LITTLE ROCK — A plan to allow Arkansas to retain excess property tax revenue from a handful of school districts stalled in the Arkansas Legislature Friday, killing an attempt to address a court ruling that Gov. Mike Beebe said threatened the state’s efforts to provide equitable education funding.
Beebe, who had pushed for the property tax proposal, declared it dead after a House panel blocked efforts to bring it up for a vote. The sponsor of an identical bill in the Senate said he wouldn’t call for a vote in that chamber because of the House objections. The measure was being considered during a special session convened to address rising teacher health insurance rates.
“It’s effectively done,” Beebe told reporters. “There’s no point in the Senate passing it if it can’t get out of the House committee.”
The proposal would allow the state to retain excess property tax revenue from districts where higher property tax collections pushed the districts above total school funding levels set by state law. It would also phase out the excess revenue from eight districts where collections are currently above that funding level.
The plan is in response to Supreme Court ruling last year that said Arkansas law didn’t allow the state to withhold the funds. Beebe and other top officials have said the decision threatened reforms intended to provide equitable education funding across the state.
“Those people who believed in Lake View and fought hard for it surely must think they’ve seen this before,” Beebe said, referring to the lawsuit brought by the Lake View School District that led to the funding 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.
Beebe and other supporters of the proposal noted that the court in its ruling last year suggested that the Legislature could give the state authority to withhold the funds.
“At the end of the day, I maintain it’s a fairness issue,” said Rep. Joe Jett, D-Success, who sponsored the House version of the bill. “We have eight schools collecting more money than 230 schools because of the way the Supreme Court interpreted the language.”
The proposal faced opposition from the top Republican in the House, who had introduced a competing proposal that would have kept the property tax money in the districts either as facilities funding or tax credits for property owners. Superintendents from the districts said the state withholding the money would hurt their schools financially and would make it harder to win voter support for millage increases in the future.
“Passing it would hurt literally thousands of kids and teachers and school employees in those districts,” said House Majority Leader Bruce Westerman, R-Hot Springs.
The proposal to help restore a school facilities fund that’s being tapped to lower the insurance rate hikes. The proposal would not affect revenue from any mills above the state-mandated minimum.
Beebe called the criticism that the bill was taking away local school district money misinformation and compared the state-mandated 25 mills to state sales tax rates. Beebe said he didn’t plan on bringing the proposal back before lawmakers in February, when they return for a session focused on the state’s budget.