Can an Arkansas rural fire protection district board raise the assessment caps written into the original petition, or charge different flat fees by commercial property type, without a new election?

Plain-English summary

Representative Andrea Lea forwarded three questions about a Pope County rural fire protection district that was created by voter approval in 1982 under Act 35 of 1979. The district's founding petition listed specific maximum assessment amounts: $12 per residence, $8 per residential lot up to 40 acres plus $0.05 per acre over 40, $12 for the first 5,000 sq. ft. of a commercial building plus $0.005 per sq. ft. over that. The questions were about whether those amounts are "taxes," whether the board can raise them, and whether the board can use a flat-fee method.

AG Dustin McDaniel's answers:

Are the fees "taxes"? No. They are "assessments." The Arkansas Supreme Court in Rainwater v. Haynes (1968) drew a clear line between the two terms. Taxes are exactions for general revenue. Assessments are exactions for local improvements that benefit the assessed property. The word "tax" doesn't include "assessments." Even though the legislature sometimes uses the words loosely and some cases refer to Act 35 charges as creating a "tax" obligation in dicta, the AG concluded a court squarely facing the issue would call them assessments. Practically, the AG noted the distinction made little difference in this case: whether labeled tax or assessment, the levy was authorized by the legislature and approved by the voters, and no constitutional provision invalidated it.

Can the board exceed the caps written into the founding petition without going back to the voters? No. Section 4 of Act 35 expressly requires the founding petition to "specify the maximum assessed benefits which may be levied against property within the district." Those caps define the outer limit of property owners' exposure. Act 35 has no provision authorizing the board to override them unilaterally. The AG concluded any increase would require voter approval, just like the original imposition did. He also flagged this as an area where legislative clarification would be helpful.

Can the board use a flat-fee assessment method? Not in this district. Act 35 originally allowed only the assessment-of-benefits method (a committee of three appointed assessors evaluates each parcel's annual benefit). The flat-fee alternative was added by Acts 648 of 1989 and 766 of 1995, codified at A.C.A. § 14-284-212(g). Both versions of the flat-fee statute apply only to districts formed after July 3, 1989 (or July 3, 1995 in the second iteration). The Pope County district at issue was formed in 1982, so it must continue to use the assessment-of-benefits method. The Cox v. Maynard Fire Improvement District case (1985) struck down a flat-tax-rate scheme in a pre-1989 Act 35 district, and the 1989 amendments were specifically a response to Cox.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What's the difference between an "assessment" and a "tax" in Arkansas?
Under Rainwater v. Haynes (1968), the Arkansas Supreme Court distinguished them this way: taxes are exactions for general revenue. Assessments are exactions for local improvements that benefit the assessed property. The court has repeated that distinction in later cases. So a fire-protection-district levy that funds fire services for the benefited property is an "assessment," even though the district relies on the same collection machinery as the ad valorem tax system.

Can an Arkansas rural fire district's board raise the assessment caps in its founding petition?
At the time of this opinion, no, not without going back to the voters. The Act 35 statute requires the founding petition to specify maximum assessment amounts, and once voters approve those caps, the board is bound by them. Any increase would need a new vote.

Why does the founding date of the district matter for flat-fee assessments?
The original Act 35 of 1979 allowed only assessment-of-benefits levies (each parcel valued individually by appointed assessors). In 1985, the Arkansas Supreme Court in Cox v. Maynard Fire Improvement District struck down a flat-rate scheme because Act 35 didn't authorize it. The legislature responded with Act 648 of 1989 and Act 766 of 1995, which added flat-fee authority but only for districts formed after the amendment's effective date. Districts formed before that date are stuck with the old assessment-of-benefits method.

How are Act 35 assessments collected?
A.C.A. § 14-284-215(b) requires the county collector to collect district assessments "along with the other taxes" each year. The board files a record of receipts and delinquencies with the county clerk. Delinquent assessments are pursued the same way unpaid property taxes are.

Are Act 35 assessments subject to the 5-mill cap in Ark. Const. art. 12, § 4?
No, in the AG's view. Article 12, § 4 caps ad valorem taxation by "municipal corporations." Improvement districts are not "municipal corporations" in the constitutional sense (they're "inferior corporations" without political or legislative authority). And in any event, the levies are assessments, not ad valorem taxes. See AG Op. 2010-043; I.M. & S. Railway v. Board of Directors (1912).

What is the "assessment of benefits" method?
Under A.C.A. § 14-284-212(b)-(d), the district board appoints three assessors. The assessors evaluate the annual benefit that fire protection will confer on each parcel and inscribe the benefit amount in a book opposite each parcel description. Owners can appeal. The board can order annual reassessments under A.C.A. § 14-284-214.

Background and statutory framework

Act 35 of 1979 (codified at A.C.A. §§ 14-284-201 to -225) authorizes rural Arkansas fire protection districts. Two formation methods: by quorum-court ordinance (A.C.A. § 14-284-204) or by county court order after voter approval following a qualified-elector petition (A.C.A. § 14-284-205). The district in the 2014 opinion was formed by the second route.

The assessment-of-benefits method runs through A.C.A. § 14-284-212(b)-(d) and § 14-284-214 (annual reassessment). The flat-fee alternative, added later, is at § 14-284-212(g). The opinion's footnotes track the legislative history through Act 648 of 1989 and Act 766 of 1995 carefully.

The petition-cap requirement is in Section 4 of the original Act 35 (codified at A.C.A. § 14-284-206, though the opinion has an apparent typo of "14-384-206"). The AG's reading: caps in the petition are statutorily mandatory, so they must be given effect even if not later restated in the ballot title or order.

The cases the opinion relies on:

• Rainwater v. Haynes, 244 Ark. 1191 (1968): foundational distinction between taxes and assessments. The block quote from Rainwater is the core of Question 1's analysis.
• Cox v. Commissioners of Maynard Fire Improvement District No. 1, 287 Ark. 173 (1985): struck down a pre-1989 flat-rate Act 35 scheme. The Cox decision precipitated the 1989 legislative fix.
• City of North Little Rock v. Graham, 278 Ark. 547 (1983): definition of "taxes" as enforced burdens for general government function.
• Holman v. City of Dierks, 217 Ark. 677 (1950): designated insecticide-spraying levy as a "fee," not a tax.
• City of Marion v. Baioni, 312 Ark. 423 (1993): courts are not bound by how an enactment labels a charge when classifying it as tax or fee.

Prior AG opinions invoked: Op. 91-128, 95-207, 96-114, 97-016, 98-290, 2004-206, 2005-087, 2008-114, 2010-043, 2012-131, 94-030.

Citations

• A.C.A. § 14-284-205 (district formation by voter approval)
• A.C.A. §§ 14-284-201 to -225 (Repl. 1998 & Supp. 2013) (Act 35 codification)
• A.C.A. § 14-284-204 (Supp. 2013) (district formation by quorum-court ordinance)
• A.C.A. § 14-284-206 (Section 4 cap requirement in founding petition)
• A.C.A. § 14-284-212(b) (appointment of three assessors)
• A.C.A. § 14-284-212(c) (assessors inscribe benefit amounts in book)
• A.C.A. § 14-284-212(d) (advertising and equalization of assessments; appeals)
• A.C.A. § 14-284-212(g)(1)(A) (Supp. 2013) (flat-fee method, post-1995 districts)
• A.C.A. § 14-284-214 (annual reassessment authority)
• A.C.A. § 14-284-215(b) (Repl. 1998) (collection alongside other taxes)
• A.C.A. § 14-284-114(b)(1)(c), -217(c) (Repl. 1998) (annual record-keeping)
• Ark. Const. art. 12, § 4 (5-mill municipal taxation cap)
• Ark. Const. art. 16, § 5 (taxes according to value, equal and uniform)
• Acts 1989, No. 648 (added flat-fee method for post-July-3-1989 districts)
• Acts 1995, No. 766 (modified flat-fee method to post-July-3-1995 districts)
• Rainwater v. Haynes, 244 Ark. 1191, 428 S.W.2d 254 (1968) (assessments are not taxes)
• Cox v. Commissioners of Maynard Fire Improvement District No. 1, 287 Ark. 173, 697 S.W.2d 104 (1985) (pre-1989 flat-rate scheme struck)
• City of North Little Rock v. Graham, 278 Ark. 547, 647 S.W.2d 452 (1983) (tax definition)
• Holman v. City of Dierks, 217 Ark. 677, 233 S.W.2d 392 (1950) (fee vs. tax)
• Board of Improvement Sewer Dist. No. 2 v. Sisters of Mercy, 86 Ark. 109, 109 S.W. 1165 (1908)
• Martin v. Reynolds, 125 Ark. 163, 188 S.W. 4
• Missouri Pacific R. Co. v. Izard Co. Highway Imp. Dist. No. 1, 143 Ark. 261, 220 S.W. 452
• Wood v. Henderson, 225 Ark. 180, 280 S.W.2d 226
• City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993)
• I.M. & S. Railway v. Board of Directors, 102 Ark. 127, 145 S.W. 892 (1912) (levee district not a municipality)
• Miles v. Gordon, 234 Ark. 525, 353 S.W.2d 157 (1962)
• Olustee Co-operative Association v. Oklahoma Wheat Utilization Research & Market Development Comm., 391 P.2d 216 (Okla. 1964)
• Op. Att'y Gen. 91-128, 94-030, 95-207, 96-114, 97-016, 98-290, 2004-206, 2005-087, 2008-114, 2010-043, 2012-131

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STATE OF ARKANSAS

THE ATTORNEY GENERAL
Dustin McDANIEL

Opinion No. 2014-032

June 10, 2014

The Honorable Andrea Lea
State Representative
Post Office Box 1342
Russellville, Arkansas 72811-1342

Dear Representative Lea:

I am writing in response to your request for my opinion on the following
questions:

1. If a volunteer fire department petitions to become a fire
   protection district under A.C.A. § 14-284-205 (Act 35 [of 1979])
   and the ballot measure is successful, the Board is given broad
   authority and responsibilities as to how to oversee the
   department. Are the fees/dues that the board is allowed to assess
   classified as taxes?

2. If the petition used to put a referendum on the ballot to create the
   fire protection district specifically lists the maximum amount of
   assessed levy that can be charged by the district, in this case $20,
   and does not provide for a method to change those limits and
   there have been no other elections to increase the maximums, can
   the Board of Directors randomly override or exceed those
   assessment caps or levies without going back to the ballot to have
   those caps or windows increased based once again on the
   wording and structure of the original petition for this ballot
   measure?

3. If the Board of Directors chooses to use the flat fee assessment
   method provided in Act 35 and assigns a rate of levy to each [of]
   the residential and commercial property categories, can the
   commercial levy differ for different types of commercial
   properties or must that flat rate apply consistently throughout the
   district for all commercial property?

You have attached to your request a copy of a petition, file-marked October 16,
1981, seeking the creation of a fire district in Pope County. The petition is signed
by various individuals who I assume were residents of the proposed district. You
have further attached a copy of a Pope County Court order, dated February 4,
1982, reflecting district voter approval and duly creating the district. I will
address your questions as relating to this particular district.

RESPONSE

With respect to your first question, in my opinion, a court directly faced with the
issue would probably decline to classify as "taxes" assessments imposed pursuant
to Act 35 of 1979. Although "assessments" are at times referred to as "taxes," the
Arkansas Supreme Court, in directly confronting the issue, has expressly
distinguished between the two categories. I interpret your second question to be
whether the district board of commissioners may exceed legally mandated
assessment caps without first obtaining voter approval to do so. In my opinion,
the answer to this question is "no." With respect to your third question, Act 35
authorizes the adoption of a "flat fee assessment method" only in districts formed
after July 3, 1989. The district here at issue was formed in 1982, meaning it is not
authorized to impose any flat-fee assessments, whether differential or uniform.

Question 1: If a volunteer fire department petitions to become a fire protection
district under A.C.A. § 14-284-205 (Act 35 [of 1979]) and the ballot measure is
successful, the Board is given broad authority and responsibilities as to how to
oversee the department. Are the fees/dues that the board is allowed to assess
classified as taxes?

In my opinion, a court faced with the issue would in all likelihood classify the
assessments as "fees," not "taxes."

I note initially that it is unclear what bearing the opening declaration in this
question has on the question itself. I must point out, however, that "a volunteer
fire department" cannot "petition[] to become a fire protection district under
A.C.A. § 14-284-205" (Act 35 of 1979). Act 35 does not authorize a fire
department to seek district status, nor does the petition you have attached to your
request appear to have been tendered by a fire department. The petition was
signed by what I assume to be the requisite number of qualified electors pursuant
to Act 35.

Act 35 provides two methods for the establishment of fire protection districts in
rural areas, either by ordinance of the quorum court or by order of the county
court following an election of the qualified voters of the proposed district. The
documents you have provided reflect that the district at issue in your request was
created by the latter method, effective February 4, 1982.

On at least one occasion, the Arkansas Supreme Court has referred in dictum to
Act 35 assessments as giving rise to a "tax" obligation. The Code in at least two
instances requires that assessments be treated in the same manner as taxes. On
various occasions, this office has further reproduced without commentary a
requester's reference to assessments as "taxes" under the Code chapter
incorporating Act 35. On none of these occasions was the designation of
assessments as either "taxes" or "fees" at issue. In another opinion, however, one
of my predecessors suggested that Act 35 assessments are distinguishable from
"bona fide taxes."

The designation of "assessments" as "taxes" appears consistent with the general
principle, articulated by the Arkansas Supreme Court, that "taxes" are "enforced
burdens exacted pursuant to statutory authority." In elaborating on this
definition, the court noted that the term applies in particular to "a payment exacted
. . . as a contribution toward the cost of maintaining the traditional governmental
functions of police and fire protection." The court distinguished such payments
from "fees" charged for "services to be rendered, such as 'fogging the city with an
insecticide three times a year.'" The assessments at issue in your request were
approved by the voters in accordance with an express statutory directive and were
used for the "traditional governmental function" of providing ongoing fire
protection services. At first blush, these facts would consequently appear to
support designating the assessments as "taxes."

Nevertheless, I believe a reviewing court addressed with the issue would decline
to designate an Act 35 assessment as a true "tax." When confronted squarely with
the question of whether "assessments" indeed constitute "taxes," the Arkansas
Supreme Court has answered in the negative. In Rainwater v. Haynes, the court
offered the following summary of the relationship between the two terms:

[S]pecial assessments are not really "taxes" in the usual and ordinary
meaning of the word. While both are referable to the sovereign
power of taxation, the words "taxes" on the one hand and
"assessment," "special assessments" or "local assessments" on the
other, ordinarily have distinct legal meanings. The word "taxes"
refers to exactions laid by the government for purposes of general
revenue. The word "assessments" refers to exactions laid for
making local improvements for the benefit of property owners. The
word "tax" does not include "assessments." Board of Improvement
Sewer Dist. No. 2 v. Sisters of Mercy, 86 Ark. 109, 109 S.W. 1165,
15 Ann. Cas. 347; Martin v. Reynolds, 125 Ark. 163, 188 S.W. 4;
Missouri Pacific R. Co. v. Izard Co. Highway Imp. Dist. No. 1, 143
Ark. 261, 220 S.W. 452. See, also, Wood v. Henderson, 225 Ark.
180, 280 S.W.2d 226.

Moreover, in districts formed after 1989, the Code expressly authorizes the
commissioners to "assess a flat fee per parcel" or "per landowner" within the
district. It defies credulity to suggest that an assessment imposed in a district
formed under Act 35 in its unamended form constitutes "taxation," whereas a "flat
fee" for precisely the same service in a district formed after the amendment does
not.

In my opinion, then, although the term "tax" has been occasionally applied to an
Act 35 assessment, I believe a court confronted with the issue would conclude that
such assessments are, in fact, "fees." For reasons set forth in the above excerpt
from Rainwater, I believe it would be inappropriate to classify an Act 35
assessment as a true "tax."

Finally, I must note that the designation of an Act 35 assessment as either a "tax"
or a "fee" would appear to be insignificant in determining the validity of the levy.
The Code expressly authorizes the imposition of this assessment upon voter
approval of the sort reportedly obtained in this case. Nothing suggests that,
however designated, a legislatively approved assessment of this sort would violate
any constitutional provision. Even if the assessment were deemed a "tax", a
result I consider highly unlikely, concluding as much would appear to be
irrelevant in determining the validity of the assessment. Irrespective of how it is
designated, such an assessment is consistent in all respects with applicable law.

Question 2: If the petition used to put a referendum on the ballot to create the
fire protection district specifically lists the maximum amount of assessed levy
that can be charged by the district, in this case $20, and does not provide for a
method to change those limits and there have been no other elections to increase
the maximums, can the Board of Directors randomly override or exceed those
assessment caps or levies without going back to the ballot to have those caps or
windows increased based once again on the wording and structure of the
original petition for this ballot measure?

This question, as phrased, is both tendentious and somewhat confusing. Although
the petition, for instance, does impose assessment caps on residential and
commercial properties, the suggestion that these caps universally total $20 appears
mistaken. The caps recited in the petition are as follows:

$12.00 per Residence (Bars, outbuilding[s], Chicken and Turkey houses excluded).
$8.00 for assessed lots up to 40 acres.
$.05 per acre all over 40 acres in same assessment.
$12.00 for the first 5,000 sq. ft. for a commercial building.
$.005 per sq. ft. all over the first 5,000 sq. ft.

It is further unclear what you mean by your alternative references, on
the one hand, to an increase "based once again on the wording and structure of the
original petition" and, on the other, to a "random[] override" by commissioners of
the assessment caps. Your underlying question, however, appears to be whether
the district board of commissioners may exceed the assessment caps recited in a
petition without first obtaining voter approval to do so. In my opinion, the answer
to this question is "no."

Section 4 of Act 35 expressly requires that any petition for the formation of a
district directed to the county court "specify the maximum assessed benefits which
may be levied against property within the district for the support of the district."
In my opinion, these caps, which are required by statutory mandate to be recited in
the petition, must be given effect unless subsequently changed. In order to avoid
rendering Section 4 meaningless, the conclusion just stated must apply even
though the caps in this instance were not recited either in the ballot title or in the
order creating the district. Act 35 requires only that these caps be specified in the
petition. Any such cap of necessity defines the extreme of any residential or
commercial exposure to assessments. Conspicuously absent in Act 35 is any
authorization for the board of commissioners to exceed such caps. Although Act
35 does not expressly address the issue, I believe a reviewing court would
conclude that any increase in the assessment caps must be approved by voters, as
was the original imposition of an assessment obligation. Legislative clarification
on this point is warranted, however.

Question 3: If the Board of Directors chooses to use the flat fee assessment
method provided in Act 35 and assigns a rate of levy to each [of] the residential
and commercial property categories, can the commercial levy differ for different
types of commercial properties or must that flat rate apply consistently
throughout the district for all commercial property?

This question mistakenly assumes that Act 35 indeed authorizes the adoption of a
"flat fee assessment method." Flat-fee assessments were authorized only in
legislation enacted subsequent to the effective date of Act 35, and they are
available only in districts formed after July 3, 1989. It follows that the board of
commissioners in the district here at issue, which was formed in 1982, is not
authorized to impose any flat-fee assessments.

A review of the pertinent legislative history supports this conclusion. As my
predecessor noted in the attached Opinion 2008-114:

As originally adopted, by virtue of Acts 1979, No. 35, the applicable
subchapter only authorized fire protection districts to levy
"assessments," which reflected the "benefits to the lands within the
district." Under this procedure, the board of the fire district is to
appoint three assessors to assess the annual benefits. A.C.A. § 14-
284-212(b). The assessors are to assess the annual benefits to the
lands and "inscribe in a book each tract of land and extend opposite
the inscription of each tract of land the amount of annual benefits
that will accrue each year to that land by reason of the services."
A.C.A. § 14-284-212(c). Subsection (d) of the same statute provides
that:

The original assessment of benefits and any reassessment shall
be advertised and equalized in the same manner as provided in
this subchapter, and owners of all property whose assessment
has been raised shall have the right to be heard and to appeal
from the decision of the assessors, as hereinafter provided.

. . . See also, A.C.A. § 14-284-214 (providing for an annual
reassessment of benefits, if necessary).

The laws recited in this excerpt remain unchanged.

As my predecessor further noted, the pertinent subchapter of the Code was later
amended to allow for flat-fee assessments in districts formed following the
effective dates of the amendments. My predecessor noted as follows regarding
subsequent legislative amendments:

The applicable subchapter was amended . . . in both 1989 and 1995,
to authorize, as an alternative to assessing benefits, the levy of a
"flat fee" per parcel of land. See Acts 1989, No. 648 and Acts 1995,
No. 766, codified in pertinent part at A.C.A. § 14-284-212(g).

This alternative, however, is not available to districts formed prior to the
amendments. The pertinent section of the statute referenced in this excerpt
currently provides as follows:

The elected board of commissioners of a fire protection district
formed after July 3, 1995, under this subchapter may assess a flat fee
per parcel of land or per acre of land located within the district or
assess a flat fee per landowner who owns land located within the
district, as an alternative to assessing benefits.

During the period between the enactment of Act 648 of 1989 and Act 766 of 1995,
the highlighted passage in this statute read "fire protection districts formed after
July 3, 1989." As this statute in both versions reflects, the authorization to impose
flat-fee assessments on parcels contained within a district formed under this
subchapter of the Code applies only to districts formed after July 3, 1989, a group
that does not include the district at issue in your question. Imposing flat-rate
levies on commercial properties in this district is thus barred, irrespective of
whether these rates are uniform or differential.

Assistant Attorney General Jack Druff prepared the foregoing opinion, which I
hereby approve.

Sincerely,

Dustin McDaniel
Attorney General

DM/JHD:cyh