AAC
SEEMS TO ME... Diversify
comes to stability in revenues. You don’t have to be greatly concerned about volatility. Except for bonded debt, county property tax rates are constitutionally set at 5 mills maximum for general operations and 3 mills for road op- erations. These are low rates but unlike municipal taxes or school taxes that apply to properties in a smaller jurisdic- tion the “county general and road millage” apply to the full assessed value in the county. So why on God’s green earth do Arkansas counties not take maximum advantage of this rock-solid revenue source? Te most common answer is that property tax is the most hated tax. For many that’s true whether or not their dislike is properly founded. Why so unpopular? It’s not unpopular for good economic reasons. It’s unpopu- lar for one simple reason: It’s the only tax left on the books for which people have to write a big check. Income taxes and Social Security contributions are with-
held from paychecks before the recipients get their hands on the money. Sales taxes are collected little by little as people make purchases, and the taxes are remitted by merchants and other business. It’s only with property taxes that a regular per- son gets a tax bill and has to pay it. However, many home- owners’ property taxes are bundled into mortgage payments and thus a bit less obviously visible. Te truth of the matter is that the majority of people pay much more in income tax and sales tax than they do in property tax, but they do it a little bit at a time. Guess what? An individual tax payer is not required to pay the full amount of current tax all at one time. Tey can make installment payments. Te first installment of one-quarter of the amount due is payable between the first business day in March and the third Monday in April. Te second payment of one-quarter is payable between the third Monday in April and the third Monday in July. And the third payment of half is payable between the third Monday in July and Oct. 15. Even better, the county collector is authorized to take install- ments of current real and personal property taxes in any amount from the first business day in March through Oct. 15 with the balance due by Oct. 15. [Ref: § 26-35-501] Only 26 counties in Arkansas, barely over one-third, have maximized the county millages by levying a 5 mill general tax and a 3 mill road tax. Tere are another 13 additional coun- ties that have maximized the general millage and 8 counties that have levied the full 3 mill road tax. Tat calculates to 47 counties, almost two-thirds that can increase county property taxes — 21 that can raise either general or road and 26 coun- ties that can increase both general and road. Counties, it needs to be done. It should be done to secure
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a solid source of revenue that can be depended on even in the tough times like we are experiencing this year. It is a difficult and tough decision to make. I fully un- derstand that, but the time is now. Make plans as you look toward budget time this fall. British Prime Minister Winston Churchill said, “Tere is no such thing as a good tax.” Yet, he completely understood government could not operate without them. Arthur Vander- bilt was so bold as to say, “Taxes are the lifeblood of govern- ment and no taxpayer should be permitted to escape the payment of his just share of the burden.” I cannot disagree with that. And everyone in county government knows that it takes more money to operate than you thought it did before entering the arena. When you step inside you soon find out all the obligations of county government. I know and understand, as much as anyone, the tightrope
you must walk in increasing taxes, especially property taxes. Here is a spot-on assessment of this type situation put forth by Jean Baptiste Colbert, the minister of finance for France under the rule of King Louis XIV. He said, “Te art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.” In other words, you do it professionally with complete transparency. You prove the county’s financial plight; you paint the picture of what a county must fund by law and the strain that puts on your limited resources; you explain how the increased tax is needed and how it will be expended; and you provide a good example of how the tax will affect them. And if you are one of the many counties in Arkansas that does not have reserves — or very little — you need to explain the dire need to accumulate adequate reserve funds and why. Te amount of dollars needed for a county budget can vary
greatly from year to year. Saving for future projects, acquisi- tions, and other allowable purposes is an important planning consideration for county government. Reserve funds provide a mechanism for legally saving money to finance all or part of future infrastructure, equipment, and other requirements. Reserve funds can also provide a degree of financial stabil- ity by reducing reliance on indebtedness to finance capital projects and acquisitions. In uncertain economic times, like we are in, reserve funds can also provide officials with a welcomed budgetary option that can help mitigate the need to cut services. In good times, money not needed for current purposes can often be set aside in reserves for future use. In addition to reserve funds, maintaining a reasonable amount of undesignated fund balance within operating funds is another important financial consideration for county gov- ernment. A reasonable level of unreserved, unappropriated
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