The Arkansas Supreme Court today overturned Pulaski County's hurried-up collection of a new property tax on Little Rock residents for the Central Arkansas Library System. The ruling was unanimous. A circuit court had upheld the plan.
A lawsuit argued that the tax -- a half-mill for maintenance and one mill for debt approved in a December 2007 special election -- couldn't be included on 2007 tax bills. The ruling doesn't overturn the tax itself . A lower court will consider the remedy.
CORRECTION: I wrote originally that a refund wouldn't harm the library because the increase was held in escrow. That's incorrect. The bond portion of the tax increase, about $2.8 million, was in escrow. Loss of that money will add to the repayment period of the bonds but have no immediate financial impact. But the operational millage collected improperly, about $1.4 million, will have to be repaid in some fashion. Plaintiffs have suggested a tax credit, but a circuit judge will decide.
The library has about $1.2 million is in reserves. Library Director Bobby Roberts said about a third to a half of any refund will come from those reserves. But Roberts said the rest will have to come from the $15 million annual operating budget. Percentagewise, that's a big cut, perhaps 5 percent. "It will be a tough year in 2010," he said.
Book purchases likely would have to be cut and personnel expenses also will have to be trimmed. Roberts said he'd put his suggestions out to the public and see if other ideas emerged. The library board will discuss it Jan. 28. Some pay has already been frozen and some positions will be frozen and left unfilled, he said. The good news is that the cuts will be necessary only to make good on one year of repayments and the increased millage will continue to produce additional revenue..
Said Roberts: "It's a slip, not a fall. We have resources to get through it. We just have to make some tough decisions." He added jokingly, "Keep checking out books because we need the fine money."
The 2007 tax rate was levied in November, before the special election. County Judge Buddy Villines ordered the rate changed in early 2008 to reflect the election results. The Supreme Court said that change had to be authorized by a vote of the Quorum Court. Lawyers at the time thought an order of the judge was sufficient. The blow here is that the court seems to have said that the problem was a procedural failing, not the mere fact that the rate was increased after the annual levy of property taxes in November.