After years of tax disputes between Clay County and the cities and special road districts within the county, the Excelsior Springs City Council voted 5-0 Monday night to accept a settlement offer from the county.
The settlement stems from a 2008 court decision in which the city of Excelsior Springs, Excelsior Springs Special Road District No. 10 and several other plaintiffs prevailed in their claim that the county had not paid the full amount of the tax revenues that were due to them.
City Attorney John McClelland explained to the council that when the economy was strong, Clay County had reduced the property tax levy for cities and road districts, intending to replace it with sales tax revenues. However, when Clay County then approved “too many” tax increment financing projects and the economy went downhill, the sales taxes dropped off accordingly, leaving the cities and road districts underfunded.
Furthermore, McClelland said, after the 2008 decision, Clay County shifted its legal theory and continued to pay less than the cities and road districts believed was proper.
But the agreement approved Monday—and being approved elsewhere around the county—should theoretically change that.
According to a memorandum from McClelland to the city council, Excelsior Springs estimates the arrearages owed from 2008 through 2011 at $201,510. The settlement is for a lower amount, but promises a certain level of revenues in the future.
Specifically, the county will pay Excelsior Springs $151,132 in two installments—half of it, or $75,556, within 30 days and the remaining half within a year. In addition, the county has agreed to raise the real estate tax levy from the current eight cents per $100 assessed valuation to 14 cents, and pay that levy assuming a 98 percent collection rate. The amount will be supplemented with 50 percent of the county’s gross sales tax from a base of $7 million to a maximum of $9 million—increasing to a maximum of $10 million starting in 2027.
The levy and sales taxes will be divided up among the cities and road districts. And McClelland said if the county fails to abide by the agreement, Excelsior Springs and its co-plaintiffs can revert to the full amount of their claims.
For more on this article, see the print edition or e-Edition of the Friday, June 8, Standard.
By Eric Copeland • email@example.com