Written by Senior Assistant Attorney General Warren R. Calvert, the opinion calls into question the city’s proposal to impose an ad valorem tax on real property.
That tax, which was slated to have a 1.25 millage, would have paid for the construction of at least two fire stations.
The council has since abandoned plans to implement a district and is mulling other options of raising the revenue needed.
City Attorney Bobby Dyer had been asked by Mayor Gene Hobgood to get the input of the office three weeks ago.
Hobgood asked Dyer to inquire whether the millage rate for the district would be interpreted as a tax or a fee and if the city could collect the revenue from the district this year.
Calvert noted in the letter it was “more than a little doubtful that Canton officials can levy an ad valorem tax for 2012 and thereby retroactively impose a lien as of Jan. 1, 2012, on property that was not located in the fire protection district then because the district had not yet been created.”
Calvert also addressed Dyer’s question about whether the millage would have been considered a tax or a fee.
Calvert notes a tax is “an enforced contribution” backed by the law “for the purpose of raising revenue to be used for public or governmental purposes, not as payment for a special privilege or a service rendered.”
A fee, he added, is a “charge fixed by law as compensation for services rendered.”
He noted that since all properties, both developed and undeveloped, in the city would have been paying the same tax rate, “that factor alone points to this charge being a tax rather than a fee.”
The letter also shot down Dyer’s assertion that the senior homestead exemption to the proposed fire district tax would not apply as it would amount to the government granting a “gratuity.”
Calvert states the constitution allows homestead exemptions to stand “conditioned upon approval by a majority of the qualified electors residing in the limits of the local taxing jurisdiction voting in a referendum thereon.”
The council last month decided to move forward with advertising to consider setting the millage rate for the district at 1.25 mills.
It was expected to generate about $930,000 per year, which the city had planned to put toward building at least two new fire stations.
The ordinance that created the fire district allowed the city to impose an ad valorem tax onto property and it would have been collected in the same way it collects property taxes.
However, no exemptions, including the senior homestead exemption, would have applied to the tax.
The creation of the district came on the heels on the council soundly rejecting efforts propelled by Hobgood for the city to consider consolidating fire services with Cherokee County.