City leaders at the end of October raced to make sure they had a contract for the county clerk to extend their taxes, but county commissioners argued they don’t need the contract at all.
Property tax collection is a three-legged system involving the county assessor, clerk and collector. The assessor determines the value of property in the county. The clerk receives the levy rates set by the cities and political subdivisions. The clerk “extends” the rates into the assessor’s tax book, which lists property values, to determine how much the collector should collect.
The clerk extends the rates for political subdivisions ranging from school and fire districts to cities. Cities are different from fire and school districts because can have their own property tax collectors. Because of that, the Cooper County Clerk’s Office has contracts with each city in the county to extend their taxes, current Clerk Sarah Herman said.
Herman, who was first elected last November and took office in January, said that while working with the state Auditor’s Office, they told her she needs those contracts with cities because she isn’t required to extend their taxes without one. Cooper County Commissioners argue extending the taxes for cities is the clerk’s job, regardless of if they have a contract. Having each city pay the clerk to extend their taxes is a waste of taxpayer money, they argue.
Richard Sheets, deputy director of Missouri Municipal League, said most cities started having their taxes collected by the county in the 1980s and 1990s. Part of the reason was that city taxes weren’t included on the bill residents would receive from the county to show that taxes were paid in order to obtain a driver’s licence. Having the county collect city taxes meant people couldn’t get licenses unless they paid their city taxes, adding another means of enforcement, he said.
Boonville collected its own property taxes until the mid-1980s through an elected collector, City Administrator Kate Fjell said. The city in 1991 entered an agreement with Cooper County to have the county collect Boonville’s taxes.
From 1991 to 2018, the city paid the county collector and clerk each 1.5 percent of the taxes they collected each year, plus 1 percent to the county for computer services. Last November, the city and county made a new agreement, including only the collector.*
The clerk wasn’t included in the new agreement because it wasn’t clear what their role was, City Administrator Kate Fjell said. Cooper County Clerk Sarah Herman was sworn in for her first term in January and wasn’t involved in negotiating that agreement. While she was working with the state auditor’s office to make sure everything was in compliance, they alerted her in October that she needed to have an agreement with Boonville in order to extend their taxes.
If state auditors see that a county has a contract to provide collection services to a city that isn’t current, it typically results in an audit finding, according to an email from Steph Diedrick, spokeswoman for the auditor’s office. A 2017 report from an audit of Cooper County said that the county collector’s contracts with seven cities for property tax billing and collection services had not been periodically updated and were not current. The collector and commission both said they had plans to update the contracts, according to the report. The report did not mention the clerk’s contracts.
“Our office would recommend that any official being compensated for their services have a written contract,” Diedrick wrote. “We would not recommend a contract as a condition of extending the tax rates.”
Still, Herman said the auditor’s office told her she needed a contract to spell out exactly what she was doing for the city. Audit Manager Travis Owens sent her an email Oct. 7 telling her that, since she isn’t required by statute to extend the city’s taxes, the terms of her agreement with the city should describe her duties. Owens tempered his advice by saying it is a “complex legal question” that he can’t fully answer.
That email sparked a rush to find a new agreement before the clerk’s Oct. 31 deadline to extend the rates. The Boonville City Council held a special meeting on Oct. 29 and voted 7-1 to approve a contract with the county clerk.
Cooper County Commissioners disagreed with Owens’ interpretation that Herman isn’t required to extend the city’s taxes. One section of law states that county officials “may” contract with cities to provide services, like tax collection, that they do for the county. Another states the clerk “shall” extend the tax rates for all political subdivisions in the county. That means the clerk can have a contract to extend taxes, but has to extend them regardless, Western District Commissioner David Booker said.
The Cooper County Commission intended to vote on the contract on the morning of Oct. 31, though Booker said they would not have passed it. They postponed the vote until Nov. 4 because they said Herman’s notice on the commission’s agenda wasn’t clear enough about the contract.
During that meeting, Fjell was asked if the 1991 contract was still in effect, she said. That contract includes a provision that it will automatically renew every year if nobody wanted to make any changes to it. The city changed the terms of the contract with the collector but didn’t change the terms for the clerk. Working with outside counsel from Lathrop & Gage, they determined those terms were still in place and told Herman to extend the books, which she did before the Oct. 31 deadline.
The commissioners disagreed with that judgement, as well, arguing that the city and county entering into a new contract including only the collector meant they had changed the terms of the 1991 contract, making it void. Early in 2018, then-Mayor Julie Thatcher approached the County Commission about negotiating a new contract for property tax collection, Booker said.
Keat Catlett, who was interim county clerk at the time, didn’t want to enter into a contract because the work of extending the rates was minimal, according to Booker. A draft contract included a provision that explicitly said the 1991 contract should be terminated “in its entirety.” That provision didn’t make it into the final agreement, but Booker argued that it shows the intent was to end the contract with the county clerk’s office.
City taxpayers are also county taxpayers, so they already pay taxes to fund the clerk’s role, the commissioners argued. If the clerk is required by statute to extend the taxes, and people are already paying taxes to fund the clerk’s office, the cities shouldn’t pay more of their money for the clerk to extend the taxes, they argued.
“I think it’s a waste of taxpayer dollars for the city to compensate the clerk for a job she’s bound by law to do,” Booker said.
Having a contract for the collector makes more sense because there is nothing in state law that requires the county collector to collect taxes for the cities in the county, Booker said. Cities can choose to have their own collectors, like Boonville did until the mid-1980s. The clerk is required by law to extend the taxes, so it’s a different situation, Booker said.
“Now, my personal thought, if I was collector, I wouldn’t worry about it,” Booker said. “It’s part of my everyday job, it’s entering information into a computer.”
Herman disputed the extent of her role in extending taxes. Gathering tax rates, working with the auditor’s office to make sure they’re all compliant, inputting them into the tax book, going through several times to check that everything adds up and ironing out any issues takes a significant amount of time.
Herman said she went to the city as soon as the auditors raised the issue, because she wanted to make sure they were in compliance. She was just trying to make sure they were following rules, not shaking the city down so that she would get paid, she said.
“We were trying to do things the correct way, and I think the city is doing their best to do things the correct way, as well,” Herman said. “That’s what our job is, to do things by law and by statute.”
Herman extended the taxes for this year under the terms of the 1991 contract. She and Fjell said they’ll continue to work out an agreement that can be used going forward, but any agreement would need the approval of the skeptical county commissioners.
“We feel like the taxpayers of Boonville, who are also taxpayers of Cooper County, are already paying for that service once, and they shouldn’t have to pay for it a second time,” Presiding Commissioner Don Baragary said.
“I would say that applies to all of the cities within the county,” Booker added.
*Editor's note: This article has been corrected on Wed. Nov. 13. It previously said the Cooper County Assessor had a contract to receive 1.5 percent of Boonville's tax revenue, but it is the Cooper County Collector who has that contract. Cities are required by law to pay 1.5 percent into the county assessment fund, which is not a direct payment to the officeholder, unlike the contracts with the collector and clerk.