Lake taxing districts ask for another bite of the apple

The counties imposing a lodging tax at the Lake of the Ozarks have filed for a rehearing before the state Supreme Court. Previously, the court found that the statute allowing the tax was unconstitutional.

The cases the court examined — Laura Salamun v. The Camden County Clerk and Gail Griswold v. Miller County — arose because a statute required lake business districts to grant public money to a private entity.

As Missouri Lawyers Media previously reported, the statute was enacted in 1993 creating lake area business districts. These districts were required to have an advisory board to govern them. The board is required to be a non-profit entity whose members are elected by the business owners of the district.

This advisory board can create a tax, paid by tourists to the area, that the board can spend on improvements to Lake area business districts.

The business owners of Bluff Winery in Miller County and Pointe View Management in Camden County sued their respective counties, claiming that the statute creating the districts violates the state constitution.

Matthew Jacober of Lathrop GPM said the business owners contacted the firm after they learned that the advisory board planned to double the tax from three percent to six percent and planned to use those funds to purchase a new soccer stadium.

“That proposal, while maybe it would have brought in additional people to the lake region, it wouldn’t have benefited their establishment at all,” Jacober said. “It would most definitely hurt them because of the additional tax that their visitors or guests, would have to pay while they were there.”

Jacober argued that the entire setup of the statute and the collection of tax revenue was a violation of the Missouri Constitution which says, “No county, city or other political corporation or subdivision of the state shall own or subscribe for stock in any corporation or association, or lend its credit or grant public money or thing of value to or in aid of any corporation, association or individual, except as provided in this constitution.”

A circuit court modified a section of the statute attempting to cure the constitutional validity, but the state Supreme Court reversed and remanded that decision.

On June 25, the court issued a unanimous decision finding that the lower court erred in modifying section 67.1175.1 (RSMo 2016). According to the opinion authored by Chief Justice Mary Russell: “That section, as modified and section 67.1177, on their faces, continue to require political subdivisions to grant public money to a private entity in violation of Article VI, Section 23 of the Missouri Constitution.”

While the Supreme Court agreed with Jacober’s argument that the statute is unconstitutional, the defense argued that it has passed muster. They have since filed for a rehearing before the court.

“The core of their argument is, this is a public entity that the voting system that was established by the statute passed muster on the Missouri constitution,” Jacober said. “Now in their motion for rehearing — which we haven’t been invited to respond to, so we don’t know what the Supreme Court is doing, yet at least — they’re also asking the Supreme Court to, in effect, to hold on doing anything until the next legislative session so the legislature can address this and fix the entire lodging district and comply with the constitution.”

Without a rehearing and based on the court’s current ruling, Jacober said the lodging tax has essentially been abolished.

“Really it means that control over the tax dollars and control over what’s going to happen has been returned to the voters,” Jacober said.

That should benefit the business owners in the area by lowering the price for tourists to rent a hotel room, Airbnb or other rental in the lake region, he said.

“I know many people are having to make hard decisions about spending their vacation dollars and this will make it a little more affordable to rent a place at the Lake of the Ozarks area,” Jacober said.

The attorneys for the counties did not respond to requests for comment regarding the motion for rehearing.