A three-year-old tax for street maintenance that is based on how much traffic business and households in Mission generate passed a key test this week when a district court judge declared it to be legal.
Judge James Vano ruled that the city’s Transportation Utility Fee, also known as the “driveway tax,” is not an illegal excise tax, as was claimed by several property owners who brought suit. In so doing, Vano took a view opposite of Kansas Attorney General Derek Schmidt.
Schmidt’s nonbinding opinion last year said that the measure was not only a tax, but an excise tax that state law bars cities from charging. The city argued that the revenues would be generated from what is basically a fee, not a tax. The difference is that cities have home rule authority to charge fees, but not excise taxes.
The Mission transportation fee varies by how much traffic each property is expected to generate. Homeowners, for instance, are charged a flat $72 per year, but larger retailers pay thousands of dollars more.
Vano ruled that the measure is a tax, but not an illegal one. He also ruled that the tax does not violate equal protection or due process of the residents, as the opponents had claimed.
“We believed the transportation utility fee was legal and we’re pleased the court did as well,” said Mayor Laura McConwell.
The city decided to go with a user-based tax as an alternative to property taxes to pay for needed street maintenance, she said. In Mission, about 15 percent of property is excluded from property tax rolls, putting a higher burden on property taxpayers, she said.
The tax has been controversial since its inception. Although similar taxes are common in Oregon and other areas of the country, they have not been used much in the Midwest. Critics of the tax made it an issue in ensuing city council elections.
One of the most noted critics, Bill Nichols, was one of the individual plaintiffs in the suit. Nichols keeps a blog called SaveMission.net which has “repeal the driveway tax” as part of its logo. He has helped council candidates who opposed the tax in their election bids and has recently filed for a spot in the fourth ward. Nichols declined comment on the suit’s outcome this week.
The suit against the tax was brought by business property owners, their associations and several individual homeowners. Sam Alpert, executive vice president of Heartland Apartment Association, one of the plaintiffs, said he agrees with the court’s designation of the measure as a tax. But he said he still believes the tax is an excise tax. The group and its lawyers have not yet decided whether to appeal, Alpert said.
Two Mission churches also had sued the city about the tax because it did not allow for any exemptions. That suit was settled over a year ago and churches, schools and some nonprofits have since been permitted to be exempt from paying.
The city has been collecting the tax since the end of 2010, and McConwell said the additional revenues have made it possible to do some major improvements since then. Martway Street and Nall Avenue are two examples, she said. The tax generates around $800,000 per year. The city also has a quarter-cent sales tax dedicated to infrastructure.