BENTONVILLE A proposed shift in Benton County tax levies could result in lower taxes for property owners and more money for county government. But cities in the county would receive less money as a result.
Benton County Judge Dave Bisbee said he may ask the quorum court to add 0.2 mills to the county’s general tax and remove 0.3 mills from the road tax.
That seemingly small shift would amount to a slightly lower overall county property tax rate at 6.9 mills, but county government would get an extra $300,000 to $350,000 per year.
The four largest cities in the county would be hit hardest under the plan. Bisbee said the annual loss in tax revenue would be about $340,000 for Rogers, $265,000 for Bentonville, $74,000 for Bella Vista and $58,000 for Siloam Springs.
“I’m not happy about it,” Rogers Mayor Steve Womack said. “It doesn’t promote harmony between the political subdivisions.
He’s trying to get our money, and he’s trying to run a county.”
“I think that Bentonville losing $265,000 in road money in a year when we’ve got our toughest budget in memory is not a good thing,” Bentonville Mayor Bob Mc-Caslin said.
Benton County is in a unique position because three cities - Rogers, Bentonville and Siloam Springs - get to keep 90 percent of the county road tax collected within their city limits. Bella Vista’s loss would be greater than Siloam Springs’ because property tax appraisals are about twice as high in Bella Vista.
Most cities in Arkansas have a 50/50 split with counties on road tax collections, based on Arkansas Code Annotated 26-79-104, which was enacted in 1937.
But Act 174 of 1920 allowed Rogers to collect 90 percent, and Act 219 of 1963 did the same for Bentonville and Siloam Springs.
Benton County keeps all of its general tax collections, and money from the general tax can be used to repair roads and bridges.
The amount the four cities together would lose totals more than the county would gain because property owners would be getting a 0.1 mill tax break under Bisbee’s plan.
“I’m not trying to beat anybody out of anything,” Bisbee said. “I’m just trying to survive over here. I’m not taking money away from them that they’ve had for any period of time or that should have ever been in their budget.”
When Bella Vista incorporated in 2006, Benton County government lost about $3 million a year in sales- and property-tax revenue because the community was then classified as a city instead of an unincorporated part of the county.
At that time, the county’s general tax was 5 mills, which is the cap allowed by the state. Because the quorum court couldn’t raise the general tax in 2006, it raised the road tax by 1 mill instead to try to make up part of the difference, but cities ended up getting about 63 percent of the money, or $2.7 million.
“The cities got a big windfall when that took effect,” said Bisbee, who served in the state Legislature from 1993 through 2008. “All we’re saying is let’s start to undo that windfall.
Most of them don’t even know they’ve got it.”
Since then, a tax rollback has dropped the general millage in Benton County to 4.8. The quorum courtcan’t add more than 0.2 mills to Benton County’s general millage because of the 5 mill state cap. The county’s road tax is 2.2 mills. The state has a 3 mill cap on road taxes.
There is another scenario Bisbee is considering. If the quorum court removed only 0.2 mills from the road tax, while adding 0.2 mills to the general tax, property owners would pay the same tax that they do now (a total of 7 mills), but the county would receive an additional $450,000 to $500,000 per year.
Bisbee said the quorum court will meet in November to consider taxes. Millages set then will be assessed on property next year, and those tax bills will be due in 2011.
A mill is one-tenth of a cent, generating $1 of property taxes for every $1,000 of assessed value. A county assesses property at 20 percent of its appraised value, and the assessment is multiplied by the millage rate to determine the taxes owed.
The majority of property tax collections usually go to school districts, but counties and cities also receive property tax money to help fund operations.
If the quorum court shifts the tax levies, Bisbee said the cities can raise their general millage rates to make up the difference, if those rates are not already at 5 mills. Rogers’ general tax is only 1.4 mills, he said. But raising taxes is seldom politically popular.
“I’m really not trying to fight with people, but if you do your job, you have to fight with people,” Bisbee said. “Politics is adversarial.”
Benton County lost a lawsuit last year claiming the 1963 law violated Amendment 14 of the state constitution, which was enacted in 1926 and bars special legislation.
News, Pages 3 on 10/14/2009
Print Headline: Proposal would cut tax revenue for cities