CAVE SPRINGS -- The results of an Arkansas State Police investigation of a suspicious millage resolution casts doubt on Cave Springs' authority to receive property-tax revenue this year.
Benton County Prosecuting Attorney Nathan Smith said he couldn't comment.
"State police today delivered their complete investigation file. I plan on releasing my findings in the near future, which will make public the contents of the investigation and any conclusion I reach," Smith said Friday.
Mayor Travis Lee said he had no part in altering the resolution.
"Somebody has turned in a fraudulent resolution to the county," Lee said. "Whoever sent this resolution in showed that we confirmed it in 2016, but we didn't."
The discrepancy was discovered by a state auditor, Lee said. Arkansas Legislative Audit in Little Rock has been working on a routine audit on the city for the years 2015 and 2016.
Alderman Mary Ann Winters said the City Council never passed a millage resolution for the 2017 budget year.
"I brought it up in October at a council meeting and said it was about time to do the millage rate, and the mayor said he didn't have any information on it," she said.
Don Zimmerman, director of the Arkansas Municipal League, said that each year cities are required to notify their county of the amount of millage to be levied for the city. A city council must adopt the millage rate through a resolution.
Zimmerman said the failure to levy the millage by the required date would result in a millage of zero the next year.
"They would wind up with no property tax [revenue] if they did not do it correctly," he said.
The city would possibly have to refund collected millage money, R. Justin Eichmann, the Cave Springs attorney, said.
"I don't know if that will be the case, [but] this is serious. This could be a very significant loss of revenue for the city, and if that happens, we're going to have to figure out how to account for that," he said.
Benton County Treasurer Deanna Ratcliffe said Cave Springs received $373,413 in property tax revenue in 2016 and collected $14,971 in 2017 through March.
Tax revenue goes toward the general fund and roads in Cave Springs, according to information provided by Ratcliffe.
Lee said he didn't know a 2017 millage rate for his city had to be submitted to the county until he received an email from Benton County Clerk Tena O'Brien. City Recorder-Treasurer Kimberly Hutcheson also received an email from O'Brien, Lee said.
State law allows cities to collect up to 5 mills in property tax each year, Eichmann said.
"Obviously there's a big issue out there about whether [Cave Springs] took action to certify those mills," Eichmann said.
O'Brien said that every year she notifies Benton County mayors of the millage levy their respective city councils are required to pass for the coming year. The resolutions are due before the Quorum Court meeting held in November. The Quorum Court is required to levy the millage rates for the county at that meeting unless an extension is granted, she said.
resolution emailed
O'Brien sent Lee a letter dated Sept. 15 asking for a certified copy of the city's 2017 millage rate as passed by the City Council, according to a copy of the letter Eichmann provided in response to a Freedom of Information request.
"I need this certificate by Oct. 21, 2016, in order to prepare the Quorum Court ordinance to be enacted in November, as required by law," O'Brien stated in the letter.
O'Brien said she emailed a reminder to Lee on Oct. 20 asking if his city had adopted the 2017 millage levy.
"He had been out of the country at the time I asked for it to be submitted. His response was he would get that to me as soon as possible," O'Brien said.
Lee responded Oct. 25, she said.
"Tena sorry for late reply. I was in Haiti all last week. I had quite a few emails when I got back. I will get this to you thanks!" Lee wrote in the email exchange.
O'Brien said she received an email with the resolution attached from Nicole Ferguson, the mayor's assistant at the time, on Oct. 28. O'Brien said she then requested a certified copy of the resolution.
Lee messaged Hutcheson on Oct. 31, saying, "Kim will you send a certified copy to Tena O'Brien? Thanks," the email messages show.
O'Brien said that on Nov. 2, someone faxed her the resolution from the earlier email.
Lindsey Bailey, general legal counsel with the Association of Arkansas Counties, said Arkansas Code doesn't address whether a faxed resolution can be accepted in place of a certified copy, but previous attorney general opinions give county clerks leeway in how to accept such resolutions.
Eichmann provided a copy of the millage resolution for 2017 faxed to O'Brien. The bottom of the resolution states "PASSED and APPROVED this 12 day of October, 2015."
The resolution is similar to the one submitted in 2015 for 2016, O'Brien said.
"Everything is exactly the same, except for the resolution number from the one that I received [from Cave Springs] in 2015," O'Brien said.
The resolution O'Brien received from Cave Springs in 2015 had the resolution number 2015-17 at the top of the resolution.
"The resolution I received on Nov. 2, 2016, is resolution number 2015-19, but everything else, the body of it, is the exact same," she said.
Lee said someone wrote over the seven in 17, changing it to a nine.
"It looks like it's a mistake, but it's obviously not because they changed the resolution number," Lee said.
A Section on 05/09/2017