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Jail construction depends on Supreme Court decision

Thursday, June 23, 2011

(Photo)
Fulton County Judge Charles Willett is hoping for a quick Arkansas Supreme Court decision, in a lawsuit which is holding up construction on a new county jail.

Justices heard oral arguments on Thursday, June 16, to a challenge of a constitutional amendment passed in the November 2010 election.

Amendment 89, which passed with a 64 percent approval rate, allowed higher consumer interest rates in the state, removed the interest rate limit on government bonds and allowed government bodies to finance energy-efficiency projects.

Backers of the amendment claimed the changes would put the state in a better position as it competes for new business and industry.

A lawsuit filed by April Forrester of Jacksonville claims the amendment should be blocked, because combining three issues into one constitutional amendment was illegal and confusing to voters.

"Our legal counsel told us not to proceed with jail construction until there is a decision, because our financing will be affected if the court throws out the amendment and reinstates the interest rate limit on government bonds," said Willett.

Fulton County has won approval of a $1.7 million USDA loan and a $300,000 stimulus grant for jail construction.

"If we don't start construction by September, we may lose the grant money," said Willett.

During Supreme Court arguments in Little Rock, attorney Eugene Sayre claimed the legislature was wrong to put three items into one amendment.

"We maintain these three are disparate and don't have a common theme, purpose or subject," Sayre told the court. In other words, they should have been three separate proposed amendments.

Assistant Attorney General Scott Richardson responded that past amendments have had multiple components, and warned that striking down the amendment could lead to challenges of dozens of other approved amendments.

An attorney for the Committee for Arkansas' Future also spoke in support of the vote, pointing out the amendment's 64% favorable vote was proof voters were not confused by the wording of the ballot title or the amendment's contents.

Justice Donald Corbin raised the issue of whether the high court can overturn an amendment, once it is ratified by a majority vote.

The Supreme Court will issue an opinion at a later date.

Little Rock Attorney Heartsill Ragon, who is handling jail financing matters for the county expects a prompt decision.

"Every sales tax issue in the state is at a standstill right now, until the challenge to the amendment is settled," said Ragon. "It is anticipated the court will hand down a ruling before it adjourns for the summer."

Judge Willett is hoping that prediction is correct and the decision allows the amendment to stand as passed.

According to Ragon, if the amendment is overturned, the state will return to a law which limits government bonds to a maximum of two percent above the Federal Discount Rate.

Since the discount rate is at an historic low, just 0.75%, the most the USDA could charge would be 2.75% interest. The USDA loan will be between 3 and 4%, putting the loan in jeopardy.

"Since construction has been on hold, gas prices and other things have risen, so our price to build has probably gone up too," said Willett. "The $2 million cost may be 20 percent higher by the time we get underway."

While the judge is itching to get things started, voters still must approve a tax agreement before work on the jail can begin. Under the agreement, cities in Fulton County will give part of their revenue from a one percent sales tax, already being collected, to the county, to help with payments on the jail construction loan.

Because the current jail does not meet state standards, Fulton County leaders are under pressure to replace it, before it is ordered closed.

In addition, a new jail would create enough new beds to end the costly practice of housing prisoners in other jails.



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