As we went to press last week, Attorney General Mike Beebe dropped a bomb of an official opinion.
He said that the 25-mill minimum school operating millage required by the Arkansas Constitution was, by statutory definition, a state tax. It cannot be used to capture money for a Tax Increment Finance (TIF) district.
Since the school tax is the biggest single source of property tax and since most school districts don’t assess much more than the minimum operating millage, this ruling was bad news for developers and many city officials.
Jonesboro, Rogers, Little Rock, North Little Rock, Fayetteville and Bentonville, to name a few, have been busily creating TIF districts. The cities and the developers hope to capture the growing property tax revenue in TIF districts for related infrastructure. The Beebe opinion puts on hold, maybe kills, most of those districts.
TIF opponents should not rest. Developer Bruce Burrow of Jonesboro is but one politically connected player who is looking for ways around the Beebe opinion. (Burrow’s project, about $9 million in drainage work to help a new mall, is underway and he must pay for it if TIF financing falls through.) The Arkansas Municipal League – which snuck the TIF scheme through the legislature – is also scheming.
This time, at least, the school lobby will be on guard. At a minimum, they won’t stand by while poor parts of the state give up state money to replace local school taxes taken for TIFs. This is a direct state subsidy of private development in the state’s richest cities and it’s wrong.
TIFs have had mixed success nationwide. They produce more in states with very high property taxes (not Arkansas). They’ve worked best as a tool for helping blighted areas, not Arkansas’s reverse Robin Hood approach. They tend to work best on a project-specific basis, as opposed to encompassing vast acreage.
If the legislature must act, it might consider preserving TIFs for places with declining property values. It might also consider pledging local sales taxes, rather than property taxes, to support redevelopment bonds. This could produce more money in some cases. It would also test the sincerity of cities that claim the net benefit of a TIF justifies the public investment, no matter who makes it, state or local government.
There’s still chance of a legal test. Beebe’s opinion is only advisory. We’d guess TIF supporters are searching for a friendly venue.
Meanwhile, TIFs have NOT been outlawed, just made less productive. In Little Rock, while 25 mills worth of tax would be off-limits, there’s still a total of 32 mills – 9 from the school district, the rest from the city, county, Children’s Hospital and police and fire pension funds — to apply to increased property values in a city TIF district. Build a $20 million shopping center and that, roughly would produce enough in new taxes from the 32 mills to support maybe $1.5 million worth of bonds for infrastructure improvements. Not a huge sum, but a meaningful subsidy.
Remember, too, that cities can use property and sales taxes and improvement districts to raise money. These should be the first options, not stealing kids’ lunch money. If there truly is a need for redevelopment districts, too, the law should favor the needy, not the rich. Also, the districts should be financed by the people who stand to enjoy the most benefits, not faraway state taxpayers praying for a little trickle-down.
The House completed action today on Sen. Trent Garner's SB 522, intended to discourage "mass picketing," a piece of legislation similar to many being passed by Republicans lawmakers nationwide to tamp down political demonstrations. The vote was 58-22.
I don't know what if anything might arise or be planned in the future relative to Gov. Asa Hutchinson's order to end Medicaid reimbursement for medical services (not abortion) provided by Planned Parenthood in Arkansas.
Mean spirit, hypocrisy and misinformation abound among the rump minority threatening to wreck state government rather than allow passage of the state Medicaid appropriation if it continues to include the Obamacare-funded expansion of health insurance coverage for working poor.
Circuit Judge Wendell Griffen ruled today that he had no choice based on a past Arkansas Supreme Court decision but to dismiss a lawsuit by Death Row inmates seeking to challenge the constitutionality of the state's lethal injection process.But the judge did so unhappily with sharp criticism of the Arkansas Supreme Court for failing to address critical points raised in the lawsuit.
Congratulations are in order for Governor Hutchinson. He decided this year to devote the weight of his office to end the state's embarrassing dual holiday for slavery defender Robert E. Lee and civil rights hero Martin Luther King Jr.
An article in Sunday's Arkansas Democrat-Gazette reminded me of John Belushi in "Animal House" exhorting frat brothers to rally against a dean's effort to put them out of business. "Was it over when the Germans bombed Pearl Harbor?"
The Arkansas Supreme Court last week delivered a blow to civil rights in Arkansas. It was another results-oriented decision that gives a clue to how far the justices likely will go to appease the legislature.