At the October 13 meeting of the JIPSD Commission, JIPSD Attorney Trent Kernodle gave his arguments as to why it would be illegal for the JIPSD to work with the Town to provide a tax credit on the tax bill.
There was no written analysis provided to the Commissioners. Kernodle scooted in on his motorcycle and the only written documentation he had was an email from me to Chairman Hollingsworth and an email from the County Auditor to me.
So, what were his arguments?
He argued that the Town admitted that using the LOST money to write rebate checks would be costly and burdensome. If the JIPSD took on that task, then it would be bearing a heavy administrative cost that would only benefit the taxpayers in the Town. Those taxpayers in the District that are not in the Town would share part of the heavy cost and receive no benefit. This would violate equal protection of the law.
This argument might apply if the Town was proposing that the JIPSD take the Town's LOST money and write rebate checks. However, the Town has never proposed that the JIPSD write rebate checks.
The Town has made three proposals to the JIPSD. All involve the County Auditor making changes in the tax bills going to the Town's tax district. While the Town has offered to compensate the County Auditor and County Treasurer for any additional costs, neither office has expressed any interest in such compensation because they realize that the cost is negligible and really nothing more than what they offer for "free" to other municipalities. The billing process is automated. The administrative costs are a one-time set up cost of a slight change in computer programming.
Interestingly, the Town's proposal from March 27 and repeated on August 11 involved absolutely no added administrative cost for the JIPSD. The JIPSD would set its property tax millage as usual and receive all of the funds from the Charleston County Treasurer exactly as before. As JIPSD Candidate Hal Hanvey pointed out, it appeared that the JIPSD Attorney had not even read the Town's proposal.
The other two proposals by the Town would have involved the JIPSD opening one or at most a few checks from the Town. There would be no significant administrative cost to the JIPSD for any of the plans. Still, the Town would have no problem compensating the JIPSD for whatever minimal administrative costs the programs would involve.
Trent Kernodle also argued that the Town is required to provide a specific percentage of the LOST funds as a tax credit and that the various percentages that the Town has proposed are too small.
The percentage that Kernodle apparently had in mind is 71%, which is the percent of the total LOST receipts from Charleston County that the South Carolina Department of Revenue must place in the Property Tax Credit Fund. Municipalities in Charleston County divide 33% of that money in proportion to their populations. The South Carolina Department of Revenue does all of the calculations and sends each municipality a check from the Property Tax Credit fund each month. The 71% percent impacts what municipalities receive, but it is not used by a municipality in calculating tax credits.
The various percentages proposed by the Town are the percent tax cut that property owners in the Town would enjoy. The percent tax cut possible has increased over the past three years, and the amount of the tax credit can be expressed relative to the tax paid to the JIPSD, the total amount of property tax, or the total amount of the tax bill, which includes fees. Also, the percent tax cut is different for homeowners than rental property, businesses and cars, and also different for boats and other personal and other business property. That is because of different assessment ratios on different types of property.
Most importantly, the LOST statute specifies that a municipality that provides too small of a credit in one year is required to provide a larger credit the following year. This happens all the time, and there is no fine or other punishment for getting the credit wrong.
Trent Kernodle is giving legal advice about a program that he does not understand.
Trent Kernodle then argued that public service districts cannot benefit from LOST funds. He also said that the reason why the Town needed to be formed is that public service districts are not eligible for LOST funds.
Kernodle's approach to legal "advice" can create embarrassing moments for the Commissioners who rely on him. Commissioner Welch sent me an email where he said that everyone knows that the LOST statute specifically bars PSDs from benefiting from LOST tax money. Surely, given the way Trent Kernodle always states that it is illegal for PSDs to receive LOST money, it must be right there in the statute?
But in reality, the LOST statute says nothing at all about PSDs. Clearly, it doesn't say anything specifically about them and, in particular, nothing about them being barred from "benefiting" from LOST funds.
If the James Island Public Service District were to contact the South Carolina Department of Revenue and request a distribution of LOST funds, it would be turned down. Nothing in the statute authorizes the South Carolina Department of Revenue to provide a share of LOST funds to any public service district. It instead distributes the funds to counties and municipalities according to a specific formula.
The only way for people who were in unincorporated Charleston County on James Island to receive a share of the municipal portion of LOST was to form a municipality. We did, and the Town gets two LOST checks each month. One is from the Municipal/County Revenue fund and the other is from the Property Tax Credit fund.
However, all municipalities spend all the money they receive from all portions of LOST for the provision of public services. Trent Kernodle just doesn't understand how the program works. For nearly all municipalities, tax credits are placed on tax bills. That means that the municipality receives less tax money from the County Treasurer. The money received from the South Carolina Department of Revenue from the LOST Property Tax Credit fund is spent on public services, along with the smaller amount of tax revenue received from the County Treasurer.
The Town's proposals put the JIPSD in the role of a vendor providing services to a municipality. If a building contractor visited the South Carolina Department of Revenue and asked for a distribution of LOST funds, he would be laughed out of the office. But that doesn't mean that the contractor cannot "benefit" from the LOST funds by doing work for the City of Folly Beach. Just because a portion of the funds the City of Folly Beach spends comes from LOST doesn't somehow make the receipt of those funds by the building contractor a violation of the LOST statute.
The JIPSD right now is providing fire services to the City of Folly Beach and the City of Folly Beach is paying for it partly with monies from the LOST Property Tax Credit fund. The Town pointed this out to the the JIPSD months ago. Has the JIPSD stopped taking money from Folly Beach? Why does the JIPSD's Attorney keep repeating long refuted arguments?
Trent Kernodle told the Commissioners that they may be criminally liable for cooperating with the Town on the tax credits.
First, there are no criminal sanctions in the LOST Statute.
In Trent Kernodle's opinion, the Towns of Ravenel, Megget, Kiawah, Seabrook, Hollywood, and Rockville, have been in violation of the law for more than twenty years. They all receive money from the Property Tax Credit Fund. They have no municipal property tax millage, provide no tax credits, and just spend the money on current operations. The Town Attorneys for those municipalities obviously disagree with Trent Kernodle's theory. Further, the Attorneys of the Municipal Association of South Carolina disagree with Trent Kernodle's theory. And at the request of the Town of James Island, we now have an opinion from the Attorney General's Office of South Carolina that disagrees with Trent Kernodle's theory.
However, Trent Kernodle's theory is not just that the municipal officials would be subject to criminal sanction for failing to mail checks or send the money back or whatever he has imagined the law might be. He is making the absurd claim that contractors to those municipalities would be subject to criminal sanctions for receiving funds spent by the municipality. For example, a contractor building a sidewalk in Hollywood would supposedly be subject to criminal sanctions because the money he received from the Town of Hollywood included some monies that the Town had received from the LOST Property Tax Credit fund.
Give me a break!
All of these bad arguments were just rattled off from the top of Trent Kernodle's head.
What about the emails he read? He read a portion of an email that I had written to Chairman Hollingsworth stating that the County had not rejected the Town's proposal. And then he read a portion of an email from the County Auditor that had been written to me to suggest that I had been told that the County had rejected the Town's proposal. While the email from the County Auditor did show that he had not been kept in the loop regarding discussions between the Town and the Chairman of County Council, it provided no evidence that the Town's proposal to the JIPSD was illegal.
It was a court room trick. The JIPSD Attorney, Trent Kernodle, was trying to discredit a witness for the opposing side--me.
Trent Kernodle's entire performance on October 13th looked like an effort to bamboozle an exceptionally inattentive and ignorant jury.
Who was he trying to fool? Was it the citizens attending the meeting? Or was it the Commissioners themselves?
The JIPSD Commissioners are in desperate need of a second opinion.
No comments:
Post a Comment