Ark. Code Ann. § 26-73-103 (2026)
Levy of new taxes permitted — Exceptions
History. Acts 1977, No. 942, § 3; A.S.A. 1947, § 17-2002; Acts 1994 (1st Ex. Sess.), No. 6, § 4; 1994 (1st Ex. Sess.), No. 7, § 4.
Publisher's Notes. Identical Acts 1994 (1st Ex. Sess.) Nos. 6 and 7, § 1, provided:
“LEGISLATIVE FINDINGS.
(a) In the State of Arkansas, municipalities are granted jurisdiction and authority over the use and control of the public rights-of-way within the corporate limits of the municipality, to the extent that such jurisdiction does not conflict with state or federal statutes or regulations.
“(b) This historic authority has included the right to assess franchise fees for the privilege of the use of such rights-of-way and of providing utility service to the public.
“(c) On numerous occasions, the courts of the State of Arkansas have referred to this right to assess franchise fees against public utilities. For example, in Hot Springs Electric Light Co. v. Hot Springs, 70 Ark. 300 (1902), the Arkansas Supreme Court expressly stated that cities may assess a franchise fee as a condition for the use of public rights-of-way.”
Identical Acts 1994 (1st Ex. Sess.) Nos. 6 and 7, § 2, provided:
“STATEMENT OF POLICY. It is, and historically has been, the policy of the State of Arkansas to permit municipalities, as one means of raising revenues, to assess municipal franchise fees against public utilities for the privilege of providing utility services to the public and of using public rights-of-way, including streets, highways, or other public places of any kind whatsoever within municipal boundaries and such franchise fees have not been considered to be within the scope of A.C.A. § 26-73-103 so as to require a vote of the electorate.
“It is also the policy of the State that nothing in this Act shall amend or adversely impact the terms and provisions of an existing franchise agreement between a municipality and a public utility entered into pursuant to A.C.A. § 14-54-704, A.C.A.§ 14-200-101, or any other enabling legislation relating to franchise fees in effect at the time of the agreement.”
Research References
U. Ark. Little Rock L.J.
Survey of Arkansas Law, Public Law, 1 U. Ark. Little Rock L.J. 230.
Goldner, A Call for Reform of Arkansas Municipal Law, 15 U. Ark. Little Rock L.J. 175.
Case Notes
Approval of Voters.
Because voters did not approve the surcharge, it constituted an illegal tax. Barnhart v. City of Fayetteville, 321 Ark. 197, 900 S.W.2d 539 (1995).
Fees.
A series of ordinances that placed “tapping fees” on builders or lot owners connecting onto city's existing water and sewer systems and required “access fees” from any person or entity connecting to city's transmission lines, placing the funds collected from these respective fees in separate accounts designed as the “water expansion account” and “sewer expansion account” and used solely to expand the city's water and sewer systems, were valid because they assessed fees and not taxes. City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993).
The distinction between a tax and a fee is that government imposes a tax for general revenue purposes, but a fee is imposed in the government's exercise of its police powers. City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993).
The court, in determining whether a governmental charge, assessment or fee is a tax, is not bound by how the enactment or levy labels it. City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993).
The holding in City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993), is simply inapplicable to situations where cities are statutorily authorized to assess public utilities franchise fees for the use or occupancy of the cities' rights-of-way. City of Little Rock v. AT&T Communications, 318 Ark. 616, 888 S.W.2d 290 (1994).
Illegal Exactions.
Charge that was imposed by ordinance and used to pay for a salary increase for city policemen and firemen was a payment exacted by the municipality as a contribution toward the cost of maintaining the traditional governmental functions of police and fire protection and was not for a specific, special service, but was a means of raising revenue to pay additional money for services already in effect; therefore, the charge was a tax and not a fee, and the ordinance imposing it, which was never voted on by the electors as required by this section, was void as an illegal exaction. City of N. Little Rock v. Graham, 278 Ark. 547, 647 S.W.2d 452 (1983).
City ordinance imposing charge for police and fire protection and street lighting was not a property tax within the meaning of Ark. Const., Art. 12, § 4 or §§ 26-25-102 and 26-25-103, where ordinance placed tax on the “resident” or “occupant” of the property as opposed to a tax on the “residence” or upon the “real property,” and such tax was not otherwise prohibited by subsection (a) of this section. Holt v. City of Maumelle, 302 Ark. 51, 786 S.W.2d 581 (1990).
Stormwater utility fee was not an illegal exaction because § 14-235-223(a)(1) did not state that the fee had to be paid by any beneficiary, whether intended or unintended, of the sewerage system, and the code did not define “sewerage system” to distinguish between the wastewater sewer system and the stormwater sewer system. Morningstar v. Bush, 2011 Ark. 350, 383 S.W.3d 840 (2011).
Utility Expansion Capital.
Raising expansion capital to pay for the extension of existing water and sewer systems to developments where new users reside by setting connection charges, which do not exceed a pro rata share of reasonably anticipated costs of expansion, is permissible where expansion is reasonably required if the use of the money is limited to meeting the cost of that extension. City of Marion v. Baioni, 312 Ark. 423, 850 S.W.2d 1 (1993).