The controversial “driveway tax” imposed by the city of Mission was ruled illegal Thursday by the Kansas Court of Appeals.
The court ruled that the fee imposed on developed property in the city is an illegal excise tax under state law. The city had argued the revenue source was a fee, not a tax.
That revenue source is based on a calculation of how much traffic on city streets is generated by a particular property. The measure has generated about $800,000 a year for road repairs since it was enacted in 2010.
“The city is currently reviewing the decision on the transportation utility fee and we are evaluating all of our options, including a review of the Court of Appeals decision by the Kansas Supreme Court,” said Emily Randel, spokeswoman for the city.
The lead plaintiff in the case was Heartland Apartment Association Inc.
“We’re pleased that they saw the merits in the case,” said Sam Alpert, executive vice president of the association. “This has been ongoing now for five years, so it’s been a grind.”
Alpert said he believes the ruling should lead to repayment of the money the city has collected from commercial properties and homeowners.
Randel said Mission is in the process of working on its budget.
The transportation utility fee was enacted with the support of then Mission mayor Laura McConwell, who stepped down last year after 12 years in office. She was succeeded by former councilman Steve Schowengerdt, who was critical of the revenue measure.
The “driveway tax” was designed to collect the most money from the properties that put the heaviest burden on city streets. Property owners pay yearly assessments ranging from a flat fee of $72 for single-family homes to more than $16,000 for commercial property.
In 2012, Kansas Attorney General Derek Schmidt issued a nonbinding opinion that the tax was illegal. But a Johnson County District Court judge ruled in 2013 that the transportation fee was not an illegal excise tax. Opponents appealed.
The appeals court noted the distinction between a fee and a tax. Payment of a fee is voluntary because an individual can choose not to take advantage of a service offered. A tax is a forced contribution to raise revenue.
Kansas law prohibits cities from imposing excise taxes, with five exceptions. The court held that none of the five exceptions apply to the “driveway tax.”
“We hold the transportation user fee enacted by the city of Mission is an excise tax banned by law and is therefore void,” the court concluded.