All right. Members, are there any more questions for the members of the committee? All right. Senator McKee, you are now recognized to close your bill.


Sen McKee: Members of the committee, I really appreciate you listening so diligently and the bottom line with this is it is about returning control of the local level, eliminating the requirement that the state puts on these communities to impose another tax in order to promote tourism and the wonderful things that they have in their communities. So that is the bottom line. I appreciate your time and I appreciate a good vote.


Sen Flippo: All right. Did I hear you say you got a motion do pass, Senator McKee?


Sen McKee: I heard that.


Vote on HB 1024 (fails 4-4)

Sen Flippo: Okay. So you got a motion. We have a second. Got a second from Senator Sullivan. All in favor, signify by saying aye. Opposed? We’ll call it ayes have it.


Members: Roll call.


Sen Flippo: Roll call. All right.


BLR Staff: Senator Stubblefield?


Sen Stubblefield: No.


BLR Staff: Senator Stubblefield votes no. Senator Hammer?


Sen Hammer: No.


BLR Staff: Senator Hammer votes, no. Senator Sullivan?


Sen Sullivan: Aye.


BLR Staff: Senator Sullivan votes yes. Excuse me, Senator Petty?


Sen Petty: No.


BLR Staff: Senator Petty votes no. Senator Bryant?


Sen Bryant: Yes.


BLR Staff: Senator Bryant votes yes.  Senator Rice?


Sen Rice: No.


BLR Staff: Senator Rice votes no. Senator Flippo?


Sen Flippo: Chair votes yes.


BLR Staff: Senator Flippo votes yes.


Sen Flippo: All right. Oh, Senator McKee?  Yeah. Yeah. Senator McKee.


BLR Staff: Senator McKee?


Sen McKee: Yes.


BLR Staff: Senator McKee votes yes.


Sen Flippo: All right. Senator, with a vote of 4-4, your bill fails. Yeah, you can.


Sen Hammer: Mr. Chair.


Sen Flippo: Yes.


Sen Hammer: And he may know already, but just for the benefits of those who do not, would you state the possibility for him to bring the bill?


Sen Flippo: Yes. The possibility, yes, sir. Senator McKee, you have the absolute right and ability to bring this bill back at any given time. If you want to sit down and work with members or others with a vested interest that this bill, then come back, you’d be more than welcome to do so.


Sen McKee: Thank you.


Sen Flippo: All right. Let’s see here. I don’t see Senator Crowell in here. Okay. So if I come in–


Sen Bryant: Mr. Chair, I may have given him a bad counsel, Senator Crowell. He had some other things to run. Can one of us run his bill for him?


Sen Flippo: Of course. Of course. Senator Bryant, are you saying that you’d like to run that bill for him?


Sen Bryant: Yes, I’d like that.


HB 1090 Separating offices of sheriff and tax collector in Hempstead County

Sen Flippo: Take a seat at the end of the table, Senator. Let’s get it out. And members, that is House Bill 1090. All right. Senator, you’re recognized to proceed with your bill.


Sen Bryant: Yes, thank you, Mr. Chair. This bill on behalf of Senator Crowell is just to break apart the elected sheriff who also has the role of elected tax collector. So what the counties all need to do is separate those two duties and actually elect its own tax collector, like the majority of our counties in the state do, where the sheriff’s role is not confused with the role of the tax collector.


Sen Flippo: All right. Members, are there any questions from the committee? All right. Senator Sullivan, you’re recognized for questions, sir.


Sen Sullivan: So I’m not familiar with the law there. So the citizens of that district or county, are they supporting this? And why can they not do it at the county level?


Sen Bryant: It’s a constitutional rule and so they are– and out of the seven constitutional officers, the counties have either combined offices or not, so by statute, we have to change it to allow Hempstead County to be able to break apart that role.


Sen Sullivan: Okay. But citizens of that county are favorable to this?


Sen Bryant: Yes. And it’ll go to the vote of the people, as far as the new tax collector.


Sen Sullivan: Okay. Thank you.


Sen Flippo: All right. Senator Stubblefield, you’re recognized for a question.


Sen Stubblefield: We need to get some taller chairs in here, Mr. Chairman.


Sen Flippo: Yeah, I agree.


Sen Stubblefield: No, we have passed– we have passed two of these in the last two sessions where we break apart the tax collector and sheriff. And when I passed the last one last year for Yell County, Governor Hutchinson came to me and ask me, “Why do you want to separate him?” So we sat down and discussed it and he was fine with it. So this has been done before.


Sen Sullivan: Okay. Okay.


Sen Stubblefield: We’ve done this the last two sessions, so.


Sen Flippo: Thank you. Thank you, Senator. All right. I don’t have anybody– is there anybody in here that’s signed up to speak for or against the bill? All right. I don’t see anybody. All right. Yeah. Senator, you’re recognized to close your bill.


Sen Bryant: Thank you, Mr. Chair. I’m closed for the bill and I motion do pass.


Sen Flippo: We’ve got a motion, got a second. And committee, second by Senator McKee. All in favor, signify by saying aye. Opposed? Congratulations, Senator. All right. Members, I see no further items on the agenda. We are adjourned.