The businessman suing to invalidate the parish bus tax that voters approved in April is urging opponents of the tax to take advantage of a state law that will prevent the Capital Area Transit System from receiving the funds until after the lawsuit is resolved.
The East Baton Rouge Parish Sheriff’s Office sent out property tax bills this month that included the newly approved 10.6-mill property tax for CATS. Taxes are due back to the sheriff at the end of the month and will be remitted to the respective taxing agencies on Jan. 10.
Milton Graugnard, the businessman who filed the suit, is telling tax opponents that they should write the Sheriff’s Office asking that office to hold in escrow the portion of their individual property tax bill that would otherwise go to CATS until the litigation is resolved.
CATS will be free to spend the tax money collected unless a property owner files a protest letter asking the sheriff to hold the amount in escrow, he wrote in an email addressed to CATS tax opponents.
“If the tax is later determined to be unconstitutional all CATS taxpayers will be entitled to a refund,” Graugnard wrote. “But if the money collected has been spent, the source of that refund is unclear and it may not be available at all.”
If CATS prevails in court, the escrowed funds would be returned to CATS.
CATS Board President Jared Loftus would not comment on the impact the escrowed account could have on CATS’ ability to deliver on the service goals promised in exchange for the passage of the tax. He also declined comment on what plan CATS has to refund money to taxpayers in the event the tax is deemed unconstitutional.
“We believe the most recent tax vote was legal and constitutional, and no court has said otherwise,” Loftus said in an emailed response. “Having said that, we would never discredit the opponents of the tax vote, nor would we initiate any ploy that would discredit the electoral statement made by the people of East Baton Rouge Parish.”
He said spending time to address every attack on the actions of CATS would be a “waste of valuable time.”
“We are focused on our efforts to continue to make CATS one of America’s most efficient and responsible transit systems,” Loftus said.
Casey Rayborn Hicks, spokeswoman for the Sheriff’s Office, confirmed in an email Tuesday that the Sheriff’s Office would hold funds in escrow at the request of tax payers.
“In the event a taxpayer advises the tax office that their tax payment is being protested or in other words paid under protest in accordance with the requirements of La. R.S. 47:2134, the Sheriff’s Office will ‘segregate’ the disputed funds — i.e., place the tax payment in an interest-bearing escrow account — and hold the funds until the issue regarding the protested taxes is resolved by the courts.”
Hicks said as of Tuesday afternoon there had been one inquiry to the tax office regarding the tax protest, but no official protests.
The deadline to protest is Dec. 31, Hicks said.
In July, Graugnard, a Cajun Industries executive, filed the lawsuit alleging that 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.
In October, state District Judge Todd Hernandez denied CATS’ request to dismiss the lawsuit, but CATS has appealed that decision.
The 1st Circuit Court of Appeal issued an order halting all proceedings in Hernandez’s court until the appeal is concluded.
Graugnard’s attorney, Kyle Keegan, said their team was hoping to secure a court order requiring the sheriff to escrow all CATS tax collections, but the effort was hindered by the appellate court’s decision to halt proceedings in Hernandez’s court.
“We can’t do anything if the litigation remains stayed,” Keegan said. “So it’s very difficult for the plaintiffs to protect the taxpayer’s interest when not given access to the courts.”
Encouraging individuals to use the property tax under protest statue allows the Sheriff’s Office to escrow individual tax collections without a court order, Keegan said.
On Tuesday afternoon the CATS Board of Commissioners approved a $17.7 million operating budget for 2013 that it says will cut wait times for buses from 75 minutes to 20 minutes during peak hours.
The CATS tax is estimated to bring in $15.3 million, according to the budget, but only $9.2 million would be applied to the operating budget. The rest would be split between a CATS Board reserve account and to pay off a loan CATS took out this year to help stay open amid a budget shortfall.