OUR OPINION: Settlement approval would begin untangling surtax mess
Monday, November 15, 2010
Jefferson City government has an opportunity Monday to unsnarl one knot in a complex surtax tangle.
We encourage the City Council to approve a settlement agreement with Cole County to trigger repayment of more than three-quarters of $1 million owed to the city.
Specifically, the agreement calls for the county to pay the city $751,056 in underpaid surtax distributions in annual installments through 2024, without interest.
The surtax jumble began when officials discovered an error in the formula used by the county collector’s office to distribute surtax revenues to 13 eligible political subdivisions.
After the calculations were corrected, a three-year statute of limitations was imposed to determine the amount of underpayment or overpayment owed.
Underpayments to six entities included municipalities, with the largest amount owed to Jefferson City.
Overpayments were made to seven other entities. Although the Blair Oaks School District was not overpaid the greatest amount, under the statute of limitations, it owes the most, more than $665,000.
Blair Oaks recently delivered a fourpage surtax supplement to patrons that included one non-negotiable issue, namely “that the plan will not have a significant negative impact on the processes that most directly affect student learning at Blair Oaks.”
Some discussion between the county and Blair Oaks has revolved around a surtax-for-surtax settlement — essentially, the school district’s future surtax revenues would offset overpayments owed.
We have some concerns and misgivings about the equity and openness surrounding this entire tax distribution debacle. We are troubled by the inequity imposed by that statute of limitations that requires comparatively lower repayments from some entities that received higher overpayments. We also are uncomfortable with the closed-door negotiations surrounding much of the process. But the errant formula created a proverbial lose-lose situation all around. Underpayments resulted in no interest earned on money not received. Overpayments resulted in money spent now being owed.
With regard to the settlement proposal before Jefferson City’s table, the 15-year repayment schedule seems reasonable. The county — through Collector Larry Vincent — initially proposed a 52-year repayment plan to Jefferson City, which countered with a 10-year proposal.
More than reasonable would be Jefferson City’s willingness to forgo interest and litigation
Thus far, the affected political subdivisions have attempted to make the best of a bad situation, and have tried to unravel the surtax distribution tangle without litigation or further penalizing other aggrieved parties.
Approval of the settlement by the Jefferson City Council would set a sensible example.