Nevada County Picayune and Gurdon Times Newspaper Archive

County Sues Arkadelphia

A lawsuit has been filed which could have devastating effects on Arkadelphia and Clark County.

Clark County is suing the City of Arkadelphia because the city wants to keep money from a one-cent sales tax.

County attorney Henry Morgan filed the suit Tuesday, Feb. 24, naming the City of Arkadelphia, City Manager Jim McAlister, City Treasurer Brad Robertson, and the board of directors, Larry Cain, Dick Rudolph, Austin Wingfield, Ann Sanders, Patsy Harris, Mike Kolb and Gwen Fullen as defendants.

The county is seeking a declaratory and temporary and permanent injunctive relief to keep the city from keeping any of the tax monies.

The tax was passed in a special election Aug. 9, 1988, by a margin of 1,677-854. The tax, according to the suit, was to be used for enumerated county purposes. Since the tax was enacted and has been collected, the city has turned over the monies collected to the county.

The Arkansas Department of Finance Authority (DFA) collects the tax money, disbursing it back to the county through the incorporated cities based on population. Arkadelphia receives 47 percent of this money, but must, by law, return all of it to the county. Gurdon receives 11 percent under the tax and also gives it back to the county.

In this manner, the money goes through each incorporated city in Clark County.

However, on Feb. 18, 1998, Arkansas Attorney General Winston Bryant issued an opinion stating the method used in Clark County was the proper way of making sure the tax monies was funneled to county so the funds could be used for the purpose the voters approved.

In addition, on Feb. 19, the Arkadelphia City Council voted to begin holding a portion of this sales tax out and not sending it to the county.

Under the claims of the suit, should Arkadelphia do this, the action will constitute an illegal exaction as defined under Article 16, Section 9 of the Arkansas State Constitution.

Such action could also lead to a class action suit by the people of Clark County, seeking a repeal of the tax in question. And, the suit states, by subjecting the county and other governmental agencies to a class action suit irreparable harm could come to Arkadelphia and the county.

According to the ballot, 47 percent of the money from the sales tax had to be deposited into the County General Fund. It was to be used for salary increases for county employees, personnel and maintenance for the county jail, maintenance and insurance for the courthouse and other county buildings, and the Clark County, Gurdon and Amity ambulance services.

Of the money collected, 47 percent was to be deposited into the county road and bridge fund to be used as appropriated for roads and bridges by the quorum court.

The sanitation fund was slated to receive 5 percent of the sales tax for the operation of the sanitation department, while the remaining 1 percent was to be distributed equally among the county's rural fire departments.

Clark County Judge Grady Runyan said the county's attorney informed the quorum court it would be illegal to allow Arkadelphia to have any portion of the tax.

"The people would have been fooled into voting for something they didn't vote for," he said. "The ballot was for a county tax, not a city tax."

Should Arkadelphia withhold the money it receives through the tax, Runyan said, the county would soon go bankrupt.

He further stated Arkadelphia sought and received a one-cent sales tax and is using it. The county has not asked for any of this money, Runyan said.

The population of Arkadelphia and the remainder of the county is almost exact. Slightly more people live within the city limits of Arkadelphia than in the rest of the county, though.

"It's strange," Runyan said. "When we asked for a penny (sales tax) we did it county wide and now they (Arkadelphia) decide they want part of ours."

Taxpayers, he said, would sue should the city be allowed to keep any of the tax monies.

According to Runyan, the county would lose two deputies, one person from each county office and five from the road department if Arkadelphia was allowed to keep the money.

Additionally, he said, repair on the county roads would dwindle to nearly nothing and all grants in aid would be eliminated.

This suit, he said, will hurt the Clark County Industrial Council, the main source of bringing industry to Clark County, because industry will not look favorably on locating in a county such as this.

The tax generates more than $1.8 million annually. Approximately $500,000 passes through Arkadelphia, while $190,000 goes through Gurdon. All of this money is returned to the county at this time.

Morgan said the legislature passed laws enabling counties to pass a one-cent sales tax to generate revenue. The DFA, he said, is responsible for returning it to the people, and does so by sending the funds to the incorporated cities in proportion to their population.

The tax was passed for a specific purpose, he said, and cannot be used in any other way. Otherwise, it would violate the state's constitution.

Any diversion of the money from the tax would be illegal, Morgan said, and a violation of Arkansas' Constitution.

Arkadelphia has been paying the tax back to the city for 10 years, he pointed out, without question.

An Attorney General opinion, sought by Dub Arnold, stated the tax money must go to the county.

Morgan said an intergovernmental meeting was held before Arkadelphia's City Board of Directors passed the ordinance. At the meeting all parties involved discussed the problem and voiced their complaints.

Because of the March 1, 1997, tornadoes, the city claims to be in dire financial straits.

The city, Morgan said, helped the county get its tax passed and now thinks it's time for the county to help the city by returning part of the money collected from the tax. The city, he said, wants the court to pass the monies back to the city.

When Arkadelphia passed the ordinance, Morgan went to the quorum court telling the justices of the peace what problems could and most likely would arise if the situation went unopposed.

He suggested the county file suit first to prevent the city from keeping any money and to defend the taxpayers.

"If Arkadelphia kept the full check," he said, "within two months

all of the county's emergency funds would be used up. The county would have to lay people off and cut services. Roads would go into disrepair quickly and it would hurt industrial recruitment.

An injunctive hearing has been set for Friday, March 13, to hear the matter.

Gurdon Mayor Rick Smith said the City of Gurdon will wait and see what happens.

Until the case is settled, Gurdon will continue sending the money to the county. However, should Arkadelphia win