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  • Arkansas's secretary of state has the full text of the property tax proposal.

  •   Grass-Roots Group Takes Aim at Arkansas Property Tax

    Oscar Stilley
    Oscar Stilley, attorney for Arkansas Taxpayers Rights Assoc. (The Post)
    By Paul Duggan
    Washington Post Staff Writer
    Wednesday, October 7, 1998; Page A03

    FORT SMITH, Ark.—Lately, when bureaucrats and politicians in this state think of Oscar Stilley, chills run up their spines.

    It wasn't long ago that they dismissed Stilley as little more than a litigious pest – a populist gadfly with a law license and an almost religious determination to curb Arkansas' taxing and spending authority. "Oscar Silly," they sometimes called him, and still do.

    Except these days their voices are tinged with anxiety. In an otherwise dull election season here, Stilley and the grass-roots organization he represents have managed to get a radical initiative on next month's ballot, one that would make Arkansas the first state to abolish property taxes and replace them with added sales taxes. The proposed constitutional amendment would severely limit state and local officials' powers to raise other revenue or impose commercial fees or regulations.

    Born of taxpayer discontent in the state's prosperous northwestern corner, the initiative has struck fear in Arkansas' government and business establishment. Opponents have begun aggressively warning that if Amendment 4 survives a court challenge and passes on Nov. 3, as a recent poll suggests it could, the economic impact would be devastating for Arkansas, especially for its weak public education system.

    "We're talking about hundreds of millions of dollars that [added sales taxes] won't replace," said Bobby Roberts, director of the Central Arkansas Library System. He and others in the public sector are awaiting a state Supreme Court ruling this week on the validity of 1,830 of the 72,810 signatures that Stilley's troops collected to get the initiative on the ballot.

    "There is just great concern at every level of government," said John Theis, Arkansas' assistant revenue commissioner. Noting that a Mason-Dixon poll showed 48 percent in favor of the initiative, with 25 percent of voters undecided, he said, "If the Supreme Court doesn't remove this from the ballot, I'd be amazed if we don't see an absolute frenzy of activity from now until the election, trying to get the word out to people on the effects of this."

    Jack Kelley
    Jack Kelly is also pushing the effort to replace Arkansas' property tax. (The Post)
    Gov. Mike Huckabee (R) has been criticizing the initiative almost daily in his reelection campaign. It is virtually the only issue he and his Democratic opponent, lawyer Bill Bristow, agree on, and they're joined by an unusual, deep-pocketed coalition of government, education, labor, industry and public interest groups.

    All of which is immensely pleasing to Stilley, 35, who grew up poor in rural Arkansas, son of a conservative Free Will Baptist minister who scratched out a farm living – an upbringing that Stilley said taught him self-reliance and instilled a deep distrust of the tax system. As organizer and legal voice of the Arkansas Taxpayers' Rights Association, he has finally succeeded in throwing a high-grade scare into "the people at the public trough," as his group likes to call its opponents.

    "I have been trying to get remedies for the wrongs against taxpayers in this state for years, and I have met with almost uniform failure in that regard," he said recently from his small Fort Smith law office. "My files are full of cases I've filed against the bureaucrats for stealing taxpayers' money, for misappropriating it, and I get beaten time and time and time again. But I'm just too stubborn to give up."

    Besides outlawing property taxes, Amendment 4 would make it almost impossible for officials to increase other taxes or enforce new ones (except for those allowed by the initiative) without the approval of voters in each statewide election. It also would bar "any law or regulation . . . detrimental to the financial well-being of the regulated person or entity, or the taxpayers at large," unless the proponent "proves that the law or regulation is reasonably necessary."

    That last provision, opponents said, would lead to courthouse chaos, giving any taxpayer legal standing to sue government officials over a regulation even if the regulation has no clear effect on him. "What it becomes is full employment for lawyers," said Theis. The anti-initiative coalition said it plans to spend at least $200,000 on a public awareness campaign if the court challenge fails.

    But Stilley said the provisions are necessary to prevent officials from violating the spirit of the property tax abolition by substituting new revenue-generating schemes.

    He and other activists also dispute the dire forecasts of state revenue analysts, who project that the sales tax increases allowed by Amendment 4 would bring in no more than $642 million next year, against a loss of $983 million in property tax receipts. The analysts said that under the initiative's spending formulas, only $300 million of that $642 million would be earmarked for schools, compared with the $745 million they stand to receive from property taxes, a net loss of at least $445 million.

    For Arkansas' 311 school districts, whose students have long ranked near the bottom in state-by-state evaluations of academic performance, the financial blow would be catastrophic, state officials said.

    "Well, that's just bull," replied Jack Kelly, a retired research engineer and Wall Street stockbroker. He is the taxpayer group's busiest public speaker, signature-gatherer and fund-raiser in the northwestern counties, where the bulk of Amendment 4's support is concentrated.

    Having shed its backward image, the fast-growing region now is Arkansas' economic engine, headquarters of such big corporate employers as Wal-Mart and Tyson Foods. Thousands of retirees from nearby states have settled there, drawn by the area's scenic hills and neighborly ambience. As a result of the boom, however, taxpayers have been jolted repeatedly in the last decade by rising property value assessments that even foes of Amendment 4 concede have gotten out of control.

    "Maybe we have a problem with property taxes," said Theis, the assistant revenue commissioner. "But you don't cure your bad thumb by cutting your arm off at the shoulder."

    But by Kelly's and the group's arithmetic, revenue from Amendment 4's sales tax increases could far exceed the state's projections. "They want to paint us as skinflints, or nutty old people or whatever," said Kelly, 67, whose $3,700 property tax bill this year is twice what it was in 1992. "I have all my grandchildren and my great-granddaughter going to school right here. If I thought what we're doing would hurt their education, I'd be on the other side, as adamantly as I'm on this one."

    It's not that Arkansans pay steep property taxes relative to their personal incomes. By that measure, they pay less than property owners in all but two other states, according to Congressional Quarterly's 1998 State Fact Finder. It's the sharp increases that have stirred anger. In Benton County, where Kelly's family has owned a 113-acre farm for three generations, total property value assessments have more than doubled in the last seven years, to nearly $1.2 billion.

    County tax officials across the state say their hands are tied. A 1979 court ruling requires counties to reassess properties as often as necessary to keep tax appraisals at 18 to 22 percent of market value. At the same time, officials are prevented from significantly lowering property tax rates by a constitutional amendment passed several years ago to protect education funding.

    Acknowledging the problem last week at a Little Rock news conference, Huckabee laid out a proposed "taxpayers' bill of rights," saying he wanted property owners to "at least know that they are not being ignored." The governor's spokesman, Jim Harris, said that in warning voters against Amendment 4, Huckabee is seeking to preserve not only property tax revenue but local control over education.

    To Kelly, though, there's a more important issue. "Go talk to Myrtle Presley," he said.

    She is 71 and lives in Sulphur Springs, not far from Kelly's farm. She and her second husband, Billy, also 71, a retired Air Force sergeant, own a tidy three-bedroom home on an acre lot. The house is older than they are, and Myrtle Presley has lived in it since the 1950s, when her first husband was alive. The tax bill from Benton County this year was $421.40, up from $125 in 1996, a 237 percent increase.

    Presley said she is making installment payments on the bill. She and her husband get by on fixed monthly incomes totaling about $1,300 after deductions, she said. The deductions include medical insurance, but the insurance does not pay for all of Billy Presley's medicine. He had triple-bypass surgery a few years ago and now is battling lung cancer. Last month his medicine cost the couple $800 out of pocket, leaving about $500 to cover living expenses.

    As she was explaining all this, Presley paused to catch her breath. Then she spoke slowly: "Four hundred and twenty-one dollars and forty cents, it's just too much for people. That's what I think."

    So during the summer, Presley said, when someone came around with an Amendment 4 petition, she signed it, and later she took a copy of the petition to her community center and urged everyone there to sign.

    © Copyright 1998 The Washington Post Company

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