News from the Tennessee Valley State, Local and National news
SUNDAY, JULY 15, 2007

Schools want county to pay up
Morgan commission owes $656,000 from tax collections to Board of Education

By Sheryl Marsh · 340-2437

The Morgan County Commission owes 18 years of back pay to county schools from sales-tax collections.

The total debt — $656,000.

That’s about the amount that the Morgan County Board of Education lost in this year’s budget when the commission failed to renew a tax levy in a timely manner.

The latest slipup represents monthly payments dating to 1989.

Put in General Fund

Instead of giving the money to county schools, the commission office put it into the General Fund and used it.

“We’re probably going to ask for forgiveness, since we’ve been doing right for a year,” said Chairman John Glasscock. “I guess we could pay it back over a long period of time.”

Jimmy Dobbs, president of the school board, said he plans to get the money that Glasscock’s office owes in arrears.

“If it’s slated to come to us, then I guess they need to come up with a way to give the money to us,” Dobbs said. “We’ve struggled a lot for the last couple of years, and we’re almost $3 million short right now. We lost a year’s worth of collections last year that amounted to about $600,000, and if they owe us more than that, then that would put us up to what we lost from the levy.”

Decatur attorney Bill Shinn’s law firm represents both government bodies.

Failed to disburse

An audit of License Commissioner Sue Baker Roan’s office shows that she submitted deposits from casual sales-tax collections to the County Commission office, which failed to disburse the money to county schools.

License offices in the state levy casual tax on automotive vehicles, motorboats, truck trailers and mobile homes bought from individuals or firms that are not licensed dealerships in the state. Also, people who buy a vehicle in another state must pay the casual tax here when registering the vehicle.

The notation in Roan’s audit is not a finding against her office, but shows that the County Commission office did not disburse the tax collections to county schools.

Glasscock and his administrator, Syble Atkins, said they didn’t know that the taxes were to go to schools until last year.

Atkins said they believed the casual sales-tax check the office received monthly was for the General Fund.

“We thought it was the administrative fees they pay to our office,” said Atkins. “Nobody knew that the check they send to our office each month was to be disbursed any further. We thought the check that Sue sent to our office was our share and it went into the General Fund.”

“We used it to run the county, to provide services to the citizens,” Glasscock said.

‘I don’t know’ game

The “I didn’t know” game kicked among Glasscock’s office and the school board when a tax levy expired. The school board discovered in early September 2006 that a 7.3 mill property and motor vehicle tax would expire Sept. 30. No one accepted responsibility for the expiration, which cause the school board to lose about $600,000.

Atkins said state examiners brought the latest matter to the commission office’s attention.

Deputy License Commission er Patsy Dougherty, however, said she started questioning the matter last year, after hearing about problems with it in other counties.

Dougherty said she talked with the county attorney, Shinn.

“About a year ago, I became concerned when I read information about this same problem in other places,” said Dougherty. “I asked Mr. Shinn if we were supposed to give the check to the commission or the sales tax office. He wrote me a letter and told me I was doing right by submitting it to the commission.”

Also, Dougherty said, she asked state officials, who told her she could give a check to the commission and one to sales tax.

“They said it was fine since it was all going to the same destination — schools,” Dougherty said.

A copy of a check Dougherty showed The Daily was payable to the commission and Glasscock. The stub portion indicated the money was to go to the sales tax office, which is responsible for disbursing the casual tax to schools.

The check was dated Oct. 4, 2006. Deputy County Administrator Carol Long said the license commissioner’s office started forwarding the money to the sales tax office at that time. She said the commission office issues the checks for Sales Tax Director Ed Sims to disburse.

Sims was not available for comment.

No legal basis for tax?

Shinn said he researched and found no legal basis for collecting the tax.

But Dougherty has a copy of the state law starting casual tax collections in counties in 1989.

The law states license offices must collect the tax on any vehicle requiring registration.

Shinn said state examiners, who are conducting an audit of commission office records, will likely charge the General Fund with a contingent liability.

Dougherty explained that the license office started collecting the tax in 1989 before the sales tax office was created in 1991. She said no one ever mentioned re-routing the money to the sales tax office once it opened.

Freezing funds

After he received legal advice, Glasscock said the county will freeze $656,000 in the Road and Bridge fund to cover the debt liability.

The problem is not exclusive to Morgan. Auditors found it existed in other counties, including Madison.

Reportedly, state examiners discovered the Madison County Commission owed the three school systems there millions of dollars from undelivered tax collections.

Madison has paid $910,000 to the school systems, according to a news report.

Examiners are pointing out the casual tax misdirection as they audit across the state. No one could say why it took them so long to discover the misdirection. Chief Examiner Ron Jones did not immediately return phone calls.

Save $84.50 a year off our newsstand price:
Subscribe today for only 38 cents a day!

Leave feedback
on this or

Email This Page