Rules for Missouri Fire Protection Districts - Page 9

VIII. Property and Sales Taxes and Fees

Parenthetical numbers in the text refer to sections of the current Revised Statutes of Missouri, abbreviated as RSMo.

Assessed valuations

ad valorem tax
Latin for “according to value.” An ad valorem tax is a percentage of the value of real or personal property

One of the most common ways FPDs generate revenue is levying ad valorem property tax rates against all real (RP) and personal taxable property (PP) assessed in the FPD (321.230). Each county in Missouri is responsible to assess, which means to place value on, all real and personal property and update all real property assessments every other year, which is called reassessment. Reassessments are required to be based on market value, which is the price that a buyer will pay a seller — sometimes this is called fair market value (FMV) or the appraised value.

Example
A home with a $100,000 market value has an assessed valuation of $19,000, which means an FPD with a levy of 30¢ per $100 of assessed value will receive $57 per year from the homeowner

Once the county sets a market value, the type of property determines assessed value (AV), which is calculated as a percentage of market value:

Real PropertyAV as a % of FMVPersonal PropertyAV as a % of FMV
Residential19%Vehicle33.5%
Commercial32%Antique vehicle5%
Agricultural12%Crops/livestock5%
RR and utilityState setOther33.5%

When assessed values rise, local governments may be expected to adjust their tax rates downward to keep down any increase in property tax bills (see the Adjustment section in this chapter). County assessors play no role in rate-setting decisions. That responsibility belongs to governing boards of local governments like FPDs.

Missouri tax rates, each set by the governing board of the government entity, are expressed in cents or dollars per $100 of assessed valuation. Some neighboring states like Arkansas, Iowa and Kansas express their tax levies in “mills,” so a 30¢ levy in Missouri would be 3 mills in another state.

There is also a surtax that county collectors must calculate and distribute to districts like FPDs. This surtax is a county-wide assessment on commercial real property made at a preset tax rate of assessed valuation that replaces the tax revenues that were derived from the inventory surtax prior to 1985. The distribution of the replacement surtax is based on the percentage of lost revenue and total commercial value in the FPD. The percentage is based on total county lost revenue, total commercial value and actual present collections.

Railroad and utility assessed valuation, sometimes referred to as state-assessed valuation, is also complex. Railroads and utilities self-report to the state their property as expressed by miles of track, pipelines, or transmission lines in each taxing jurisdiction in the state. Each FPD receives a percentage of the railroad or utility company’s total tax bill based on the mileage in the FPD as a percentage of all the mileage in the state.

Levy options

Most special purpose districts, such as fire protection, ambulance, drainage and road districts, have only one operating levy. However, FPDs have numerous options as to services they may offer and taxes they may levy to support those services. Each FPD operating levy requires voter approval and stands permanently, though it must be recalculated every odd-numbered year.

If FPDs have bonded indebtedness, they can use an additional debt-service levy. Bonded indebtedness, which requires an additional debt-service levy, is covered later in this chapter under Long-term debt and bond issues.

An FPD’s basic levy options are outlined in the following table:

Basic LeviesRate per $100 AVAuthorization
Initial rateUp to 30¢321.240
Added rateUp to 10¢321.240
Added rateUp to 25¢321.241
Added rate after 8/13/82Up to 10¢321.241
Added rate after 9/28/85Up to 25¢321.241
Added rate50¢321.241
Maximum basic levies$1.50 

Beyond an FPD’s basic levy options, there are the following levy options:

Additional LeviesRate per $100 AVAuthorization
Firefighter pensionsUp to 10¢321.240
Emergency medical services40¢321.225
Emergency ambulance30¢321.225
Ambulance (first class counties)30¢321.620
Emergency dispatch321.243
Additional dispatch(St. Charles County)321.243(3)
Rollback exemption(rate reverts back)Varies321.244
Pension support in certain first class counties40¢/25¢321.610
First class counties10¢321.610

Approval

All tax rates require approval by a simple majority of voters. Bond issues (long-term indebtedness) require either two-thirds or four-sevenths voter approval (66.7% or 57.1%), depending on the election date as explained later in this chapter under Long-term debt and bond issues.

Procedures

RSMo 67.110
• A public hearing is required before setting the tax rate
• Newspaper notice or public postings in three public places, of time and place, placed seven days before the hearing
• Notice shall include assessed valuation by category, new construction in dollar and percentage amounts, amount of revenue required in the annual budget, and proposed tax rates

Timing is crucial in order to get the FPD’s property tax rate(s) on tax bills for the current year (321.250 and 67.110). Before a tax can be levied, the FPD board must set the rate(s) in a properly announced public session. Generally, the FPD board should have already approved at least a preliminary budget for the next fiscal year — otherwise, how does the board justify the property tax rates? The FPD must certify on forms supplied by the state auditor the total approved rate (all the rates added together) to the county clerk (or clerks for FPDs that cross county lines) before Sept. 1 or Oct. 1 for FPDs located in first class charter counties. The state auditor examines the rate set by the board against the tax rate ceiling to ensure compliance (137.073.6). The tax rate the state auditor says complies is levied against all real and personal taxable property assessed in the county or counties that lie within the FPD.

To make assessed valuation comparisons and property tax calculations easier, the state auditor provides electronic spreadsheet versions of its forms in the Local Government Forms and Reports section of its website.

The penalties for failing to report levy information under the Chapter 137 deadlines can be extraordinary and can result in a loss of tax revenue for the year. Needless to say, failing to attend to these matters could be disastrous. (137.243).

Adjustments

RSMo 137.073.7
“No tax rate shall be extended on the tax rolls by the county clerk unless the political subdivision has complied with the foregoing provisions of this section”

Under constitutional requirement, each year’s assessed valuation must be compared with that of the prior year. Excluding new construction and improvements, to the extent valuation exceeds last year’s plus the federally calculated consumer price index (CPI), or cost of living, the tax rate(s) must be reduced to produce the same revenue as before, plus whatever amount new construction adds. New construction figures are furnished by the county (RSMo 137.073 and Missouri Constitution, Article X, Section 22).

The FPD must also make a second calculation. If the assessed valuation increased, a tax-rate ceiling is established by statute (137.073). This tax rate ceiling is capped at either the most recent voter-approved rate or the rate that was levied in 1984. The intent is to provide no more revenue from the new assessed valuation than was produced by the old, with growth in new construction and improvements excluded.

Long-term debt and bond issues

For capital expenditures, the FPD may issue bonds. Examples of capital expenditures include building an additional firehouse, purchasing new equipment that will last multiple years, and making other purchases or improvements of long-term usability rather than normal annual operating expenses.

When certifying annual levies the FPD board needs to take into account a separate levy for the next year’s installments and interest payments on bonds (321.260). The tax revenues from this separate levy must be deposited into a separate reserve fund for debt retirement (321.290), which may have enough tax revenue for up to two years’ of installments and interest payments. (See Chapter XVII. Bond Issues for more detail.)

Sales taxes

Three statutes authorize some FPDs to impose a sales tax. The legislature may expand this authority, so consult the current version of Chapter 321 and the most recent session laws to determine what sales taxes may be imposed. As of this writing, the sales tax authority is found in sections:

  • 321.242 (¼% for perhaps a single qualifying FPD),
  • 321.246 (½% for a few FPDs) and
  • 321.552 (½% for all FPDs except those in Greene, Platte, Clay, St. Louis and St. Charles counties, with 50% of the sales tax committed to property tax relief).

Estimating the revenue an FPD might realize from a sales tax is difficult. The Department of Revenue (DOR) keeps its sales tax data by ZIP code, and ZIP code boundaries seldom coincide with FPD boundaries. A few years ago an FPD discovered that some of its merchants were mistakenly listed in a neighboring FPD. To ensure that merchants are listed in the correct FPD, FPDs with a sales tax should have an authorized person, like the treasurer, check the detailed sales tax reports every month to ensure that all merchants in the FPD are remitting the sales taxes. FPDs with a sales tax should also remember that some utilities, including telephone service, vehicles and other personal property such as boats are also subject to sales taxes. Any problems should be promptly called to the attention of the DOR.

Keep in mind that sales tax information is highly sensitive. Care must be taken by the FPD’s authorized DOR liaison not to divulge any information that could reveal the sales tax information of any individual taxpayer. A violation is a criminal offense! (32.057)

Service fees

While local governments do not always like the limits on tax revenues required by the Hancock Amendment, covered earlier in this chapter under Adjustments, local governments do like another part of the Hancock Amendment (Missouri Constitution Article X, Section 16) that prohibits the state from requiring any new or expanded activity or service by political subdivisions, like FPDs, without full state financing. The Hancock Amendment also prohibits political subdivisions like FPDs from levying any tax, license or fees without voter approval (Missouri Constitution Article X, Section 22).

Passage of the Hancock Amendment by voters raised the question, “What is a tax, license or fee?” which was finally decided by the courts in Keller v. Marion County Ambulance District (820 S.W.2d301 Mo. en banc). This case determined increases in specific charges for services actually provided by the ambulance district were not subject to the Hancock Amendment because the charges were user fees, while the constitution refers to fees that are really taxes in everything but name. The following table might be helpful when FPDs consider new taxes, licenses or fees.

Question to AskProbably Requires a Taxpayer VoteProbably Requires Just a Board Vote
When paid?Periodic basisOnly when goods or service provided
Who pays?All or almost everyoneOnly those using goods or services provided
Is it proportional to level of goods and services provided?NoYes to level of goods and services provided
Goods or services provided by FPD?NoYes
Activity historically government provided?YesNo, especially if the private sector can also provide

Brandsville FPD v. Phillips (SD 31576)
FPDs were affirmed to be able to bill emergency service fees.

Two statutes authorize FPDs to bill for services rendered when mutual aid is not involved. The first law (321.220[12]) allows FPDs to bill for “actual and reasonable” costs of emergency services provided in the FPD, but to residents who live elsewhere. However, the bill cannot exceed $100 for responding to each fire call or alarm and $250 for each hour, billed in 15-minute increment.

The second law (321.622) allows FPDs to bill for services rendered beyond their corporate boundaries. However, the bill cannot exceed $100 per call or alarm and $500 for each hour, billed in 15-minute increments. These fees are not applicable if there’s a previous written agreement with the property owner, although this fee structure might be a reasonable starting point when negotiating such agreements.

Prior to any billed services provided, FPDs must make sure the fees are properly adopted, that is, through resolutions and ordinances (see Chapter XIX. Ambulance and Emergency Medical Services for information regarding rules and regulations if an FPD provides ambulance services).

Reimbursements

The “Spiller Pays” statute (260.546) states that spillers of hazardous substances are liable to FPDs for “reasonable and necessary” costs such as the costs of materials and supplies to secure the emergency and non-routine contracted services. However, the FPD must submit an itemized statement of costs within 60 days of completion of the cleanup. If the spiller is unable to pay, then the state is to pay the FPD.

Prior to any spills, FPDs must make sure to adopt resolutions or ordinances requiring spillers to reimburse FPDs when there is a spill.