BENTONVILLE -- The county judge for Benton County on Monday denied Cave Springs' request to collect nearly $400,000 in property tax revenue.
Barry Moehring said Monday he ruled in favor of the county officials who are withholding the money: Treasurer Deanna Ratcliffe, Collector Gloria Peterson and County Clerk Tena O'Brien.
"They never voted," Moehring said of the Cave Springs City Council's actions regarding the millage.
Cave Springs can appeal Moehring's decision to Benton County Circuit Court. The City Council will meet at 6:30 p.m. today at the American Legion, 168 Glenwood Ave., to consider appealing the decision, Mayor Travis Lee said.
"Surely the council will vote to do an appeal," Lee said. "I can't imagine why they wouldn't."
Council member Larry Fletcher said he was disappointed in the ruling, but added he understands the arguments on both sides.
"We have to reassess our position on whether or not the council wants to appeal that decision," Fletcher said.
The ruling was another setback for the city. Benton County Prosecutor Nathan Smith announced last week he has asked the Arkansas State Police to investigate financial wrongdoing reported in a recent legislative audit of Cave Springs.
O'Brien was contacted in March by someone who claimed Cave Springs had not adopted a millage for 2016, according to filings.
Cities and school districts must approve and then notify the county each year of the property tax millage they intend to levy. All the millages are in an ordinance adopted by the Quorum Court in November.
O'Brien found that the 2016 document provided to her by Cave Springs was a copy of the city's 2015 millage resolution. The only difference between the 2015 resolution and the 2016 resolution submitted by the city was a handwritten resolution number.
The three county officials asked the County Court to decide whether the city properly adopted the millage and the amount, to determine what they should do with revenue already collected and to dismiss them from any liability to the city. Moehring presides over County Court in his role as county judge.
The county sent the city $10,907 in 2016 payments before the discrepancy was found. The county has held tax receipts pending the resolution of the case.
Justin Eichmann, city attorney, said in a hearing in County Court on Friday the millage would bring in an estimated $400,000, which is about one-quarter of the city's budget.
Eichmann argued that minutes of City Council meetings that detailed discussions of a proposal to lower the millage showed that council members intended for the property tax to remain at the 2015 level of 5 mills. He said the city's budget, which shows revenue from the millage at that rate, was another indicator of the City Council's intent.
Eichmann said Friday that state law doesn't require an ordinance or a resolution, only that a city council "make out and certify" the tax levy, and the minutes and budget show the Cave Springs City Council wanted it to remain the same.
"I appreciate the careful consideration that Judge Moehring gave to this issue," Eichmann said. "I disagree with the decision, however, as I believe that the city met the basic requirements of the law."
George Spence, county attorney, argued the City Council had a greater responsibility. Spence said at Friday's hearing that council members had to vote, the vote had to be recorded, and the record had to be submitted to the county in order to meet the requirements of the law.
Moehring said he had asked Spence, as the prevailing attorney, to draft an order that Moehring will review and sign.
Metro on 08/08/2017