MFPD’s tax-rate ceiling 68.3 cents, according to initial figures from state

Initial state numbers validate Prop 1, Prop 2, Hilmer says.

By MIKE ANTHONY

Preliminary numbers from the state auditor’s office show the Mehlville Fire Protection District Board of Directors could establish a maximum tax rate of 68.3 cents for 2010 — roughly 50 cents more than what Missouri Auditor Susan Montee said the district could levy last year.

Based on those preliminary numbers, the Board of Directors could levy about $12 million more than what Montee contended the district could levy last year.

As first reported by the Call last November, Montee’s office deemed the fire district’s 2009 tax rate to be higher than permitted under state law and referred the issue to Attorney General Chris Koster for further action.

In mid-November, 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.

In late January, the state auditor 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, Koster filed a lawsuit that asked the St. Louis County Circuit Court to determine the fire district’s tax rate.

Nanci Gonder, press secretary for the attorney general, said at the time the suit was filed, “We believe the issues in the case are significant and we wanted to allow the court to weigh in. We also are seeking finality on the issue.”

The suit is pending with a settlement conference scheduled next February.

At issue is the board’s decision in August 2009 to set the fire 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 is 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 the state auditor.

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

District officials have noted that the ballot language for the propositions specifically stated they were not subject to any tax-rate-reduction rollback.

Besides the issue of the ballot language, district officials have noted that during a nonreassessment year, SB 711 provides that a taxing entity can levy up to its maximum ceiling if it conducts a public hearing and adopts “an ordinance, resolution or policy statement justifying its action prior to setting and certifying its tax rate.”

The district late last month received preliminary figures from Montee’s office that show the board could establish a maximum tax rate of 68.3 cents for 2010.

Of that preliminary maximum tax rate, Board of Directors Chairman Aaron Hilmer told the Call, “… It really validates the tax decrease and it also puts to rest a lot of the turmoil that was raised last year when the auditor’s office purported that we couldn’t take the amount of money we levied. As everyone knows, we were able to take that money. Now there is a lawsuit pending from the attorney general’s office determining if it was legitimate that we took it or not. There’ll be nothing on that until February of next year at the earliest.

“But I think what’s important is that this shows that it was what I’ve always said it was. It was a one-year anomaly and I don’t think it’s even an anomaly. I think the auditor’s office is just wrong. They don’t know how to even figure a tax decrease — never has been one before, they haven’t done one since. But either way, it was a one-year issue and I think it shows how it was much ado about nothing.”

Hilmer also noted that Koster’s lawsuit simply is asking a judge to determine the fire district’s correct 2009 tax rate.

“All the AG’s office asked for — and this is what the lawsuit is about — is wondering did we take the correct rate? They’re not asking the court for relief as far as should we give the money back? Should we refund it? And quite frankly, by the end of the year we’ll have spent the money already,” he said. “And remember, if the AG’s office thought there really was something wrong, they had an opportunity to try to enter a preliminary injunction against us last November. They declined that. They did not seek that.”

Due to a recent change in state law, the board has until Oct. 1 to set the district’s tax rate, but Hilmer said he will ask the board to vote on a preliminary budget and the 2010 tax rate before the end of the month. Because the tax rate the board sets this year will become the tax-rate ceiling for next year under SB 711, Hilmer anticipated the 2010 tax rate would be closer to 68 cents than 59 cents.

“For example, if we take 60 cents this year, that’s all we can take next year even if next year we want to buy some apparatus or something, perhaps take a few more pennies. So I would say our rate’s going to be closer to 68 cents than 59 cents, without a doubt,” he said. “We’re doing that because we’re basically taking a rate for the next two years. It doesn’t mean next year we can’t drop back below the 59 cents. We have to have some flexibility …

“We’re still working on some numbers as far as the cost of the new firehouse for the property we just purchased on Lindbergh and (Chief) Tim White and (Assistant Chief) Brian Hendricks are working on a vehicle replacement plan for some large equipment purchases …”

Hilmer recalled that when he and board Treasurer Bonnie Stegman first took office in 2005, the district’s tax-rate ceiling was approaching $1.25.

“… I think that when residents see what our total levy could be, which is 68 cents, and when Bonnie and I took office it was going to be roughly $1.25, and now that is our maximum ceiling forever — 68 cents. That shows that Prop 1 and 2 did work. They had their intended effect …,” he said. “We can increase our tax rate roughly 8 cents without a vote of the people. But if Prop 1 and 2 wouldn’t have passed, that’d be 48 cents without a vote.

“If someone sees our tax rate go up 8 cents or 6 cents, whatever, in order to build a new firehouse without indebting the district, in order to buy some new equipment without indebting the district so they have the best equipment when they call 911, I don’t think that’s a problem with anybody.”

As for the district’s 2010 tax rate, Hilmer said, “I don’t think it’s going to be the full 68 (cents). It’s going to be somewhere between those two (the current rate and the 68.3 cents). If that does upset someone that we’re going to increase our tax rate 4 or 5 cents, certainly I think there’s other taxing entities that are doing that tenfold — asking voters for tenfold that amount and in some cases, almost twentyfold.”