A bill filed Thursday in the Arkansas House of Representatives would require all property taxes collected for schools to be returned to the school district in which they were collected.
House Bill 1435 would amend Arkansas Code Annotated 6-20-2305(a)(4)(B) and (C) to allow school districts to retain property-tax revenue for schools above the state “foundation” funding requirement, which is currently $6,023 per student.
A 25-mill property tax required by the state Constitution generated more than that amount per student in four Arkansas school districts this year. The state Department of Education has asked those districts to remit the additional tax revenue from the 2010-11 school year, a total of about $2.56 million.
The state seeks $1,387,567 from Fountain Lake in Garland County; $824,916 from Eureka Springs in Carroll County; $232,734 from Armorel in Mississippi County; and $112,284 from West Side in Cleburne County.
“These taxpayers were paying taxes to fund their local schools,” said state Rep.Bryan King, R-Green Forest, whose District 91 includes Eureka Springs. “Not only were their tax dollars going to leave the district, but our revenues were going to subsidize other districts.”
King is the lead sponsor of House Bill 1435, which has 12 co-sponsors: eight representatives and four senators.
Attorney General Dustin McDaniel’s office issued an opinion in October saying the tax revenue is state money, citing a school-funding opinion from the state Supreme Court in 2002 and state school-funding laws.
King sent a letter to Mc-Daniel on Thursday requesting another opinion.
King asked the attorney general if Arkansas Code Annotated 26-80-101 conflicts with other state law. A.C.A. 26-80-10 states in section (b)(1)(B), “No portion of the revenues from the uniform rate of tax shall be retained by the state but shall be distributed back to the school district from which the revenues were received or to other school districts.”
Then the law refers to a subsection (c) that states, “For each school year, each county treasurer shall remitthe net revenues from the uniform rate of tax to each local school district from which the revenues were derived.”
The attorney general just looked at one part of Amendment 74 to the Constitution, King said. “When you look at the other language that was enacted after that, it’s clear that the local revenue generated is to be remitted back to that district,” he said.
State Rep. Bruce Westerman, R-Hot Springs, a cosponsor of the bill, said the attorney general’s opinion didn’t mention A.C.A. 26-80-101.
“That’s where we think the discrepancy is,” he said. “They just ignored that section of the law. I’m not a lawyer, but it says all net revenue shall be returned to the district where it’s collected.”
State Education Commissioner Tom Kimbrell said he’ll wait for McDaniel to respond to King’s letter.
“We’re taking our guidance from the attorney general,” Kimbrell said.
The property tax of 25 mills is required in every district by Amendment 74, which was approved by voters in 1996. The amendment says 25 mills is the minimum rate of property tax for maintenance and operation of schools in each district. Each district may have a property tax rate of higher than 25 mills if voters there approve it.
The state provides other public school funding from state sales taxes and income taxes.
According to the funding formula approved by the Legislature in 2004, the state must provide “foundation,” or per-student funding, to each district to pay for an “adequate” education as required by the state Supreme Court.
To reach the foundation funding amount of $6,023, most of the state’s 239 districts get money from the state on top of the money raised from the 25 mills of property tax. But the opposite is true for Fountain Lake, Eureka Springs, Armorel and West Side. Their 25-mill tax raises more money than the foundation amount.
A mill is one-tenth of a cent. Each mill produces $1 of tax for each $1,000 of assessed property value. Property in Arkansas is assessed at 20 percent of its value, and that amount is multiplied by the millage rate to determine tax revenue.
“I think it’s the right thing to do,” Eureka Springs Superintendent Wayne Carr said of House Bill 1435. “We’re also working with some attorneys in Little Rock. They’re looking at the thing, too. We think there may be some conflictsand possibly some errors in the attorney general’s opinion.” Carr said if Eureka Springs School District has to remit about $800,000 this year and the same amount next year to the state, “It pretty much depletes the bank account.” Carr said that could mean people losing their jobs with the school district. The district currently has 120 employees, half of whom are certified teachers. The district has about 660 students.
“Next year, we’re looking at cutting $600,000 or $700,000 out of the budget,” he said. “Most of our budget is spent on salaries and benefits.” Carr said the issue won’t affect plans to begin construction this month on a new $10.7 million high school. It’s being funded primarily through a bond issue.
Darrin Beckwith, superintendent at Fountain Lake, said school officials in other districts think they’ll get more money if the four districts remit the $2.56 million to the state, but all schools in the state are already fully funded for this year based on the perstudent formula.
Northwest Arkansas, Pages 9 on 02/18/2011