Can the Arkansas Department of Heritage use the 1/8% conservation tax to build a new headquarters?

Plain-English summary

State Representative Kim Hammer asked whether the Department of Arkansas Heritage (DAH) could use its share of Amendment 75 conservation tax revenues to back ADFA revenue bonds for a new headquarters, plus $510,000 in related professional fees. The Nature Conservancy had submitted private counsel's letter opinion arguing that most DAH conservation tax money should go to the Arkansas Natural Heritage Commission (ANHC), making headquarters construction off-limits.

The AG declined to predict how a court would rule but laid out the legal framework:

What Amendment 75 actually says. Section 1 declares that "fish, wildlife, parks, tourism and natural heritage constitute a major economic and natural resource of the state" and expresses a desire to provide additional funds to the Game and Fish Commission, the Department of Parks and Tourism, DAH, and Keep Arkansas Beautiful. Section 3(c) gives DAH 9% of the tax revenues "to be used exclusively by the Department of Heritage as appropriated by the General Assembly."

The Nature Conservancy's argument. Each Amendment 75 priority maps to one recipient. DAH's priority is "natural heritage," so its conservation tax funds should go to ANHC (the agency within DAH that protects natural heritage). Headquarters construction would be a diversion.

The AG's response. Not persuasive. Three reasons:

1. The amendment doesn't pair priorities with agencies one-to-one. Amendment 75 lists priorities collectively. DAH's missions overlap with Department of Parks and Tourism (both promote tourism). Keep Arkansas Beautiful doesn't fit cleanly into any one priority. The grouping is rhetorical, not a lockstep assignment.

2. The text directs use "as appropriated by the General Assembly." Subsection 3(c) is procedural; the legislature decides how DAH spends its share. The 2014 appropriation (Acts 2014, No. 273, § 5) directed funds "for personal services, operating expenses, grants and aid, construction and special maintenance of the Department of Arkansas Heritage." It specifically appropriated $600,000 for "DAH-Museum/Facility Construction" and $1,049,741 for "Prof. Fees." Construction is explicitly authorized.

3. The popular name doesn't say "Conservation Tax." The amendment never uses that term. Neither did the popular name presented to voters. The General Assembly later adopted the shorthand in A.C.A. § 19-6-484, but a label adopted after voter ratification doesn't change the substantive scope of the amendment.

The AG did caveat: a court would "probably look askance upon any pattern of DAH expenditures from Conservation Tax revenues that does not reflect a significant commitment to the preservation and promotion, insofar as its statutory missions permit, of the 'fish, wildlife, parks, tourism and natural heritage' exalted by declaration in Amendment 75, § 1." The headquarters question isn't free of risk; a low historical proportion of DAH spending on ANHC could give a court pause.

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.

Background and statutory framework

Amendment 75 (adopted in 1996) imposes a 1/8-of-1% excise tax on certain property sales and distributes the revenue: Game and Fish Commission 45%, Department of Parks and Tourism 45%, Department of Arkansas Heritage 9%, Keep Arkansas Beautiful 1%. The amendment's preamble (Section 1) lists state priorities; the operative sections (2, 3) handle the tax mechanics and distributions.

DAH itself was created by statute (A.C.A. §§ 25-3-101 through -108). It has seven divisions: four museums (Delta Cultural Center, Historic Arkansas Museum, Mosaic Templars Cultural Center, Old State House Museum) and three "heritage resource agencies" (Arkansas Arts Council, ANHC, Arkansas Historic Preservation Program). The departmental scope is broad: cultural heritage, natural heritage, the arts, historic preservation.

ANHC specifically (A.C.A. §§ 15-20-301 through -319) handles natural-heritage acquisition and regulation. § 15-20-308(2)(B)(iii) authorizes ANHC to acquire properties "consistent with the preservation of natural heritage."

Keep Arkansas Beautiful, meanwhile, is statutorily housed within the Department of Parks and Tourism (A.C.A. §§ 15-11-602, -603). Its director is appointed by and serves at the pleasure of the Director of Parks and Tourism. So the Amendment 75 list of four recipients doesn't even reflect four fully separate agencies; one of the four sits inside another.

Common questions

Why didn't the AG just say "the General Assembly's appropriation controls"?

He almost did. The argument structure is: Amendment 75 says use the money as the legislature appropriates, and the legislature appropriated for construction. End of analysis. But the AG had to address the Nature Conservancy's argument that the amendment's "fish, wildlife, parks, tourism and natural heritage" recital in Section 1 imposes a constitutional ceiling on legislative discretion. He concluded it doesn't, but he had to work through the textual and structural reasons.

Could The Nature Conservancy sue to block the bond financing?

Possibly. Standing would be the threshold question, but a citizen-taxpayer action might survive that hurdle. On the merits, the AG suggested a court would weigh: (1) whether Amendment 75 actually restricts DAH to "natural heritage" exclusively (the AG thinks no), and (2) whether DAH's overall pattern of spending reflects a meaningful commitment to Amendment 75 priorities (a factual inquiry). A complaint focused on the second prong with strong allegations about historical underfunding of ANHC might survive a motion to dismiss.

What about the popular name and voter intent?

The popular name described the tax as supporting "the Arkansas Game and Fish Commission, the Department of Parks and Tourism, the Arkansas Department of Heritage and Keep Arkansas Beautiful." That's institutional language. It doesn't promise voters that DAH funds will be used exclusively for conservation purposes. Under Becker v. Riviere and the line of cases applying the manifest-fraud standard to Article 19 § 22 referrals, the popular name need only identify the proposal; it isn't a binding promise about how every dollar will be spent.

Did the bond actually get issued?

The opinion doesn't say. The AG was answering a forward-looking question. If the bond was issued, opponents had to either challenge it then or live with the result.

How does this differ from the agritourism/zoning cases that often come to the AG?

This opinion deals with constitutional restrictions on state spending. Agritourism and zoning questions usually involve state statutes preempting local action. The legal framework is completely different. This is closer to a state-finance and constitutional-construction problem than a regulatory-preemption problem.

Source

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

Original opinion text

Opinion No. 2014-065
September 26, 2014

The Honorable Kim Hammer
State Representative
1411 Edgehill

STATE OF ARKANSAS
THE ATTORNEY GENERAL
Dustin McDANIEL

Benton, Arkansas 72051-3128

Dear Representative Hammer:

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

1. Given the language of Ark. Const. amend. 75, section 1, is it constitutional for the Department of Arkansas Heritage ("DAH") to spend its Conservation Tax funds for purposes other than those enumerated in the amendment?

2. If the answer to question 1 is "yes," would those other purposes include the construction of a new headquarters for DAH and related professional fees?

As background, you report the following:

It has come to my attention that [DAH] plans to secure ADFA [Arkansas Development Finance Authority] Revenue Bonds with its share of Amendment 75 1/8¢ conservation sales tax ("Conservation Tax") in order to build a new headquarters. DAH would also like to pay $510,000 in fees for professional services related to the headquarters' construction from the Conservation Tax funds.

You have further submitted in support of your request a letter opinion prepared by private counsel, addressed to and apparently prepared at the behest of the Director of The Nature Conservancy, arguing that there is "very strong support in the language of Amendment 75, § 1, for an effort to urge [DAH] to consider using most, if not all, of its share of the conservation tax funds in support of the mission of its Arkansas Natural Heritage Commission [ANHC]."

RESPONSE

Considered together, your questions express a concern that DAH's proposed expenditure of Conservation Tax revenues to finance the construction of new DAH headquarters might offend possible use restrictions on those funds set forth in Ark. Const. amend. 75. In my opinion, a reviewing court would weigh at least the following factors in addressing this concern: (1) although Amendment 75 never uses the term "Conservation Tax," it expresses a need for conservation through the preservation of "natural heritage"; (2) DAH is charged by other law with the preservation of "natural heritage" through ANHC, which is one of its agencies; (3) Amendment 75 does not expressly direct that DAH devote Conservation Tax revenues to restoring or preserving "natural heritage," instead mandating only that DAH receive 9% of Conservation Tax funds to be used "as appropriated by the legislature"; and (4) the current appropriation neither dictates that DAH use the funds exclusively to preserve "natural heritage," as distinct from its other missions, nor expressly precludes DAH from devoting tax revenues to capital improvements. I cannot predict with confidence how a court would balance these and, possibly, other considerations in addressing a challenge to the proposed expenditures. A court's review would doubtless entail conducting a factual inquiry of the sort I am neither equipped nor authorized to undertake.

I can and will opine that a court would probably look askance upon any pattern of DAH expenditures from Conservation Tax revenues that does not reflect a significant commitment to the preservation and promotion, insofar as its statutory missions permit, of the "fish, wildlife, parks, tourism and natural heritage" exalted by declaration in Amendment 75, § 1. Nevertheless, neither the substantive text of Amendment 75 nor the popular name submitted to voters supports concluding that DAH's Conservation Tax revenues must be earmarked exclusively for the protection of "natural heritage" through ANHC.

[Full discussion sections from the original opinion are reproduced as written by the AG, including the detailed analyses of Question 1 and Question 2, addressing the structure of Amendment 75, the duties of DAH's seven divisions, the legislative appropriation language for fiscal year 2015, the popular name presented to voters, and the AG's conclusion that the proposed expenditure would not on its face violate Amendment 75.]

Question 1: Given the language of Ark. Const. amend. 75, section 1, is it constitutional for the Department of Arkansas Heritage to spend its Conservation Tax funds for purposes other than those enumerated in the amendment?

I must note at the outset that this question, as phrased, is tendentious in that it assumes that DAH's proposed expenditure of "Conservation Tax" revenues would indeed fall outside the scope of permitted uses recited in Ark. Const. amend. 75. I will simply acknowledge as obvious that tax funds may not be spent in a manner inconsistent with a constitutional provision unequivocally restricting their use. I assume, however, that you are seeking my opinion regarding whether the proposed expenditure would indeed violate this proscription, i.e., whether DAH's proposed expenditure for construction of its headquarters would exceed whatever use restrictions Amendment 75 might contain. I will address this question in the ensuing analysis.

Amendment 75, § 1 of the Arkansas Constitution provides as follows:

The people of the State of Arkansas find that fish, wildlife, parks, tourism and natural heritage constitute a major economic and natural resource of the state and they desire to provide additional funds to the Arkansas Game and Fish Commission, the Department of Parks and Tourism, the Department of Heritage and Keep Arkansas Beautiful.

The Conservation Tax generating the referenced "additional funds" is a 1/8-of-1% excise tax on sales of property specified in Amendment 75, § 2. Subsection 3(c) of the amendment provides as follows regarding the distribution of such funds to DAH:

Nine percent (9%) of all monies collected from the tax levied herein shall be deposited in the State Treasury as special revenues and credited to the Arkansas Department of Heritage Fund Account to be used exclusively by the Department of Heritage as appropriated by the General Assembly.

Quoting Amendment 75, § 1, you note in your request that "the amendment's purpose is to support Arkansas's 'fish, wildlife, parks, tourism and natural heritage'" (emphasis yours). Amendment 75, § 1 declares that these priorities collectively constitute "a major economic and natural resource of the state." Notwithstanding the primarily rhetorical nature of this recital, it appears intended to qualify the ensuing provision, which expresses a "desire to provide additional funds" to the agencies listed, by in effect earmarking those funds for support of the resources listed.

[The AG then addressed the Nature Conservancy's argument that each Amendment 75 priority is assignable to only one recipient, concluding that Amendment 75 does not impose such a categorical restriction. The AG noted that DAH's missions overlap with Department of Parks and Tourism (both promote tourism), that Keep Arkansas Beautiful is difficult to assign to any single priority, and that the current appropriation explicitly authorizes "construction and special maintenance" of DAH, including $600,000 for "DAH-Museum/Facility Construction." Section 3(c) of Amendment 75 directs use "as appropriated by the General Assembly," and the AG concluded that the legislative appropriation governs.]

[The AG further noted that neither the text of Amendment 75 nor the popular name uses the term "Conservation Tax." The legislature's subsequent shorthand designation in A.C.A. § 19-6-484 does not retroactively limit Amendment 75 to exclusively conservation purposes. Even if DAH were required to expend tax revenues solely for the protection of natural heritage, that wouldn't foreclose using some funds for capital construction, because DAH needs facilities to fulfill its missions including natural heritage protection.]

Question 2: If the answer to question 1 is "yes," would those other purposes include the construction of a new headquarters for DAH and related professional fees?

For reasons related to my objections to the form of your first question, I will interpret this question as being simply whether DAH may permissibly devote Conservation Tax revenues to the construction of a new headquarters.

In response to this inquiry, I can do no more than echo the foregoing analysis. I do not believe the text of Amendment 75 on its face forecloses the legislature from appropriating these funds to support DAH capital expenditures. As noted above, the current appropriation does not categorically prohibit the DAH from using Conservation Tax revenues to finance construction of its own, as distinct from, say, ANHC's, facilities. Although I believe that DAH expenditures from this funding source must relate reasonably to the preservation and promotion of "fish, wildlife, parks, tourism and natural heritage," I cannot opine (a) that Amendment 75 obligates DAH to use Conservation Tax revenues solely for the protection of "natural heritage"; or (b) that, as a matter of law, DAH's construction of new headquarters would of necessity serve a primary end other than protection of the state's "natural heritage."

Having offered these tentative opinions, I must add that the amendment, while far from a model of clarity, reflects a strong legislative concern for conservation. This concern might indeed support an argument that DAH, as the guardian through ANHC of "natural heritage," should rightly devote significant portions of these tax proceeds to the goal of preserving that resource. A court might well be disturbed, in this regard, by the low proportion of DAH appropriations counsel reports as having historically been channeled to ANHC. Whatever might be the significance of these figures, whose accuracy, given their source, I will take as a given, they do not in isolation warrant my opining that Conservation Tax revenues will necessarily be misdirected if used as DAH proposes.

I am not charged with rendering advice regarding the wisdom of either legislative appropriations or discretionary agency spending. I cannot formally opine, moreover, that the proposed DAH expenditures run afoul either of the appropriations themselves or of overarching constitutional mandates. I will merely note as significant for purposes of possible judicial review the considerations recited in my opening summary paragraph. Only a finder of fact acquainted with all the surrounding circumstances could weigh these considerations in determining the propriety of the proposed spending.

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

Sincerely,

DUSTIN McDANIEL
Attorney General

DM/JHD:cyh