Columbus Municipal School District officials are questioning whether the schools should be on the hook for a portion of a fee the city pays to outsource its ad valorem tax collection services.
Where all parties involved have found common ground, however, is acknowledging no written agreement exists between CMSD and the city dividing the fee.
Now, City Attorney Jeff Turnage said he is crafting a memorandum of understanding that would formalize an arrangement with CMSD on splitting the fee. But CMSD Board President Jason Spears did not indicate on the record to The Dispatch whether district officials would sign it.
“Our biggest thing is that we are fully evaluating all the information regarding the collection fee, the process and any binding contracts that may be in place for the agreement,” Spears said.
Since 2002, Columbus has contracted with Lowndes County to collect ad valorem taxes each year at a cost of $120,000 per year. For the past 15 years, Turnage said, the school district has paid $85,000 of the fee, with the city covering the remaining $35,000.
This became an issue in July, when county supervisors aborted an attempt to raise the fee to $200,000, of which CMSD would have conceivably paid as much as $141,600.
Before supervisors backed off that plan, city officials had indicated it would sit down with school board members to renegotiate the city’s agreement with CMSD. This was particularly curious to Spears, as no one could find any proof of an existing agreement.
“Our questions really stem from there is no agreement in place at this time to outline how the fee should be structured or split among the parties involved,” Spears said. “Nothing is in the official minutes of any of the school board minutes to indicate this arrangement.”
Turnage couldn’t find any written proof either, but he said his “best guess” is the fee amount is divided based on the proportional amount of money each entity receives from tax collections, with CMSD getting a little more than 70 percent.
While CMSD’s fee has paid a set $85,000 since 2003 for ad valorem collections, Turnage said the new memorandum of understanding would set a percentage, which would mean the actual dollar amount would depend on total tax collections each year.
“We’ll have an agreement in place, in short order, probably within a month that will go in the next fiscal year and the years after,” Turnage said. “It will have some flexibility (so that) when the millage rates fluctuate, the proportionate share will fluctuate along with it.”
Debate over ‘cost of collections’
CMSD doesn’t pay the fee from its operations budget. It’s actually the school district taxpayers who more directly foot the bill.
Each year, the district requests a certain dollar amount it needs from local sources to operate. From there, the city adds tax collection fees, among other things, to the district’s request and increases the CMSD millage rate — mills are the units, based on property values, through which citizens pay ad valorem taxes — to cover the new total.
That way, CMSD still gets all the money it requests every year, even after the county collects its fee.
Turnage and city Chief Operations Officer David Armstrong said the city, as the tax levying authority, is statutorily obligated to fully fund CMSD’s local funding request and to increase CMSD’s millage to cover tax collection service fees.
Turnage specifically cited Mississippi Code 37-57-1, which states, “the levying authority shall levy an additional amount sufficient to cover anticipated delinquencies and costs of collection.”
Spears, however, isn’t convinced “costs of collection” applies to the fee in question.
“We’re weighing out all options back to the interpretation of what costs of collections mean in the law and will continue to work with local officials who come to a resolution,” Spears said.
But Lowndes County Tax Collector Assessor Greg Andrews agrees with the city’s interpretation and said the law is clear on the matter.
“(CMSD is) mandated to pay it per that law,” Andrews said. “… (The law says) not only can we (levy a fee) but we shall.”
A separate statute allows the city to assess similar fees for vehicle tag collection service fees, for which CMSD taxpayers pay $35,000 toward each year and the amount is also added to the millage rate.
Turnage: It doesn’t matter whether CMSD signs MOU
Turnage emphasized it is city taxpayers, not the school district itself, who pay those fees.
“No matter how it’s divided between the district and the city on paper, the net result is that the city taxpayers are paying for it,” Turnage said. “It seems to me what we are arguing about is who is going to take the blame for how much millage there is. I think the city’s viewpoint is the school district’s percent of the overall millage is substantially larger than the city’s millage is.”
Currently the school millage is 61.39 mills, while the city of Columbus is 46.69 mills.
Whether CMSD signs the memorandum is an “academic argument, Turnage said. In the end, the result will be the same.
“We don’t have any choice, it will be set and it will be added to the overall millage,” Turnage said. “I don’t see why the school district would care. We are going to set the millage to offset the cost of collections one way or another. (The city) doesn’t have to have the school district’s agreement because they are required to set the additional millage.”
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