LITTLE ROCK, Ark. — An unprecedented tax battle is brewing this week in Little Rock as Walmart, the world's largest retailer appeals its property tax assessment in Pulaski County.
Arkansas' biggest corporation has joined other big box stores across the country in the effort to reduce their property tax bills, and it puts millions of dollars are at stake at an appeal hearing this week.
“The concern is, at least for me, is just the notion of fairness,” said Dr. Charles McNulty, the superintendent of the Pulaski County Special School District. “Essentially we are looking at appraised value and how we're going to judge what is a fair market value.”
The educator will take time out from his summer vacation to attend the hearings. Members of the county quorum court will hear the appeal over 10 Walmart stores across Pulaski County.
In 2018, Arkansas' biggest county valued those properties at $145 million, and tax bills went up to the Bentonville headquarters based on that appraisal. But Walmart appealed to the Board of Equalization last August, saying the properties are worth $74 million.
If the judges agree, that would mean about $4.5 million less in taxes, with about 75 percent of that coming out of school budgets, according to the assessor’s office.
Critics say Walmart and other retailers rely on a disputed accounting method.
“It's called ‘Dark Store’ theory,” McNulty said. “In essence, you reach an appraisal value as if [the store] was vacant. It is appraised at the same level as a store that is active and bringing in revenue as if it was vacant.”
McNulty said another argument corporations make is that large properties are hard to utilize after they are closed. The counter-argument McNulty says is that a restrictive lease agreement is often the reason for that.
Another reason for the differing appraisals according to experts is the way the store and the county determine its value. The retailer looks at the costs to be there. A county assesses the space the same way it would any other property, but without an active market buying and selling big stores, determining the market is difficult.
“We believe in fair property taxation and, based on an independent analysis of current market conditions, we believe the value of the property is lower than the assessed amount,” said Anne Hatfield, a spokesperson with Walmart corporate communications, who said the company uses independent assessors using industry standards to reach its conclusions. She declined to specifically name the assessors who handled the Pulaski County valuation.
McNulty left a previous post in Wisconsin just before Walmart successfully cut its taxes there. He said some counties lost about 50 percent of their initial assessment. He says that’s not fair.
“We all to be obligated to our future, and our future is a fair and equitable taxation process,” he said. “It is critical for municipalities who support our roads, the infrastructure that supports our businesses. It's critical for our schools.”
The hearings are scheduled for July 17-18.