Arkansas Lawmakers Study Effects of School Property Tax Ruling

by Andrew DeMillo, The Associated Press  on Friday, Nov. 30, 2012 4:22 pm  

House Republican Leader Bruce Westerman has said he'll oppose any efforts to prevent the districts from keeping the money.

LITTLE ROCK - Arkansas lawmakers said Friday they were unsure what steps they would take next year to address the state Supreme Court's ruling that school districts that collect more in property tax revenues than state-mandated school funding levels can keep the money.

Legislative leaders said they were still studying the impact of the court's Thursday ruling, which Gov. Mike Beebe and other top elected officials said threatened years of reforms aimed at providing an equitable education across the state's school districts. The reforms were the result of a long-running school funding case that ended in 2007.

The high court ruled 4-3 that state education officials cannot withhold excess money from the Eureka Springs and Fountain Lake school districts, where higher property tax collections pushed the districts above total school funding levels set by state law. The court ruled that current law doesn't allow the excess funds from a state-mandated minimum property tax to be redistributed to other school districts by the Arkansas Department of Education.

Though the court said the Legislature could allow the state to redistribute the excess money, even critics of the decision said they weren't in any rush to look at that option.

"I am not sure that a legislative solution is what we ought to be bringing to this issue because as surely as we pass a bill, somebody else can pass another bill. It's hard for me to see how that's going to give any kind of sustainability or certainty to school funding going forward," said Sen. Joyce Elliott, D-Little Rock, who was said she was disappointed with the court's ruling.

The districts sued last year after the Education Department billed Fountain Lake for $1.4 million and Eureka Springs for $825,000, saying they'd received too much money from levying the state-mandated minimum property tax. State officials said the financial impact of the ruling would be relatively small, with only six of Arkansas' 239 districts this year collecting more in property taxes than the state school funding amount. However, they fear the ruling will undermine a series of school funding equity reforms.

A 1996 constitutional amendment approved by voters requires each school district to levy no less than 25 mills of property tax for maintenance and operation of schools. Districts are allowed to levy more than 25 mills. A mill produces $1 for every $1,000 of assessed property value.

The state argued it had the authority to withhold the excess money because it would have given the districts more than the per-student funding it receives from the state each year. The four-justice majority said there was no law that allowed the state to redistribute the funds to other schools.

Beebe, a Democrat who authored the 1996 amendment as a state senator, has also said he's wary of asking the Legislature to allow the funds to be redistributed. If he does, he'll likely face opposition from Republicans who will control both chambers of the Legislature next year.

House Republican Leader Bruce Westerman has said he'll oppose any efforts to prevent the districts from keeping the money. Westerman, R-Hot Springs, has disputed the idea that it would hurt the state's school funding efforts.

"I'm waiting for somebody to show me how one district is getting less money than they were before," Westerman said Thursday.

The incoming chairman of the Senate Education Committee on Thursday said lawmakers need to take a close look at the ruling and the state's districts to see what the impact will be in the future.

"Is that disparity going to grow as economic cycles occur or will it be a situation where those districts come back down and there's equalization again?" said Sen. Johnny Key, R-Mountain Home. "I think we need to think a little longer term before we just jump in there and decide what we need to fix."

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