The City of Magnolia has filed a suit for declaratory judgment against two Columbia County officials and the Arkansas state treasurer. The suit was filed in the Circuit Court of Pulaski County Monday and seeks to determine whether the city has the right to keep its per-capita portion of the county’s 1-cent sales tax for solid waste management.
It names as defendants State Treasurer Dennis Milligan; County Judge Larry Atkinson and County Treasurer Selena Blair. All are being sued in their official capacities. Magnolia Mayor Parnell Vann stated Thursday that the suit was filed in Pulaski County because Milligan is a defendant.
The suit follows months of disagreement between the city and county about whether the City of Magnolia should receive its portion of the tax collected for solid waste management. Vann was authorized by the City Council to “pursue” the city’s portion of the sales tax which, he says, will fund the city’s own trash collection program.
Further, the city argues that the county has $8 million in tax dollars, unused, in bank accounts. Vann has said that municipalities within the county have a right to that money because no Interlocal Agreement is in place between and among the entitites. The county eliminated that agreement in 1998 after it was entered into in 1992 — the same year Columbia County voters went to the polls to approve the tax for solid waste.
The county has argued that the city has no right to the tax money or to receive its portion of tax collections.
In a statement sent to the Banner-News Thursday, Vann said:
“The City Council and I have concerns about the current (method) of contracting and operating the countywide solid waste disposal system. First, millions of tax dollars leave the county through the current solid waste contract, which has just been recommended by the county for renewal. Second, as I initially stated an as the County Treasurer recently confirmed, nearly $8 million sits in a couple of solid waste reserve funds and appear to be doing nothing but accumulating more taxes from citizens. I don’t think this is what the taxpayers intended or deserve.”
“There are better ways to use this money and the people should get to decide ... when the dollars are not being used.”
“The City of Magnolia can more efficiently and effectively handle its own solid waste collection. We’ll create more jobs and have a positive economic impact by keeping those dollars in this city and county. While the city did not like the perpetual nature of the Interlocal Agreement and the lack of representation, the county’s unilateral decision to void the 1992 agreement means that the dollars pledged by the City of Magnolia to the solid waste system should stay with the city.”
“We are also seeking an accounting of the taxes received and spent by the system since 1998, which is when the county says it voided the agreement with all of the cities,” Vann stated.
“I certainly wish there had been another way to resolve this matter, but the city has been rejected at every turn when trying to come up with a compromise to solve the unfairness in the current arrangement and discuss better ways to use the tax dollars for the citizens.”
“We have only pursued the parties in their elected capacities so that the court can determine for the officials where the tax dollars will go,” Vann stated.
Atkinson issued a statement Thursday afternoon, saying: “It is a shame that the City of Magnolia is willing to sue elected officials for following the law as voted on by the citizens of Columbia County.”
City Attorney Mike Boyd said Thursday that the city disagrees with previous legal opinions that have come down on the side of the county.
He said that without the interlocal agreement in place, there is no language in the 1992 ballot specifying how the tax dollars would be distributed. With the ballot silent on the matter, the tax proceeds should automatically revert to the municipalities.
According to the suit, “Ark. Code Ann. 26-74-214 provides that the tax collected shall be deposited with the Treasurer of State and deposited to the Local Sales and Use Tax Trust Fund. The Treasurer of State shall monthly transmit to the county treasurer and to the city treasurer of each municipality ... their per capita share, if any, of the moneys received by the Treasurer of State.”
“Ark. Code Ann. 26-74-214 provides for per capita distribution of county sales taxes among the county and its municipalities unless the ballot provides for another method of distribution or an interlocal agreement is executed between the ... county and its municipalities.”
The suit alleges that on March 23, 1992, a Solid Waste Management System Interlocal Agreement was entered into by and among Columbia County and the cities of Magnolia, Taylor, Waldo, Emerson and McNeil. The agreement “provided that the parties consented to the pledge of their proportionate shares of the tax and the payment of all proceeds of the tax to a solid waste management system to be administered by (Columbia County.)”
It goes on to state that “on April 22, 2015, (Atkinson) informed the city that the interlocal agreement was repealed in 1998” by county ordinance. “A special election held Oct. 6, 1998, reallocated 25 percent of the net collections of the tax to the repayment of bonds issued to finance jail and criminal justice facilities.” The official ballot provided that “the balance of the net collections (would) continue to be used to finance a solid waste management system.”
“The voter-approved bonds to finance (the jail) have been repaid and all proceeds of the tax musta gain be used for solid waste management and for no other purpose,” the lawsuit states.
“Because both ballots by which the voters of Columbia County approved the tax were silent on the method of distribution and Columbia County has repudiated the interlocal agreement ... the City of Magnolia and all other municipalities within Columbia County are entitled to their per capita share of the proceeds of the tax, including any accumulated surplus,” the lawsuit states.
On June 23, Vann sent Milligan a letter requesting the city’s per capita share stop being remitted to the county and instead be remitted directly to the city. On July 27, Milligan responded that state law did not support the city’s request.
The city declares the following: “(It) is entitled to its per capita share of the tax ... and to its per capita share of the surplus proceeds of the tax accumulated since Columbia County’s repudiation of the ... Interlocal Agreement ... and to an accounting of all proceeds of the tax (since 1998).”
Vann told thd Banner-News that the city would initiate its own trash pick-up service if it is allowed to keep its share of the tax.