Friday, May 22, 2015

Town Council Report--Majority of Council Backs Tax Relief Plan

James Island Town Council met on Thursday, May 21.

Council approved the purchase of two cameras that will identify license plates.   These will be located on Folly Road.   The information will be used to catch criminals.   The technology cannot be used to control speeding.

Council approved a Municipal-County agreement for paving Jeffry and Lemontree Roads.

Council approved requesting CTC funds to construct Phase II of the Camp Road sidewalk project.

Council held a public hearing on the budget.  

Two representatives of the Harbor Creek asked for money to help purchase  land for a park near their neighborhood.

JIPSD Chairman Donald Hollingsworth spoke in opposition to the Town introducing a property tax.  He said that the JIPSD would not lower its property taxes so that any Town property tax would be in addition to the JIPSD taxes.   He said that would be double taxation.   He said that the Town would not be able to take over the JIPSD's garbage and trash trucks and would have to buy its own.    He said that since the JIPSD wrote a letter saying that it would provide solid waste and fire services within the Town and that was included in the Town's feasibility study, it would be unfair to the JIPSD for the Town to provide solid waste services.   There would be no Town without the JIPSD.    He said that the JIPSD was raising taxes by 2 percent and wouldn't raise them again before 2020.  

He suggested that the Town send some members of Council and the JIPSD send some Commissioners to discuss these issues.  (I support that.)

Trent Kernodle spoke as  private citizen in opposition to the Town providing solid waste services.   He said that because the feasibility study for the Town included a letter from the JIPSD that it would provide solid waste collection and fire services to the Town and collected taxes within the Town, if the Town were to provide solid waste services in some other way it would be in danger of losing its charter.   He said that if the Town wanted to get into the garbage business it would have to buy its own garbage trucks.   He said that the portion of state law that speak of the transfer of service rights refers to annexation and not incorporation.   He said that the Supreme Court has said that incorporation is not annexation.   He said that the contracts the JIPSD has with the City of Charleston and the City of Folly Beach requires those Cities provide their own solid waste  services and continue to pay the JIPSD for solid waste services.

He didn't mention that he was suing the Town for millions of dollars.

JIPSD Commissioner June Waring spoke and said JIPSD was financially sound.   She said that they were raising their employees salaries because that was necessary.   She said that they were increasing taxes by 2%.    She said that the JIPSD couldn't provide an agreement with the Town that was different than that provided the other municipalities.   She said that some citizen would sue the JIPSD and she didn't want to go to jail.   She said that the Commissioners support the Town and would like to help the Town with LOST money, but it had to be legal.   She said that she was not a lawyer.

Susan Milliken spoke against the Town introducing a property tax and seeking service rights to solid waste.   She said that she first heard about this proposal the previous evening.   She didn't think that her Town's budget should depend on what another public body would do.   She said that the JIPSD were elected by the citizens and represented them.

Council approved 4-1 an amendment to the draft budget to introduce a 17.7 mill property tax rather than a 35.1 mill property tax, provide a tax credit of $2,948,058 rather than $2 million, and spend $1 million on solid waste collection rather than $2 million on fire services.    Councilman Milliken opposed the amendments.

Council then voted 4-1 for the budget on first reading.   Councilman Milliken voted in opposition.

Town Council voted in favor of my motion to defer the ordinance governing a property tax until the June meeting.

I plan to write Chairman Hollingsworth and ask him to place on the JIPSD's agenda a request by the Town to purchase 2 acres of the JIPSD property for a site of a Town Hall and also the Town's request that the JIPSD transfer service rights to solid waste collection to the Town  and that the Town purchase solid waste service from the JIPSD by contract.

I will copy this letter to all of the Commissioners.   I hope that the Chairman (or any Commissioner) will ask that these items be placed on the agenda and that a Commissioner will move that each be adopted and another Commissioner will second, so that there will be a vote of the Commissioners and we will see where each JIPSD Commissioner stands.    It is important the Commissioners go on record.

I have never proposed that the JIPSD turn over any garbage or trash trucks to the Town.   Instead, I have proposed that the JIPSD provide solid waste services to the Town by contract.    That means that the JIPSD would continue to own the garbage trucks and trash trucks, hire the employees, pay them, and direct them.   The JIPSD Commissioners would determine whether service was one day or two days a week, whether residents provide their own garbage cans or the JIPSD provides them, and so on.  

The Town is offering to pay the JIPSD for solid waste collection.  We will pay them an amount that is based upon the property tax they would have collected in the Town's tax district.  I have suggested 1/3 of 53.1 mills, which is 17.7 mills.  This would be approximately $1 million per year.   I believe the Town should agree to modest annual increases in payments in the solid waste contract to reflect inflation.

However, the Town is seeking to have the JIPSD stop collecting property tax to fund solid waste collection within the Town's tax district.   We are not asking that the JIPSD cease collecting property tax to fund fire service or street signs within the Town's tax district.   So we are asking the JIPSD to reduce the millage it collects in the Town so that what remains is that portion that pays for fire service and street sign provision.

If the JIPSD agrees to provide solid waste by contract rather than direct taxation within the Town, the Town will introduce a millage to fund solid waste collection.  The Town will be obligated to provide a LOST property tax credit against its own millage.   For the foreseeable future, that credit will be greater than the tax owed, so that taxpayers in the Town will pay nothing to the Town.   The net result would be a substantial tax cut to all property taxpayers in the Town.

What would happen is that on the tax bill sent by the County Auditor to everyone in the Town, there would continue to be a line for the JIPSD, with a reduced operating millage--initially 35.4 rather than 51.1.   There would remain a line for JIPSD bonds which is 3.8 mills.   There would be a new line for the Town operating millage, and that would initially be 17.7.   The municipal LOST tax credit would appear on the top of the bill.   The amount billed from the Town's line would be zero.    There would remain other lines for county government operating, county bonds, school board operating, school board bonds and so on.    All of the amounts billed are added up to get the total amount that the taxpayer must pay the County Treasurer.   

For homeowners in the Town, the bottom line would be a substantial tax cut.   The cut is going to be approximately 16% for a homeowner.   I can't promise that taxes will be 16% lower than last year, because multiple government bodies collect property taxes in the Town and maybe some of their taxes will increase.   But it will be just about 16% lower than what a homeowner would have paid.

South Carolina statutes governing annexation clearly state that special purpose districts can provide services to municipalities by contract.   Having a municipality pay for services it doesn't receive may be a contract of sorts, but it isn't a contract for providing and receiving services.

The Town has annexed areas with the JIPSD, though most of the Town was initially incorporated within the JIPSD.

The statute requires that a special purpose district and a municipality negotiate an agreement regarding the transfer of service rights in an annexed that is fair to both the municipality and those remaining in the unincorporated area.  

Nothing in the law even hints that when a special purpose district has several municipalities that have annexed territory it must make the same agreement to all of them regardless of differing circumstances.   The requirement that an agreement be negotiated and be fair to the municipality and those remaining unincorporated area would make such a rule unreasonable.

Personally, I think a "contract" by which a municipality pays for solid waste services that it does not receive is patently unfair to the residents of the municipality.   I grant a municipality could agree to such a contract if it wanted to.   However, nothing in the law requires that such an unreasonable and unfair agreement be made.  

I am sure that any JIPSD Commissioner who insisted on such an unfair contract, requiring the people of the Town to continue to pay the JIPSD for solid waste collection and find and pay a commercial solid waste company to actually provide solid waste service would find themselves replaced in the next election.

If the JISPD made a fair agreement with the Town, might some citizen in the City of Charleston or the City of Folly Beach complain that the agreement their Cities made with the JIPSD were unfair?    Perhaps they would, but their municipal governments made those agreements.   It is not up to individual citizens of the municipalities to challenge agreements their elected leaders made.

In my opinion, the reason those municipalities made those agreements is because they didn't want the JIPSD providing services by contract.   Since the Town wants to continue receiving solid waste services from the JIPSD by contract, a different agreement is appropriate.

It was obvious that Chairman Hollingsworth and Commissioner Waring were just repeating arguments from their former General Counsel.

Trent Kernodle's arguments run from the implausible to the ridiculous.

Most telling was the truly absurd claim that the Town's "charter" would be in danger if it provided solid waste services some other way than by having the JIPSD collect taxes in the Town and provide the services.    The feasibility study submitted to the Secretary of State before the Town's incorporation was nothing more than a study showing that a municipality could operate in some way or other.   It is not an agreement with state government binding on the voters and elected officials of the Town for all time.

Of course, what did the Town's feasibility study actually say about solid waste services?
The proposed municipality will have the James Island Public Service District continue to provide solid waste pickup. While the municipality could collect property taxes and pay the funds to the James Island Public Service District, the likely approach will be for the James Island P.S.D. to continue to collect the property tax from the Town’s residents, with the Town pursuing an agreement with the District and the Charleston County Auditor to provide for a tax credit against those taxes.


Doesn't look to me that the Town has promised that the JIPSD will continue to collect the taxes.   The feasibility study specifically mentioned that the Town might collect the property taxes and pay the JIPSD.   

Why would Trent Kernodle say that the Town's charter might be in danger?  Why would he make such an absurd claim? 

It was an insult the intelligence of Town Council.    

But I have seen this pattern before.  I saw him tell the JIPSD Commissioners that since the Town agreed that writing tax rebate checks is an administrative nightmare, then having the County Auditor place a tax credit on the JIPSD line on the tax bills would greatly burden all taxpayers of the JIPSD, including those in the unincorporated area who would receive no tax credits.   But there would have been no cost to the JIPSD at all!  No one was proposing that the JIPSD write and mail rebate checks and so how much that would cost the Town is obviously irrelevant.   But that is what Trent Kernodle said to the Commissioners.

That was an insult to the intelligence of the Commissioners.

The JIPSD is proposing to raise property taxes by 3.9% in 2015.   The way to calculate the percent change in a millage is as follows:   (53.1-51.1)/51.1  = 2/51.1 = .039 = 3.9%.   A 2 mill increase from an initial millage of 51.1 mills is a 3.9% increase.   It is not a 2% increase.

If the JIPSD will come to an agreement with the Town, they can instead reduce their property tax in the Town from 51.1 to 35.4.      The JIPSD could provide a more than 30% tax cut in its taxes compared to what they charged last year..

The Town would then pay for the solid waste collection service by contract, so that there is no decrease in the amount of money the JIPSD receives.  In fact, they would get approximately 4% more than they did last year.

As I said before, your taxes can go down rather than go up.   All it takes is a majority of Town Council and a majority of JIPSD Commissioners to agree.  

The majority of Town Council showed its willingness to move forward.   Thank you to all of those members of Council willing to provide tax relief to the people of the Town.   Thank you Mayor Pro-tem Leonard Blank, Councilman Josh Stokes, and Councilman Troy Mullinax.   I am sad that Councilman Milliken refused to work with me on this.

So all that is necessary now is  for a majority of JIPSD Commissioners to move forward.

Of course, Trent Kernodle is suing the Town for millions of dollars.   He is seeking lawyer fees from the Town.    His self interest is to sabotage this plan.   If the Town has its own property tax and provides a LOST credit against it, his suit to force the Town to mail settlement checks will be moot.

I think the JIPSD Commissioners need to get a lawyer who will provide them with honest advice.  

Not a lawyer who has a proven record of making patently absurd claims.  

And more importantly, not  a lawyer who has a clear financial conflict of interest.

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