The Arkansas Supreme Court ruled last week in a unanimous decision that Pulaski County levied a 20-year, one-mill increase in the property tax rate a year earlier than it should have.
Voters approved the tax at a special election in December 2007 to support $32 million of bonds for the Central Arkansas Library System. Voters also approved a permanent 0.5-mill increase for library operations.
However, the election was held after the date established under Arkansas law when the county must certify the next year's property tax rate within its borders.
The court ruled that County Judge Buddy Villines improperly issued an executive order in January 2008 that amended the tax rate adopted by the county in November 2007 to include the higher library tax. The court said the tax should not have been levied until the court adopted a tax rate for 2009.
"We reverse the judgment of the circuit court because County Judge Villines did not have statutory or constitutional authority to retroactively apply the millage-rate increase to 2007 library taxes after the special election," Justice Jim Gunter wrote in the decision.
Gunter said county officials could only issue an order correcting the tax rate if the original ordinance contained a clerical error, which was not the case with the library tax.
The bonds were issued by Little Rock after Pulaski County Circuit Judge Timothy Fox said in May 2008 the new tax had been legally levied. The Supreme Court action returns the case to Fox, who must develop a method to repay residents for the $4.5 million in tax revenue collected for 2008.
Officials at the library system said the ruling will require significant budget cuts to make up for the $1.4 million in operational revenues from the 0.5% tax increase.
The bonds are rated AA by Standard & Poor's.