On April 1, the sales tax rate in the city of Conway will change from 1.75 percent to 2.125 percent after voters approved a street improvement tax on Nov. 14, 2017.
Residents will start paying the higher tax in April and the city will see the benefits in June, when the street improvement work will begin.
Chief Financial Officer Tyler Winningham explained why the work won’t start sooner.
“People start paying it in April, but there’s a time lag,” he said. “Cash flow-wise, we’re not going to have it all right away.”
Winningham said that businesses collect the tax at the time of purchase and have until the 20th of the next month to remit it to the state.
“The state has another month to get it back to the cities and counties,” he said. “It’s usually between the 20th and 25th [two months later] that we get it.”
The tax is expected to bring in around $5.1 million annually until it sunsets in 2023 based on the state’s breakdown of tax groupings, Winningham said.
The total base tax on food and alcohol sales in the city will be 9.125 percent.
Although Faulkner County is a “dry” county, meaning retailers can’t sell alcohol, it often referred to as a “damp” county because restaurants that obtain a private club permit from the state Alcohol Beverage Control (ABC) Board are allowed to sell alcohol.
The private club holders that sell mixed drinks and liquor bring in 28.125 percent tax, of which 6.5 percent is state tax; 2.125 percent is city tax; .5 percent is county tax; 10 percent is state mixed drink tax; 4 percent is an additional state mixed drink tax; and 5 percent is Conway’s beverage tax.
Clubs that sell beer and wine only bring in 14.125 percent tax because the state’s mixed drink taxes of a combined 14 percent are omitted.
Restaurants that are not private clubs, or serve no alcohol, bring in 11.125 percent tax – the state sales tax of 6.5 percent; city sales tax of 2.125 percent; Faulkner County tax of .5 percent; and the Conway Advertising and Promotion prepared food tax of 2 percent.
City officials said a “mixed drink is any sale of alcohol that is not beer or wine.”
For a complete list of street improvement projects expected to come from the street improvement tax revenue, visit www.cityofconway.org.