Ash Flat is looking to delve into an unchartered area of law and assess an annual fee on billboards located within the city limits.
City attorney Larry Kissee is drafting an ordinance that is expected to be proposed at the next council meeting. The ordinance will assess an annual fee of 10 cents per square foot of advertising space on billboards. The fee is to be paid by billboard owners. It will be the first law of its kind in the state.
"It could be a groundbreaking area of the law," Kissee said at the Nov. 30 council meeting. "The (Arkansas) Municipal League wants to back us and wants us to be the test case."
Billboard owners will fight back, possibly in court, Kissee said, adding that the legal battle could cost the city more than the tax would bring in. Alderman Carolyn Stewart said she didn't think the 10-cent charge is worth a lawsuit and suggested raising the fee.
Outdoor advertisers are not subject to state taxes, said Chad Wiles, who operates Wiles Outdoor Advertising with his father, Cleatus. While the Ash Flat based business owns the majority of the billboards in the city limits, it doesn't own all of them.
"Some of the council felt like it was unfair that there wasn't any tax being paid on his business which operates in the city," Mayor Brien Nix Hall said. "Any kind of business, they should pay the state, county and city taxes."
Wiles said although his business does not pay sales tax on advertising, it does charge sales tax for storage buildings and carports it sells for an out-of-town company. The local store does not collect or pay the tax, but the company does, he said.
Hall said he felt certain the council would dissolve the ordinance if the local billboard owners paid city sales tax. An unnamed representative of the sales tax division of the Arkansas Finance and Administration Department said she could not divulge the names of businesses that pay or don't pay sales tax.
"We can't give out information of that nature," the representative said. "We're not allowed to do that."
The representative suggested contacting City Hall for those records; however, the department does not provide the city with a list either. The monthly sales tax income is direct deposited into the city account.
The state Legislature proposed a tax on billboards, laundromats and storage buildings two to three years ago, Wiles said.
The bill faced opposition and only after advertising was dropped from the bill was it approved, he said.
"Billboard advertising can't be taxed by the state, so I wouldn't think the city could tax us either," said Wiles,
The proposed city law would cost Wiles approximately $480 a year, he said, adding that he and his father own approximately five advertising structures in the city limits with approximately 4,800 square feet of advertising space.
"They could charge us but, I think, only when someone applied for a permit for a new structure," Wiles said.
City businesses with billboards on the same property advertising their business will be excluded from the annual fee.
"The ordinance says if it's a business on the property there is no limit on the size of the sign for the business," Hall said
The city began tossing around the billboard issue soon after they noticed billboards inside the city were increasing in size, Hall said.
"We have all the billboards we want in the city," he said. "It's not the revenue. It's the principle. Everyone should be treated equally."
Wiles said he had not been informed of the proposed ordinance prior to Dec. 2, but said he, his father or a representative of their business will be at the Dec. 16 council meeting.