AG Opinions: From the Property Tax Relief Fund to volunteer fire departments and dues

By: Mark Whitmore
AAC Chief Legal Counsel

AG OPINION NO. 2025-005

The question was posed to the AG, may funds received from the Property Tax Relief Fund be pledged to bond debt for capital improvements or other lawful purposes? The AG explained that it is lawful to use the funds received from the Property Tax Relief fund for the same purposes as the property tax revenues. The money received from the homestead credit are replacing funds the counties would have received but for homestead credit. According to the AG, it would only be lawful for the funds to be used by a library for a bond issue for the same purposes as the property tax that is levied by the library (and in the same proportions as the property tax revenue the county would have received but for the homestead property tax credit).

AG OPINION NO. 2025-094

The AG explained in general the extent of the tax-exempt status of Regional Intermodal Facilities under A.C.A. § 14- 143-121(a) and 121(b)(1). The properties of a Regional Intermodal Facility are by virtue of 121(b)(1) exempt from all local and municipal taxes, which includes any property taxes assessed by cities, counties, school districts and improvement districts that are authorized to levy a tax. The properties of a Regional Intermodal Facility are by virtue of 121(a) exempt, with some exceptions, “from the payment of any taxes or fees to the state or any subdivision thereof” which indicated that the subject property of the authority is exempt from the payment of property taxes. The opinion noted that Article 16, § 5 does not provide for an exemption from property taxes where the subject real property is owned by a for-profit corporation or where the property is not used exclusively for public purposes. The opinion does not specifically address whether the authority is exempt from the payment of state and local sales or use taxes.

AG OPINION NO. 2024-090

The question presented to the AG was does A.C.A. § 13-2-404(c)(3) allow a library board to present a claim to the county treasurer for the entire undistributed balance in the county public library fund? Yes, the AG explained the law provides that if a county adopts an ordinance as authorized by A.C.A. § 13-2-404(c)(3)(i), the governing library board may certify to the county treasurer a claim against the fund for an amount equal to the undistributed balance of the fund. When the claim is paid, the funds shall be in the custody of the governing library board and shall be subject to expenditure pursuant to an appropriate resolution or budget adopted by the governing library board. Question 2 inquired: If the library board receives payment of the entire undistributed balance in the county public library fund, is the board authorized to (a) control and hold the entire balance with no time limit or other limitations, (b) keep the balance in a bank account separate from and outside of the control of the county treasurer, and (c) pay the board’s expenditures directly pursuant to a resolution or budget adopted by the board? The AG responded: When a library board receives the undistributed balance of the county public library fund, the board must place that money into a bank account in the name of the library board. Then the board must pay the board’s “expenditure[s] pursuant to an appropriate resolution or budget adopted by the governing library board.” As to limitations, the board must comply with the comprehensive financial management system requirements in A.C.A. § 14-21- 101 and Amendment 38, § 2 of the Arkansas Constitution, which requires that “[t]he proceeds of any tax voted for the maintenance of a county public library … shall be segregated … and used only for that purpose.” Question 3, inquired: If the library board receives payment of the entire undistributed balance in the county public library fund, are there any additional applicable procedures required other than those set forth in A.C.A. § 13-2-404(c) and the subsections thereof? The AG responded, the procedures set forth in the answer to question No. 2 apply. At the end of the financial year, funds that have been appropriated but not yet spent should remain in the custody of the library board. If there are unappropriated and unspent funds at the end of the financial year, then the funds disposition depends on whether the quorum court has enacted a certain ordinance.

AG OPINION NO. 2025-028

The AG was asked whether HB 1416 —now Act 673 of 2025 — allows for certain volunteer fire departments serving unincorporated areas of the county to levy dues? The AG explained that a municipal fire department that serves not only the city, but also unincorporated areas of the county are not considered volunteer fire departments. The AG further underscored that cities of the first class cannot use A.C.A. § 14-20-108, as amended by Act 673 of 2025, to levy volunteer fire department dues. The AG noted that multiple forms of “volunteer fire departments” exist. A.C.A. § 14-20-108 authorizes certain volunteer fire departments to collect annual dues if approved by the quorum court. The question here is whether a “volunteer fire department,” as that term is used in Act 673 of 2025, includes municipal fire departments of first-class cities. In my opinion, the answer is “no,” for at least two reasons. First, A.C.A. § 14-20- 108(a)(1)(A) authorizes county quorum courts to levy on behalf of volunteer fire departments and designate a county official to collect the “dues charged by the volunteer fire department in consideration of providing fire protection to unincorporated areas in the county.” Second, A.C.A. § 14-20-108 (e)(1) specifically authorizes incorporated towns and second-class cities to levy volunteer fire department dues. Therefore, cities of the first class, unlike several other political subdivisions (e.g., counties, towns, cities of the second class), are not given authority under Act 673 of 2025 to levy volunteer fire department dues. While cities often characterize their fire departments as “volunteer,” the applicable statutes concerning cities creating a fire department do not use the word “volunteer.” A.C.A. § 14-20-108 covers but one form of “volunteer fire department.” This Office has long opined that there are several forms of “volunteer fire departments”: Private, nonprofit corporations collecting membership fees or dues under A.C.A. §§ 14- 20-108 (discussed above) or 14-284-225; Fire-protection districts that access local benefits to be collected with ad valorem taxes under either A.C.A. §§ 14-284-101 et seq. or §§ 14-284-201 et seq., or suburban fire districts. See, e.g., Ark. AG Opinions 2011-149, 2004-294, 2004-070, 2001-351, 97-377. 4 See A.C.A. § 14-53-101. 5 This Office has concluded that § 14-20-108 generally concerns volunteer fire departments organized as private, nonprofit corporations or “subscription” fire departments.