The Mississippi Supreme Court has thrown out a lawsuit Lowndes County School District filed against county supervisors over property taxes.
In an opinion issued Thursday, justices ruled the school district filed the suit in the wrong court and in an untimely manner.
LCSD filed suit against the supervisors in chancery court on Oct. 26, 2020, for not fully funding its request for property tax revenue. The supervisors voted to deny LCSD’s full request, shorting it by roughly $3.4 million, on Sept. 15, 2020.
Chancery Court Judge Rodney Faver granted a summary judgment for LCSD in August 2021, and supervisors appealed the decision to the supreme court.
In Thursday’s opinion, however, the supreme court ruled chancery court did not have jurisdiction in the case, and the district should have filed suit in circuit court within 10 days of the supervisors’ vote.
“We reverse the trial court’s grant of summary judgment, and we remand this case to the chancery court for it to enter an order dismissing the case for lack of jurisdiction,” the opinion read.
LCSD claimed roughly $50 million in added assessed value in its tax collection area as “new property” in 2020 — contributing to a $5.5 million increase in tax collections. The “new property” LCSD wants to claim comes from fee-in-lieu agreements that have expired.
Claiming that as new property would have increased their tax request for operations by more than 7%.
By law, the district is allowed to request an increase of up to 4% each year for operations. An increase of more than 4% and up to 7% triggers a potential reverse referendum, meaning citizens can sign a petition to get the tax hike on the ballot. More than 7% requires a direct referendum.
The law exempts “new property” — property on the tax rolls for the first time — from that equation.
A fee-in-lieu is often granted to businesses that make a minimum capital investment of $60 million. Those agreements allow companies to pay a fee of one-third of their full taxes for up to 10 years.
Faver’s ruling said LCSD could acquire the taxes from expiring fee-in-lieu agreements as new property because those properties had never been on the tax rolls, disagreeing with the supervisors’ argument they had been on the rolls for 10 years.
Supervisors denied fully funding LCSD’s budget request each of the last three years, with LCSD claiming a budget shortfall in 2021 and 2022. A shortfall allows the district to borrow against what it claims it did not receive in property taxes, and repay the debt with additional millage.
Speaking with The Dispatch, representatives with LCSD and the board of supervisors noted the supreme court ruling does not address the question of whether expiring fee-in-lieu agreements can be counted as new property.
“The issue has not been resolved of what it is as far as the interpretation of new property by ourselves, whether we were right and in-line with the law or whether the board of supervisors is,” LCSD Superintendent Sam Allison said. “Our legal team will work on the next steps moving forward and probably won’t have that today. We’ll discuss what our next steps will be because nothing is resolved. That’s the frustrating point. Nothing has been resolved about whose interpretation was right.”
In questioning LCSD attorney Jeff Smith on if the district would have to sue again to get the answer, Smith told The Dispatch in a text, “Or ask the Supreme Court to review or re-hear that part of its opinion.”
Allison said the district has not yet decided on what the next steps are, but he still would like the question to be answered.
District 2 Supervisor Trip Hairston said the supervisors are happy with the decision, but the non-decision regarding fee-in-lieu is still an issue.
“I don’t know (where we’re going from here),” Hairston said. “… We’re trying to weed through it because it’s still early on from the decision. We’re trying to weed through it, what this means where we go from here. Obviously we’re happy about the decision, but we also wish the Supreme Court would have answered the question about the taxation issue. But it is what it is.”
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