Does Arkansas's 100% disabled veteran property tax exemption cover fees and assessments charged by a suburban improvement district?

Plain-English summary

Representative Bob Ballinger asked, on behalf of a constituent, whether a 100% disabled veteran was exempt from fees or assessments levied by a suburban improvement district against his real property. The AG said no.

The disabled-veteran exemption is in Ark. Code Ann. § 26-3-306, which provides that a disabled veteran "shall be exempt from payment of all state taxes on the homestead and personal property owned by the disabled veteran." The text says "state taxes." The Arkansas Supreme Court in Bensberg v. Parker, 192 Ark. 908 (1936), drew a clear line between "ordinary taxes... for the general purposes of government" and "special assessments for local improvements which are charged upon property on the theory that such property is specially benefited thereby." The exemption reaches the first kind. It does not reach the second.

Suburban improvement district assessments are the second kind. They are levied by a local improvement district to pay for infrastructure or services that benefit the specific properties within the district. The benefit theory is built into the assessment: each property pays a share that reflects the special benefit the improvement provides to that property. Tax exemptions, by long-standing Arkansas rule, do not get the property out of paying for those benefits.

So the disabled veteran in the constituent's situation must still pay the SID assessment, even though he does not pay state property taxes on his homestead.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: What is a suburban improvement district?
A: A local taxing entity formed under Arkansas law to fund infrastructure (sewers, streets, drainage, fire protection, etc.) for a defined geographic area. Property owners within the district pay assessments that reflect each property's share of the benefit. The district is governed by elected or appointed commissioners.

Q: Why is a "special assessment" treated differently from a "tax"?
A: The legal theory differs. A general tax funds government broadly. A special assessment funds a specific local improvement and is calculated based on the benefit each property receives. Courts (including in Bensberg) have long said that tax exemptions reach only general taxes, because the exemption rationale (the property owner deserves relief from contributing to general government) does not apply when the assessment is for a benefit the property itself receives.

Q: Does this rule apply to other improvement districts too?
A: Yes. The principle applies broadly to "special assessments for local improvements." That includes suburban improvement districts (the question here), municipal improvement districts, sewer districts, drainage districts, and similar local-improvement entities. The same logic would apply.

Q: What if the improvement district itself wants to grant a hardship exemption?
A: The opinion does not reach that question. Whether an SID has authority to waive an individual assessment as a matter of policy is a separate question. The AG was answering only whether state law required the exemption. It does not.

Q: What if the SID assessment funds something that looks like ordinary taxes (police, fire)?
A: Even then, the assessment is collected based on the special-benefit theory, so it remains a special assessment under Arkansas law. The labels and underlying purpose matter for the legal classification.

Background and statutory framework

Section 26-3-306 of the Arkansas Code is the state's primary disabled-veteran property-tax exemption. The text says "exempt from payment of all state taxes on the homestead and personal property." The "state taxes" framing is critical. The AG's analysis turns on the long-recognized distinction between general taxes (covered) and local-improvement special assessments (not covered).

Bensberg v. Parker, 192 Ark. 908 (1936), is the foundational Arkansas case. Quoting Ruling Case Law, the court said:

It is the well-established rule that a constitutional or statutory exemption from taxation is to be taken as an exemption from ordinary taxes, for the general purposes of government, state, county, or municipal, and does not relieve those in whose favor such exemption exists from the obligation to pay special assessments for local improvements which are charged upon property on the theory that such property is specially benefited thereby.

Horace Sloan's 1928 treatise The Law of Improvement Districts in Arkansas states the same rule.

Citations

• Ark. Code Ann. § 26-3-306(a)(1)(A)(i) (disabled-veteran tax exemption)
• Bensberg v. Parker, 192 Ark. 908 (1936)

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2018-137
May 10, 2019

The Honorable Bob Ballinger
State Representative
508 Dr. Spurlin Circle
Berryville, AR 72616-3825

Dear Representative Ballinger:

This is in response to your request for an opinion on behalf of a constituent. In this regard, you have asked the following question:

Is a veteran that is declared fully disabled (100%) exempt under Arkansas law from any fees or assessments levied against his real property by a suburban improvement district?

RESPONSE

It is my opinion that a fully disabled veteran is not exempt from paying fees or assessments that a suburban improvement district levies against his real property. Therefore, the answer to your question is "no."

Section 26-3-306 of the Arkansas Code provides, in pertinent part, that "[a] disabled veteran ... shall be exempt from payment of all state taxes on the homestead and personal property owned by the disabled veteran." This provision exempts a fully disabled veteran from paying "state taxes" on his homestead property. It does not, however, contemplate an exemption from fees or assessments levied by a local improvement district. The Arkansas Supreme Court has explained that such statutory tax exemptions do not reach assessments for local improvements:

It is the well-established rule that a constitutional or statutory exemption from taxation is to be taken as an exemption from ordinary taxes, for the general purposes of government, state, county, or municipal, and does not relieve those in whose favor such exemption exists from the obligation to pay special assessments for local improvements which are charged upon property on the theory that such property is specially benefited thereby.

It follows, in my opinion, that Arkansas law does not exempt a fully disabled veteran from paying fees or assessments that a suburban improvement district levies against his real property.

Sincerely,

LESLIE RUTLEDGE
Attorney General