Senate committee hears hours of testimony on bill to let counties, cities renegotiate countywide sales-tax allocation; 'do pass' motion fails

The Senate Revenue and Tax Committee on Oct. 12 debated Senate Bill 394, which would create a statutory path for counties and incorporated municipalities to negotiate a new allocation of countywide 1¢ sales tax revenue when an urban municipality's population exceeds the county's rural population. Sponsor Joshua Bridal (Senate District 32) told the committee SB394 would not change current distributions unless voters approve a new interlocal agreement; instead, the bill creates a legal route to trigger those interlocal talks and, if agreed, refer the reallocation to countywide voters.

Why it matters: Counties and cities in parts of Arkansas have seen major population shifts since the countywide sales tax scheme was written in the early 1980s. Supporters say some counties' constitutional obligations — courts, jail operations, clerks — are funded by a shrinking share of the county tax and that the bill gives local governments a negotiated option short of a voter-led abolition. Opponents contend the proposal risks shifting tens of millions of dollars away from municipal services including police, fire and infrastructure.

Bridal opened the committee presentation with a walkthrough of the statute’s history, pointing to Act 26 of 1981 and related law that set a per-capita allocation default if no interlocal agreement existed. He said the law allowed counties to set an expiration date on a tax or negotiate interlocal agreements with cities, but it did not anticipate modern urban annexation patterns. “What the bill does is it would allow a look at the tax again based on allocation if any one city exceeds the population of the rural county,” Bridal said, describing a trigger tied to census-derived population shares.

County officials and municipal leaders gave contrasting testimony. Benton County Judge Barry Moring, who described repeated local efforts to secure additional county sales tax revenue that voters had rejected, framed the bill as giving voters and local elected officials a way to revisit allocations. “It simply empowers voters to decide how to allocate their countywide sales taxes,” Moring said, adding that Benton County’s unincorporated share dropped from roughly 45% in 1990 to about 15% today while county obligations remained.

Several mayors and municipal finance officers said the bill threatened core city services. Charles Snapp, mayor of Walnut Ridge, said the county sales tax is “essential for city services” and that his municipality generates more than half of county sales-tax revenue while formally receiving a much smaller share. Bill Edwards, mayor of Centerton, said his city relies on county tax allocations for about 35% of its $16 million annual budget and warned that cuts would endanger EMS and fire services. Justin Scantlin of the Arkansas Association of Fire Chiefs told the committee municipal fire budgets could be cut 20–35% under reallocation scenarios and that many rural residents rely on municipal-provided emergency services.

Committee procedure and vote: Early in the public-comment period the committee adopted a three-minute time limit for each speaker; that procedural motion passed. After more than two hours of testimony and questions from committee members, the committee took formal action on SB394. Senator Hester moved a “do pass” recommendation and Senator Petty seconded. The chair called a roll call; the motion failed on the committee vote (yes: Hester, Hammer, Petty; no: Caldwell; not voting/absent or no vote recorded: Desmaine/Desmay?, Boyd, Crowell and others), so SB394 did not receive a favorable recommendation from the committee.

What’s next: Because the committee voted not to give SB394 a “do pass” recommendation, the bill’s immediate path from the committee ends unless the sponsor reintroduces it or a member successfully moves to reconsider. Supporters framed the measure as giving local leaders tools to negotiate before counties face a full abolition vote; opponents urged caution, saying municipal budgets and public-safety services depend on current allocations.