Editor’s note: The following is the second of two parts of a report about challenges to certain sales taxes imposed by some Missouri cities. The first part ran in Sunday’s edition.

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By Debby Woodin

dwoodin@joplinglobe.com

A bitter war of words has developed over whether the state Legislature chose not to act or whether a bill to protect cities from lawsuits challenging some sales taxes was purposely blocked as political payback.

Cities like Mount Vernon, Granby and Joplin face lawsuits that could negate some of the sales taxes residents in those town rely on for things like street projects and police protection. Purdy has already lost one of its sales taxes.

Legislation

The Missouri Municipal League, which represents 660 cities in the state, tried to avoid litigation being brought by Farmington attorney and former legislator Tom Burcham by having a bill proposed in the Legislature’s last session that would have allowed cities to impose multiple general sales taxes of up to 2 cents.

“The bill was introduced early. It had an early hearing and was voted out of committee unanimously, and then it disappeared,” said Gary Markenson, executive director of the MML.

Critics of Burcham have alleged that Steve Tilley, House majority leader, didn’t calendar the bill because Burcham funneled $110,000 in campaign contributions to him.

Burcham said he is treasurer of the Missouri Leadership Committee. “We give money to literally dozens, maybe in excess of 100, candidates a year. Steve is one of them. Steve is my state representative. I live in Steve’s district.

“But I can prove Markenson is wrong because the legislation he was pushing got nowhere in the House or the Senate.

“He can say Tilley stopped it in the House, but it got nowhere, period, in the Senate.

“Legislators are smart enough that they are not going to retroactively bless illegal taxes. The taking of money illegally from their constituents is not a smart thing to support.

“The legislation not only said to those cities that you can keep these illegal taxes but raise taxes. There’s a lot of legislators that think that’s a goofy idea.”

He said his committee also gave money to Tim Jones, who sponsored the MML legislation.

“There’s no connection,” between his litigation and the failure of the bill to advance in the House, Burcham said.

Markenson, asked if the bill would be proposed again next year, said, “I don’t know why we would be more successful this year than we were last year.”

Basis of taxes

Both Markenson and Joplin’s city attorney, Brian Head, said cities relied on a 1999 letter from the Department of Revenue that advised them that state law appeared to allow multiple general-use sales and capital-projects taxes, but only one transportation, or parks and storm-water sales tax.

The Globe requested a copy of the letter from the revenue department.

Ted Farnen, a spokesman for the department, wrote in reply to the Globe’s request that the letter “is not a binding opinion. The closest thing the Department of Revenue has to a formal opinion is a letter of ruling, but this letter is not even that. It is one piece of correspondence from 1999.”

The letter, addressed to the International Association of Fire Fighters in St. Joseph, reads: “There is no limit to the number of taxes that may be imposed” under state statutes authorizing general and capital improvements sales taxes.

It does say that sales taxes for parks and storm-water projects and transportation are limited to one for each purpose.

The department has begun issuing a formal statement along with copies of the letter. It reads:

“When a local governmental entity asks the Missouri Department of Revenue to collect a newly enacted sales tax, the department reviews the underlying ordinance and other supporting documents to it by the local governmental entity. If everything appears in order, the department will collect the tax as requested. This does not, however, preclude a person or group from challenging the city’s imposition of the tax.”

Burcham contends that state law does not give taxpayers direct standing to challenge collection of taxes they might think are illegal. He contends the law requires that merchants protest taxes.

“That is not an adequate remedy and the state has said it will not process protests from consumers and taxpayers,” Burcham wrote in one of his lawsuits.

The Revenue Department’s statement says there was a 1993 decision in St. Charles County upholding stacked taxes. Head said that decision may not be the final say if other lawsuits are litigated and the decision is not binding like an appeals-court decision would be.

Bitter exchanges

Joplin’s city attorney Brian Head, asked if the statements make it appear the revenue department is backing off the opinion expressed in its 1999 letter, said, “Absolutely it looks like that. It seems incongruent that in 1999 they could issue an opinion that is very strong in words that do not qualify it at all (that multiple general-use and capital-projects taxes are allowed) and now it’s ‘only one piece of correspondence.’”

Markenson said the letter “was just a statement of what their policy was. No state department issues legal opinions to cities.”

Burcham disputes that, saying the state attorney general issues opinions and two of those underpin his lawsuits.

Markenson said, “The only legal opinion I’m aware of was one issued by Burcham when he was city attorney for Farmington, but I can’t get a copy of it.”

He contends that Burcham once advised the city that more than one capital improvements sales tax was legal.

Replies Burcham: “Neither Farmington nor I have said that, and neither can talk about it because it’s attorney-client privilege. He (Markenson) doesn’t know.”

Markenson said Burcham’s lawsuits are “manufactured,” and that cities could be bankrupt overnight if a judge were to order a refund in any of the lawsuits.

Burcham said that most cities survive by collecting legal taxes “at or below the legal maximum. Those cities are not bankrupt. They provide fire and police and all the other services we expect. So 97 percent of cities can prove him wrong.”

While his critics contend he’s pursuing cities in order to make money from the lawsuits, Burcham rejects that and said the reason he has taken up the challenge is because it takes a lawyer to weave through the complicated law on the issue.

Joplin attorney Head bristles when someone implies the city intentionally skirted the law.

“What bothers me is some of the comments that the city did something wrong,” Head said. “The city followed the advice of the Department of Revenue.”



At issue

At issue is what is called “stacked” sales taxes. Attorney Tom Burcham says Missouri law allows a town, with voter approval, to assess one general-use sales tax, one capital-projects sales tax, one transportation tax, and one parks and storm-water tax.

Burcham plans to challenge Joplin’s public-safety sales tax this summer, citing it as a general-use tax. He says the half-cent public-safety tax on top of the city’s 1-cent general-use tax constitutes stacking and is illegal.