Judge: CATS tax suit moving forward

Advocate staff file photo by Patrick Dennis -- Buses operated by the Capital Area Transit System, going in and out of the central terminal on Florida Boulevard in July of 2011.
Advocate staff file photo by Patrick Dennis -- Buses operated by the Capital Area Transit System, going in and out of the central terminal on Florida Boulevard in July of 2011.

A state court judge ruled that he will not toss out a lawsuit against the Capital Area Transit System seeking to invalidate the results of the April property tax election and is allowing the case to move forward to trial.

In July, businessman Milton Graugnard, a Cajun Industries executive, filed the lawsuit alleging the CATS tax violates federal and state equal protection rights. A second petitioner, William L. Smith Jr., has since signed on as a plaintiff.

The crux of the plaintiffs’ argument is that the tax was levied within the city limits, yet some areas outside the city limits, such as the Mall of Louisiana and Perkins Rowe, will receive service without having to pay a tax.

On Oct. 15, CATS attorneys argued in state court that the lawsuit should be dismissed because it was filed after a state deadline to challenge election results.

Under state law, opponents have 60 days to challenge an election once the results have been promulgated, or officially declared. The lawsuit was filed on May 18 — 70 days after the tax election results were promulgated.

Graugnard’s attorney Kyle Keegan argued — and Judge Todd Hernandez agreed, that the 60-day provision doesn’t apply to their case because a state law cannot “limit the rights that a plaintiff has in a federal claim.” The plaintiffs have asserted that the tax election violated their equal protection rights under both state and federal law.

“Therefore, the court finds that the (lawsuit) does successfully state a cause and a right of action,” Hernandez wrote in his Oct. 29 ruling that was not made public until Thursday.

A trial has not yet been scheduled.

Jared Loftus, CATS board president, said CATS disagrees with Hernandez’s ruling and will ask the appellate court to review his decision.

“It is important to note that this decision has no bearing on whether or not we will receive the tax revenues for 2013,” Loftus said. “We will continue to move forward with our planning and preparation to provide the best possible services for transit reform in Baton Rouge.”

Keegan said he will file a motion for summary judgment and ask that the tax be thrown out before the end of the year because he wants the case to be decided before property tax bills are sent out in December.

“That’s our goal, but it’s an aggressive goal given the time frame,” he said.

He said if the summary judgment is denied, he expects the case to go to trial during the first half of next year.

Ultimately, it will be appealed, he said, which will likely tie the case up in the legal system for an extended period of time.

“This was a potential hurdle, although we didn’t expect to lose,” Keegan said of the initial hearing. “We are looking forward to getting to the merits of this election.”

Brian Wilson, East Baton Rouge Parish tax assessor, said the unless a court rules otherwise, the CATS tax will by on the tax rolls this December and CATS will begin to receive revenues early next year.

It remains unclear whether the tax proceeds would have to be reimbursed if the tax is thrown out or if the tax revenue will be withheld from CATS in an escrow until a final ruling on the case is handed down. The attorneys in the case and the East Baton Rouge Parish Sheriff’s Office, which handles tax collection, are all looking into the issue.

In April, residents in the city limits of Baker and Baton Rouge approved a 10.6-mill property tax to expand and improve the bus service.

The cash-strapped CATS was running out of money and faced a possible shutdown this year unless it secured a new source of revenue.

The tax was also on the ballot in Zachary, where it failed.