Suit challenging CATS tax of 2012 is dismissed; escrowed funds to be released

Louisiana’s top court dealt the final blow Friday to a lawsuit challenging the 2012 Capital Area Transit System tax election, meaning $900,000-plus in protested taxes will be made available to the cash-strapped bus system.

But exactly when that will happen was not immediately clear. The East Baton Rouge Parish Sheriff’s Office has been holding the taxes in escrow until the suit was resolved.

“I think that this hopefully brings the issue to resolution,” CATS Chief Executive Officer Bob Mirabito said of the state Supreme Court’s decision. “We are focused on delivering what was promised to the taxpayers.

“Our attorney will be reviewing the finding from the Supreme Court, and I would imagine he’ll contact the attorney for the Sheriff’s Office,” Mirabito added.

Without comment, the high court let stand a state appeals court ruling that threw out the CATS tax suit.

Kyle Keegan, an attorney for the plaintiffs, said he was reserving comment on the Supreme Court ruling until he had a chance to review it.

Voters in Baker and Baton Rouge approved a 10.6-mill property tax in April 2012 to fund the bus system, but businessman Milton Graugnard sued to void the election.

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

Now that the state’s highest court has ruled in favor of CATS, the Sheriff’s Office will be able to disburse the funds to the bus system. If the election had been declared unconstitutional, only those taxpayers who filed with the Sheriff’s Office to pay their CATS tax “under protest” would have been reimbursed for their property taxes paid to the agency.

The Sheriff’s Office has reported that 1,207 taxpayers submitted requests this year that their tax payment be held in escrow. The combined value of the taxes they owe is more than $463,000. Last year, 1,299 people filed to hold their taxes, amounting to more than $470,000.

That means CATS is due more than $933,000 in owed tax dollars.

Graugnard alleged the 2012 election 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. later joined Graugnard as a plaintiff.

CATS attorneys asked that the suit be dismissed, arguing the opponents had only 60 days under state law to challenge the election once the results had been promulgated. The suit was filed 70 days after the tax election results were officially declared.

State District Judge Todd Hernandez refused last fall 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 of Appeal ruled in December in favor of CATS, dismissing the suit.

The $24 million CATS budget for 2014 does not account for any funds being held in escrow.