‘An improper tax’: Judge declares $18 charge illegal

Tuesday, March 10, 2020

By Scott Loftis


Carroll County Circuit Judge Scott Jackson ruled Friday that an $18 charge included annually on property tax bills for Carroll County landowners is “an improper tax.”

The charge will continue to be billed and collected, however, pending a likely appeal of Jackson’s ruling.

Jackson made his ruling at the conclusion of a hearing in a class-action lawsuit challenging the $18 charge, which is intended to repay bondholders and the Arkansas Department of Environmental Quality in connection with a failed landfill in Baxter County that was purchased in 2005 by the Ozark Mountain Solid Waste District.

Fayetteville attorneys Matt Bishop and Wendy Howerton filed separate lawsuits challenging the $18 charge in each of the six counties — Baxter, Boone, Carroll, Marion, Newton and Searcy — where it is being levied. Defendants in the Carroll County Suit are the solid waste district and Carroll County tax collector Kay Phillips.

Pulaski County Circuit Judge Tim Fox ordered the collection of the $18 fee following the recommendation of Geoffrey Treece, a court-appointed receiver for the solid waste district, after Bank of the Ozarks (now Bank OZK) sued the waste district on behalf of the bondholders in 2014.

Mary-Tipton Thalheimer, the attorney representing Treece, argued that the $18 charge is a service fee that the waste district is legally authorized to collect. Bishop and Howerton argued that it is an illegal exaction and is not connected to services provided by the waste district.

During Friday’s hearing, Berryville mayor Tim McKinney testified that most garbage collection and disposal in Carroll County is provided by the newly formed Carroll County Solid Waste District — and before that by the Carroll County Solid Waste Authority — which charges a fee for its service. McKinney said the Ozark Mountain Solid Waste District does not provide any garbage collection services in the county.

Melinda Caldwell, director of the solid waste district, acknowledged during her testimony that the district does not collect or dispose of garbage in Carroll County, although it is responsible for licensing haulers in the county.

Jackson denied a motion by Thalheimer seeking a directed verdict, rejecting her argument that the Summers lawsuit amounted to a “collateral attack” on Fox’s order. Jackson pointed out that the court had addressed that argument at two earlier hearings.

In announcing his ruling, Jackson referred to Arkansas Code § 8-6-714, which outlines the authority of regional solid waste management boards to impose fees or charges for the collection and disposal of solid waste.

“The court has to decide whether 8-6-714 should be construed broadly or very narrowly,” Jackson said. “When I say narrowly, I mean within the clear meaning of the statute. … The court’s ruling is that (the $18 charge) is not within the plain meaning of 8-6-714.”

The $18 charge is collected by Phillips’ office and remitted monthly to the Carroll County treasurer, who in turn remits the collections annually to Treece to be disbursed to the bondholders and ADEQ. Jackson ordered Treece to hold the money that is collected until any appeals are adjudicated.

Bishop and Howerton had issued a subpoena for state Sen. Bob Ballinger to testify, but withdrew it after Ballinger filed an emergency motion Thursday with the Arkansas Supreme Court requesting a stay of Friday’s hearing. That followed Jackson’s denial of a motion by Ballinger to quash the subpoena. That motion argued that “any testimony of Senator Ballinger is protected by legislative privileges and immunity …”

Bishop said Monday that he chose to withdraw the subpoena for Ballinger rather than risk having Friday’s hearing delayed.

As for Jackson’s ruling, Bishop said he expects an appeal to either the Arkansas Court of Appeals or the state Supreme Court. Still, he was pleased with Friday’s outcome.

“I’m very happy,” Bishop said.

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