Sebastian County Assessor explains impact of proposed school millage increase on seniors, disabled

The Fort Smith Public School District (FSPS) has not seen a millage rate change since 1987, so for supporters of the May 22 referendum, the time has come. But any increase, however slight, could be a tough sell to the city’s older and disabled voters.

In a recent interview with Talk Business & Politics, Sebastian County Assessor Zach Johnson noted one potential hurdle organizers will face — higher tax bills for seniors and disabled persons. While taxpayers 65 and older as well as 100% disabled persons qualify for “frozen” real estate tax assessments, their protected status does not carry over to millage increases.

“Of course, any increase will be felt by all, but I believe this segment of our population would be confused the most and potentially broadsided,” Johnson said. “In my past experiences, there is confusion” that the county freezes taxes at a certain point.

Johnson said he wanted to be “proactive in explaining this,” so affected voters can “have the bigger picture.”

The Fort Smith School Board is set to hold a special meeting March 12 to discuss options on a proposed $120 million improvement and expansion plan to district facilities and programs.

HOW IT WORKS FOR THE AVERAGE TAXPAYER
“In a nutshell, with the current millage, it’s $52.50 per $1,000 in value,” Johnson explained. “Increasing the millage rate by 5.588 mills (proposed, as amended) would raise that to $58.088 per $1,000; and 6.88 mills (as originally proposed) would raise that to $59.38 per $1,000.”

Providing an example of what that would mean to a home valued at $100,000, Johnson said the state of Arkansas taxes on 20% of value, making the assessment amount $20,000.

The existing millage rate (.05250) multiplied by this assessed value results in a $1,050 annual tax bill, or $87.50 per month. Doing the same calculation on the “proposed, as amended” increase of 5.588 mills ($20,000 in assessed value times .058088 mills) raises the tax bill $111.76 to an annual of $1,161.76, or a monthly of $96.81. The initially proposed millage rate increase of 6.88 mills, using the same setup, would be $20,000 in assessed value times a new millage of .05938 for an annual bill of $1,187.60, an increase of $137.60 per year. The monthly breakdown would be approximately $98.97.

SENIORS AND DISABLED WOULD PAY MORE
Johnson said where the scenario could get “a little confusing” is when calculating for properties whose assessed values froze due to the eligibility of the owners.

“This would include individuals who are 65+ years of age or someone who is 100% disabled. There is the appearance that taxes are frozen when in reality, the assessed value is frozen. Changing the other multiplying factor (millage rate) will cause the tax bill to increase on these as well,” Johnson said.

Using a home with a current market value of $200,000, “The owner has lived here for several years and qualified for the assessed value freeze when the property appraised at $125,000. This (freezing) locked the assessed value in at $25,000. Here’s a breakdown of how they would be affected: the current millage (.05250) times $25,000 in frozen assessed value would result in a $1,312.50 tax bill.”

But the “proposed, as amended” millage increase would change that to .058088 times $25,000, or an annual tax bill of $1,452.20, an annual increase of $139.70. The initially proposed millage rate increase of 6.88 mills (.05938 times $25,000) equals $1,484.50 in annual taxes, an increase of $172 from the current level. The monthly increases for both scenarios would be between $11.64 per month and $14.33 per month. The citizens’ committee that presented the millage rate increase study to the FSPS School Board foresaw an $11.67 per month increase per $100,000 of real estate value for the average taxpayer. All things being equal on real estate values — and not including the $350 tax credit for which some taxpayers qualify under the Amendment 79 Homestead Tax Credit — seniors and disabled persons would fit into the same reported average increase applying to other non-protected classes of taxpayers.”

“This could be confusing as a large section of the individuals with a ‘frozen assessment’ might not fully understand that this would affect their bills as well,” Johnson said, adding that it also “doesn’t take into consideration increases to the personal property tax bills. This wouldn’t be as surprising as the real estate, simply for the fact that the assessed values with the personal property are never frozen. That is only on a homesteaded parcel, which is the individual’s principal place of residence,” Johnson said.

AT STAKE
Following are some of the top items in the citizen’s proposal the board will review.
• $43.824 million (1.924 mills) expansion at Southside High School
• $34.696 million (1.523 mills) expansion at Northside High School
• $13.724 million (0.602 mills) for a new career and technology center
• $9.665 million (0.424 mills) for renovations at Darby Junior High School
• $5.5 million (0.241 mills) for safety, security and lighting system upgrades at several schools

While the school’s millage rate has not changed since 1987, revenue from it has risen. Millage revenue was $14.183 million in 1998, rose to $28.929 million in 2000, and reached $40.186 million in 2007. Millage revenue in 2017 was $52.917 million, down 1.35% compared to $53.645 million in 2016.

Student population (K-12) has risen from 13,637 in 2006 to 14,341 in 2016, a 5.16% gain.

FINANCIAL STEWARDSHIP
Literature and data produced by the school district indicate that part of the effort to gain voter approval will include an argument that the school’s millage is low compared to other schools, and the district has been financially prudent as evidenced by lower debt than other comparable schools.

For example, the Fort Smith district’s outstanding debt is considerably lower than the top five Arkansas school districts by student population. Fort Smith debt – as of Oct. 31 – was $73.187 million, well below Little Rock ($191.38 million), Springdale ($183.295 million), Bentonville ($281.24 million), and Rogers ($147.505 million).

According to Arkansas’ Assessment Coordination Division, the average millage rate in Sebastian County is 39.27 mills. If voters approved the citizens’ committee plan without change, the Fort Smith School District millage would rise to 43.388 mills. County millage rates range from 44.13 mills in Pulaski County to 29.25 mills in Lee County.

The millage rate in Fort Smith is now below that of other districts in Sebastian County. Following are millage rates for other districts in the county or partially in the county.

• Booneville, 40.2
• Charleston, 37.5
• Greenwood, 40.6
• Hackett, 38
• Lavaca, 41.9
• Mansfield, 40.01

In neighboring Crawford County, the millage rate ranges from 43.4 in Alma to 36 in Cedarville. The Van Buren school millage is 42.6.