Rules for Missouri Ambulance Districts

VIII. Property and Sales Taxes and Fees

Assessed valuations

One of the ways some ADs generate revenue is levying ad valorem property tax rates against all real (RP) and personal taxable property (PP) assessed in the AD (190.010.2). 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 must be based on market value, which in theory, is the price a buyer will pay a seller — this is also called fair market value (FMV) or the appraised value.

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

When assessed values rise, local governments may be expected to adjust their tax rates downward to avoid an increase in property tax bills (see the Adjustments section below). County assessors play no role in the tax rate-setting decision — that responsibility belongs to governing boards of local governments like ADs.

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 such as Arkansas, Iowa and Kansas express their tax levies in “mills,” so a 30¢ levy in Missouri would be 3 mills in another state.

A taxpayer pays the AD the rate multiplied on each $100 of assessed valuation. A taxpayer’s total property tax bill is the combination of similar calculations from all the taxing jurisdictions where the taxpayer’s property is located.

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

Railroad and utility assessed valuation is sometimes referred to as state-assessed valuation. Railroads and utilities self-report to the state the total value of their property as expressed by miles of track, pipelines and transmission lines in each taxing jurisdiction. Each AD receives a percentage of the railroad or utility company’s total tax bill based on the mileage in the AD 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, ADs have several options as to services they may fund and taxes they may levy to support those services. If ADs have bonded indebtedness, they can use an additional debt-service levy. Each AD operating levy requires voter approval and stands permanently, though it must be recalculated every odd-numbered year. Bonded indebtedness, which requires an additional debt-service levy, is covered later in this chapter under Long-term debt and bond issues. An AD’s initial basic levy is 30 cents per $100 of AV (190.040.1).

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

Approval

All levies 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 upon the election date as explained later in this chapter under Long-term debt and bond issues.

Procedures

Timing is crucial in order to get the AD’s property tax rate(s) extended on tax bills for the current year (67.110). Before a tax can be levied, the AD board must set the rate(s) in a properly announced public session. In theory, the AD board also 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 AD 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 ADs that cross county lines) before Sept. 1, or Oct. 1 for ADs 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). If the state auditor says the tax rate complies, it is levied against all real and personal taxable property assessed in the counties that lie within the AD.

For ADs in first class charter counties, it is important that before April 8 of every year, the AD informally projects a nonbinding tax levy — failure to do so will result in a 20% reduction in the AD’s tax rate(s) for the year (137.243).

Adjustments

By law (190.043), an AD board can voluntarily decrease its property tax rate(s) in any tax year, and then in a later year, the AD board can increase its property tax rate(s) to the rate previously authorized by the voters without seeking voter approval.

The constitution requires that each year’s assessed valuation be compared with that of the prior year. With new construction and improvements excluded, 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 AD must also make a second calculation if the assessed valuation on existing properties 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, excluding growth in new construction and improvements.

Long-term debt and bond issues

For capital expenditures, the AD may issue bonds (190.074). Examples of capital expenditures include building an additional station, 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 AD board needs to take into account a separate levy for the next year’s installments and interest payments on bonds. The tax revenues from this separate levy must be deposited into a separate sinking fund for debt retirement that has enough tax revenue for installments and interest payments (190.065.4), usually up to two years’ worth. (See Chapter XVII. Bond Issues for more detail.)

Sales taxes

Except for AD’s in Charter counties with over one million inhabitants, an AD may levy and impose a sales tax in lieu of a property tax to fund the AD (190.015.3); however, the petition to create the AD has to have stated whether the AD was to be funded by a property or a sales tax. The sales tax  may not exceed 0.5% of all retail sales in the AD (190.035) — subject to the general provisions of sales tax law such as the Missouri Department of Revenue (DOR) keeping 1% of revenues collected for its collection and administration expenses (190.040.5).

If an AD is funded by a property tax, it appears that the statutes (190.040.3) allow the AD to also be funded by up to a 0.5% sales tax; however, 50% of the sales tax from the current year must be used to roll back property taxes in the next year. It is important to point out that an AD might be collecting other property taxes besides the general operating tax, for example, for pensions under 190.074 or dispatch under 190.041. These are not subject to the rollback.

Estimating the revenue an AD might realize from a sales tax before it is enacted is difficult. The DOR keeps its sales tax data by the existing units of local government that have a sales tax and also by ZIP code, but ZIP code boundaries seldom coincide with AD boundaries. ADs 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.

A few years ago an AD discovered that some of its merchants were mistakenly listed in a neighboring AD. To ensure that merchants are listed in the correct AD, districts with a sales tax should have an authorized person, perhaps the treasurer, check the detailed sales tax reports every month. Keep in mind that sales tax information of individual businesses is protected from disclosure by law. In fact, revealing that information is a Class E Felony (32.057). If a representative of the AD is verifying payment for businesses within the district, that person should be very careful about passing that along, even to other officials or employees of the district. Any problems should be promptly called to the attention of the DOR.

Service fees

While local governments do not always like the adjustments to tax revenue 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, §16) that prohibits the state from requiring any new or expanded activity or service by political subdivisions such as ADs without full state financing. The Hancock Amendment also prohibits political subdivisions, including ADs, from levying any tax, license or fee without voter approval (Missouri Constitution Article X, §22).

Passage of the Hancock Amendment by voters raised the question, “What is a tax, license, or fee?” In Keller v. Marion County AD (820 S.W.2d301 Mo. en banc) the court found that increases in specific charges for services provided by the AD 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 ADs consider new taxes, licenses, or fees.

Prior to any billed services provided, ADs must make sure the fees, rules and regulations are properly adopted, that is, resolutions and ordinances (see Chapter XIX. Ambulance Services for detailed information about ambulance service fees).

Reimbursements

The “Spiller Pays” statute (260.546) states that spillers of hazardous substances are liable to ADs for “reasonable and necessary” costs such as the costs of materials and supplies to secure the emergency and non-routine contracted services. However, the AD 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 AD.

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