Staff Presentation 1 Six Cents Local Option Gas Tax - STAFF
PRESENTATION
1 .
, Recap of Local Option Gas Tax
Apopka/Ocoee/Winter Garden
Joint City Commisson Meeting
May 30 , 1996
I . Local Option Gas Tax - Historical
A. Seven and a half years ago (1988) the first request was
made to address the distribution problems .
B . In 1992 a study was completed and presented to Orange •
County demonstrating that Apopka, Ocoee, Winter Garden
and Belle Isle had been shorted $2 , 980, 668 and Orange
County had been shorted $4 , 844 , 016 over the term of the
Interlocal Agreement . •
C. On October 18 , 1993 a formal request was made to Orange
County to reconvene and address the distribution
problem.
D . In 1994 a bill was presented and was adopted by the
Florida Legislature that required the parties to the
interlocal agreement to "review and hold public
hearings cn the terms cf the agreement at least every
two years . If no cooperative review of an agreement has
been conduced within two years prior to January 1,
1994 , the parties to the agreement must hold public
hearings on the agreement prior to January 1, 1995 . "
NOTE: NO meeting was held to review the agreement nor were
public meetings held prior to January 1, 1995 as required by
state law.
E . On November 21, 1994 Florida Legislature' s ACIR (Advisory
Council on intergovernmental Relations) completed a
year long study on LOGT. No agreement could be reached
between counties and cities as to how LOGT should be
distributed.
F. On July 5 , 1995 a letter was sent to Chairman Chapin
requesting that if any renegotiation took place between
Orange County and Orlando then the Cities of Apopka,
Ocoee and Winter Garden-would like to attend.
G. On January 3 , 1995 Mayor Hood requested a meeting with
Chairman Chapin and mayors of other Orange County
cities to review the agreement . At this meeting issues
were prese_n_ted by Orlando, Orange County, Apopka, Ocoee
and Winter Garden. A staff study committee was
established and was represented by Rebecca Ares, Budget
Director of Orlando, Sharon Donoghue, Manager, OMB,
1
Orange ,County and Jack Douglas, Assistant City
Administrator, City of Apopka.
H. On May 11, 1995 the report from the committee was issued
to Mayor Hood and Chairman Chapin. It listed several
options as well as the pros and cons of the options .
I . On August 7, 1995 Chairman Chapin called for a public
meeting on August 29, 1995 to discuss the issue of
distribution of the gas tax.
J. On August 23 , 1995 Mayor Hood sent a letter to Chairman
Chapin advising that Orlando did not feel that a public
hearing was the place to talk about the LOGT. Mayor •
Hood advised that Orlando and Orange County together
must call the meeting and not just the county.
K. On August 28, 1995 Orlando passed a resolution requesting
Orange County to cancel the public hearing scheduled
for August 29, 1996 .
L. On August 29, 1995 a public hearing was held at the
Orange County Commission Chambers . Mayor Hood addressed
the County Commission and advised that the public
hearing was ; not a legal meeting as Orlando did not call
for the public hearing along with Orange. County -- they
being only parties to the interlocal agreement .
Chairman Chapin and the County Commission agreed to
hold a meeting with Orlando and the other cities to try
to resolve the issues and mend some fences . She
assigned Lane Stephens and Sharon Donoghue from the
county.
M. On September 22, 1996 a meeting was held at the Orange
County Administrative Building. Various options were
talked about by various cities . A member of the City of
• Orlando Staff advised that no one at the meeting knew
anything about transportation issues and that the only
one that knew anything about the needs of the area was
himself . Several of his comments insulted many of the
attendees and started this process off under some
feeling of hostility.
N. On September 29 , 1995 Apopka hosted a meeting of all the
cities in Orange County with the exception of Orlando.
We talked about a number- of options and it was the
consensus that we would transmit- to Orange County a
proposal to increase the LOGT by two cents and
distribute the full tax based on population. In this
way Orlando would not lose any funds .
0 . On October 17 , 1995 Mayor Vandergrift sent a letter to
Mayor Hood voicing his concerns about the attitudes of
the Orlando representative at the September 22 , 1996
2
committee meeting.
P. On October 23 , 1995 Mayor Hood sent Mayor Vandergrift a
letter of apology for the employee who made some
insulting comments at the September 22, 1995 meeting.
She .also assigned Howard Tipton, Orlando Chief
Administrative Officer, to "personally" conduct any
future deliberations . She also advised that Mr. Tipton
would be contacting each city to set a future meeting.
Q. On October 24 , 1995 Lane Stephens sent a proposal from
Orlando to distribute the first 6 cents based on the
1993 agreement and the next 5 cents based on current
populations .
R. On November 3 , 1996 Apopka sent a letter to Lane Stephens
with a proposal to increase the LOGT and redistribute
the proceeds with population being the basis .
kjc S . ,Orf contact was made Orlando with the other cities in
the, county as Mayor had advised Mayor Vandergrift .
Hood
T. Apopka, Ocoee and Winter Garden agreed to hire a
legislative lobbyist to help move a bill in Tallahassee
through both the House and Senate .
U. On May 1, 1996 SB 698 Passed the Senate
V. On May 2 , 1996 Mayor Hood flew to Tallahassee to lobby
legislators to not pass this bill in the House.
X. On May 3 , 1996 Jack Douglas of Apopka and Mike Horner of
the Apopka Area Chamber of• Commerce drove up to
Tallahassee . Commissioners Gleason of Ocoee and
Youngblood of Winter Garden flew to Tallahassee on May
4 , 1996 .
•
Y. A meeting was conducted on May 4 , 1996 in Senator
Ostalkiewicz' s office with Senator Ostalkiewicz,
Representative Sindler, Kathy Russell, Mike Horner,
Lane Stephens, Commissioner Gleason, Commissioner
Youngblood, Oscar Juarez and his associate Carlo,
Cheryl Moore, Luiz Rodondo and Jack Douglas in
attendance . At that time it was agreed to process the
bill through the House as an amendment to SB330 .
Z . Howard Tipton advised Senator Ostalkiewicz and Apopka,
Ocoee, and Winter Garden that the City of Orlando would
be filing suit if this bill was passed. Several meeting
took place between Senator Ostalkiewicz, Representative
Sindler, Representative Constantine, Representative
Sublette, Representative Trovillion, Representative
Starks , Representative Reddick and other state
3
personnel . The bill passed the House at 3 :45pm on May
4 , 1996 . The Senate bill was sent back to the Senate
for passage then, was later sent back to the House
where it was finally approved around 1 : 00am on May 5,
1996 .
II . Current Events
•
A. Jody M. Litchford, Chief Assistant City Attorney, issued •
a memorandum to Howard Tipton, Chief Administrative
Officer, both with the City cf Orlando, detailing out
her opinion about SB330 . She advised the following
three items :
1 . The City can challenge the amendment to SB 330
2 . The City could wait and challenge the first annual
distribution •through the administrative procedure
3 . The City could proceed to negotiate a new interlocal
agreement with Orange County
B . On May 9 1996 Mayor Hood wrote Chairman Chapin a letter
advising her that the amendment to SB 330 was by nature
a local law and therefore it could not be introduced
without proper notice. However, she would be :
"willing to meet with both the County and Cities
• representatives in an effort to reach agreement on a
reasonable and equitable distribution of these gas tax
dollars . If we are able to successfully negotiate
future distribution, I would see no need to move
forward on: any legislative challenge. "
C. Howard Tipton called some of the city administrators and
advised them that the City of Orlando would like to
meet to discuss the distribution formula. He would be
calling a meeting in the near future .
File .TRICITY
4
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Lift/ of C!r1altbv
orrice OF CITY HALL.ONE CITY COMMONS TCLC►'ONC
400 SOUTH ORANGE AVENUE 4407 246.222i
GLENO E. H000 •
fAX
.�w'OR ORLANDO. FLORIOA
(407, 246•2J42
32901-3302
May 9, 1996 •
•
The Honorable Linda W. Chapin
Orange County Chairman •
201 South Rosaland Avenue
Orlando, Florida 32801
Dear Ef‘ft:e1)::
The legislature recently passed SB 330, amending s. 336.025, Florida Statutes, to require the
utilization of annual population statistics for dividing local fuel tax funds in Orange County.
Apparently, a new interlocal agreement is called for which would be in effect by July 1, 1997,
and affect distribution of gas tax funds thereafter.
I have been advised by my attorneys that this legislation, by its restrictive definitions, affects only
Orange County and is therefore a local law. As you know, the state constitution and statutes
require publication of notice of the substance of local bills a minimum of 30 days in advance of
introduction into the legislature and requires proof of such publication be attached to the Iaw
when introduced.
The amendment to SB 330 failed to follow the constitutionally and statutorily mandated
procedures for a local law; hence, I am told that these local provisions probably can be
challenged successfully either administratively or in court. Either challenge, however,
undoubtedly will tic up the distribution of chest gas tax dollars for several years. I do not
believe, therefore, that a challenge is necessarily in the best interest of the residents of our
Central Florida communities.
It is the City's position that the distribution of gas tax proceeds can and should be worked out
at the local level. We are willing to meet with County and City representatives in an effort to
reach agreement on a reasonable and equitable distribution of these gas tax dollars. If we are
able to successfully negotiate future distribution, I would see no need to move forward on any
legislative challenge.
• 5
The Honorable Linda W. Chapin
Page Two
May 9, 1996
•
If you are amenable to this proposal, please contact me so that we can discuss the details on
scheduling an initial meeting. I recommend that we keep the negotiating committee members
low in number to speed the process. I Iook forward to hearing from you on this issue in the next
ten days.
Sincerely,
Glenda E. Hood
Mayor
cc: Orange County Legislative Delegation
Mayors, Orange County Cities
Orlando City Commission
Enclosure: Legal Opinion
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6
. ` .,,.. MEMORANDUM
fir 47 � .
City of Orlando
Office of Legal Affairs
DATE: MAY 8, 1996
FROM: JODY M. LITCHFORD
CHIEF ASSISTANT CITY ATTORNEY
TO: HOWARD D. TIPTON
CHIEF ADMINISTRATIVE OFFICER
SUBJECT: AMENDMENT TO LOCAL OPTION FUEL TAX LAW •
This session the state legislature, as part of a general bill
on transportation, apparently added the following language to s .
336 . 025 , Florida Statutes :
"3 (a) (3 . ) Notwithstanding subparagraphs 1 . and 2 . , any
inland county with a population greater than 500, 000 as
of July 1, 1996, with an interlocal agreement with one or
more of the incorporated areas within the county
established pursuant to subparagraph 1 . must utilize the
population estimates of local governmental units as of
April 1 of each year pursuant to s . 186 . 901, for dividing
the proceeds of the local option fuel tax contained in
such interlocal agreement . . . . "
The substance of this language was not heard in any
substantive committee prior to floor action, in violation of the
procedural rules of the legislature. More significantly from a
legal standpoint, however, is that this language, as drafted,
affects only one county in the state and is hence a "local law. "
Both the state constitution, in Article III, Section 10, and
the state statutes, in Chapter 11, contain very specific
requirements that must be met before the legislature can validly
enact a local law. These requirements include publication of .
notice of the contemplated law 30 days in advance of introduction, •
or inclusion in the law of a provision for a voter referendum prior
to its becoming effective . Unless a bill contains a referendum
provision, state statutes require that a local law bill be
accompanied by proof of publication of notice when the bill is
first introduced. A local law passed without meeting the
requirements of these constitutional and statutory provisions is
invalid.
7
A law is considered to be a local act when the law effects
only a county or counties of a particular classification and that
classification is, not reasonably tied to a general legislative
purpose . As a general rule, attempts by the legislature to pass as
general legislation provisions applicable only to a single county
by means of population based definitions have been invalidated by
the courts . See Budget Commission of Pinellas County v, Blocker,
60 So. 2d 193 4Fla. 1952) (holding invalid a law exempting from
state budget commission requirements any county having a population
of more than 150, 000 but less than . 170, 000, a classification
affecting only Pinellas County) ; Waybright v. Duval County, 196 So.
430 (Fla. 1940) (invalidating a statute creating a civil service
system in all counties having a population of not less than 165, 000
and not more than 180, 000, passed without published notice and
affecting only Duval County when passed) ; Anderson v. Board of
Public Instruction for Hillsborough County, 136 So. 334 (Fla. 1931) •
(a "general" bill with special school tax provisions applicable
only to counties having a population between 145, 000 and 155, 000 as
of the last census held unconstitutional) ; Alachua County v.
Florida Petroleum Marketers Association, 553 So. 2d 327 (Fla. 1st
DCA 1989) (a statute permitting counties to adopt more stringent
laws regulating underground storage tanks written so as to apply
only to Alachua County invalidated for failure to comply with local
law notice requirements) .
Under this line of cases, it seems clear that the amendment to
s . 336 . 025 , Florida Statutes, applicable only to Orance County,
altering, without any reasonable purpose, the distribution system
otherwise applicable throughout the rest of the state, and which
was passed without the publication of notice required for local
bills, will if challenged be found invalid by the courts .
There appear to be two possible methods that could be used to
challenge the amendment to s . 336 . 025 . The most direct route would
be by an action for declaratory and injunctive relief in circuit
court . Additionally, the statutes provide for an administrative
challenge prior to distribution of the local fuel tax by the
Department of Revenue . The circuit court challenge can be filed at
any time. An administrative challenge will need to be filed at the
time the County makes its annual notification to the Department of
Revenue (by July 1 of each year) . An administrative challenge
would result in an escrow of the county' s fuel tax funds for that
year. It is likely that an administrative challenge will take
approximately two years for resolution. A court case should result
in a preliminary decision within six months, but will be
potentially subject to several years of appeals .
In addition, there is a good argument that the legislation is
an unconstitutional impairment of existing contractual rights by
invalidating or attempting to invalidate an existing interlocal
agreement . The law is not as well developed in this area, but may
provide an equally successful basis for challenge to the validity
of the amendment to s . 336 . 025 .
8
Even were the new statutory language not challenged or if
challenged, upheld, there seems to be no mechanism in place that
would allow the Department of Revenue to distribute the fuel tax
money other than by the existing interlocal agreement. The
Department of Revenue is authorized under the statutory scheme to
distribute funds according to the provisions of an interlocal
agreement if provided with a certified copy of same by July 1 of
any year. It is otherwise authorized, "if an interlocal agreement
has not been hxecuted. . . " , to distribute the fuel tax .proceeds
using a statutory formula based on transportation expenditures over
the last five years . It is unclear what result would follow if the
City and the County are unable to reach agreement under the
criteria of the recent amendment , although it seems at least
reasonably likely that the default formula would apply.
In sum, the City has at least three options with respect to
the recent amendment to s. 336 . 025 :
•
1) It can challenge the enactment in court on several legal
grounds. This challenge appears from my research to have a
very good probability of success . In that case, the current
interlocal agreement remains in place absent agreement by both
the City and the County to amend it;
2) It can wait and challenge the first annual distribution
affected by the amendment through administrative procedures .
This is a lengthy process that will tie up distribution of the
tax funds for a considerable period of time. .If the City is
unsuccessful in the administrative challenge, it can still
proceed in circuit court;
3 ) It can proceed to negotiate with the county to reach a new
interlocal agreement on future distribution of fuel tax
dollars, following the mandate of the new amendment to
"utilize" current population data in crafting a distribution
formula (language which does not appear to me to foreclose the
additional utilization of other relevant data as well) .
Failure to reach a new interlocal agreement would leave
resolution of the distribution issue to an initial
determination by the Department of Revenue (possibly using the
statutory default formula) . Initiation of negotiations would
not preclude subsequent court or administrative challenge. If
the City and County were to agree on a new distribution
formula, however, execution of a new interlocal agreement
would effectively foreclose other avenues of relief.
J ociy/M 7 chford
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FOLEY & LARDNER
ATTORNEYS AT LAW
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•
•
THIS MEMORANDUM IS CONFIDENTIAL AND EXEMPT FROM THE FLORIDA PUBLIC
RECORDS LAW PURSUANT TO SECTION 119 . 07 (3) (N) , FLORIDA STATUTES . DO
NCT RELEASE THIS MEMORANDUM TO ANYONE OTHER THAN EMPLOYEES AND
ATTORNEYS OF THE CITIES OF OCOEE, WINTER GARDEN, AND APOPKA.
To : Ellis Shapiro, City Manager
From: John R. Hamilton, Assistant City Attorney
Paul E. Rosenthal, City Attorney
Date : May 20 , 1996,
•
. Re: SB 330 , Section 68 : Amendment to Section
336 . 025, Fla. Stat .
This memorandum addresses issues related to the amendment
to section 336 . 025 of the Florida Statutes contained in Senate Bill
330 ( "the Amendment" ) - Effective July 1, 1996 , the Amendment
modifies the distribution of revenues from the local option fuel
tax. The Amendment revises section 336 . 025 by adding the following
language:
3 . Notwithstanding subparagraphs 1 . and 2 . , any
inland county with a population greater than
500 , 000 as of July 1, 1996 , with an interlocal
agreement with one or more of the incorporated
areas within the county established pursuant to
subparagraph 1 . must utilize the population
estimates of local governmental units as of April 1
of each year pursuant to s .. 186 . 901 , for dividing
the proceeds of the local option fuel tax contained
in such ' interlocal agreement . However, any
interlocal agreement agreed to under this
E S T A 3 L I S H E O 1 9 4 2
Ellis Shapiro, City Manager
May 20, 1996
Page 2
subparagraph after the. initial imposition of the
tax, extension of the tax, or change in the tax
rate authorized in this section shall under no
circumstances materially or adversely affect the
rights of holders of outstanding bonds which are
backed by taxes authorized by this section, and the
amounts distributed to the county government and
each municipality shall not be reduced below the
amount necessary for the payment of principal and
interest as required under the covenants of any "
bond resolution outstanding on the date of
establishment of the new interlocal agreement .
SB 330 § 68 (emphasis added) .
We have examined: (1) the Amendment ; (2) the memorandum,
dated May 8 , 1996 , from Jody M. Litchford, Chief Assistant City
Attorney, of the City of Orlando Office of Legal Affairs, to Howard
D. Tipton, Chief Administrative Officer (hereinafter referred to as
the "Orlando Memorandum" ) ; and (3) the relevant statutes, -
constitutional provisions , and case law. We have not reviewed any
legislative history for the Amendment, including any reports that
may have been generated or any statements that legislators may have
made during the enactment process . We also have not reviewed any
population data for the counties in the State of Florida.
In the Orlando Memorandum, the City of Orlando legal
department opines that the Amendment is probably an
unconstitutional "local law" that does not comply with the notice
requirements imposed upon such laws by Article III, Section 10 of
the Florida Constitution and Chapter 11 of the Florida Statutes .
The rationale for the conclusion in the Orlando Memorandum is that
the Amendment affects only one county in the state .
It is our opinion that the Orlando Memorandum correctly
sets forth the current state of Florida law concerning the
standards applicable to local laws and their validity under the
state constitution; however, we have insufficient factual
information to conclude whether 'the law as applied to these
specific facts would result in the Amendment being found to be
invalid. A brief review of the law in this area is appropriate.
General Legislation Contrasted With Special or Local Legislation
The nature of the subject with which legislation deals
determines the general, special, or local nature of the law. See
Ellis Shapiro, City Manager
May 20, 1996
Page 3
State ex rel . Ervin v. Barnes, 56 So . 2d 506 (Fla. 1952) . Statutes
are Considered general in nature if they have uniform operation
throughout the state and are potentially applicable to every county
in the state . See Collier v. Cassadv, 63 Fla. 390 , 57 So. 617
(1912) . Legislative classifications as to subdivisions within the
state are valid general enactments if they are based upon
distinctions and differences that inhere in or are peculiar or
appropriate to the class designated' in the legislation. See
Shelton v. Reeder, 121 So. 2d 145 (Fla. 1960) ; State ex rel . Buford
v. Daniel, 87 Fla. 270, 99 So. 804 (1924) .
On the ether hand, a statute relating to particular
subdivisions or persons of the state, or to particular places of -
classified
f -classified locality, is a "local law, " and a statute relating to
particular persons or things, or otherwise particular subjects of
a class, is a "special law. " Carter v. Norman, 38 So. 2d 30 (Fla.
1948) . The manner is which the legislature treats the legislation
does not control ; recardless of how the act is framed, it will be
treated by the courts 'as special or local in nature if the court
determines it is in fact operative as a special or local act . See
State ex rel . Baldwin. v . Coleman, 148 Fla. 155 , 3 So . 2d 802
(1941) . It is irrelevant to this determination whether the
particular locality affected by the legislation is expressly named
in the enactment . See id. ; Anderson v. Board of Public
Instruction, 102 Fla. 695, 136 So. 334 (1931) . "A special law
passed under the guise of a general law remains a special law. "
Alachua County v. Florida Petroleum Marketers Ass' n, 553 So . 2d
327, 329 (Fla. 1st DCA 1989) , aff' d, 589 So . 2d 240 (Fla. 1991) .
With respect to legislative classifications based on
population, the legislature clearly has the power to enact general
laws classifying counties on a population basis for governmental
purposes . See State v. Dade County, 39 So . 2d 807 (Fla. 1949) .
Such enactments are valid general legislation if the classification
is not merely arbitrary and if the classification in population is
reasonably related to the purposes to be affected or the subject to
be regulated. See Budget Comm' n v. Blocker, 60 So. 2d 193 (Fla.
1952) ; State v. Dade County, 157 Fla. 859, 27 So. 2d 283 (1946) .
Moreover, if any state of facts at the time the law was enacted can
reasonably serve to sustain the classification as general, the
existence of that state of facts will be presumed, and the courts
will not invalidate the legislation if they cannot conclude that
the legislature could not have had any reasonable ground for
believing that there were public considerations justifying the
classifications and distinctions made in the legislation. See
Lewis v. Mathis, 345 Sc . 2d 1066 (Fla. 1977) .
Ellis Shapiro, City Manager
May 20 , 1996 ,
Page 4
An act retains its status as general legislation even if,
at the time of the enactment, it is applicable to only one
subdivision in the state . See Budget Comm'n v. Blocker, supra;
Crandon v. Hazlett, 157 Fla. 574 , 26 So. 2d 638 (1946) . Generally,
to qualify as general legislation under these circumstances, the
act must be potentially applicable to other counties . See Board of
Public Instruction v. County Budget Comm' n, 90 So. 2d 707 (Fla.
1956) ; Anderson v. Board of Public Instruction, supra.
In contrast, an act will be held to be special or local
legislation if it applies only to a ccunty or counties of
particular classification according to population and no
conceivable state of facts would justify a legislative
determination that the act was intended to be of general uniform
operation based upon differences between that group of counties and
other counties . See Andersen v. Bcard of Public Instruction,
supra . If it is clear that if the loci stature used population as
the means of legislative classification merely to avoid or
circumvent the constitutional requirements for special or local
acts, the legislation is deemed invalid. See State ex rel
Cotterill v. Bessencer, 133 So . 2d 409 (Fla . 19661) ; Wavbright v.
Duval County, 142 Fla. 375 , 19S Sc . 430 (1940) . Likewise, the act •
will be deemed special or local in nature if it affects only one •
county "and there is no possibility that it will ever affect or - •
apply
r -
apply to any other county since no other county meets the statutory-
criteria
tatutorycriteria nor can any other county meet it in the future. " Alachua
County v. Florida Petroleum Marketers Ass' n, supra, 553 So. 2d at
329 .
Status of Amendment as General, Special, or Local Legislation
In this case, the Amendment, like all legislation, is
presumed valid. See Toole v. City of Tampa, 143 Fla . 124 , 196 So.
2d 430 , 439-40 (1940) . The legislature is vested with a reasonable
scope of legislative judgment in making classifications in
legislation, and " [a] 11 reasonable doubts as to the validity of
statutes under the Constitution should be resolved in favor of the
statutes in proper deference to the co-ordinate powers of
government that are vested in the three departments . . . . " Id.
at 440 . Thus, if the City of Orlando challenges the validity of
the Amendment, it will bear the initial burden of proving its
unconstitutionality. If the statute is not judicially challenged
or if, in the course of such a challenge, the City of Orlando does
not satisfy its initial burden of showing the statute to be
invalid, it will be upheld.
Ellis Shapiro, City Manager
May 20, 1996
Page 5
The City of Orlando' s initial burden in challenging .the
Amendment would be to show, through judicial notice of population
statistics or other evidence, that the Amendment in fact applies
only to Orange County. The case law is unclear whether the City of
Orlando would then need to show that there is no reasonable basis
for the classification and that no other county could potentially
fall within the legislative criteria. However, regardless of
whether the City of Orlando would have this initial burden, the
Office of the Attorney General, on behalf of the State of Florida,
would ultimately needs to show a reasonable basis for the '
classification and, if possible, that other counties are, or could
in the future become, subject to the legislative criteria. If the
Attorney General' s office can succeed in that effort, the Amendment
should be upheld as valid general legislation.
Implementation and Enforcement of Amendment
The Amendment is somewhat ambiguous as to how it is to be
implemented. It does not appear to be self-executing. Rather, it
appears to require the execution of a new interlocal agreement that
comports with the new mandated distribution formula. The new
formula will also recuire determination of the population data for
Orange County as of both April 1 of this year and July 1 .
Section 336 . 025 (5) (1) , Fla. Stat . (1995) , requires each
county to notify the Department of Revenue, by July 1 of each year,
of the 'distribution proportions of the tax revenues, whether
established by interlocal agreement or otherwise . It is unclear
how this provision will operate following the Amendment, especially
if Orange County and the City of Orlando have not executed a new
interlocal agreement, embodying the terms of the statutory
amendment, by July 1 of this year. It is also unclear whether the
Amendment applies to the 1996 notice to be sent by the County since
the Amendment becomes effective July 1, 1996 which will be after
the County has determined the distribution. In our opinion, the
course of action for Orange County to take under those
circumstances would be for it to notify the Department of Revenue
that, effective July 1, 1996 , - the tax revenues should be
distributed according to the formula in the Amendment and that the
County would be prohibited from notifying the Department to
distribute the revenues in accordance with the existing interlocal
agreement between Orange County and the City of Orlando.
•
Ellis Shapiro, City Manager
May 20, 1996
Page 6
•
Bonds
There is nothing in the Amendment that would preclude the
City of Orlando from pledging its current tax revenues to bonds,
thereby preventing any reduction in its tax revenue receipts . If,
however, the validity of the legislation is challenged, either
judicially or administratively (or both) , the ability of the City
of Orlando or any of the municipalities slated to receive
additional money under the Amendment or to bond the additional
revenue would probably be impeded.
Proposed Courses of Action of City of Orlando
In the Orlando Memorandum, Chief Assistant City Attorney
Litchford sets forth three options that the City of Orlando has
with respect to the Amendment : (1) challenging the Amendment =n
circuit court through an action for a declaratory judgment and
injunctive relief ; (2) wait and challenge the first annual
distribution of the tax revenues through an 'administrative
prodedure specified in chapter 336 ; and (3 ) attempt to negotiate ..
with Orange County to reach a new interlocal agreement regarding
future distribution of the tax revenues . The consequences of each
of these courses of action are examined next .
Court Challenge: A judicial challenge would be brought
in circuit court, undoubtedly with a request that the court issue
a declaratory judgment as to the Amendment' s unconstitutionality
and an effort to obtain an injunction, both temporary and
permanent, against the use of the new distribution formula
contained in the Amendment . Whether such an injunction would be
issued would be within the discretion of the court . Any such
injunction, if issued, could take various forms . The court, for
example, could enjoin distribution of any monies collected under
the local option fuel tax, it could require the prior distribution
formula to be followed pending the outcome of the case, or, most
likely, it could order an escrowing of the proceeds affected by the
Amendment until the case is resolved. If the operation of the
Amendment is not enjoined and the tax proceeds are distributed in
accordance with the new formula, then the recipients could be
forced to return those monies if the legislation is ultimately held
invalid. We estimate that any such court challenge will consume
between eighteen months and three years, including any appeals that
may be filed.
•
Ellis Shapiro, City Manager
May 20, 1996
Page 7
Administrative Challenge: As previously noted, section
3 3 6 . 025 (5) (1) , Fla. Stat . (1995) , requires each county to notify
the Department of Revenue, by July 1 of each year, of the
distribution proportions of the tax revenues, whether established
by interlocal agreement or otherwise . The statute also provides
that " [a] ny dispute as to the determination by the county of
distribution proportions shall be resolved through an appeal to the
Administration Commission in accordance with procedures developed
by the commission. " § 336 . 025 (5) (b) , Fla. Stat . (1995) . If such
a challenge is initiated, the statute requires the tax to be
collected and held in escrow by the clerk of the circuit court
pending final disposition of the proceeding. Id. It is unclear
whether the required escrowing would extend to all of the tax
proceeds or, alternatively, whether it would apply only to the
monies affected by the Amendment . Consistent with the Orlando
Memorandum, we estimate that an administrative proceeding of this
nature would consume approximately two years .
Negotiated Resolution: It is unclear how the City of
Orlando would seek a compromise through negotiation. It is also
unclear how long that process would take and whether the City of
Orlando would want to include other municipalities in the
negotiations . If the City of Orlando and Orange County were to
agree upon a new distribution formula and enter into a new
interlocal agreement embodying that formula, the City of Orlando
could potentially be later barred from attempting to challenge the
Amendment . However, mere negotiations by the City of Orlando would
not preclude it from mounting contemporaneous challenges to the
validity of the Amendment . Likewise, other municipalities could
challenge the validity of a new interlocal agreement if it is
contrary to the Amendment .
CONCLUSION
The City of Orlando has raised a legitimate issue as to
whether or not the Amendment is a local bill which has not been
adopted in accordance with constitutional requirements . While the
Amendment is presumed valid, the City of Orlando may be able to
present a good case to invalidate -the Amendment . The defense by
the Attorney General would need to establish that the Amendment
could apply to more than one county and that there is a reasonable
basis for the classification. Unless challenged, the Amendment
remains in place and the County could be required to notify the
Department of Revenue to distribute the local option fuel tax in
accordance with the Amendment .
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