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Thursday, July 28, 2011

MFPD's '09 Tax Rate Proper, Judge Rules

Fire board chairman pleased with ruling issued by Clifford.

July 27, 2011 - The Mehlville Fire Protection District's 2009 tax rate did not violate state law, a St. Louis County Circuit Court judge ruled last week.

Attorney General Chris Koster filed the lawsuit against the fire district in February 2010 that asked the circuit court to determine the fire district's 2009 tax rate.

Associate Circuit Judge Patrick Clifford ruled July 20 the fire district's 2009 tax rate did not violate state law.

Clifford's judgment came after the attorney general's office and the fire district's attorney in March signed a stipulation of facts stating they would submit a proposed order to the judge "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, and states, "Mehlville is the first political subdivision in the state of Missouri to pass legislation to reduce its tax-rate ceiling.''

Mehlville Fire Protection District Board of Directors Chairman Aaron Hilmer told the Call he was pleased with Clifford's ruling.

"We're just really glad it's over and it's behind us,'' he said.

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 was 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 against the fire district.

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 Section 137.073.5 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 judgment states, "On April 7, 2009, district voters approved two ballot measures which purported to avoid the effect of tax-rate reductions required by Section 137.073.5 in reassessment years and voluntarily reduced its levies based on no re-assessment rollback.

"Political subdivisions are required to apply state law as expressed in Section 137.073,'' the judgment states. "In attempting to calculate the proper rate, the auditor utilized the voluntary rollback reductions but disregarded the ballot's italicized language which would not subject the calculation to any rollback based on the 2008 reassessment.

"Political subdivisions do not have the legal authority to apply rollbacks in a year when reassessment is done,'' according to the judgment.

"If the district's general and pension levy is calculated without the voluntary levy rollbacks and applying the rollback provisions of 137.037.5, the district's proposed tax levy for general and pension purposes did not exceed its tax-rate ceiling. Therefore, judgment is entered declaring that the district's proposed levy for 2009 did not violate state law. Each party is to bear their own costs,'' the judgment states.

In September, Montee's office certified the fire district's 2010 tax rates. The district's board voted Sept. 24 to approve a resolution setting the district's 2010 blended tax rate at 67.1 cents per $100 of assessed valuation — 7.8 cents more than the previous rate of 59.3 cents per $100.

The 2010 tax rate is the maximum that can be levied by the district.

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

Hilmer praised the professionalism of the attorney general's office, particularly Holliger.

"Those guys were very professional the entire time,'' he said. "I still think this whole problem came out of Susan Montee's office ...''

The ruling also brings to a close a nearly five-year effort to allow MFPD residents to reduce the district's tax-rate ceiling, Hilmer said, noting he and board Treasurer Bonnie Stegman first had voted in December 2006 to place a tax-rate-ceiling decrease measure on the April 2007 ballot.

But that measure was removed after a legal challenge.

"I think what's interesting, though, is to look back in a context of how long this whole process took,'' he said. "I mean, letting voters vote on a tax reduction was an idea Bonnie and I originally had back in 2006. In December of '06, we voted to put it on the April of '07 ballot. It's been well documented in this publication about the travails we had to go through to finally get it to the public and what we still had to go through after that.

"... To me as being someone really so personally involved as the architect of drawing this up and bringing it through, this has been an almost five-year odyssey,'' Hilmer said."... Think about this in the context of the political mood of the day, what people are reading in the papers now.

"Five years ago, Bonnie and I were throwing tea bags overboard long before everyone else decided to have a party about it. And I think that's pretty interesting that we were so far ahead of the curve,'' the board chairman said.

The decrease in the district's tax-rate ceiling through Prop 1 and Prop 2 is forever, Hilmer said.

"That's what's tremendous,'' he said. "The only way the tax rate will ever increase in the fire district is No. 1, they'd have to have a Board of Directors who'd vote to put one on the ballot, and two, the voters would have to approve it.''

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