A century-old law that regulates the way sales-tax revenue is disbursed in counties with dual seats has officials in seven Arkansas counties concerned about how hospitals, roads, industrial recruitment and other expenses will be funded.
Arkansas Act 81 of 1901 established dual county seats in 10 Arkansas counties, creating separate judicial districts and providing access to a courthouse within a day's travel for anyone in the county.
Under the act, in counties with two seats, districts are only allowed to use sales tax revenue collected in the district. Districts are not allowed to share sales tax revenue with the other district.
State legislators are addressing the act, hoping to amend it during the General Assembly. The House of Representatives passed House Bill 1743 on Monday, which would amend Act 81 of 1901, along with sections of other acts dating to 1881 that deal with county revenue. The bill now goes to the Senate.
Act 81 was mostly forgotten, officials said, until Mississippi County justices of the peace tried to call for a special countywide sales tax election to fund construction of a new courthouse in the Chickasawba District, which includes Blytheville.
Residents of the Osceola District objected, saying their tax revenue would go to the other district. The state Supreme Court upheld a circuit court's injunction of the election, ruling that use in the Chickasawba District of the countywide sales tax collected in the Osceola District would be illegal.
"This act has been missed for several years," said Chris Villines, executive director of the Association of Arkansas Counties. "Counties didn't even know about it. The Department of Finance and Administration didn't realize it existed."
The 10 counties in the state with dual seats are Arkansas, Carroll, Clay, Craighead, Franklin, Logan, Mississippi, Prairie, Sebastian and Yell, but only seven of those are mandated to keep tax revenue in the district where it is collected.
Arkansas, Carroll and Sebastian counties are allowed to disburse tax revenue regardless of where it is collected based on the discretion of their quorum courts. Villines said Act 81 allows counties with codified language in their charters to specify where revenue can be spent.
"This is an equity bill," Villines said of HB1743. "The crux of it is that you can't take away revenues and maintain a split."
Villines said if the act was upheld, motorists could drive on a two-lane, paved county road in one district of the county and then, when crossing the district line, immediately be on a gravel road.
"The amount of money given is going to have a devastating effect on some," he said.
Craighead County Judge Ed Hill said the act would be detrimental to the Eastern District of Craighead County.
The county has seats in Jonesboro and Lake City. Because of its population, Jonesboro collects nearly 80 percent of the county's sales tax.
"We'd have to keep separate budgets," Hill said. "It would be pretty confusing to do.
"We want to take it out of one pot."
Yell County Judge Mark Thone said his jail would have to close if Act 81 were enforced.
Yell County has seats in Dardanelle and Danville. The Northern District of the county collects at least 60 percent of its county sales tax, if not more, Thone said. The jail is in the Southern District.
"If the money collected in the north wasn't supposed to be spent in the south, you couldn't make the jail payments," Thone said. "Good grief, can you imagine keeping up with it all? It would be a financial hardship for everyone.
"Anybody can realize this is ridiculous."
Mississippi County appropriates a sales tax for its county hospitals in Blytheville and Osceola, raising about $3 million a year for the facilities. Because the Blytheville district contains about two-thirds of the county's population, the South Mississippi County Regional Medical Center could receive only $1 million of tax revenue, regardless of need, said Mississippi County Judge Randy Carney.
"It would hurt Osceola," Carney said. "They wanted to stop the election for the new courthouse in Blytheville, but it would hurt them in the long run.
"It would be a horrible miscarriage of justice. We'd need two sets of books for each of the eight county offices."
Villines said a Senate committee should discuss the act Thursday and legislators could vote on the bill to amend the act as early as Monday.
"If this fails, every county with two seats will be paying for it," Carney said.
State Desk on 03/15/2017