How Holiday Island would pay for this

Arkansas cities can't just raise property tax to cover whatever they need — state law gives cities a specific, limited toolkit. Here's what that toolkit is, how the Long Range Plan uses it, and which pieces are adopted, proposed, or still only planning assumptions.

Arkansas's municipal revenue toolkit

Source: May 2, 2026 feasibility study presentation; Arkansas Constitution, art. 12, § 4.

What's adopted, what's proposed, what's assumed

These categories get blurred in conversation, so here they are side by side. Only the first and last rows describe money the City is collecting today.

Sources: Long Range Plan, September 22, 2026; City of Holiday Island, State of the City, January 2026 (4-mill levy); May 2, 2026 feasibility study (revenue estimate).

Property tax: the current rate and the planning assumption

On Holiday Island tax bills due in 2026 the City's 4 mills are one line among several: the total rate is 51.8 mills, of which Eureka Springs schools take 35.8 and county services 10.5.⁶ A year earlier, before the City's levy, the total was 48.1.

The City currently levies 4 mills. The Long Range Plan's road-funding projections use 5 mills as a planning assumption. Millage is established annually through the required public process: in the plan's words, it "must be set annually by the city council and is levied by the Carroll County Quorum Court."

What a mill means in dollars: Arkansas taxes real property on 20% of its value, so each mill costs about $20 a year per $100,000 of market value. On a $200,000 home, 4 mills is about $160 a year and 5 mills is about $200. Figures on this site that say "5-mill" model the planning assumption, not an adopted rate.

Sources: Long Range Plan, September 22, 2026, pages 4–5; City of Holiday Island, State of the City, January 2026. Dollar examples are this site's arithmetic and ignore credits and caps that can lower a real bill.

Sales tax: what the plan uses it for

The ballot measure would authorize a 2.5% local sales and use tax for general fund expenses and capital improvements.⁷ The Long Range Plan identifies the City's added administrative costs as HISID is phased out as the principal reason for the proposed revenue; the law would not restrict the tax to that use. The City and HISID spend a combined $1,093,430 on administration today³. The plan projects a single long-term administration at about $640,000, which is about $437,000 more than the City spends now and well below the current combined total³.

The plan also says what the vote decides. If the tax passes, planning for the water and sewer and fire department transitions can begin. If it fails, future transition planning is put on hold and stays with HISID, with no assessment reduction beyond the road transfer. See what the November 3 vote decides.

Source: Long Range Plan, September 22, 2026, "Administrative Costs," pages 5–6.

Why sales tax won't carry us the way it does other cities

In most "organic" Arkansas cities — where residents live, shop, and raise families locally — sales tax generates an average of about $239 per resident for every 1% of tax². Holiday Island, like fellow retirement/vacation communities Cherokee Village and Horseshoe Bend, is estimated much lower: closer to $80–82 per resident per 1%². Most residents are retired, do the bulk of their shopping near a Walmart 20 minutes away or online, and Holiday Island itself sits just 5 miles from Eureka Springs — a tourist town with over 70 restaurants and attractions that captures a lot of local spending.

Even so, the feasibility study projected that a 2.5% sales tax, applied to an estimated population of 2,452, would raise about $502,660 a year² — a meaningful piece of the puzzle, just not the dominant one it would be in a more "organic" city.

Source: May 2, 2026 feasibility study (earlier estimate; the Long Range Plan does not restate a revenue figure).

How each service would be funded

The feasibility study described future City finances as five separate funds, each intended to largely pay for itself. The Long Range Plan follows the same logic phase by phase.

Sources: fund structure from the May 2, 2026 feasibility study; phases and years from the Long Range Plan, September 22, 2026.

What the money is for

The transition does not cost nothing, and this site does not claim it does. But today's bill reflects today's structure, and it should not be treated as the permanent cost of doing nothing. Roads, public safety, recreation, water and sewer, and administration all have to be funded under any structure; none of those costs are caused by HISID and none disappear with a city.

So the useful question is not only what the transition costs, but what structure residents get for it. This site's view is that one government, with the full municipal toolkit and a single place for accountability, is the clearer and more sustainable way to pay for the same services. See One community. One government.

What happens to the HISID assessment

The assessment does not vanish on a single date. The Long Range Plan describes it stepping down as each service leaves HISID: first roads in 2027, then $54.25 when the sewer loan is paid³, then again after the fire and recreation transitions, and ending only when HISID itself is phased out. Apart from the $54.25, the amounts are not yet determined. See the step-by-step assessment diagram.

Why vacant lots and improved properties are treated differently

The May 2026 feasibility study put HISID's assessment revenue at about $2.3 million a year (net of the sewer bond)². Vacant lots alone generate roughly $840,000 of that — but at 5 mills of property tax, those same vacant lots would only generate about $33,000². Replacing HISID's flat assessment with property tax and usage-based fees necessarily shifts more of the funding responsibility onto improved properties and residents who directly use city services.

The Long Range Plan lists this as a deliberate benefit: "making vacant lot ownership more affordable and increasing lot retention."³

Source: May 2, 2026 feasibility study (earlier estimates). The Long Range Plan describes the study's goal as replacing "the $1.8 million HISID collects annually in assessments to cover operating expenses"; the two figures are measured differently and this site has not reconciled them.

A revenue base built to grow

Sales tax, property tax on improved value, and Urban Service District fees all share one trait the old HISID assessment didn't: they scale with the size and success of the community, not just its lot count. Every new resident and every vacant lot that becomes a home adds directly to this funding picture — see how deliberately growing Holiday Island reinforces this whole plan on the Growth Plan page. And even with a 2.5% sales tax and property tax at the 5-mill planning assumption added on top of everything above, this site's own comparison of property and sales tax (not counting service fees) finds Holiday Island stays competitive with nearby Arkansas towns and below larger regional cities. See the numbers on the Tax Comparison page.

What about short-term rentals?

Holiday Island's Airbnbs and other short-term rentals are already paying into local government, separately from anything in this plan. In November 2024, voters approved a 3% short-term lodging tax⁸ on stays under 30 days — hotels, bed-and-breakfasts, and rentals booked through platforms like Airbnb and VRBO all collect it. The City Council used that revenue to stand up a seven-member Advertising & Promotion Commission dedicated to marketing Holiday Island as a destination.

By state law, that money runs in its own lane: A&P tax revenue is restricted to authorized advertising, promotion, tourism and related purposes. It is not general-purpose revenue for the General Fund, Public Safety Fund, Sewer & Water Fund, Parks & Recreation Fund, or Street Fund described above. So it doesn't directly pay for the HISID-to-city transition — but it does mean overnight visitors are already contributing something residents don't have to. And every dollar a short-term rental guest spends at a local restaurant, shop, or amenity while they're here would flow into the same proposed 2.5% sales tax discussed above, the same way any other visitor's spending would.