Sales Tax is delayed at least six months
Thursday, August 21, 2008
Legislative action
is required first
By Brandy Nance
nance@emporiagazette.com
The new Lyon County sales tax, which was supposed to be collected starting Oct. 1, is now not likely to be imposed until April 1 at the earliest.
Lyon County Commission Chairman Scott Briggs said Wednesday that Lyon County residents won’t see any revenue soon from the recently approved 1 percent sales tax. Voters approved the sales tax on Aug. 5, and it was to go into effect Oct. 1.
But the Kansas Department of Revenue said the tax violates two state statutes because Lyon County would exceed the 1 percent sales tax cap. Richard Cram, director of Policy and Research at The Kansas Department of Revenue, told the Gazette that counties do not have the authority to impose a sales tax in excess of one percent unless special legislation is passed.
“It was my understanding that the vote a couple of weeks ago was for a full percent,” Cram said. “That is why we advised Lyon County that it was void.”
Lyon County has an existing half percent sales tax being used to pay off the Lyon County Courthouse. According to Cram, Lyon County could only levy another half-cent tax.
After receiving word of the problem from the revenue department, Briggs said, he sought an opinion from the Kansas Attorney General’s Office. The AG’s office said it agreed with the department of revenue’s opinion.
But local officials disagree with the interpretation of the state statute 12-189.
“Legal opinions back in 2007 of the county were that the language of the statute did not establish a cap,” said Lyon County Attorney Goodman, who serves as counsel to the county commission. “It is not that the county action is illegal.”
The next step, according to Cram, is for Lyon County to go to the Kansas Legislature for special legislation to collect the full one percent.
“That can’t happen until the legislature goes back into session in January,” Cram said.
The bill will then have to go through both houses and be signed by the governor, Cram added.
If legislation is passed by the end of January, the earliest the tax can be collect is April 1 because retailers must be given a 60-day notice before the tax can be collected, Cram said. If the law passes later, it could be July 1.
Meanwhile, the county still has a budget to fund. Briggs said the decision will only delay the sales tax collection, which was due to start on Oct. 1.
“It will not change the budget,” Briggs said. “This is only going to delay the sales tax. It will happen, it will just be a delay in the collection. We’ll work through it.”
Lyon County is left in the lurch, as it is still bound by the $1.5 million promised to property tax relief in the 2009 budget. Although it’s unclear at this stage what the effect will be, the county does have options, such as temporary notes or no-fund warrants, said Dan Slater, Lyon County controller.
“We are reviewing and trying to figure out what the best route is,” Slater said Wednesday.
“We have to find the $1.5 million somewhere,” County Commissioner Marshall Miller said following this morning’s announcement.
Briggs said the public needs to be aware of the facts.
“This will not change what we have promised them,” he said.
City Manager Matt Zimmerman agreed.
“The county is keeping its promise to the taxpayers,” Zimmerman said. “We’re still going to keep our promise and do capital projects, the question is how much.”
Lyon County Attorney Marc Goodman said the key point of the issue is that it won’t change anything.
“It’s no different if you use everything up in one fund if the weather goes bad,” Goodman said, adding that when counties face a shortfall they make up for it somewhere. “The commission is being very open about this.”
Joan Wagnon, Kansas secretary of revenue, will attend the county commission meeting at 8:15 a.m. Aug. 28 to explain the department’s interpretation of the language of the sales tax.