City officials in Farmington, Prairie Grove and Lincoln are not too happy about a Quorum Court proposal that could potentially take away thousands of dollars from their street departments.
A Washington County justice of the peace proposed earlier this month the county zero out its current 1.1 road millage tax and move that to the county general millage rate, raising it from 3.9 mills to 5 mills, the maximum allowed.
If approved, Farmington could lose an estimated $46,000 for its street department, according to rough estimates from county Treasurer Bobby Hill. Prairie Grove could lose more than $33,000 and Lincoln $11,500. In all, cities in Washington County would lose $2.2 million in revenue. The county Road Department would lose $1.3 million.
During the Washington County Quorum Court's Nov. 17 meeting, Justice of the Peace Rick Cochran, who represents parts of Farmington, Prairie Grove, Fayetteville and rural areas, made a motion to change the millage rates. The motion was tabled until the court's Dec. 15 meeting.
Revenue from the road tax is split between cities and county. All cities, except Fayetteville and Springdale, receive 50 percent. Fayetteville and Springdale each collect 80 percent of proceeds from the road tax.
Each cities' portion of the tax is based on local property tax assessments within the respective city limits. The county receives the other half.
Local officials found out about the proposal from an article in the Northwest Arkansas Democrat-Gazette the next morning.
"It kind of gripes me that these people represent us and they don't contact us," said Larry Oelrich, director of Administrative Services and Public Works for Prairie Grove. "This is a tax that has been in place for 80 years. Thirty thousand dollars a year is a lot to our Street Department."
Oelrich said this is the third or fourth time the Quorum Court has tried to reduce the tax and he has fought it every time.
In an email, Oelrich said the county is seeking to take money allocated to cities and put it in their own treasury.
"The Quorum Court reduced the county millage voluntarily a number of years ago and has had budget constraints ever since, which they now seek to pass on to the cities," Oelrich stated.
Farmington Mayor Ernie Penn said he was shocked to read about the motion in the newspaper.
Penn said Farmington can afford the tax cut but, at the same time, $40,000 is still a fairly large percentage of the Street Department's budget. He said the Quorum Court is discussing a millage rate adjustment when cities are in the midst of approving their 2017 budgets.
"Yes, we can make up the difference," Penn said. "No, I do not think we should have to. I don't think that's fair to our city and other cities."
Last week, Cochran said he hates to be at a crossroads with cities in the county, but believes the Quorum Court needs to consider future needs and revenues. The county's sales tax revenues are based on population and he said those funds are decreasing as cities approve annexations.
Estimates are that the county will take a $1.2 million hit in revenue at the next census, Cochran said. At the same time, the county still has to provide services for all residents in Washington County, Cochran said.
He said he has brought up the idea in the past but no one wants to discuss it. Ideally, Cochran said, the Quorum Court would have a finance committee to discuss such proposals to give the public time to comment. Because the Court does not have a finance committee, proposals have to be brought up during Quorum Court meetings, Cochran said.
By eliminating the road tax and switching that 1.1 mills to the county general millage tax rate, the county would be able to increase its revenue without raising taxes, Cochran said.
"Will it pass? I don't know but it needs to be discussed," he said.
Oelrich, in his email, pointed out that cities contribute to paying for county services because all residents pay the county sales tax when making purchases.
He also said annexations only have a small effect on county sales tax distributions and these are readjusted every 10 years, not often. When a city annexes an area, it assumes all responsibilities for those residents, including roads, police and fire service, he added.
The reason the county is losing sales tax revenues is not because of annexations but because the population of cities is growing much faster than the population in unincorporated areas, Oelrich said.
After talking to Cochran about his proposal, Lincoln Mayor Rob Hulse said he understands budget constraints but, at the same time, he said he hopes the county can find a solution other than potentially reducing the revenue streams of small towns.
"Small towns are being penalized that have not been active in annexations," Hulse said.
As far as Lincoln is concerned, Hulse said, the city could be affected by Quorum Court action in two different situations -- losing revenue from the road tax and possibly losing service from Ozark Regional Transit. The Quorum Court has indicated it will reduce its funding to ORT by $100,000, which most likely means the fixed route 620, which runs from Lincoln to West Fork, will be eliminated.
"We may have our funding taken away and a service taken away," Hulse said.
Last week, Hill said he projects the county will have a $23 million carryover going into 2017. This figure is based on unappropriated reserves, hold-back money, any unspent money in budgets and any additional revenues. The county projects to take in $61 million in revenue. Budget requests total $65.1 million. The Quorum Court has not approved the 2017 budget.
General News on 11/30/2016