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— Tourism generated $5.6 billion in the sale of goods and services in Arkansas last year,

accounting for 5.6 percent of the state's gross domestic product.

Rising gasoline prices and uncertainty in the national economy slowed the growth of the

state's tourism industry, but it

still managed to grow in com

parison to other components of

the Arkansas economy.

One measure of Arkansas

tourism is revenue from the

tourism tax, which is collected

at hotels and recreational facil

ities, as well as on the rental of

boats, water skis and marine

equipment. Last year the tax

generated a little more than $12

million, which was a 3.8 percent

increase over the previous year.

However, that increase was largely attributable to higher prices and represents a decrease of 0.4 percent when adjusted for inflation. Another way of measuring the economic effect of tourism is that 59,677 people worked in travel-related jobs last year. That is down slightly from the year before, when 59,797 people had jobs related to travel and tourism.

The total payroll for employees in travel-related jobs was $1.05 billion. Since 1977 the total payroll for the Arkansas tourism industry has grown by 415 percent.

The state Parks and Tourism Department spends some of the tourism tax on marketing and promotion in the major population centers that are near the state: Dallas, St. Louis, Kansas City, Memphis, Shreveport, Houston and Oklahoma City.

Tourism officials have updated advertising campaigns to keep up with changing trends in the media. In the past, an effective ad campaign consisted of television and radio spots, combined with eye-catching ads in magazines and newspapers. Now Arkansas tourism has a much larger presence on the Internet.

The "Welcome to Arkansas" concept, which has been used in print and television campaigns, is now being placed throughout the Internet in banners, videos, mobile messaging and text links. Ads promoting Arkansas tourism can be seen on "checkout TV," that is, large television monitors inside Wal-Mart Super centers in Houston and Chicago.

Ads are shown in cinemas in Dallas, St. Louis, Tulsa and Memphis. Arkansas tourism spots are shown on the Branson Vacation Channel, which is available at hotels, offices, private residences and campsites in Branson. Ads for Hispanic audiences were placed on cable television networks in Little Rock, Fort Smith and Fayetteville.

Arkansas has a reputation for natural beauty and outdoor recreation such as boating, hunting and fishing. Arkansas also has an image problem, according to research firms that analyze surveys filled out by tourists from other states. Outof-state visitors are surprised by the offerings available in Arkansas, in fact, the mismatch is striking between their expectations and the reality in Arkansas.

That is a reason Arkansas ad campaigns do not focus exclusively on outdoor activities and include "indoor" activities such as fine dining, art galleries, shopping, music and nightlife.

The primary audience of the 2009 spring and summer ad campaign was adults, ages 25-49, with an emphasis onwomen. The secondary target audience was older adults, also with a focus on women. The goal is to expand upon the already established and positive image of Arkansas as a place with natural scenic beauty.

Highway finance

Serving on a blue ribbon panel is usually prestigious, but few people envy the 19 members of the Arkansas Blue Ribbon Commission on Highway Finance.

Their task is difficult and their recommendations likely will generate controversy. They face tough choices and their decisions could affect every taxpayer in Arkansas. To top it off, they're under a tight deadline - the law requires the commission to report to the legislature by July 1 of next year.

That isn't much time to consider proposals from a large number of competing interests.

Act 374 of 2009 created the commission and charged it with looking for ways to pay for the growing cost of building and maintaining highways.

The act directs that membership reflect city and county government, business, transportation, engineering, finance, economic development and industry.

The director of the state Highway and Transportation Department recently saidArkansas needs to increase highway funding by $300 million a year to adequately maintain roads and bridges.

That estimate made headlines because it was much higher than the previous estimate that $200 million a year in additional funding was necessary.

The price of asphalt and petroleum products used in highway projects has gone up. The Highway Department's major sources of revenue are motor fuels taxes that are collected on a per gallon basis, and they do not increase with inflation.

When gasoline prices go up, motorists cut back on driving and buy fuel efficient cars. Fuel taxes based on volume, like those in Arkansas, decrease or stagnate. That has been the trend for several years and probably will continue.

Any recommendations made by the Blue Ribbon Commission will likely create opposition. Truckers do not want to pay increased registration fees.

Some motorists don't like toll roads, and they would be feasible in few areas of a rural state like Arkansas.

Some advocates for highway funding would like to dedicate revenue from sales taxes on new and used motor vehicles, as well as tires and car parts.

The amount of revenue would be in the hundreds of millions of dollars.

That money now goes intothe state's general revenue fund and moving it to highway maintenance would generate vigorous opposition from the areas that now receive the bulk of it.

They are schools from kindergarten through 12th grade, higher education, technical education, health care, nursing homes and prisons.

The legislature met in special session last year to increase the severance tax on natural gas and allocate the increased revenue to highways. The Highway Department estimates it will bring in $23.2 million in severance taxes during the current fiscal year. Without the severance tax revenue the department would be facing possible decreases in total funding because motor fuel taxes were down 2.8 percent last year.

Consumption of gasoline has rebounded in the past few months because the price of gas is down compared to last year, but long-term trends do not build confidence.

Another factor is that a large portion of the state's federal funding has been obligated to pay off bonds, which Arkansas voters approved in 1999 to finance improvements to interstates.

If you have any questions or comments about legislative issues, please contact me at HendrenK@arkleg.state.ar.us or call me at 479-787-6500, extension 30.

Forum, Pages 5 on 07/29/2009

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