Kan. AG: City's driveway tax is against the law

By Jessica M. Karmasek | Jan 24, 2012


TOPEKA, Kan. (Legal Newsline) - Kansas Attorney General Derek Schmidt says a city's so-called "driveway tax" is illegal.

In a six-page opinion filed Thursday, Schmidt explained to state Rep. Scott Schwab that the tax is an excise tax and the city of Mission is "specifically, clearly and uniformly" prohibited from levying or imposing such a tax under state law.

Funds from Mission's Transportation Utility Fee, or TUF, would be used for -- but not limited to -- surfacing and resurfacing, curb and gutter maintenance and repair, bridge maintenance and repair, sidewalk maintenance and repair, trail maintenance and repair, transit facility maintenance and repair, bicycle lane maintenance and repair, landscape enhancements along rights-of-way, street tree replacement and street lighting.

Schmidt says TUF, which was imposed in August 2010, is considered a tax and not a fee because it is forced on property owners.

The attorney general points to the definition by the Kansas Supreme Court, which says a tax is a "forced contribution to raise revenue for the maintenance of governmental services offered to the general public."

"In contrast, a fee is paid in exchange for a special service, benefit, or privilege not automatically conferred upon the general public. A fee is not a revenue measure, but a means of compensating the government for the cost of offering and regulating the special service, benefit, or privilege. Payment of a fee is voluntary -- an individual can avoid the charge by choosing not to take advantage of the service, benefit, or privilege offered," the Court's definition states.

Schmidt says TUF, indeed, fits the definition of a tax.

"Although the (Mission) Ordinance provides for an administrative appeal, the appeal is limited to challenges to the City Administrator's interpretation of all terms, provisions, and requirements of the Ordinance and to determine the appropriate charges," he wrote.

"Additionally, the manner in which the transportation utility fee is billed and collected on an annual basis with ad valorem real estate taxes provides strong support to conclude the TUF is a forced contribution.

"The City of Mission is authorized by the Transportation Utility Fee Manual created by the City Administrator to utilize a collection procedure that allows it to charge late fees for past due amounts and to place a lien on the property for unpaid amounts due under the transportation utility fee ordinance."

With a fee, the refusal to pay or the tardiness of payment results in the loss of the service, benefit or privilege until the fee is paid -- not the institution of collection proceedings, Schmidt notes.

The attorney general gets more specific, adding that TUF is not an ad valorem tax because it is imposed by calculating the estimated number of vehicle trips from a property using a trip generation model, rather than the value of real property.

Instead, Schmidt says TUF is considered an excise tax.

And under state law, "no city or county shall levy or impose an excise tax or a tax in the nature of an excise, other than a retailers' sales tax and a compensating use tax."

"Therefore, if the TUF is an excise tax or a tax in the nature of an excise, the City of Mission is preempted from using its home rule authority to enact or enforce this tax," the attorney general wrote.

"It is well settled in Kansas that the power to levy taxes is inherent in the power to govern, but the exercise of that power is dependent upon the existence of legislation designating the kinds of property to be taxed. Nothing is taxable unless clearly within the grant of the power to tax."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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