Road tax worries officials n Resolution would change apportionment

BENTON COUNTY -- County officials are worried by an Arkansas Municipal League resolution expressing the cities' wish to reap more revenue from county road taxes.

"That's unnerving," said Tom Allen, Benton County justice of the peace for District 4 and chairman of the county's Finance Committee. "I'm looking at it. I've already contacted one state representative about it and I plan to speak with as many senators and representatives as I can. Using common sense and logic, it doesn't make sense to try and raise city revenues by taking revenue away from the county."

The Municipal League, in 2013 and again in 2014, has asked the apportionment of taxes as prescribed by Arkansas law be amended to pay municipalities 100 percent of the taxes collected within the city. Most Arkansas cities and towns receive 50 percent of the road millage tax revenue although some receive more. In Benton County, Rogers, Bentonville and Siloam Springs receive 90 percent of the revenue collected within those cities. In Washington County, Fayetteville and Springdale each receive 80 percent.

Roger Haney, Washington County treasurer, said the road tax brought in $3,094,198 in 2013. Washington County received about $1.1 million of that, Haney said, while Fayetteville received about $1 million and Springdale about $675,000.

Smaller cities received lesser amounts that ranged from about $90,000 in Lincoln to $1,313 in Winslow.

In Benton County, the road tax is similarly distributed among the county and cities.

Benton County officials estimated changing the law to give cities 100 percent of the tax in their jurisdictions would cost the county about $1.6 million a year.

"It'd be huge, $1.6 million," Benton County Judge Bob Clinard said of the proposed change. "I don't know what we'd do with this."

Clinard said he hasn't heard any comments on the possible change from mayors. Clinard said the county works closely with smaller cites on road projects and he hopes they would understand the need for the county to retain the revenue.

"I would hope it wouldn't even be considered by the Legislature," Clinard said.

Mayor Bill Edwards of Centerton said he wasn't aware of the Municipal League resolution. Centerton has an annual budget of about $600,000 for streets, he said.

Edwards said he'd welcome the additional revenue that would net about $117,000 a year, but he would be willing to consider something less.

"The big ones -- Rogers, Bentonville and Siloam Springs -- they get 90 per- cent," Edwards said.

"I wouldn't mind seeing more, but I don't know about 100 percent. I'd have to favor an opportunity for us to get more revenue. That would be great. We've got a lot of roads. But the county needs to keep some of it. We've got a lot of roads we sort of share."

Washington County's road tax is 1.1 mills, Haney said. The county could drop the millage and increase the general fund millage, that is now 3.9 mills and could go up to 5 mills, if the proposed change in distribution were approved, Haney said.

That prospect could make Washington County cities consider the change more carefully since they get no revenue from the general fund millage, Haney said.

In Benton County, the general fund millage is 5 mills and the road tax is 1.9 mills. That leaves the county with no room to consider such a change.

"We did that a few years ago," Allen said. "We dropped the road tax and increased the general fund millage."

Eva Madison, Washington County justice of the peace for District 9, said she wasn't aware of the resolution, but she would try to work with mayors to avoid problems.

"That's the conflict of cities versus the county," she said.

"We're all in this together. I think we should try to head it off before then."

Legislators who represent both urban and rural areas have to consider the needs of city and county governments and the services they provide before considering a change, Madison said.

Madison hopes the resolution won't become a priority for the cities, especially since voters approved a statewide sales tax for transportation benefiting both counties and cities.

"I felt like this issue was going to be quiet for the next 10 years because of the sales tax," she said.

"I don't see why we're still trying to get a bigger piece of the pie."

Arkansas code 26-79-104 - Apportionment to municipalities, provides that:

(a) Of the amount collected from the annual three-mill road tax in any county in the state, the county courts shall apportion one half (1/2), except when a greater amount is allowed by law, of the amount collected upon property within the corporate limits of any city or town for use in making and repairing the streets and bridges in the respective cities or towns.

(b) The county collector of any county in the state shall pay into the treasury of the respective cities or towns the amount so apportioned by the county court, which amount shall be expended exclusively by the cities or towns for the purpose of making and repairing the streets and bridges within the corporate limits of the town or city.

(c) This section shall not repeal, alter, change, or affect any special act passed under which any city or town is receiving any greater or lesser amount than the three-mill county road tax.

Source: Arkansas Code

General News on 10/22/2014