BENTON — Benton Mayor David Mattingly said he has found a way to cut taxes paid by city residents, but before taking the proposal to the Benton City Council, he is waiting for a ruling from Arkansas Attorney General Dustin McDaniel to see if the idea is allowed by state tax laws.
Several weeks ago, Mattingly said he wanted to step down the millage rate for personal property taxes over the next three years, finally eliminating most of the taxes on cars, boats and other personal property, but not including real property such as homes, buildings and land.
However, soon after the announcement, Jim Crawford, Saline County assessor, notified the mayor that the proposal might violate state statutes on how tax rates are applied in Arkansas.
Crawford said he is concerned because state law ACA Sec. 26-26-405 declares that if a city levies a tax on personal property, it has to be the same tax rate as the one for real property.
“As unfathomable as it may seem, it might be that cutting taxes are against state law,” Mattingly told the Tri-Lakes Edition in an interview Sept. 11. “The city attorney, Brent Houston, has written to the attorney general for a ruling on the law. State Rep. Kim Hammer, R-Benton, has also written asking that if the law does prevent the tax cut, can it be addressed legislatively?”
The appeal to McDaniel is based on a section of the Arkansas Constitution that reads “No municipal corporation shall … levy any tax on real or personal property to a greater extent in one year, than five mills on the dollar of the assessed value of the same.”
Houston’s letter contends that the use of the word “or” in the section of the constitution “allows [the city] a levy on either personal property or real property or both,” and would make it possible for each kind of tax to have a different rate.
Mattingly said he proposed the tax cut because two new sales taxes passed last year. One was to provide more money for public safety in the city, and one was for “quality of life issues,” such as the proposed Riverside Park Complex, for which construction is set to start next spring.
“Someone spending about $10,000 was asked to spend about $100 more with these taxes,” Mattingly said. “I just want to try and give that $100 back over a few years with reduced taxes and other city expenses.”
The personal property taxes are now 4.5 mills, with 0.4 mills going to the firefighters’ pension and relief fund. The remaining 4.1 mills are for the general fund.
“Actuary people tell us it will take 20 or more years to make the fund solvent, which is a no-no for an unfunded liability,” Mattingly said. “I proposed moving 0.2 mill from the 4.1, reducing it to 3.9 and bringing the level of funding for the pensions to 0.6 mills. By infusing the cash, it brings the payoff back to 12 years, and it is more sustainable.”
At the same time, the mayor wants to reduce the general-fund tax rate to 3.0, taking the total tax burden to 3.6 mills.
Under the proposal, the general-fund millage would drop to 1.5 mills the following year and would then be eliminated the year after that, while the 0.6 would remain in place to fund the pensions.
Mattingly said the city could sustain the tax cuts because of increased tax revenues from the Benton Event Center, retail development and the proposed new park.
“The event center has had more than 56,000 visitors since last October and is booked for every weekend through June 2015,” he said. “Those visitors spend money in Benton. That money translates to more successful businesses and more tax revenue for the city. The new park will bring in revenue both directly and indirectly when completed. And before that, the new Kroger Marketplace Mall north of Alcoa Road will provide more than $1 million in revenues to the city when the mall is built out.”
In addition, he said, the new fire station planned for construction near the Kroger complex, along with new firefighting equipment that has been purchased, will improve the city’s fire-safety ratings, which will, in turn, reduce insurance rates on homes and businesses in Benton.
“All this is predicated on Benton’s financial status remaining strong,” Mattingly said. “I can’t predict what could come up a year from now, but I asked for help, and now I want to return
the favor. The plan will do that.”
As of Thursday, there was no word from the attorney general’s office on the matter.
Staff writer Wayne Bryan can be reached at (501) 244-4460 or at wbryan@arkansasonline.com.