Nevada County Picayune and Gurdon Times Newspaper Archive

Education And More Hurt If Property Tax Axed

Arkansas voters will have the opportunity to decide the fate of the state's property tax.

A referendum to eliminate the property tax has garnered enough signatures to be placed on the ballot for the November General Election.

According to the ballot title, the measure will abolish the ad valorem state property tax, while authorizing the increase of sales and use tax. However, it also requires voter approval of new taxes and tax rates along with periodic approval from voters for certain local sales, use and occupational taxes.

Under the issue, once the property tax has been abolished, those owing back taxes cannot be charged, fined or otherwise penalized for not paying what had been determined to be their fair share.

All officials and people with jobs related to the assessment and collection of taxes will be terminated. This will result in the loss of hundreds of jobs across the state.

In addition, this measure would give the Arkansas General Assembly the authority to levy a + cent sales and use tax dedicated to counties and municipalities distributed on the basis of population.

Half of these funds would be dedicated to roads and bridges, with the rest being used in any other lawful manner.

And, the legislature could also levy another sales and use tax of up to 7/8 percent, with this money to be used for primary and secondary education.

Also under the measure, every two years the voting public would have to decide the fate of many taxes, including excise taxes and fuel taxes, sales and use taxes and taxes upon lawful trades, useful occupations and learned professions collected on or after Jan. 1, 2001. One of the few exceptions is a countywide sales tax of + percent, which would be in addition to the state sales tax of + percent as authorized by the issue.

Another exception to the rule would be taxes dedicated to paying off legally occurred debts prior to Jan. 1, 1999.

This measure was put forth by a Forth Smith attorney, Oscar Stilley. There, he operates a one-man law office and maintains his own web page.

Stilley, according to an article in the Aug. 16, Arkansas Democrat-Gazette, has a history of raising "dubious and futile constitutional" arguments.

He also has a history of losing many cases, including others on property taxes.

Stilley contends the state wants more money for government, but prefers getting it through trickery instead of just asking the people in a direct manner.

He drew up what will be proposed Amendment 4 on the ballot, getting friends and supporters to collect signatures to get it on the ballot. Most of the names came from three conservative counties in Northwest Arkansas Sebastian, Washington and Benton, where the economic growth rate has led to a marked increase in property taxes.

However, his proposal could have a devastating impact on Arkansas's present and future.

Should the measure pass, school districts across the state stand to lose a total of $445.5 million per year. The overall loss from property taxes would be $745.3 million, while there would be a gain of $299.8 million from the sales tax. This still results in a net loss for schools.

County libraries would also feel the brunt of the blow from taxes. Many such facilities are subsidized from city and county millage. The estimated loss to libraries would be $27,792,855 annually. Such a loss would force most of the state's county libraries to close.

Area representatives and school superintendents oppose proposed Amendment 4.

State Rep. Percy Malone said the bottom line is people need to pay attention to this issue. While it sounds appealing, it will be costly to the state.

The measure, should it pass, he said, could put a lot of rural school districts out of business.

By taking away local taxes, he continued, it would give the state the power to decide education for almost all students in Arkansas, basically creating state schools by taking away local control.

School bond funding, Malone said, would be in jeopardy as most bond companies would be hesitant to purchase bonds knowing taxes would be voted on every two years.

While many feel they are paying more taxes than they need, he said, this goes to the heart of something close to everyone the education of our children. "It would devastate schools. This is where much of this money has been going."

State Sen. Mike Ross is also against the issue. "I know people are tired of paying taxes and their first inclination is this is a way to lower their taxes. But this isn't the way to do it," he said.

Ross said this issue has become a bipartisan one, bringing Democrats and Republicans together in their opposition of it.

While it eliminates the property tax, he said, it gives the legislature the power to impose two others. The problem, however, is the two taxes combined won't make up for the loss of revenue from the elimination of property taxes.

Ross recalled the situation in Arkansas when the Medicaid program was going broke. At the time, the people implemented a two-cent sales tax on soft drinks to keep the program afloat.

Later, this tax was challenged, but the people voted to retain the tax so the program would survive.

Ross said if the state suffered another problem like the Medicaid crisis it would take two years before a tax-based remedy could be considered.

Because of today's medical technology, he said, people are living longer. This means more people are going to nursing homes, and more of these people being on welfare.

If a person retired at age 65 with $250,000 and went into a nursing home the same day, he said, in less than 10 years they would be on welfare.

"The legislature doesn't like to raise taxes," Ross said. "There's a lot of scary things to this (proposed Amendment 4). I have a problem with voters approving all taxes."

Ross said everyone is fed up with taxes, but Arkansas has one of the highest influxes of elderly residents in the nation (second only to Florida). This is primarily because of the state's tax base.

If this issue passed, he said, it would affect bond issues. "You can't get a bond issue without the ability to pay the money back.

"People think Arkansas has plenty of money, but Arkansas is a poor state and there's little fat in its budget." Under the Arkansas Constitution, the state must operate within its annual budget and cannot go in debt.

The budget breaks down with 60 percent of the funds earmarked for education, 20 percent for welfare and 10 percent for the state's prison system. The remaining 10 percent must be used to operate the state with. "There's nowhere to cut," Ross said.

And, should the issue be approved in November, students will suffer the most. Extracurricular activities, such as athletics and band, wil