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Wednesday, March 23, 2011

Attorney General, Fire District Attorney Reach Agreement on Suit Over Tax Rate

Fire board chairman pleased with outcome of agreement.

March 23, 2011 - Mehlville Fire Protection District Board of Directors Chairman Aaron Hilmer last fall predicted a lawsuit filed against the district by Attorney General Chris Koster would be "resolved amicably.''

That appears to be the case as both the attorney general's office and the fire district's attorney have signed a stipulation of facts agreement that was filed Friday in St. Louis County Circuit Court.

Under the agreement, both sides will submit a proposed order to Associate Circuit Judge Patrick Clifford "finding that tax bills issued by Mehlville in 2009 did not exceed what would have been its properly calculated tax ceiling.''

The stipulation of facts agreement was signed by Ronald Holliger, general counsel for Koster's office, and Mathew Hoffman, legal counsel for the fire district.

"You couldn't resolve any lawsuit more amicably than this was taken care of here,'' Hilmer said, particularly praising Holliger. "He was very professional to deal with. I don't think you could ask for more from a public servant.

"Through this whole process, the attorney general's office has been very open to communicate with us. We've explained a lot of things to them. We've kind of got their point of view on some things, understanding why they brought this action. And when I saw the proposed stipulation of facts from the attorney general's office, I was just tickled to death.''

As first reported by the Call in November 2009, then-Missouri Auditor Susan Montee's office deemed the fire district's 2009 tax rate to be higher than permitted under state law and referred the issue to Koster for further action.

In mid-November 2009, MFPD officials met with representatives of Koster's office and said they were informed the attorney general had no plans to pursue any legal action against the district.

The county collector of revenue levied the tax rate approved by the fire district Board of Directors.

But in late January 2010, Montee released a report citing 12 taxing entities, including the Mehlville Fire Protection District, that levied tax rates in excess of what is permitted by law.

Montee's report stated the fire district had levied nearly $10 million more than the amount legally allowed with its tax rate. In February 2010, Koster filed the lawsuit that asked the circuit court to determine the fire district's tax rate.

At issue was the board's decision in August 2009 to set the district's tax rate at 59.3 cents per $100 of assessed valuation, an amount it contended was the legal maximum it could levy as a result of the passage in April 2009 of two propositions reducing Mehlville's tax-rate ceiling by 40 cents.

The 2009 tax rate was 3 cents more than the previous year's tax rate of 56.3 cents, and board members voted to roll up the tax rate to collect the same amount of revenue as the previous year under the provisions of the Hancock Amendment.

However, Montee contended that because the board voted in August 2008 to levy a tax rate less than the district's tax-rate ceiling of $1.052, Mehlville's ceiling was reduced to 56.3 cents under the provisions of Senate Bill 711. Under SB 711, a tax rate set in a nonreassessment year becomes the tax-rate ceiling in a reassessment year.

As a result, the tax-rate-ceiling reduction of 40 cents approved by voters as Proposition 1 and Proposition 2 in April 2009 set the district's tax-rate ceiling at 16.3 cents, according to Montee.

Proposition 1 asked whether the district's general-fund tax-rate ceiling should be permanently reduced by 36 cents per $100 of assessed of valuation while Proposition 2 asked whether the district's pension-fund tax-rate ceiling should be permanently reduced by 4 cents per $100.

The ballot language for both propositions included the phrase: "This proposition is based upon the 2008 assessed valuation for the district. The foregoing shall not be subject to any tax-rate-reduction rollback.''

The stipulation of facts agreement states that in attempting to calculate the fire district's proper tax rate, Montee "utilized the voluntary levy reductions'' outlined in the propositions, but disregarded the language that "would not subject the calculation to any rollback based on the 2008 assessment.''

But the agreement also notes Missouri statute 321.244 sets forth "the required form of the ballot language for increasing — or decreasing — the general levy for fire protection districts. By adding the last two sentences to the form of ballot, neither Proposition 1 nor 2 followed the ballot form set out in Section 321.244 RSMo.''

Both the attorney general's office and the fire district did agree, "Mehlville is the first political subdivision in the state of Missouri to pass legislation to reduce its tax-rate ceiling.''

"One of the things that we both agreed on (in the stipulation of facts) was that we were the first entity in the state of Missouri to ask someone to decrease our tax levy and this is just endemic of when you're trying to change the system, how it is hard when you're the forerunner. But we set up a tremendous example for anyone else to follow,'' Hilmer said. "The only thing that has changed since November of '09 in my statements — since then, the voters in the great state of Missouri have agreed with me that Susan Montee was unfit to do her job.

"That's why she lost. That's the only thing that has changed.''

Montee was defeated in her re-election bid last November by current Missouri Auditor Tom Schweich.

"I felt this was a problem that was rooted out of the auditor's office ...,'' Hilmer continued. "I think that if someone reads the entire statement of facts, they can see that we, the Mehlville Fire Protection District, and they, the attorney general's office, have agreed to disagree on some things.

"But the end product is both of us agreeing that we did not take too much money in 2009 and that was the whole crux of the case the entire time.''

The agreement also states, "If Mehlville's certified rate is calculated disregarding the ballot language as worded, the certified rate would exceed the levy rate used to calculate tax bills for 2009.''

"Well, they pretty much summed up what we've been doing for six years — taking less money than we're entitled to,'' Hilmer said. "I'm glad this episode's over. Obviously in 2010, our (tax) rates were certified. There was no question from the auditor's office. There was no question from the AG. So this was a one-year anomaly. I said that a year-and-a-half-ago and I've been vindicated on that.''

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