Billboard tax ruling set aside after AG objects

A Pulaski County circuit judge set aside her ruling that voided part of a state law regulating billboards after she learned the attorney general’s office had objected.

The case, in front of Judge Mary McGowan, questions the constitutionality of Act 573 of 2015, which limits the assessment methods a county can use to tax “off-premises advertising signs.”

Under the law, assessors must use the “cost approach.” In general, when using this approach, a property’s market value is equal to the costs of land and construction against depreciation.

Assessors can’t use factors like the age of the sign or location information to make their calculations, the law says.

In 2015, the Arkansas Outdoor Advertising Association Inc. worked with state lawmakers to pass Act 573 to avoid a “massive tax increase” anticipated by new guidelines under the state Assessment Coordination Department, according to Thomas Gibbens, president of the advertising association.

His testimony was entered as a court filing in the lawsuit, which was filed in October by a married couple, Charles Louis Lee Lott and Kaitlin Anne Lott.

Pulaski County Assessor Janet Troutman Ward and Bear Chaney, director of the Assessment Coordination Department, were named as defendants. Chaney was eventually dismissed.

The Lotts’ complaint quoted Article 16, Section 5 of the Arkansas Constitution.

It says the General Assembly can establish procedures for valuing taxable property “by a vote of not less than threefourths of the members elected to each house.”

Act 573 was not passed with three-fourths of the vote by the House or the Senate; therefore, it’s unconstitutional, the complaint says.

The law was passed 18-9 in the Senate, with seven people not voting. In the House, lawmakers approved the law 67-6, with 23 people not voting and four people voting “present.”

“We don’t understand why a parliamentarian … wouldn’t have caught this at the time and ruled that the vote failed, instead of passed,” said John L. Burnett, one of two attorneys representing the Lotts. The other is Bettina Brownstein.

Because of Act 573, signs have been assessed at “less than fair market value,” the lawsuit argues.

Most revenue from property taxes benefit public schools, and the Lotts have two children in the Little Rock School District, the complaint says.

County Attorney Adam Fogleman represented Ward. Last week, Burnett filed a motion for “consent judgment,” basically saying the Lotts and Ward agreed that Section 2 of Act 573 is unconstitutional.

That section is the bulk of the law. The next day, McGowan ruled that section null and void. However, she set aside that decision Tuesday.

What McGowan did not realize, she wrote in her Tuesday order, is the state attorney general’s office filed a motion objecting to the motion for consent judgment.

Burnett and Fogleman filed the consent judgment motion March 13. The attorney general’s objection was filed the next day, but it did not appear in the electronic filing system before McGowan issued her ruling later that afternoon, she wrote.

Whenever the constitutionality of a law is challenged, the attorney general is entitled to be heard, McGowan wrote.

She set aside her prior ruling so the objection can be argued. There was no indication of when that might happen in the court filings.

Fogleman said he cannot comment on ongoing litigation. William C. Bird, the lawyer for the attorney general’s office, is not able to speak on-the-record to the media, a spokesman said on his behalf.

McGowan’s Tuesday order did not mention that Arkansas Outdoor Advertising Association Inc. asked to intervene in the case March 16.

According to the association’s attorney, Sylvester Smith, overturning Act 573 will cost the association “hundreds of thousands of additional dollars” in taxes.

Allowing the association to intervene will force the case to be argued “in the light of day rather than making some back room deal to declare a law unconstitutional without public debate,” Smith wrote.

When reached by phone, Burnett said the law is “blatantly unconstitutional” since it doesn’t meet the voting requirements.

“There’s a reason that the constitution requires such an extraordinary vote when you start messing around with property assessment,” he said.