Court Opinion

ID: 3263034
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:33:22.997366+00
Date Added: 2024-06-11T15:05:49.676183
License: Public Domain

The Honorable Paul Miller State Senator P.O. Box 488 Melbourne, AR 72556-9511
Dear Senator Miller:
I am writing in response to your request for my opinion on the following question regarding the implementation of Ark. Const. amend. 79 § (b)(1):
  Let's assume a parcel of land is valued at $10,000 in 2001 and in 2002 the parcel is reappraised and has a full assessed value of $15,000. The taxable value for 2002, using the ten percent cap, will be $11,000. In 2003, what will be the taxable value of this parcel? Will it be $12,000 or will it be $12,100?
RESPONSE
It depends on the nature of the parcel of land. I assume from your question that the parcel is not a homestead, since a homestead is subject to a 5% annual cap on the increase in assessed value following a reappraisal. Ark. amend. 79 § 1(c)(1). If the parcel is not utility or carrier real property, its taxable value in 2003 will be $12,000. If the parcel is utility or carrier real property, its taxable value in 2003 will be $12,100.
Section 1 of Ark. Const. amend. 79 provides in pertinent part:
  (a) After each county-wide reappraisal, as defined by law, and the resulting assessed value of property for ad valorum [sic] tax purposes and after each Tax Division appraisal and the resulting assessed value of utility and carrier real property for ad valorem tax purposes, the county assessor, or other official or officials designated by law, shall compare the assessed value of each parcel of real property reappraised or reassessed to the prior year's assessed value. If the assessed value of the parcel increased, then the assessed value of the parcel shall be adjusted pursuant to this section.
  (b)(1) If the parcel is not a taxpayer's homestead used as the taxpayer's principal place of residence, then for the first assessment following reappraisal, any increase in the assessed value of the parcel shall be limited to not more than ten percent (10%) of the assessed value of the parcel for the previous year. In each year thereafter the assessed value shall increase by an additional ten percent (10%) of the assessed value of the parcel for the year prior to the first assessment that resulted from reappraisal but shall not exceed the assessed value determined by the reappraisal prior to adjustment under this subsection. For utility and carrier real property, any annual increase in the assessed value of the parcel shall be limited to not more than ten percent (10%) of the assessed value for the previous year.
(Emphasis added.)
Applying this formula to your example, I agree that the taxable value of the land for 2002 will be $11,000 — an amount that reflects a 10% increase over the assessed value of the property in the year preceding the reappraisal. Your question appears to stem from confusion regarding which of the following formulas should apply in calculating the amount to be added in 2003 to the $11,000 value assessed in 2002:
$10,000 x 10% = $1,000
$11,000 x 10% = $1,100
In my opinion, the highlighted language in the above excerpt from Amendment 79 clearly dictates that the assessor apply the first formula above to property other than utility and carrier real property. The passage unequivocally states that the increase in the assessed value of such property in year two following the reappraisal will be 10% of the assessed value in the year preceding the reappraisal, not 10% of the assessed value in the year preceding the current assessment. In 2003, then, the taxable value of such a parcel should be $12,000.
By contrast, with respect to utility and carrier property, the highlighted language in the above excerpt from Amendment 79 dictates that the annual increase in the assessed value of the property be limited to 10% of the assessed value in the previous year, not 10% of the assessed value in the year preceding the reappraisal. The 10% cap would consequently apply to the $11,000 value assessed in 2002, meaning that the taxable value of the parcel in 2003 would be $12,100.
Assistant Attorney General Jack Druff prepared the foregoing, which I hereby approve.
Sincerely,
MARK PRYOR Attorney General
MP:JD/cyh