By Debby Woodin
dwoodin@joplinglobe.com
JEFFERSON CITY, Mo. — A House committee on Wednesday gave a “do pass” recommendation on a bill intended to clarify state law on tax-stacking, which resulted in a lawsuit last year against the city of Joplin.
“This is an issue that is near and dear to the citizens of Joplin,” City Attorney Brian Head testified before the Special Standing Committee on General Laws at the state Capitol.
A lawsuit aimed at knocking out Joplin’s half-cent public safety sales tax or its 1-cent general fund sales tax was filed in July by a Farmington attorney and former state legislator, alleging that the city had violated state law by imposing more than one general tax.
The attorney, Tom Burcham, filed lawsuits against a few small cities before aiming for Joplin, including Purdy, Mount Vernon and Granby. Burcham has since said he will not press forward with the lawsuits, saying he would dismiss the actions to allow the Legislature to resolve the issue.
The rub
Burcham had contended that state law authorized cities to enact only one general sales tax and one capital projects sales tax. He sued the other cities for enacting multiple capital projects taxes, and Joplin for enacting the public safety tax, which is formally a general sales tax.
While Burcham contended that he filed the lawsuits in the interests of taxpayers who did not know that the technicalities of the law did not permit multiple taxes in those categories, he drew fire from critics affiliated with the Missouri Municipal League, who said his quest was intended to build a class-action lawsuit that would win him a big paycheck.
The legislation being proposed would allow cities to have more than one general sales tax and more than one capital projects tax, the House committee was told Wednesday. State law regarding the establishment of sales taxes earmarked for transportation projects, economic development, fire protection, and parks and stormwater projects are clearly specific in establishing limits on those taxes, unlike the state law on the two taxes at issue.
Head testified that when he was asked whether the city could ask voters for a sales tax for public safety based on the recommendation of a residents’ task force that sought more police and fire protection, he consulted the state Department of Revenue. That department is charged with aiding cities, counties and the state with implementing and collecting sales taxes.
Head said that department had issued an opinion that more than one general sales tax was permissible. He said he also found a court opinion in a case argued in St. Charles that upheld multiple taxes.
Court decision
Recently, though, one of Burcham’s lawsuits resulted in a court decision involving the town of Iberia. The decision vacated the town’s multiple taxes.
None of the cities involved in the lawsuits agreed to settle the issue outside court, Head told the House committee.
He said the issue is important to Joplin residents because the public safety tax so far has paid for 30 additional police officers, six additional firefighters, five dispatchers and support personnel, new computers and other equipment for the departments, 1,500 streetlights to combat nighttime crime, and a police substation.
The half-cent sales tax for public safety was approved by Joplin voters in 2006.
Question
Legislators asked if they were being called on to make an illegal act legal by recommending passage of the bill. They were told that the cities did not enact illegal taxes, because they were acting on interpretation of the law in the Department of Revenue’s 1999 decision and the St. Charles case. Legislators were told that they were being asked to enact a clarification of existing law.
Head told the legislators that with Burcham’s lawsuits and news stories about the topic, the issue has clouded the authority of cities to ask voters whether certain taxes could be enacted. That has put a chill on some public projects, he said.
Additionally, it could affect financing of a project if voters did authorize a tax. “A bond attorney may not write an unqualified opinion with questions about the legality of these taxes,” he said.
A representative of the city of St. Joseph also testified in support of the measure.
The committee gave the bill a unanimous “do pass” recommendation.
Gary Burton, a former legislator who works as a lobbyist for the city of Joplin, said the bill will now go to the House speaker to be assigned to the rules committee, and then to the floor leader to be placed on the schedule for debate.
The House speaker is Ron Richard, R-Joplin, who is co-sponsor of the bill with Rep. Timothy W. Jones, R-Eureka.
A similar bill was introduced in last year’s legislative session, but it was not advanced for consideration because House leaders did not want it to appear that cities were asking them to rescue them from illegal acts, Burton said.
“One of the concerns last year of the floor leader (in not scheduling the bill for discussion) was that it would look like they were trying to dictate a lawsuit,” Burton said.
The Associated Press reported in November that the FBI had been looking into why House leaders blocked last year’s bill.
Joplin Mayor Gary Shaw, who attended Wednesday’s hearing, said he appreciated the committee’s unanimous support of the bill.
“It was very good for our city” that the legislation is being advanced, he said. “The tax has blessed us with a lot of things, and there will be no time when we will be without it,” if the legislation resolves the opportunity for legal challenge.
Tax history
Joplin enacted a 1-cent sales tax to support the general fund in 1969. Voters approved the tax and, in turn, were granted lower property taxes. That tax last year generated nearly $11.8 million for the city’s general fund. The half-cent public safety sales tax generated about $5.9 million last year.
The public safety tax also generated some controversy last year when some of its proceeds were borrowed to bolster the pension fund for police and firefighters. City officials said they were able to use the proceeds in that fashion because the tax was designated as general sales tax, and the transaction fit the spirit of the assessment’s public safety title.
