Sales tax delayed by intrepretation
By Brandy Nance (Contact)
Originally published 01:31 p.m., August 20, 2008
Updated 06:27 p.m., August 20, 2008
In a surprise announcement this morning, Lyon County Commission Chairman Scott Briggs said 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.
Lyon County now has 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.
Lyon County Attorney Marc Goodman said the issue is the intepretation of KSA 12-189.
"Legal opinions back in 2007 of the county were that the language of the statute did not establish a cap," Goodman said. "It is not that the county action is illegal."
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 a 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 this morning.
“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.”
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 it makes 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.
Comments
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Posted by madpoet (anonymous) on August 20, 2008 at 2:36 p.m. (Suggest removal)
You'd think they would have checked all the angles before proposing this tax increase. It figures the stupid courthouse would bite us in the butt. Again. It cost more than first said and looks nothing like the drawing released and now the tax for it is holding the county back. Just great. I wish the commissioners good luck getting this mess straightened out.
Posted by Summer_Breeze (anonymous) on August 20, 2008 at 2:38 p.m. (Suggest removal)
Where is the County's legal counsel? Why didn't he realize this was illegal? Makes us look like ignorant hicks, don't you think?
Posted by create (anonymous) on August 20, 2008 at 3:23 p.m. (Suggest removal)
Yes, it does make us look like ignorant hicks. Don't you just love these kinds of surprises that could have been avoided by checking with the Dept. of Revenue to begin with?
So does this mean that we don't get the promised property tax relief? Most people voted yes based on that promise.
If this is a delay, as Briggs says it is, how can the tax still go forward if it is a violation?
Posted by OutsiderJ (anonymous) on August 20, 2008 at 3:46 p.m. (Suggest removal)
create-
the article said that the local gov't was still obligated and bound to the property tax relief. I guess that means the city/county is just ass out on the 2 or 3 months of sales tax that doing this correctly would have generated. Serves 'em right for putting it on the primary ballot so soon after it was introduced. Should have waited until the general election and had a lawyer make sure everything was kosher.
Posted by citizen (anonymous) on August 20, 2008 at 3:51 p.m. (Suggest removal)
Some of those who were interviewed kept saying "it won't change anything". So why have the 1% tax in the first place? As you can tell, I did not vote for it.
Posted by madpoet (anonymous) on August 20, 2008 at 3:57 p.m. (Suggest removal)
My understanding is that once the budget is published they can't really change the mill levy. That's why they're up the proverbial brown creek without a paddle.
Posted by booker5m (anonymous) on August 20, 2008 at 5:16 p.m. (Suggest removal)
What a bunch of Bozos! They all should get out of town!
Posted by netloafer (anonymous) on August 20, 2008 at 5:39 p.m. (Suggest removal)
There is a God in heaven after all.
Posted by neighbor (anonymous) on August 20, 2008 at 6:36 p.m. (Suggest removal)
Phew, I have until tax time next spring to buy big ticket items locally before the fleecing begins. Just think of the sales pitch opportunities this provides car, furniture, and appliance dealers!
Drafting an illegal ordinance, promoting it, holding an election at tax payer's expense, then finding out that it is illegal, why does this not surprise me that it happened in Lyon Co? Did anyone down there at the Goliath on Commercial St. think to check this before proceeding? Obviously not. I bet Phil Winter would have caught this had he still been the County Council.
Posted by mylife (anonymous) on August 20, 2008 at 6:51 p.m. (Suggest removal)
Lyon County Attorney Marc Goodman said the issue is the intepretation of KSA 12-189.
"Legal opinions back in 2007 of the county were that the language of the statute did not establish a cap," Goodman said. "It is not that the county action is illegal."
In defense of the county here, I do not believe they were trying to do anything illegal. It comes down to intrepretation of the KSA statute. Goodman is quoted in this story as saying something different, which I've posted above. It's coming down to intrepretations of the two entities: state and local.
Posted by jayhawker (anonymous) on August 20, 2008 at 9:28 p.m. (Suggest removal)
There is a lot of spin in this article. Special Legislation is not always a foregone conclusion. I can easily see where there would be significant opposition to any special treatment given to one county when the legislature has already established a statewide policy forbidding a county from imposing more than a 1% sales tax. Additionally, even if successful, it may very well require another election. I'm not sure when the courthouse tax expires (the original price tag was $17,000,000.00, which should have already have been paid, suggesting that the final price tag greatly exceeded the advertised price), but the final decision may very well be that a new election will be necessary on a 1/2% sales tax, then, when the courthouse tax expires, a second election on the question of imposing another 1/2%. There is a reason that counties cannot impose more than 1%. I'm not sure that the legislature will back off from that. Trust me, there are some worried local government leaders over this one. In the best case scenario, they will lose six months of a twelve month year in expected tax revenue. They may spin this as no big deal, but I'm here to tell you, it is a big deal. Very big indeed. I bet that they consult with the County Counselor for advice next time.
Posted by LifeGoesOn (anonymous) on August 20, 2008 at 9:45 p.m. (Suggest removal)
mylife, sounds like you are the only one who can read, everybody else just wants to complain, and THEY talk about looking like hicks!
Posted by smokeNmirrors (anonymous) on August 20, 2008 at 10:19 p.m. (Suggest removal)
Lyon County Attorney Marc Goodman said the issue is the intepretation of KSA 12-189.
"Legal opinions back in 2007 of the county were that the language of the statute did not establish a cap," Goodman said. "It is not that the county action is illegal."
In defense of the county here, I do not believe they were trying to do anything illegal. It comes down to intrepretation of the KSA statute. Goodman is quoted in this story as saying something different, which I've posted above. It's coming down to intrepretations of the two entities: state and local.
I think you hit the mark. IMHO, the title of this article has done more to spark these kinds of remarks.
Posted by jayhawker (anonymous) on August 20, 2008 at 10:47 p.m. (Suggest removal)
It does look like the County Counselor (Mr. Goodman, who wears a second hat as County Attorney) may have looked at this in advance. If there is ambiguity in the statute, as suggested in the article and by posters here, perhaps the County Counselor should have talked to the Department of Revenue in advance. If the statute is open to interpretation as suggested herein, and the county's interpretation of a state statute differs from that of a state agency, guess which trumps (unless a Court, after litigating the issue, rules otherwise). I was not opining on the merits of the sales tax increase, but was pointing out the magnitude of the problem and the mess that we find ourselves in. I suspect that we may have to wait until the courthouse tax (1/2% sales tax) expires before a full one percent can be used as proposed on the last ballot question.
Posted by jayhawker (anonymous) on August 20, 2008 at 11 p.m. (Suggest removal)
I know very little about this area of the law, but I wonder if the statute would be satisfied if the county only raised an additional 1/2% (for a total of 1% with the courthouse tax) and the cities in the county raised their own sales tax such that the total revenue envisioned by the failed sales tax proposal would still be raised. Of course, to do that, it would require elections in all jurisdictions attempting to raise the tax. If passed by county voters and voters in all the towns in the county, the revenue would be raised, but the county itself would not be in violation of the governing statute. Of course, that would leave the last election as nothing but a plebiscite gaging public opinion, which is a very expensive public opinion poll. I bet that whatever action comes about is carefully examined by a battalion of lawyers, and local governing bodies will still have to deal with the loss of revenue resulting from the current tax not going into effect timely. If they hurry, they might be able to get this on the General Election ballot. For reasons that I have posted about before, however, I bet that they will not want such questions at the General Election where the chances of a tax increase passing is greatly reduced. This is going to be interesting to watch.
Posted by netloafer (anonymous) on August 21, 2008 at 6:13 a.m. (Suggest removal)
I don't know about whether or not the commissioners set out to do something illegal. I'm not sure I care. The net effect of this, at least temporarily, warms my heart. It seems to me to be one of those times when the good folk of Sherwood Forrest win and the Sheriff of Notingham loses.
In the end we may get a good fleecing or have our pockets picked, but for right now I hear the birds chirping, the critters chattering, and I feel a cool breeze blowing through the trees.
Jayhawker
Please don't give 'em any ideas. They've found enough creative ways to ply their trade without our help.
Posted by create (anonymous) on August 21, 2008 at 7:03 a.m. (Suggest removal)
Thank you jayhawker. It seems as though some of us can read after all. The predicament still boils down to the question of why the state was not consulted to begin with, particularly since interpretation of the statute was open and not iron-clad clear.
Part of the sales pitch on the sales tax question was that surrounding cities would be able to benefit by receiving a percentage of the raise. Were they to raise their own sales tax now, the amount they would generate would still not be as much as they had originally contemplated since they don't have volume in sales. They may not think it's worth it to put that question on their ballots.
Posted by citizen (anonymous) on August 21, 2008 at 8:19 a.m. (Suggest removal)
I have an idea. Stop all the stupid spending.
Posted by dhcc66 (anonymous) on August 21, 2008 at 10:34 a.m. (Suggest removal)
i've got an idea, elect officials OTHER than the ones we've voted for and then COMPLAINED ABOUT for the last 20 years....geez folks, you all vote them in and then complain about them. or you don't vote.
stop whining and vote the idiots out if you don't like them
Posted by citizen (anonymous) on August 21, 2008 at 12:59 p.m. (Suggest removal)
We are allowed to complain. And why gives you the opinion that I voted for those who are in office now. You have thrown a wide net over the few that have posted.
Posted by jayhawker (anonymous) on August 21, 2008 at 1:07 p.m. (Suggest removal)
netloafer: I like the Sherwood Forrest comparison. Its almost as if we have been saved from ourselves. Our local economy is failing, and will continue to do so until it comes into balance. We cannot tax ourselves into prosperity, but we can tax ourselves into poverty. I fully recognize the pain that would come without additional revenue to fund local government. However, that is what happens when a town of 26,000 people loses 2,000 jobs in a two year period. I wish it were otherwise, but when we squeeze the balloon in the middle, it pops out on the ends (or explodes). I suspect that, one way or the other, there will be additional taxes imposed, which is exactly the wrong prescription for what ails us. We are too many years passed from when people understood the need for sacrifice in order to improve the future. Now, we want constant gratification and, above all, comfort. The warning signs are everywhere that the road ahead ends; yet, we continue to drive at 75 miles per hour straight ahead. I fear that we will continue to do so until the car crashes when the road ends.
Posted by jayhawker (anonymous) on August 21, 2008 at 1:32 p.m. (Suggest removal)
dhcc66: You remind me of myself in my youth. You have some good ideas, but the ideas lack a deep understanding of what is really going on. That will come with life experiences. In the mean time, since you seem like a nice young person, I'll give you free (but valuable) advice: don't be so shrill in your comments about others. It doesn't help your point of view. Also, pay attention to posters like netloafer, create and others - they know what they are talking about. Read between the lines and you can discern the difference between those who post to let off steam and those who are trying to help the community. You may disagree with some of the latter, but they are the ones who opinions should be given deference and a fair hearing.
I know that you will either not understand what I am saying to you or choose to ignore it. You know how I know? Because that is what I did, too. It took me many years to learn that I should have listened.
I hope that you don't think that I'm picking on you. I'm not. You have some good ideas. Keep posting. I enjoy reading your point of view.
Posted by netloafer (anonymous) on August 21, 2008 at 3:28 p.m. (Suggest removal)
Jayhawker
You're right. We are going 75 MPH, and worse yet we are going the wrong way on a one way street!
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