A mix-up concerning land annexed into North Little Rock has resulted in at least $1.5 million in property taxes being given to the wrong school district and about $145,000 being overcollected from residents since 2009.
About 400 homes and businesses in unincorporated Pulaski County that were annexed into North Little Rock’s boundaries should have remained in the Pulaski County Special School District tax zone when the property-tax information on the land was updated in the Pulaski County assessor’s office to reflect other city taxes.
However, those homes and businesses were incorrectly changed to reflect inclusion in the North Little Rock School District. The school district boundaries do not line up with the city’s boundaries.
The properties are largely in western North Little Rock and off Crystal Hill Road and Maumelle Boulevard, although some are west of JFK Boulevard closer to Sherwood.
Pulaski County assessor’s office officials said they didn’t notice the error until two weeks ago, when someone called and asked about a tax bill.
Now that the assessor’s office is correcting the mistake, North Little Rock district officials are expecting a revenue shortfall of $450,000 and facing repayment of the funds gotten in error to the Pulaski County Special School District.
“That’s tough to swallow when we’re already in the middle of cutting costs” as desegregation funds are being phased out, Superintendent Kelly Rodgers said.
The school district must eventually come up with millions of dollars in budget cuts to coincide with the future loss of state funding tied to the long-running desegregation case in Pulaski County. But officials said the loss in property-tax revenue will affect the school district immediately.
Its fiscal 2015 budget — which totals close to $100 million and kicks in July 1 — relies on property taxes that have already been paid and are now being adjusted to re- flect the correct millage rate, said Denise Drennan, chief financial officer for the North Little Rock district.
In total, the North Little Rock district received more than $3 million it shouldn’t have over the past five years, and the Pulaski County Special district missed out on nearly $3 million it should have received. The difference between the figures is made up by about $145,000 that taxpayers overpaid because of the North Little Rock School District’s higher millage rate.
A mill is one-tenth of 1 cent. Millage rates vary depending on the area of each county. To determine how much is collected in tax dollars, 20 percent of a property’s assessed value is multiplied by that area’s millage rate. The North Little Rock School District millage is now 48.3, and the Pulaski County Special district’s is 40.7.
State and school district officials believe that the total amount the Pulaski County Special district is actually owed is less than half of what was taxed into the wrong school district, however, because the first 25 mills collected in every school district is state-mandated for “foundation funding.”
Mike Hernandez, the Arkansas Department of Education’s assistant commissioner for fiscal and administrative services, said the state pays a school district for however much it needs after 25 mills are collected to reach the “foundation” amount per student. This year, that amount is $6,393 per student. Because the districts involved each got what they needed to reach that amount, the first 25 mills won’t factor into the reimbursement.
What the reimbursement process between the school districts will look like is still unknown, officials said.
“We’re in the very early stages of talking about this issue,” said Bill Goff, chief financial officer at Pulaski County Special schools.
Goff said Tuesday that he believed the amount the school district is owed is about $1.5 million but that he wasn’t sure because an illness had kept him out of the office for the day. North Little Rock officials said they believe the number is closer to $2 million.
“It was not something that tremendously impacted the way we did business during that time,” Goff said. The Pulaski County Special School District budget has been about $170 million for the past few years.
“We’re at least a month or two away from having that final resolution in place,” Goff said.
In addition to figuring out how North Little Rock schools will pay back the Pulaski County Special district, officials will also have to settle on the amount that taxpayers overpaid.
Joe Thompson, the Pulaski County assessor’s office’s chief administrator, said property owners would be reimbursed only for what they overpaid for the past three years.
Arkansas Code Annotated 26-35-901 (a) (2) bars reimbursements dating back more than three years, meaning taxpayers will be reimbursed for overpayments made in 2011, 2012 and 2013. But taxpayers won’t be paid back for what they were overcharged in 2009 and 2010.
The amount overpaid in those years was about $3,500 total for the 400 properties affected, he said.
“Fortunately, they are very small [amounts],” Thompson said.
The overcollections started in 2009, when taxes were collected for 2008.
From 2008 to 2011, the North Little Rock School District millage rate was 40.9, and the Pulaski County Special School District millage rate was 40.7. But in 2012, North Little Rock School District voters raised millage rates to 48.3, making 2013 the year in which the vast majority of overcollections occurred — about $135,000.
One resident who was affected, Beverly Moguin, has lived at her home since 1989. She said she was unaware that she had been overcharged, although she remembers receiving a letter telling her the millage rate had gone up.
“I guess if they take care of it, everything will be fine with me,” she said.
“I don’t mind paying for education,” she added.
The North Little Rock School District will have a regularly scheduled meeting Thursday evening, in which Pulaski County assessor officials will be present to explain the matter to board members and answer any questions.
A section on 05/14/2014