Plaintiffs to appeal CATS tax suit to Louisiana Supreme Court

Bus system leaders breathed a sigh of relief in December after a yearlong lawsuit challenging the 2012 Capital Area Transit System tax election was tossed by a state appeals court. But Monday, the plaintiffs’ attorney said they will bring their fight to the state Supreme Court.

The decision to continue the litigation against CATS means the bus system will still go without hundreds of thousands of tax dollars owed to the agency paid under protest.

Voters in Baker and Baton Rouge approved a 10.6-mill property tax in April 2012 to fund the bus system.

Businessman Milton Graugnard filed a lawsuit to void the tax election, alleging it was unconstitutional because the tax is levied within the city limits, yet some areas outside of the city limits, such as the Mall of Louisiana and Perkins Rowe, still receive bus service.

William L. Smith Jr. subsequently joined Graugnard as a plaintiff.

CATS attorneys subsequently filed a motion to dismiss the suit, arguing that under state law the opponents had only 60 days to challenge the election once the results had been promulgated.

The lawsuit was filed 70 days after the tax election results were promulgated, or officially declared.

State District Judge Todd Hernandez refused to dismiss the suit, agreeing with the plaintiffs’ attorneys that the 60-day provision doesn’t apply to their case because a state law cannot limit the rights a plaintiff has in a federal claim.

The 1st Circuit Court ruled last month in favor of CATS, dismissing the suit.

Kyle Keegan, an attorney representing the plaintiffs, said his clients still firmly believe the tax election should be invalidated. But he said the appellate court’s decision has wider implications than just CATS.

“It’s about the ability of people to reasonably assert federal constitutional claims in Louisiana state courts,” Keegan said. “The 1st Circuit ruling would support limitations of this type in a wide range of constitutional issues. It’s no longer confined to just the CATS tax issue.”

Keegan said he will file his request to the Supreme Court to hear their case by Jan. 21.

Because of the challenge to the tax election, some property owners have been taking advantage of a state statute that keeps their tax payment from being used by CATS until the suit is settled.

Taxpayers who filed with the Sheriff’s Office to pay their CATS tax “under protest” will have their money held in escrow. If the election is declared unconstitutional, only those taxpayers will be reimbursed for their property taxes paid to the agency. But if the courts ultimately rule in favor of CATS, then the Sheriff’s Office will disburse the funds to the bus system.

Last year, about 1,300 people filed to pay their CATS tax under protest, meaning CATS did not receive $470,000 in property taxes.

Property owners have to refile every year for the taxes to be held.

Sheriff’s Office spokeswoman Casey Rayborn Hicks said her office does not yet have a count for how many people made the request this year.

CATS CEO Bob Mirabito called the lawsuit “a distraction in the community” but said he feels confident in the agency’s legal footing, which he said was supported by the appellate court decision.

But the $24 million CATS budget for 2014 does not account for any funds being held in escrow, so the continued litigation means CATS could endure a budget shortfall.

CATS won’t know how much is being withheld until the Sheriff’s Office calculates the number of requests.

But Mirabito said if it’s close to the same as last year, shortfalls could potentially be offset with reserve funds.

“Anything that’s critical to CATS in 2014, we’ll get done,” he said. “No question about it.”

While the lawsuit over the tax election has been ongoing for more than a year, the issues being argued are still procedural in nature.

No judge has yet to weigh in on the constitutionality of the tax election.

“Particularly when you’re dealing with constitutional claims — justice is not always swift,” Keegan said.