Homestead tax credit has always been priority

By Chris Villines
AAC Executive Director

Those of you who were around in county government at the turn of the century will well remember a not so well thought out push to eliminate property taxes. Petitions were circulated, but the issue failed to get on the ballot. The driver behind this movement has long since been forgotten, but thankfully it created healthy discussion among the populace about how we as Arkansans desire to be taxed.

Furthermore, it served as a reminder as to where property taxes go. Many people mistakenly believe government is the primary recipient simply because it is collected in the courthouse. Alas, these taxes go largely to schools, at about an 80 percent clip. As a former tax collector, I relished the opportunity to educate our residents about where these taxes go … and the fact that many parcels in our state are owned by out-of-state residents or companies. So, it is a misconception that Arkansans alone bear the costs of real estate taxes.

As a result of the public push against property taxes, a group formed called Arkansans to Protect Police Libraries Education and Services (APPLES), which worked to let everyone know exactly how much the sales taxes would have to be raised sans property tax to continue funding required services, including education.

While I cannot remember the exact number, I believe the total to make up the loss was a staggering double-digit sales tax percentage. This would have put Arkansas far and away the highest sales taxed state in the union. A lot of eyes were opened, including those of the legislature and then-Gov. Mike Huckabee. That property taxes, despite very low in Arkansas, are the least desired taxes was obvious — and remains so to this day.

The response, known all too well to our assessors and collectors, was the passage of Amendment 79 and the accompanying enabling legislation, which became Acts 1 and 2 of the 2nd Extraordinary Session of 2000.

While Amendment 79 created a freeze for homestead values for seniors and those with disabilities, the focus of this column is the homestead credit. Put simply, all Arkansans pay ½ cent in sales taxes, and this is refunded to homestead owners in the form of a credit on those parcels of land that qualify. This credit was established in 2000 at $300 per homestead parcel, but over time the ½ cent funding has increased dramatically. As a result of the freeze and credit provisions, many assessors across the state have had to add staff and offices dedicated to Amendment 79 processes.

This fund, labeled the Property Tax Relief Fund, has grown in excess of the moneys paid out consistently since 2000, and has largely gone to homestead owners commensurate with this growth. However, from time to time the surplus over and above what is needed to pay the credit has been disgorged by the legislature for other projects, which may be legal but is not in keeping with the purpose of the fund. Recent moves in the last two years have helped re-establish the purpose of the fund — and as I write this the legislature is working on approving an increase in the homestead credit from $425 per parcel to $500 per parcel beginning with the 2025 tax year (2024 assessment year).

The AAC has been a part of every homestead credit increase through the years. We have always believed that this stable revenue source is important to schools and local governments, and as such we have supported making sure all excess funds go back to Arkansans to ameliorate any anti-property tax sentiment. Our state has long collected in the lowest 20th percentile of property taxes, hovering around 10th lowest state at present. At this time, as one of our largest homestead credit increases winds through the legislature I would like to thank Sen. Steve Crowell, Rep. Bart Schulz and Gov. Sarah Huckabee Sanders for leading the charge and making this their priority as well.

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Here’s a reminder you all probably don’t need, but I’m giving anyway — make sure you attend our AAC annual conference August 7-9 in Garland County. The Hot Springs Convention Center is the host site, and we are looking forward to a banner crowd to see wonderful speakers like Gov. Sanders and Glen Ward.

Our agenda is still being worked on, but the theme is “Many Voices — One Song, When in Harmony we are Strong!” and how about that dinner/dance theme of “BAACK IN TIME BREAKDANCE”?

We look forward to seeing you all there and if you aren’t yet registered make sure you go to our website, www.arcounties.org, and do so soon.