The Honorable Shirley Walters State Representative P.O. Box 1876 Greenwood, Arkansas 72938-1876

Dear Representative Walters:

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

1. What action would be required for school districts to be able to impose and use a local sales tax solely for school district purposes?

2. Is there any method by which a local sales tax can be assessed and collected specifically for school district use?

RESPONSE

Although a school district does not have the authority to itself impose a sales tax, a 1993 law authorizes a city or county to designate on the ballot of a sales and use tax measure that a portion of the proposed tax will be dedicated to a school district or districts located wholly or partially within the city or county.

Section 26-73-114 provides as follows:

26-73-114. Dedication of sales and use tax to school district.

(a) When a city or county calls an election on the issue of a sales and use tax, it may designate on the ballot that a portion of the tax will be dedicated to a school district or districts located wholly or partially within the city or county on a per capita basis.

(b)(1) The Treasurer of State shall transmit to the treasurer or fiscal officer of each such local school district that district's share of the local sales and use taxes collected under this section at the same time as the city and county taxes are transmitted.

(2) Funds so transmitted may be used by the school district for any purpose for which the school district's general funds may be used.

(c) To the extent § 14-58-502 conflicts with this section, it is hereby superseded.¹

In response to your questions, therefore, the available method for school districts to impose and use a local sales tax solely for school district purposes is a city or county sales tax election as set out above. School districts do not have independent power to levy sales taxes under current law. See Op. Att'y Gen. 87-385.

Deputy Attorney General Elana C. Wills prepared the foregoing opinion, which I hereby approve.

Sincerely,

MIKE BEEBE Attorney General

MB:ECW/cyh

¹ Section 14-58-501 of the Arkansas Code authorizes cities and incorporated towns to grant financial aid to public school districts in the city or town. Section 14-58-502, however, restricts the funds from which such aid is payable. The latter provision states that: "payments shall not be made from the regular city taxes collected by the county or state for the town or city." Before the passage of A.C.A. § 26-73-114, this provision in all likelihood prohibited a city from granting local sales tax funds to a school district. See Op. Att'y Gen. 92-301. The adoption of A.C.A. § 26-73-114 in 1993, however, now authorizes this action, under the circumstances outlined in that law. See Op. Att'y Gen.98-025.