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Carlock v. The City of Blytheville

Supreme Court of Arkansas

October 24, 2019



          Law Offices of Harris & Morrison, by: James W. Harris and Zachary W. Morrison, for appellant.

          William Clark Mann III, for appellee.


         James Craig Carlock, individually and as a representative of a class of persons similarly situated, appeals from an order of the Mississippi County Circuit Court dismissing his illegal-exaction complaint against the City of Blytheville, Arkansas. He argues on appeal that the trial court should have been permitted to look beyond the wording of the enabling ordinance and ballot title in determining whether tax money is being spent for an approved purpose. He contends that case law from this court to the contrary should either be overruled or not applied in this case. We affirm.

         For a period of time, the City stopped paying payroll and employment taxes to the federal government. In 2011, the Internal Revenue Service made a demand for payment of the unpaid taxes. In December 2011, the City passed an ordinance proposing a temporary one-cent sales and use tax to be collected for fifteen months. The City passed a second ordinance calling for a special election to be held on the proposed tax on March 13, 2012.

         The ballot title for the proposed tax stated,

The Sales and Use Tax shall be levied and the net collections received used by the City to pay and remit federal and state income tax withholdings, employer and employee FICA and Medicare payroll tax contributions, federal and state employment tax contributions, and other amounts due and payable by the City to federal and state authorities in connection therewith.

         The proposed tax was approved at the special election. The tax generated $3, 519, 296.57 in revenue. The City paid the federal government $2, 947, 853.05 to settle its tax obligation. After the debt was satisfied, the City continued to collect the tax for the last two months of the fifteen-month enactment period. A total of $571, 443.52 in revenue remained after the debt was satisfied. Those funds were placed in a separate account and used to pay payroll taxes.

         In September 2014, Carlock filed a class-action complaint alleging that the excess revenue was an illegal exaction because the tax was approved for the sole purpose of paying the City's debt to the federal government. Carlock sought to certify a class defined as "[a]ll citizens of Blytheville, Arkansas, during the period of September 1, 2012, through December 1, 2013." The parties filed competing motions for summary judgment. In his motion, Carlock urged the trial court to consider media coverage of the election, along with statements by City officials, in determining whether the City's use of the excess funds constituted an illegal exaction. Following a hearing on the motions, the trial court entered an order granting summary judgment in favor of the City and dismissing Carlock's complaint. In the order, the trial court recited case law from this court holding that the determination of whether the use of tax revenue for a specific purpose is to be based on the wording of the ballot title. The trial court found that, based on the wording of the ballot title, the City's use of the excess funds to pay payroll taxes was authorized and there was no illegal exaction. This appeal followed.

         The law is well settled regarding the standard of review used by this court in reviewing a grant of summary judgment. Muccio v. Hunt, 2016 Ark. 178, 490 S.W.3d 310. A trial court will grant summary judgment only when it is apparent that no genuine issues of material fact exist requiring litigation and that the moving party is entitled to judgment as a matter of law. Id. The burden of proof shifts to the opposing party once the moving party establishes a prima facie entitlement to summary judgment; the opposing party must demonstrate the existence of a material issue of fact. Id. After reviewing the evidence, the trial court should deny summary judgment if, under the evidence, reasonable minds could reach different conclusions from the same undisputed facts. Id.

         This court has held that any use of sales-tax revenue for purposes other than those designated by the levying ordinance and the ballot is in violation of article 16, § 11 of the Arkansas Constitution and constitutes an illegal exaction. Daniel v. Jones, 332 Ark. 489, 966 S.W.2d 226 (1998). This court limits review to the enacting ordinance and ballot title because it has long been regarded as axiomatic that the majority of voters, when called upon to vote for or against a proposed measure at a general election, will derive their information about its contents from an inspection of the ballot title immediately before exercising the right of suffrage. Christian Civic Action Comm. v. McCuen, 318 Ark. 241, 245, 884 S.W.2d 605, 607 (1994). This, indeed, is the purpose of the ballot title. Id.

         Carlock recognizes this court's precedent. Despite this, he contends on appeal that in illegal-exaction cases involving a tax enacted through an election, trial courts should be permitted to consider evidence other than the ballot title in determining whether tax revenue is being used for an authorized purpose. To that end, he argues that precedent from this court requiring a trial court to make the decision based on the contents of the ballot title be either reversed or not applied in this case.

         We decline Carlock's invitation to break from our longstanding precedent. In Arkansas-Missouri Power Corp. v. City of Rector, 214 Ark. 649, 217 S.W.2d 335 (1949), it was argued that the fact that the revenue generated from a tax enacted for the stated purpose of constructing a power plant would be insufficient to cover the entire construction cost did not render the tax an illegal exaction, despite the absence of any indication in the language of the ballot title that additional funds would be necessary, because the need for ...

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