CITY JOINS FIGHT OVER USE-TAX REFUNDS

JACKSON -- Aldermen voted Monday night to join the list of plaintiffs against the Missouri Department of Revenue.

"We've entered into that just like Cape County and Cape city have," Mayor Paul Sander said.

Sander said Jackson will "go to battle with the rest of them."

The city of St. Louis and St. Louis County are leading the fight, and will pick up the legal costs for the lawsuit. Other communities in the suit will not face legal costs.

"They want all the support they can get, and we're obviously in favor of the suit," Sander said.

The Missouri Supreme Court ruled the local portion of Missouri's use tax unconstitutional in March. The Missouri Department of Revenue is demanding that communities pay back the money they received through that tax.

At issue is whether the state has a right to demand that refund, and more importantly to many communities, whether or not the state can charge communities 12 percent interest on that tax revenue.

Sander said aldermen will willingly pay back the $200,000-plus Jackson received in revenues, but asking for the interest is going too far.

"We don't feel like it's fair with that 12 percent," he said.

The cities of Jackson and Cape Girardeau and Cape Girardeau County set aside the use tax revenues they received in special escrow accounts, and could refund the state immediately, officials in those communities say.

The state had originally proposed withholding sales tax disbursements to local governments over a five-year period until the use tax revenues are repaid.

Prosecutor Morley Swingle, who is representing the county in the lawsuit, said that when a tax is repealed or declared unconstitutional, the presumption is generally against refunds, because communities may have already spent or budgeted the funds.

The lawsuit was filed June 4 in Cole County. An injunction was granted that day barring the Department of Revenue from collecting the refunds until the suit can be settled.