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Rogers mayor unhappy with TIF ruling.

Attorney General Mike Beebe said last week that the constitutionally required 25-mill property tax earmarked for school operations can't be used to fund tax increment financing districts.

Beebe's opinion, requested by Senate President Pro Tempore Jim Argue, D-Little Rock, has put a damper on an epidemic of TIFs in northwest Arkansas and scattered TIF proposals elsewhere in the state.

TIF districts had been proposed for Rogers and Fayetteville and were also under consideration in Johnson and other small cities.

The proposed TIF in Fayetteville would help pay for $22.5 million in downtown improvements, including the renovation of the century-old Mountain Inn, which has been vacant since 1998.

The proposed Rogers TIF would generate about $35 million for street improvements along the Interstate 540 corridor in that city. If the 25 mills is excluded from the funding formula, Mayor Steve Womack of Rogers said the TIF would only be able to raise about $-10 million and it would be "punitive" to NorthWest Arkansas Community College under those Circumstances.

"I am very disappointed in this ruling," Womack said. "This is yet another example of why Arkansas is 49th and 50th in a lot of categories. I think it's very essential for our state to recognize the importance of the investment of infrastructure and economic development. It's very frustrating that we have so many great needs in northwest Arkansas in terms of infrastructure, and we have very little capacity to make those investments."

Womack said the sales tax is already 9 percent in Rogers and he doesn't know where the city will find funding to improve roads.

"We've taxed ourselves to death," Womack said. "We're doing everything we know how to do, and still we get our legs cut off."

Womack said he can't understand why the state Legislature would write a law allowing TIFs but excluding the 25-mill tax.

"I don't see how a TIF could be a viable economic tool without the 25 mills," he said. "You had to assume the 25 school mills was in the calculation."

Womack said the amount of money that would have been taken from school districts statewide would have been "minimal compared to gains back to the state." He said Rogers' TIF would have brought 12,000 jobs to Rogers.

"I think if people put this under the microscope, this was not a lose-lose deal for public education," Womack said. "We're gaining population. Other areas are losing population, and the funding is the same. Something isn't right. We're just trying to take care of ourselves up here."

Act 43 of 2003 eliminated the increase in property value, based on improvements within the TIF district, from the state's school funding formula.

The state collects the amount taxed on the first 25 mills in each school district and returns that money to the district with additional state funds to equal a statewide per-student formula ($5,400 per student for the current school year). A school district's debt mills are excluded from the TIE (A mill is one-tenth of 1 percent of assessed property value.)
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Title Annotation:Inside Business; tax increment financing
Comment:Rogers mayor unhappy with TIF ruling.(Inside Business)(tax increment financing)
Author:Bowden, Bill
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Jan 17, 2005
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