City’s Lawsuit Over Act 833 Fund Distribution Dismissed By Judge May 8th

May 15th, 2014 | By admin | Category: News and Features

BY LEE “CAT” McLANE

Editor/Publisher

An issue that has been batted back and forth between the White County Quorum Court and members of the County Intergovernmental Cooperation Council (CICC) - made up of the 16 mayors of the county and the White County Judge and County Clerk  -involves the way in which Act 833 monies are distributed among the county’s fire departments. These monies have, in the past several years, been distributed according to the current census and have been used by the fire departments to finance large purchases of equipment, such as fire trucks.

The issue came up in Circuit Court with retired Pulaski County Circuit Judge Marion Humphrey presiding last Thursday, May 8th.  After a motion to dismiss the case was presented, the judge granted the motion after hearing testimony from Richard Drilling, fiscal accounting manager at the Dept. of Finance and Administration’s Office of Administrative Services.  The Act 833 funds have been frozen since the lawsuit was brought in January 2013.

Act 833 of 1991 tacks a 0.5 percent premium tax on fire insurance collected from Arkansas homeowners and is deposited into the Fire Protection Premium Tax Fund quarterly and is distributed on a quarterly basis.

The issue about the distribution of the funds came up in March of 2012 when the CICC voted to use the 2000 census to distribute the funds instead of using the current 2010 census. This would cause smaller cities to receive more and Searcy and Beebe to receive less money. This is when the City of Beebe brought the lawsuit.

The CICC later decided to use a 60/40 plan to distribute the funds which would use a combination of population (60%) and the remainder would be distributed equally  throughout the fire districts (40%).

Mayor Mike Robertson expressed his opinion about the lawsuit dismissal by saying:

“How I feel about it is we are correct in the interpretation of the original implementing procedures to implement act 833.  DFA chief fiscal officer Richard Drilling has been remiss, neglectful in his responsibilities of enforcement resulting in chaos of distribution of funds distributed in Arkansas.  Rather than accept responsibility he has chosen to say he should have amended implementing procedures to allow CICC a blank form to do as they wish as he has allowed.  His decision not to follow DFA procedures as written results in inequitable distribution per capita allowing taxation without representation.  Insurance premium tax paid in Beebe is not staying in Beebe to improve fire protection to the residents of Beebe.  Beebe fire trucks have always been paid for out of Act 833 funds since  the 1990 census.  Beebe will now have to pay out of General Fund resulting in shortage of services elsewhere.  Pledging of funds for 10 years as designated by Act 833 for equipment will no longer be acceptable by finance companies.  DFA  is not accepting responsibility for their actions.”

“I thank the city council and fire department for having the integrity to stand up for the rights of the citizens of Beebe. By taking this stand we have made others realize that mayors representing less than 10 percent of the population of White County are controlling insurance tax premium distribution for fire improvements.   Beebe and Searcy citizens are paying the most in taxes and receiving the least. I encourage Beebe and Searcy residents to communicate to their state officials a need to amend Act 833 statute to clarify equitable distribution of insurance tax funds.”