{ "id": 1882700, "name": "Larry CRANE, Director of the Arkansas Assessment Coordination Division, et al. v. NEWARK SCHOOL DISTRICT NO. 33 of Independence County", "name_abbreviation": "Crane v. Newark School District No. 33", "decision_date": "1990-11-19", "docket_number": "89-354", "first_page": "650", "last_page": "656", "citations": [ { "type": "official", "cite": "303 Ark. 650" }, { "type": "parallel", "cite": "799 S.W.2d 536" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "Ark. Code Ann. \u00a7 6-20-302", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "pin_cites": [ { "page": "(4)", "parenthetical": "iii" } ], "opinion_index": 0 }, { "cite": "281 Ark. 303", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1742383 ], "weight": 2, "year": 1984, "opinion_index": 0, "case_paths": [ "/ark/281/0303-01" ] }, { "cite": "298 Ark. 508", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1889886 ], "weight": 2, "year": 1989, "opinion_index": 0, "case_paths": [ "/ark/298/0508-01" ] }, { "cite": "294 Ark. 586", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1895728 ], "weight": 2, "year": 1988, "opinion_index": 0, "case_paths": [ "/ark/294/0586-01" ] }, { "cite": "266 Ark. 64", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8717402 ], "weight": 2, "year": 1979, "opinion_index": 0, "case_paths": [ "/ark/266/0064-01" ] } ], "analysis": { "cardinality": 563, "char_count": 12847, "ocr_confidence": 0.897, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.0690737181974702 }, "sha256": "5d310f870bd35964e1bdfe7e343394990f2d7aa38a0b35e730f1dfd851190e97", "simhash": "1:dbb20ca07866b23e", "word_count": 2111 }, "last_updated": "2023-07-14T18:41:20.399175+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Larry CRANE, Director of the Arkansas Assessment Coordination Division, et al. v. NEWARK SCHOOL DISTRICT NO. 33 of Independence County" ], "opinions": [ { "text": "David Newbern, Justice.\nThis is a property tax case requiring interpretation of Ark. Const, art. 16, \u00a7 14, and implementing legislation. The action was brought by the appellee, Newark School District No. 33 of Independence County (Newark), against appellant Larry Crane, Director of the Assessment Coordination Division (ACD), which is a division of the Arkansas Public Service Commission. Also named as defendants were appellants Margaret Boothby and George Kimmer, County Clerk and Tax Collector, respectively, of Independence County. Newark claimed that Boothby and Kimmer, pursuant to the directions of ACD, had assessed and collected personal property taxes, on other than property belonging to utilities and common carriers, in amounts improperly low in its district in 1988. The chancellor found the formula used by Boothby and Kimmer at the instance of ACD was contrary to applicable statutes and to the Constitution. She enjoined the appellants from using the ACD formula and ordered a 1988 assessment on the basis of a formula required by the statutes implementing Amendment 59. The decision was correct.\nMassive reassessment of property occurred in Arkansas pursuant to our decision in Arkansas Public Service Comm. v. Pulaski County Bd. of Equalization, 266 Ark. 64, 582 S.W.2d 942 (1979), which required real and personal property to be taxed on an equal basis. Amendment 59 was a response to that decision. The amendment was intended to effect equalization on a gradual basis by holding the revenue from taxation of personal property relatively static as taxes on real estate increased. Clark v. Union Pacific R.R., 294 Ark. 586, 745 S.W.2d 600 (1988). See also Wright v. Storey, 298 Ark. 508, 769 S.W.2d 16 (1989). Act 848 of 1981, codified as Ark. Code Ann. \u00a7 \u00a7 26-26-401 through 26-26-409 (1987), was passed to implement Amendment 59.\nThe portion of Amendment 59 now codified as Ark. Const, art. 16, \u00a7 14, sets up a \u201cbase year\u201d defined as \u201cthe year in which a county completes reassessment and equalization of taxable real and personal property . . . and extends the rolled back millage rates for the first time . . .for collection in the following year.\u201d Newark\u2019s reassessment occurred in 1983. The assessment on personalty in 1982 yielded $262,354.00. Based upon assessed personalty of $5,830,080, the tax rate was thus 45 mills. ($262,354 divided by $5,830,080 equals .045.) The chancellor found as a matter of fact that the 45 mill rate had been approved by the electorate.\nThe statutory scheme of implementation of the amendment is that the revenue figure of the base year will remain \u201cfrozen,\u201d \u00a7 26-26-405(a), as the assessment base increases and the tax rate decreases. There is support for the statutory freeze of revenues in the amendment. For example, in a proviso which could easily be interpreted as applying to the entire amendment there is the following:\nProvided, however, that the amount of revenues derived from taxable personal property assessed in the taxing unit for the base year, other than personal property taxes to be paid by public utilities and regulated carriers . . . shall be computed at the millage necessary to produce the same dollar amount of revenues derived during the current year in which the base year adjustment or rollback of millage is computed, and the millage necessary to produce the same dollar amount of revenues received from personal property taxes received by the taxing unit, for the base year shall be reduced annually as the assessed value of taxable personal property increases until the amount of revenues received from personal property taxes, computed on the basis of the current year millage rates will produce an amount of revenues from taxable personal property equal to or greater than received during the base year, and thereafter the millage rates for computing personal property taxes shall be the millage rates levied for the current year. [Ark. Const, art. 16, \u00a7 14.]\nTo accomplish this freezing of revenues and reduction in rate of taxation on personalty, the general assembly created a formula for annual computation of the reduced interim tax rate until equalization. To use the formula, the following data, specified in the statute, are required:\n1. Base year revenues _\n2. Previous year assessment base _\n3. New assessment base _\n4. Current millage by tax source _\nThe formula provided in the statute is as follows:\nPrevious Assessment divided by New Assessment = Growth Factor\nBase Base\nGrowth Factor times Current Millage = Interim Millage (rounded)\nInterim Millage times New Assessment = Revenue\nBase\nFor example, Newark\u2019s new assessment base for 1983 was $6,775,115. Its previous (base year) assessment base was $5,830,080. The latter figure divided by the former yields a growth factor of .8606. The current millage, .045, multiplied by the growth factor .8606 yields an interim millage of .0389 or 38.9 mills. The new assessment base, $6,775,115, multiplied by the interim millage, .0389, yields revenue of $263,551. That figure is no more than 10% above the previous year revenues, thus the provisions of the statute are satisfied. See Hot Springs School Dist. No. 6 v. Wells, 281 Ark. 303, 663 S.W.2d 733 (1984).\nWe must note here the discrepancy between item 2. in the statutory data list, \u201cPrevious year assessment base,\u201d and the term used in the formula, \u201cPrevious assessment base.\u201d The chancellor concluded that the term used in the formula referred to the base year assessment base rather than that which was obtained in the year previous to the year under consideration. We do not know the basis of her choice, but it makes no difference, significant for our purposes, in the result she reached.\nBoth the constitutional amendment and the statute contemplate that equalization of rates of taxation on realty and personalty will occur because there will be an increase in personal property in any taxing unit from year to year but the amount of realty will remain the same. To hold the amount of revenue received from taxation of personal property at the same level, or within 10 % of it, in spite of personal property tax base increases, the rate of taxation is to be decreased as in the example given. At the point when the rate of taxation on personalty is reduced to that on real property, equalization will have been achieved.\nWhile the assumption that the amount of assessable real estate in a taxing unit will remain the same is acceptable, unfortunately the assumption that the amount of personalty in the unit will increase is not acceptable. It has been demonstrated in Newark that the amount of personalty, and thus the assessable tax base on that species of property, may be reduced in any particular year. Newark\u2019s personal property assessable tax base decreased in 1984,1985, and 1986. If the formula set out in the statute had been followed, the rate of taxation (the millage figure) would have increased.\nFor example, in 1987, Newark\u2019s assessable base was $5,790,600. In the base year it was $5,830,080. Using the formula and dividing the former figure by the latter, the growth factor would have been 1.01. The growth factor times the \u201ccurrent millage,\u201d defined by \u00a7 26-26-405 (a) as \u201cthe millage that was used in each taxing unit to derive the base-year revenues for personal property,\u201d in this case .045 yields an interim millage of .0455 or 45.5 mills. That is a figure which is in excess of the base year millage. It clearly was not contemplated by the amendment or the statute that the millage would go up to any level, much less one not approved by the voters.\nThe Independence County authorities handled the problem during the years of decreasing assessment base simply by skipping the second part of the formula and using the rolled back rate of 38.9 mills during the period of declining personalty tax base. They thus apparently received less revenue in those years.\nAuthorities in the Assessment Coordination Division attempted to solve the problem in 1986 by changing the data to be used for the calculations from those provided in the statute. Instead of \u201cBase year revenues\u201d they instructed the clerks and collectors to use \u201cprevious year.\u201d In Newark\u2019s case, that meant that when the personalty tax base rose, as it did in 1987 to $6,902,315 from the 1986 figure of $5,790,600, Newark could receive no more than 10 % in excess of the $256,520 generated in the previous year, 1986. In addition, the Assessment Coordination Division instructed the county authorities to use the personalty assessment base from the \u201cprevious year\u201d instead of the base year as item No. 2 in the data to be applied in the formula. These variations caused Newark\u2019s revenue figure to drop substantially below that which it would have received if the formula had not been changed, and they caused Newark to bring this lawsuit challenging the practice of the Independence County Clerk and Collector which they had been instructed by the Assessment Coordination Division to follow. Newark contends it is entitled to a minimum of the \u201cfrozen\u201d base year revenue figure of $262,354.\nThe Assessment Coordination Division contends it had the authority to vary the statutory formula because of the provision of \u00a7 26-26-409 giving it\nauthority and responsibility with respect to the implementation of . . . Amendment 59 and the provisions of . . . laws enacted to carry out the purpose and intent of the amendment. . . [and] to adopt appropriate rules, regulations, and guidelines to assure that the intent and purpose of-the amendment and the laws . . . are effectively and efficiently carried out during the transitional period.\nWe agree with the chancellor\u2019s conclusion that no authority was given to vary the specific terms of the statute or to adopt a formula directly at odds with that contained in \u00a7 26-26-405.\nThe Assessment Coordination Division argues that if we fail to adopt its \u201cinterpretation\u201d of the statutes we will make \u201cArk. Code Ann. \u00a7 6-20-302(4) (iii)\u201d meaningless. The reference is apparently to \u00a7 6-20-302(4)(B)(iii) which provides:\nPersonal Property. The actual assessment for the previous calendar year shall be used for school districts located in counties that have not been reassessed. For school districts located in counties that have been reassessed, the charged assessment used shall be the actual assessment for the calendar year prior to the base year multiplied by the ratio of the taxes due to be collected in the current or latest year to the taxes due to be collected in the base year; ....\nNo explanation is provided as to how this language, which is part of the School Finance Act, an entirely separate piece of legislation, would be made meaningless if Amendment 59 and its implementing statutes are followed. We decline to speculate on the manner in which the two programs may be related. In any event, we would not hold that the language supersedes a constitutional amendment.\nWe agree with the chancellor\u2019s declaration that the rate to be applied to Newark for 1988 is 38.1. It is figured as follows:\nBase year revenue $262,354\nPrevious year base $5,830,080\nNew base $6,902,315\nCurrent millage .045\nThe previous year base (base year), $5,830,080, divided by the new bas\u00e9, $6,902,315, yields a growth factor of .8446. The current millage, .045, multiplied by the growth factor, .8446, yields an interim (rounded) millage of 38.1. The interim millage applied to the new base yields $262,978 which is within the 10% above base year limit.\nWhile we approve the chancellor\u2019s conclusions about the case before us, we must note that we are not dealing with an increase in millage above the base year figure of .045. Following the statutory formula could result, as demonstrated above, in a rate of taxation which is in excess of that of the base year and in excess of any approved by the electorate. That case was not before the chancellor, and consequently it is not before us now. The general assembly should be aware that the formula may be fatally flawed and completely unworkable if property values fall or if the amount of personalty in a taxing unit decreases to the extent that following the formula causes an increase in the millage to a level in excess of that of the base year or a level not approved by the voters. We find no provisions which would govern such an instance, and we urge the general assembly to consider the problem.\nAffirmed.", "type": "majority", "author": "David Newbern, Justice." } ], "attorneys": [ "Steve Clark, Att\u2019y Gen., by: Frank J. Wills III, Asst. Att\u2019y Gen., for appellants.", "Rose Law Firm, A Professional Association, by: David L. Williams, M. Jane Dickey, and B. Michael Bennett, for appellee." ], "corrections": "", "head_matter": "Larry CRANE, Director of the Arkansas Assessment Coordination Division, et al. v. NEWARK SCHOOL DISTRICT NO. 33 of Independence County\n89-354\n799 S.W.2d 536\nSupreme Court of Arkansas\nOpinion delivered November 19, 1990\n[Rehearing denied December 21, 1990.]\nSteve Clark, Att\u2019y Gen., by: Frank J. Wills III, Asst. Att\u2019y Gen., for appellants.\nRose Law Firm, A Professional Association, by: David L. Williams, M. Jane Dickey, and B. Michael Bennett, for appellee." }, "file_name": "0650-01", "first_page_order": 694, "last_page_order": 700 }