BENTONVILLE -- Benton County officials have been told a possible option to pay for a new courts building isn't allowed by Arkansas law.
The Quorum Court's Finance Committee is looking at possible funding methods for a new building. An estimated cost is in the range of $24 million.
Courts building
A study on a new Benton Count courts building identified locations in downtown Bentonville and on county property on Southwest 14th Street adjacent to the Benton County Jail. The county’s Public Safety Committee has endorsed keeping the courts downtown. The preliminary plan for a downtown complex calls for a four-story building on Second Street with space for five courtrooms and related offices and shell space for two future courtrooms. The plan would use the historic county courthouse and the courts annex building.
Source: Staff report
Justices of the peace heard a presentation from Bob Wright, with Crews & Associates, on possible funding methods during a Finance Committee discussion May 7. Wright told the committee the county's revenue from courts costs and fines is probably insufficient for a project of that size, particularly since the revenue already is included in the county's existing budget. A property tax increase or a sales tax increase are more adequate sources of revenue, but both will require voter approval, Wright said.
Kurt Moore, justice of the peace for District 13, raised the prospect of changing the county's existing 1 percent sales tax so a portion of that revenue could be diverted to pay for a new courts building. The county currently receives about 20 percent of the revenue from the tax, budgeted at $7.3 million in 2014 and 2015. The remainder is distributed among the cities according to their share of the overall county population.
In Wright's briefing, he provided justices of the peace with a breakdown of revenue from sales tax increase ranging from a 1/8 percent tax increase that would raise about $4.4 million a year, to a 3/4 percent tax increase that would raise about $26.5 million a year.
Moore asked for information on changing the county's existing tax, so voters could dedicate a portion of an existing tax rather than being asked to approve a new tax.
"The cities are the main users of the courts system," Moore said. "That way everybody would be paying for the new courts facility according to their share of the population."
The question was put to Jill Drewyor, an attorney with the Mitchell-Williams law firm, which has experience in municipal financing.
Drewyor said Thursday that Arkansas law allows the county to alter the use of its portion of the tax, but not to change the distribution of the tax revenue, even with voter approval. Drewyor said The Legislature approved Act 1160 of 2005 "to make clear that a re-designation of use by election cannot limit the way the municipalities use their shares."
Since Benton County's original ordinance didn't specify any use for the funds, Drewyor said, they are to be divided among the county and cities on a per capita basis.
"That's too bad," Moore said Friday. "It seemed like a good idea."
The county has to be careful when considering any tax increase and to make certain voters are aware of the need for the courts building and the cost, Moore said. He said he still favors a sales tax increase over a property tax because it is a quicker way of paying for the project.
"I still think a sales tax is probably the best way, speaking for myself," he said. "The other JPs may have other opinions. To me, a sales tax pays off in the shortest time, and you pay the least amount of interest."
Moore would favor a sales tax increase large enough to pay for the project in a single year, if possible.
"If we could have a sales tax of 1 percent or 7/8 percent, whatever would generate the necessary funds in one year, I think we might persuade the voters to support that," he said. "We would need to be certain we don't collect too much from the tax because you get into a complicated process on how you handle the excess revenue. I think we need to be close and if there's any shortfall the county can kick in the rest."
Moore thinks having the tax limited to a single year could be an important selling point for the county with voters.
"People aren't going to differentiate between a 1.8 cent tax, a quarter-cent tax or a half-cent tax," he said. "But the longer it stays on the books the more likely they are to say 'You're going to get used to having it and will want to keep it for something else.' "
Tom Allen, justice of the peace for District 4 and chairman of the county's Finance Committee, said he also had been interested in the possibility of re-dedicating the existing tax, but the county still has other options.
"It appears that way is closed," Allen said. "I don't like tax increases and I don't like recommending tax increases. But we've got to get it fixed up. We will certainly bring this up and talk about it at our next meeting. It narrows down our options. We need to figure out something pretty quickly. We have to put the location question to bed first and then decide how to pay for it."
NW News on 05/24/2015