"We're not like a normal town of 2,000 people," Mayor Butch Berry said at a September 24 public forum, as reported by the Eureka Springs Times-Echo. "We're not like Alpena. If we were Alpena, we wouldn't be needing as large of a sewer plant that we have." His point was that somewhere between one million and 1.5 million visitors a year put a burden on the water and sewer systems, and that visitors use most of the water. On Tuesday, November 3, voters went along with that reasoning.
Unofficial results show the 1 percent sales and use tax passed 586 to 381, or 60.6 percent. The water improvement bonds passed with 75.5 percent and the sewer bonds with 76.8 percent. Each bond authorizes up to $10 million, and the tax pays them back. For anyone who gets a city water bill, the vote matters most because of one small charge near the bottom of that bill. That charge was created as a stand-in for exactly this tax.
A Fee Created to Fill In for a Tax
The Infrastructure and Improvement charge, or I&I, is billed by use tier. The city's September 2026 financing presentation lists it as $5 for the first 2,000 gallons, $10 for the next 8,000 gallons and $50 above 10,000 gallons. The presentation estimates it brings in $223,150 a year.
The fee started with an earlier failed vote. In October 2025, council member Terry McClung proposed removing it. Berry told the council, according to the Times-Echo, that the I&I fee was added after a one-cent water and sewer sales tax failed at the polls, and that it should stay until a tax passed. The motion failed 3 to 2. Council members Steve Holifield, David Avanzino and Gruning voted to keep the fee, and McClung and Meyer voted to drop it.
Holifield is now mayor-elect after Berry opted out of a runoff. That means a council member who voted to keep the fee until a tax passed will lead the city now that a tax has passed. City officials have said that passing the tax would eliminate the I&I fee. The 2025 removal attempt was handled by a council vote, so taking the fee off bills goes through the council too.
State Law Requires the Utility to Pay Its Own Way
The I&I fee is only part of a larger change. As the Times-Echo explained when the council voted on rates, Arkansas Acts 605 and 925 require city water and wastewater departments to support themselves without help from the city's general fund. In August 2025, the council responded by unanimously passing Ordinance 2371, which raised water and sewer rates in three steps: 25 percent in September 2025, 8 percent in January 2026, and another 8 percent on January 1, 2027.
Public Works Director Simon Wiley explained the first step using the most common household. He said the average residential bill covers less than 2,000 gallons. That bill had been $40.96 for water and sewer, including the $5 I&I fee. After the September 2025 increase it became $48.48, which is $7.52 more per month before taxes and sanitation charges. At that level, the $5 I&I charge was about a tenth of the water and sewer total.
That leaves residents paying for the system in two ways. The rate schedule covers the utility's required self-sufficiency, and the I&I fee covers improvements. The new tax is aimed at improvements. In March 2026, finance director Michael Akins described what would happen without a tax, as the Times-Echo reported: "Water bills will keep going up. I and I will stay there, and then for any large projects we would have to rely on more loans and more grants."
The Calendar From Here
The order of these dates matters for a household budget, because the next rate step comes before the first tax collection.
| Date | What happens |
|---|---|
| September 2025 | First rate step under Ordinance 2371, 25 percent |
| January 2026 | Second rate step, 8 percent |
| November 3, 2026 | Voters approve the 1 percent tax and both bond measures |
| January 1, 2027 | Third rate step under Ordinance 2371, 8 percent |
| February 24, 2027 | Projected delivery date for the sales-tax bonds in the city's financing model |
| April 1, 2027 | Earliest likely start of tax collection under state notice timelines |
The April date comes from the timing rules in the Arkansas Municipal League's guide to local sales tax elections. Those rules require notice to the state Department of Finance and Administration and to retailers, plus a period for challenging election results. April 1, 2027 assumes the notices go out promptly and nobody challenges the results. The ballot set the tax for 20 years. According to the city's model, the bond issue would be paid off on March 1, 2047.
The tax pays for the system's backlog. The rate schedule covers the requirement that the utility support itself. Ordinance 2371 still includes the January 2027 step.
What the Money Is Aimed At
Wiley's September 24, 2026 presentation shows why Eureka Springs' pipes cost more than a typical town of 2,000. His slides describe historic neighborhoods on hilly ground, water demand that rises and falls with the tourist seasons, and the need for treatment and storage that can flex with it.
The presentation tracks water loss year by year from 2020 through August 2026, and the slides name aging mains and leak reduction as the first priority for the distribution system. Valves, hydrants, service lines and pressure zone management come next. On the sewer side, the presentation describes older pipe segments that let groundwater seep in, lift stations that need regular upkeep, and a treatment plant whose capacity is strained when that extra water reaches it. The plant releases its treated water into Leatherwood Creek, which flows to Table Rock Lake and then the White River. The state's 2025 draft renewal permit for the plant prohibits sanitary sewer overflows.
The city's financing presentation includes terms for a $6 million loan for wastewater treatment plant improvements, $6.18 million with fees, and a separate $100,000 loan for emergency repairs. It also models a $17.125 million sales-tax bond issue that would provide about $17 million for projects, with average debt service of about $1.325 million a year. In March, the city estimated $30 million in needed improvements over ten years, including plant upgrades and replacement of aging water and sewer lines.
Some of the work will tear up streets. Wiley's presentation says construction can be phased and timed with road projects. One of those projects is already in planning. In October 2025, Wiley told the council that utility line relocation was being planned for the roundabout at U.S. Highway 62 and Arkansas Highway 23.
What Changes at the Register
Eureka Springs' city sales tax has been 2.375 percent since October 1, 2017. Carroll County adds 0.5 percent and the state adds 6.5 percent, for a total of 9.375 percent on the Department of Finance and Administration's October–December 2026 rate table. Once the new tax starts, the rate on a purchase in town goes to 10.375 percent.
Residents will pay that extra penny on local purchases too. The difference is the size of the pool. Akins estimated the tax at about $1.7 million a year, roughly seven and a half times what the I&I fee collects. The fee was charged only to water customers. The tax is collected at every register in town, including the ones visitors use.
Holifield said the city would keep the public informed. He told the Times-Echo he wants to keep "people up-to-date on how that money is going to be spent, why it's spent, what the progress is, how it's gonna make a difference." Any money left after bond payments goes to running, maintaining and improving the water and sewer systems.
This is general information about a local tax and utility fees, not legal, tax or financial advice. For your own situation, check your bill and any questions with the city or the right professional.
Utility costs come up in nearly every home sale in Eureka Springs, and buyers from out of town often ask about them early. When you're ready to talk about how changes like these affect your property, the team at Coldwell Banker K-C Realty knows the local details. Contact Us.
