County-city police jurisdiction lawsuit

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Russell County’s attorney updates commission on the latest

By Blenda Copeland

Almost four months have passed since Russell County filed a lawsuit against the City of Phenix City that has since been amended to cover issues in the contested police jurisdictions and annexed areas of Ft. Mitchell and Ladonia.

The lawsuit seeks to reclaim millions of dollars dating back to May 2016 that County Attorney Kenneth Funderburk says the county’s due. Funderburk argues the city overstepped its authority and collected taxes it shouldn’t have — in areas that are, in his estimation, not under the city’s control because of how a 2016 state law reads.

The case is complex and multi-faceted. Funderburk said the county’s actions will benefit the county’s residents because it could reduce taxes in the police jurisdiction area, including sales taxes.

Funderburk publicly updated the Russell County Commission about the case and associated matters during its meeting May 9, highlighting information he said the public should be privy to.

County delves deeper into the issues

In short, Funderburk sought the commission’s permission, to handle various matters pertaining to the ongoing case, with County Administrator LeAnn Horne’s help. Funderburk outlined several issues, including the county’s need to: 1) follow up on issues in a development called Parkman Pointe; 2) see that the county’s planning commission is exerting its legal authority outside the original Phenix City limits; 3) notify Revenue Discovery Systems (RDS) about the proper sales tax percentages police jurisdiction area merchants should be charging and also notify those merchants; and 4) ensure the county’s building inspection officials are collecting county building permits for businesses in the police jurisdiction areas the county is contesting.

County building permits enforced

The latter item became effective immediately upon the commission’s vote. The county’s enforcement officer, Bill Friend, clarified the attorney meant businesses past the 1.5 mile police jurisdiction point. Commissioner Cattie Epps inquired whether that meant Friend’s office would also handle noise complaints in the affected area’s subdivisions; the county attorney answered that a noise complaint would have to be “pretty serious” to qualify as a “nuisance” for Friend’s office to intervene.

Police jurisdiction sales taxes

Regarding RDS’s records, Commissioner Gentry Lee suggested if RDS returns any tax money to the county, that the money be held in an escrow account. Funderburk said that’s already been suggested. He also noted the police jurisdictions tax issue is a problem statewide, and RDS is already aware of it. Lee said if the county’s lawsuit is successful, “it’s going to affect every county in the state.” In answer to Commissioner Ronnie Reed’s question about how much money the county is due, the county attorney said a simple way to calculate it would be to take the amount of money the county has collected, and then double the figure – back to 2016 when the law changed — and continuing forward.

In discussion about sales taxes in the police jurisdiction, the county attorney referenced a May 2016 law change regarding “lassoing.” He said the areas he’s talking about were “lassoed,” which in his opinion, is not allowable under the law.

County planning commission powers enforced

As for the county planning commission’s powers, Funderburk explained that essentially the county was asserting in a letter to the City of Phenix City that the city no longer has authority outside the city limits. He noted the county planning commission needed to take charge of everything outside the city limits.

Parkman Pointe

Regarding Parkman Pointe, the main issue is citizens reportedly complaining about getting their road fixed. According to Funderburk, basically, the hold-up in getting the work done relies on bonds being made payable to the county. According to Funderburk, the City of Phenix City took out the bonds and they were allowed to expire. Funderburk said the city has been notified of its “responsibility” on that matter. According to Funderburk, the estimated cost of the road work is around $125,000, in answer to Commissioner Chance Corbett’s question. The Parkman Pointe project dates back to around 2008-2009, as best Corbett could remember, and according to Funderburk, it’s “not a legitimate subdivision.”

The commission unanimously approved the attorney’s request to proceed.

Statute of limitations

During the update, Funderburk also referenced a comment about a two-year statute of limitations on challenging police jurisdiction matters in court. He said that only applies to taxpayers (individuals), and the county is not a taxpayer, therefore, the limitation doesn’t apply. He also noted the public should be aware that some matters aren’t specifically the county’s issues in this case. In those circumstances, he said individuals may have a right to make separate claims against the city, apart from the county’s claims – for certain issues, such as property taxes, for example.

Funderburk said that since taxes are charged on a continual basis, that moves the statute of limitations on a continuum (i.e., claims can be made going back two years from the last time the tax was charged).

County Tag Office monitoring lawsuit

In an interview after the commission meeting, Funderburk confirmed Russell County Tag Office Director Paulette Colbert’s inquiry to him is a valid one. She asked whether the county’s lawsuit could affect how her office collects sales taxes on vehicle registrations. Funderburk indicated that, yes, the lawsuit may have an impact. Funderburk asserts the lawsuit’s outcome could save taxpayers money, although it may end up “costing the City of Phenix City.”

Colbert confirmed to The Citizen May 14 that when residents buy vehicles from individuals, or out-of-state vendors, they pay Alabama sales tax when they register those vehicles. The sales tax rate charged depends on where residents live. Residents living in Phenix City’s police jurisdiction pay 5.25 percent (1.5 percent of that rate goes to the City of Phenix City). Russell County residents pay 4.5 percent; Phenix City limits residents pay 6 percent. The tag office uses the E-911 address system to verify which rate should be charged. (The above scenario doesn’t apply if residents buy from an in-state dealership, because the dealership already collects the appropriate taxes at the point of sale).

City’s update

Regarding an update from the city’s perspective, in an interview after Tuesday’s Phenix City Council meeting, City Attorney Jimmy Graham told The Citizen he expects a new judge to be appointed soon. He received notice Monday that the current appointed judge, Roman Ashley Shaul, is going to serve as general counsel for the Alabama Bar Association. He wasn’t sure how soon a replacement judge may be appointed. Meanwhile, “We’re in the discovery phase,” he said of the case’s progress, noting both sides have asked for informational items.