City, parish hashing out tax disagreement

Donaldsonville Mayor Leroy Sullivan stands with Rotarian Cliff Ourso, Mark West, Administrator for Ascension Parish Sales and Use Tax Authority, and Rotary Club President Marvin Gros after the discussion on parish and city tax agreement at Café Lafourche last week.

Discussions between the City of Donaldsonville and Ascension Parish have been ongoing in the past few weeks, with the city hoping to reinstate a tax sharing agreement for its common area – the Wal-Mart shopping area.

During a discussion at Donaldsonville’s Rotary Club luncheon where Mayor Leroy Sullivan, City Council chairman Raymond Aucoin, Mark West, Administrator for Ascension Parish Sales and Use Tax Authority, and Parish Attorney O’Neil Parenton all attended, the two sides know clearly where each stands.

West explained to the club how the sales tax breaks down for the West Side of the parish.

When the City of Donaldsonville annexed the land to accommodate Wal-Mart in its City Limits, West said the parish’s tax stayed the same.

“The city’s tax overran and it added an additional two percent sales tax to the existing 4.5 percent sales tax,” West said.

However, West said the political powers at the time did not want to see the sales tax in the small area to be higher than the rest of the surrounding area so they entered into a revenue sharing agreement signed by the Ascension Parish Sheriff’s Office, parish government and the City of Donaldsonville.

The three sides agreed to share a two percent sales tax in January of 2004 and it went on for five years with no opposition.  West said it automatically extended an additional five years, but the maximum length of the agreement was 10 years.

Now that a final three-month extension nears expiration that was agreed on by the APSO and the parish in December, on April 1 the sales tax rate expects to increase from nine percent to 11 percent.

“The city’s tax does not cancel out the parish’s tax, that’s what you have to understand,” West said. “Once you understand that you’ll understand why it’s going up.”

The sharing agreement between the three sides would no longer be in place. The way it worked before was when the City of Donaldsonville reached $1.75 million the money was split 50/50. When that sharing agreement ceases, the parish government and the sheriff’s office would no longer have to wait until that $1.75 million is reached, “they’ll start receiving immediately.”

Mayor Sullivan said the problem he has is the parish has “no responsibility” in the area.

“If they want to spend that money in Prairieville they can and there’s nothing we can do about it,” Mayor Sullivan said. “As far as infrastructure, they have no responsibility and all of that is on the City of Donaldsonville.”

Mayor Sullivan explained prior to the time Wal-Mart moved to its current location, the city was getting $1.4 to $1.5 million a year in sales tax and that’s why “we came up with the benchmark of $1.75 million in order to give us a little cushion because we were already getting that amount.”

“Now if we split 50/50 we are losing that sales tax we were getting all of when Wal-Mart was on Highway 1 South, and I don’t think that is right at all,” Mayor Sullivan said.

Mayor Sullivan said he asked in a meeting with Parenton and Parish President Tommy Martinez if the parish’s sales tax is up 30 percent, “do you really need to take that money from us?”

“Because the plan he had was to take the money from the sales tax in that common area to pay the debt to ACUD 1, which I told him is not fair to the City of Donaldsonville because we had nothing to do with that,” Mayor Sullivan said.

With the 50/50 split, in comparing the last two years, one year the City of Donaldsonville be lessened approximately $150,000 and the next it be lessened about $200,000 if the 50/50 split in place those years, according to research by Aucoin.

The city is hoping for an agreement because on May 7, 2009 the parish put in place an ordinance that reads:

“(1) Previously annexed property: In all cases where developed commercial properties were annexed prior to the effective date of this sales tax enhancement plan, fifty (50) percent of the net proceeds shall be retained by the districts and fifty percent of the net proceeds shall be paid to the municipality. The net sales tax revenues shall be those received by the District after accounting for all expenses of collection.

(2) Subsequently annexed property: In all cases where properties are proposed to be annexed following the effective date of this agreement, unless the parish council concurs in the annexation, within the allowable days, the entire net proceeds shall be retained by the districts. In all cases where properties are proposed to be annexed following the effective date of this agreement, the parish council shall not arbitrarily refuse to concur in the annexation. For purposes of this plan, arbitrary refusal to concur means the absence of a compelling interest, either in terms of the loss of a significant tax revenue or the potential for adverse impacts to life, property or the general welfare of the residents of Ascension Parish. In those cases where the parish concurs in the annexation, the districts shall retain seventy-five (75) percent of the net proceeds and twenty-five (25) percent of the net proceeds shall be paid to the municipality…”

However, Parenton made it clear and said as the ordinance now says it’ll be 50/50, “so, it’ll be 50/50.”

“At the city’s request the parish can do 50/50.”

As it stands right now, if the ordinance goes into effect and the tax is increased to 11 percent, the City of Donaldsonville would gain more taxes in the future and possibly as much as $200,000. However if the split were 50/50, the city would lose close to the same.

Mayor Sullivan answered a question on the likeliness of the city going into litigation with the parish saying, “That’s always a possibility.”