FAYETTEVILLE -- Washington County Justice of the Peace Ann Harbison has asked for information on changes to the property tax rates that could boost county revenue while costing cities more than $1 million annually.
The county levies a property tax of 4.4 mills for the general fund and 1.1 mills for the road fund, according to County Treasurer Bobby Hill. Hill said state law allows the Quorum Court to impose a property tax millage of up to 3 mills for the road fund and up to 5 mills for the general fund without voter approval.
The changes in the millage rate discussed by the Quorum Court would have no effect on the taxes paid by property owners. They would change the amount of revenue received by the county and cities, Hill said.
Harbison said she asked Hill to send information about changing millage rates to the court. The justices of the peace are working on the 2021 budget and discussing how to allocate revenue.
"There was some discussion at the last meeting about the 60-40 division of the county sales tax, with the Road Department getting 40%, and some JPs wanted to discuss that 60-40 split," she said. "I said that's an option and there are other options. So I asked Bobby Hill to send out this information."
Raising the property tax millage for the general fund would give the county about $1.7 million more, Hill said. Cutting the millage for the road fund would decrease revenue by the same, but spread the cuts across the county and the cities.
Fayetteville and Springdale receive 80% of the revenue from the county's road millage generated from property inside those cities while the county gets 20%, Hill said. Other cities in the county receive 50% of the revenue from the road millage tax generated from property inside their city and the county receives 50%.
Hill said his rough estimate is cutting the road millage would cut revenue from that tax by about $633,000. Fayetteville would lose about $576,000 and Springdale would lose about $357,000, according to his estimates. Other cities would lose lesser amounts, ranging from a decrease of about $32,000 for Tontitown down to about $551 for Winslow. The total losses would be about $1.7 million.
Wyman Morgan, Springdale's director of finance, said his city would feel the loss, particularly in the wake of its recent annexation of Bethel Heights. Morgan said an assessment of the streets in Bethel Heights is planned, and work likely will be needed to bring them up to the city standards.
West Fork Mayor Heith Caudle said the idea of shifting the millage rates reminds him of the decision to charge cities a daily fee for housing prisoners as a way to offset some of the cost of operating the county jail. The county and the cities eventually agreed on a charge based on each city's population.
Caudle said his city and others depend on revenue from state and county taxes to do street work. His said his 2021 budget calls for about $50,000 in paving work and another $12,500 for work on sidewalks. Losing $5,300 in revenue would hamper the city's plans.
"We've still got some gravel and dirt roads in West Fork we would like to pave," Caudle said. "This would definitely impact our budget."
Patrick Deakins, justice of the peace for District 5, said the idea needs more discussion.
"I want to hear a lot more about it," Deakins said.
Eva Madison, justice of the peace for District 9, said the idea of shifting the millage rates in this fashion has come up before and has never been acted on by the Quorum Court. She opposes the idea.
"We've visited this issue multiple times," Madison said. "This is just robbing the cities of revenue they've had for a long time. It's a way for the county to increase revenue and say we're not raising taxes on anyone. But there would be a tax increase because the cities would have to make up for the revenue they lose."
Madison also said any such proposal from the county should come when all those involved would have time to consider the issue and adjust. The county and most of the cities are working on their 2021 budgets right now, she said.
"This isn't ample notice," she said. "This is crunch time for everybody's budget."
Washington County’s justices of the peace will resume discussion of the 2021 budget when the Quorum Court’s Budget Committee meets at 6 p.m. Tuesday. Justices of the peace and members of the public can attend in person or participate remotely using the Zoom meeting technology.
Source: Washington County