Mississippi Advisory Opinions September 01, 2000: AGO 000013955 (September 1, 2000)

AGO 000013955.

Dear Mr. Mitchell:

Attorney General Mike Moore has received your recent letter on behalf of the City of Tupelo and has asked me to respond. Your letter states:

In 1991 the City of Tupelo held a special election in which the proposition presented was to authorize the levy of 10 mills of ad valorem tax, exempt from the limitation prescribed in Section 27-39-321, for the special purpose of producing revenue to be used for constructing, improving or paving streets, sidewalks, driveways, parkways, walkways or public parking facilities, and purchasing land therefor. This was known in the City of Tupelo as the Major Thoroughfare Tax. A majority of the voters voted in favor of the 10 mill levy and it was applied to the fiscal years beginning 1991 through 1995.

In 1996 the proposition was once again placed before the citizens of Tupelo to continue the special levy of 10 mills for street improvements, which was also passed by a majority of the voters. Copies of the notices of both elections are attached for your information.

If is our opinion, which has been concurred in by the State Auditor's Office, that revenues derived from the special levy pursuant to the election are excluded from the tax base for the purpose of determining aggregate receipts for which the 10% increase in limitation applies under Section 27-39-321(2).

Earlier this year the reappraisal conducted by the County Tax Assessor pursuant to dictates by the State Tax Commission was conducted, and the result is a much greater valuation of property in the city which is subject to ad valorem tax. The question of whether or not the City Council could lower the 10 mills designated for the Major Thoroughfare program has been raised by some members of the City Council. I am of the opinion that in their discretion they may do so.

The basis for my opinion is that the special election authorized the 10 mill levy but did not mandate it and so there is some flexibility on the part of the City Council in setting the millage. With reappraisal, the millage could actually be reduced and still produce the revenue necessary to complete the thoroughfare program.

When the matter comes up for renewal in 2001, the millage can be set at that time based on the total assessed valuation of property in the municipality, and it may be that the proposition presented to the public would be to continue the tax on a reduced basis. However, the current question facing the City Council which needs to be answered prior to the setting of the total millage by September 15, 2000, is whether or not the City Council has the discretion to lower the Major Thoroughfare millage which was authorized by the special election of July of 1996.

Miss. Code Ann. Section 27-39-321 provides that a city may not levy ad valorem taxes in any fiscal year which would render in total receipts from all levies an amount more than the receipts from that source during any one of the immediately preceding three fiscal years plus an increase of ten percent of such receipts. The ten percent limit on an increase in taxes may be exceeded only if the proposed increase is approved by a majority of those voting in an election held pursuant to Section 27-39-321(2). This section provides that revenues derived from a tax levied pursuant to an election are excluded from the tax base in computing the ten percent limitation, stating in relevant part:

Revenues derived from any taxes levied pursuant to such election shall be excluded from the tax base for the purpose of determining aggregate receipts for which the ten percent (10%) increase limitation applies.

We are of the opinion that revenues derived from the special levy for the Major Thoroughfare Tax pursuant to the election in 1996 are excluded from the tax base for the purpose of determining aggregate receipts for which the ten percent increase in limitation applies under Section 27-39-321(2). We are also of the opinion that the City Council in their discretion may lower the 10 mills designated for the Major Thoroughfare program which was authorized by the special election in July, 1996, when the City Council sets the ad valorem tax levy for the fiscal year which begins October 1, 2000. If we may be of any further assistance, please let us know.

Very truly yours,

MIKE MOORE

ATTORNEY GENERAL

By: Alice Wise

Special Assistant Attorney General