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October 19, 2013

City to take longer on sales tax repayment

GREENVILLE — The City of Greenville will be spending a little less than expected each month and each year, to repay millions in sales and use tax rebates.

But the city will take 10 more years to pay back the more than $2.7 million it owes to the Texas Comptroller’s Office, under an agreement to be voted on next week by the Greenville City Council.

The council’s vote is included as part of Tuesday’s regular agenda, starting at 6 p.m. in the Municipal Building, 2821 Washington Street. A work session is also scheduled for 5 p.m. Tuesday.

A Texas Supreme Court decision earlier this year resulted in the City of Greenville owing sales and use taxes, which were paid by the Texas Comptroller of Public Accounts to the City in error.

The city had proposed repaying the sales taxes back over a 30-year period, at $7,707.06 per month or $92,484.72 per year, with the payments to begin December 1.

The council is scheduled to vote Tuesday on a plan which would now pay back the funds over 40 years, at $5,780 per month or $69,363.54 per year, with the payments to start April 1, 2014.

Sales taxes are one of the two main sources of revenue, along with property taxes, which feed the city of Greenville’s general fund.

A rededication of a percentage of the sales tax revenue goes toward the 4A economic development corporation.

In March 2012, the Texas Comptroller’s Office notified the city of Greenville that it would postpone collection of more than $2.7 million in sales tax revenue. The state agency had previously indicated the city would be required to refund the money, based on a sales tax exemption expanded significantly by the Austin Court of Appeals.

The Texas Supreme Court agreed to hear two lawsuits between the State Comptroller’s Office and Health Care Services Corporation.

Former City Attorney Brent Money filed a brief on behalf of the Texas Municipal League (TML), Texas City Attorney’s Association (TCAA) and the city of Greenville to represent the interests of Texas cities and counties in the two lawsuits, amid concerns the issue could cost the State of Texas more than $600 million in sales tax refunds and decrease revenue by approximately $75 million annually.

The Texas Supreme Court ruled in June that Health Care Services Corporation, successor to Blue Cross and Blue Shield of Texas, Inc., could claim a sale-for-resale exemption on tangible personal property and taxable services purchased to fulfill contracts with the federal government to administer Medicare Part A, Medicare Part B, and the Federal Employees Health Benefit Program (“FEP”).

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