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October 24, 2013

City gets extension to pay off sales taxes

GREENVILLE — City of Greenville officials said it took some arm twisting by county and state government officials, but the city will be allowed to take an extra decade to repay millions in sales and use tax rebates.

The Greenville City Council voted Tuesday to approve a plan to pay back the more than $2.7 million it owes to the Texas Comptroller’s Office over a 40 year period.

The original proposal was to pay the money — which the Texas Supreme Court ruled the city owes to the State of Texas — over 30 years.

City Attorney Daniel W. Ray said the city appealed to the Comptroller’s Office, asking the money to be repaid over the longer term.

“They said under no uncertain terms they would not approve anything over 30 years,” Ray said.

County Judge John Horn heard about the problem and then contacted the office of State Representative Dan Flynn, who in turn placed a call to the State Comptroller.

“Within a matter of a few hours, the comptroller had agreed to a term of 40 years,” Ray said.

Council member Dan Perkins said the council owed Flynn a call of thanks, while Mayor Steve Reid said Horn also should receive credit.

“He was the one who rattled the cage,” Reid said.

The Texas Supreme Court ruled the City of Greenville was one of several cities in the state who owe sales and use taxes, which were paid in error by the Texas Comptroller.

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 city will now pay back the funds over 40 years, at $5,780 per month or $69,363.54 per yea, with the payments to start next April.

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 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.

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