Can a City Council Socialize Ambulance Fee Losses?

[Brian in Oklahoma]

Jurisdiction

Oklahoma

The City Council of Broken Arrow, OK, recently decided to add a fee to everyone's water bill to pay for Fire Department losses due to people who do not pay their ambulance bill.

The Fire Department is funded by taxes, which everyone pays when buying local product.
The Ambulance "used to be" paid by the customer who uses that service.

Basically, the Council wants to socialize BAFD losses rather than reform the business model or let private ambulances take over.

If this fee was paid by an increase in taxes, teven the deadbeats would be helping to pay with each local purchase. However, this fee punishes only those who have a water bill.

Is this legal?
Is there any recourse?

 

[zddoodah]

Is this legal?

No one here will be familiar with your city's local ordinances (and, as far as I know, no one who posts here regularly is in OK), but this is likely legal. Municipalities are generally entitled to levy taxes.

Is there any recourse?

At the next election, vote out the current council members who voted to do this and vote in people who will be willing to reverse the tax levy.

You could, of course, pay a local attorney several hundred (at least) dollars to research whether the imposition of this tax violates state or local law. If the lawyer determines that there is a violation, you could sue. If you can find enough folks willing to share the cost of legal action, it might not cost too much on an individual basis.

I suppose you could also try and find another water source so that you don't have to buy from the city.

 

[welkin]

Is it legal? Probably but maybe not.

You start by getting a copy of the ordinance the city council passed and reading it. You want to look at the preamble to find the justification and reasoning for the passage of the ordinance.

Then, depending on what it says, you may find that it is possibly arbitrary and/or capricious in which case, it may violate your state's constitution for equal protection.

 

[army judge]

Is there any recourse?

Vote with your feet by relocating to a less onerous taxing jurisdiction/locale.

 

[Brian in Oklahoma]

I appreciate all of the responses! I will get a copy of the ordinance.

Be aware this is NOT a tax. It is a fee added to everyone's water bill.
Does this point make any difference in the legality?
This was an arbitrary idea the council passed to pay for their FD budget deficit.

 

[army judge]

I appreciate all of the responses! I will get a copy of the ordinance.

Be aware this is NOT a tax. It is a fee added to everyone's water bill.
Does this point make any difference in the legality?
This was an arbitrary idea the council passed to pay for their FD budget deficit.

Contact your state legislative officials, here:

Oklahoma Legislature - Home Page

Contact your Governor, here:

Governor J. Kevin Stitt

Be aware this is NOT a tax. It is a fee added to everyone's water bill.

Any governmental entity that confiscates one penny from me, I consider it a tax.

Call it anything you wish, even what the thieves call it, its a tax to me.

 

[adjusterjack]

Be aware this is NOT a tax. It is a fee added to everyone's water bill.

It's a tax disguised as a fee.

Does this point make any difference in the legality?

Probably not.

 

[zddoodah]

Be aware this is NOT a tax. It is a fee added to everyone's water bill.
Does this point make any difference in the legality?

Calling it a "fee" or a "tax" or a "whatchamacallit" doesn't make even the tiniest difference.

This was an arbitrary idea the council passed to pay for their FD budget deficit.

That's the exact opposite of arbitrary.

 

[welkin]

A fee is something you pay in return for getting something. In terms of a water usage fee, you get water and the support of the infrastructure, the distribution, and treatment of that water. It serves a public good. But it serves only the water company's users and not the entire municipality.

On the other hand, the ambulance and/or fire department also serves the public good but of the entire municipality and paid for by taxes. In my opinion, that makes the water fee increase arbitrary if in fact, the revenue is used to pay for municipal-wide services.

Municipalities are free to move tax money around from their general revenue accounts in their budgets however they like to pay whatever they like. But fees collected for things that are specific like water, recreation, garbage collection (if a fee is charged), court, etc. should support only what the fee is charged for and the service self-supporting.

There is a fair chance that the budget wouldn't get approved according to the Oklahoma Budget Act.

Oklahoma Statutes | MUNICIPAL BUDGET ACT | Casetext

 

[flyingron]

Nothing says they can't put taxes on service fees. Anybody who's looked at the details in their utility bills see those sorts of things.

 

[Tax Counsel]

Be aware this is NOT a tax. It is a fee added to everyone's water bill.
Does this point make any difference in the legality?

It might make a difference. You'd need to read the state constitution and the applicable state statutes to find out.

This was an arbitrary idea the council passed to pay for their FD budget deficit.

It may not be arbitrary. Instead, it might have been the easiest way (or perhaps even the only way) for the state to get the money it needed. In my state most increases in city or county taxes must be approved by the voters. That means going through all the steps need to put it on the ballot and then wait for the next general election or schedule a special election. The problem with the latter is that generally special elections get a poorer voter turnout. And, of course, there is also the very real prospect the voters would defeat the tax increase proposal.

Your state may also have some kind of limit or special hoops the local governments need to pass a tax increase. In that case, the difference between a fee and a tax is huge. The fee avoids having to deal with whatever restrictions are imposed on the city for tax increases, may significantly speed up getting the new revenue stream in place, and doesn't risk voters rejecting it. Though, of course, if the citizens of the city are unhappy about the fee they still have recourse in replacing the council members who voted for the fee when they come up for re-election.

Bear in mind that having a fire department is generally considered an essential service for the city and you'll end up paying for it one way or the other. Or you could shut down the public fire department and organize a private volunteer fire department.

 

[welkin]

This is not the state that is seeking to charge a fee for one service to fund another service. It is a subdivision of the state (a municipality or town) that is trying to do it. So what we are discussing has nothing really to do with the state except, that the state must approve the municipal budget as passed by the city council.

The local budget is not approved by the voters. It is voted on by the council members to pass a resolution adopting the budget and signed by the mayor (depending on the type of government they operate under). After it is passed, it is sent to the Oklahoma State Auditor and Inspector for approval. And at that time, for 15 days after the budget is received by the state, any taxpayer of the municipality can file a protest with the state auditor on any item in the budget.
Section 17-210 - Protests - Failure to protest - Examination of filed budget
Section 17-209 - Adoption of budget - Filing - Effective period - Use of appropriated funds - Levying tax

Putting a municipal budget together used to take my municipality 6-8 months. There had to be an account (or fund) for the revenues, the expenditures, and the anticipated revenues, and expenditures out two years for every department and service that was provided. It didn't matter if the service was funded by taxes or fees. But any service that was paid for by fees (water, recreation, etc.) had to be self-supporting. Every dollar had to be accounted for. My municipality put the budget together with the help of a municipal auditor throughout the entire process to ensure we complied with state law.

 

[adjusterjack]

The bottom line here, folks, is that if the city politicians want the fee, the city politicians will get the fee. If it takes state approval, their cronies at the state level will approve it through back door politics.

If I seem cynical, it's because I've seen it happen here in AZ several years ago.

 

[Tax Counsel]

This is not the state that is seeking to charge a fee for one service to fund another service. It is a subdivision of the state (a municipality or town) that is trying to do it. So what we are discussing has nothing really to do with the state except, that the state must approve the municipal budget as passed by the city council.

If you were referring to my post where I used the word state where I meant city that might indeed confuse some people and unfortunately by the time I realized that it was too late for me to make that change. For clarification, my entire post was one discussing in general what might motivate the city to make the switch from a tax to fee. It wasn't specific to any one state.

I'm glad you could provide the OP with some specific OK law. But the question still remains: what likely motivated the municipal government to change the revenue source to fund this particular service? Your post doesn't answer that and neither did I. I just mentioned things that in many states would be a motivating factor and you mentioned the budget process. So neither of us gave the answer to the actual question asked by the OP. As you seem to be familiar with OK law on municipal taxes and fees, perhaps you could address that.

And as a side note, I discovered that OK may be the only state in the country that cannot use its property tax revenues for its general operating costs. Oklahoma City addresses this in its post on taxes. Unfortunately the page does not discuss what the city has to do to raise any of the taxes it levies.

 

[welkin]

But the question still remains: what likely motivated the municipal government to change the revenue source to fund this particular service?

That is an easy question to answer. The answer is to not have to raise taxes in order to fund the expenditures of the fire department. So the political solution is to hide the fact that the mismanagement of fire department budget and the failure to collect the fees owed by individuals that used ambulance service has left a deficit in the operating fund of the fire department. Each service and departments of the city government each have their own fund in the budget that is not considered a general operating fund. The general fund is mostly the day to day expenses to operate the government.

A budget in the OK Budget Act is defined as:

"Budget" means a plan of financial operations for a fiscal year, including an estimate of proposed expenditures for given purposes and the proposed means for financing them;

If you have the time and want to delve into it, you can read Statewide Accounting Manual.

And as you pointed out (from your link), the city can't use property tax revenue for day-to-day expenses. The city receives plenty of other taxes to fund their operations (use tax, sales tax, and hotel/motel tax). But I would take what is on that website with a bit of skepticism. Because, property tax revenue is surely divided up in their budget.

 

[Tax Counsel]

That is an easy question to answer. The answer is to not have to raise taxes in order to fund the expenditures of the fire department.

That was my thought too. It's typically easier (and politically palpable) for a city to impose a fee for a distinct service than it is to raise taxes to fund it. In my city it has always been a separate fee for water in part because the city provides water for some of the suburbs. Using a city tax to do it would put the burden all on city residents and the suburbs would get a free ride.

The water wars among southwestern states are starting to heat up. The century old water agreement between those states is coming to an end, and the populations of some of those states (especially California) have exploded over the last century. Unlike last time, though, there is a hard deadline because if they can't settle it among themselves by the time the compact ends the federal government will impose one. None of the states want that.

 

[adjusterjack]

The water wars among southwestern states are starting to heat up. The century old water agreement between those states is coming to an end, and the populations of some of those states (especially California) have exploded over the last century.

Yet we continue to build like there's no tomorrow. 16,000 new apartments in the Phoenix metro area as of 2022, double the number in 2021. If they were all built in 2022, there are thousands more being built in 2023. There's at least 1000 units going up about a half mile from my house. And I haven't looked up golf courses or housing.

 

[welkin]

Like building housing that each need a water supply, building EV's need electricity. Where is it going to come from?

Our future is being planned by short-sighted nitwits!

 

[Tax Counsel]

Yet we continue to build like there's no tomorrow. 16,000 new apartments in the Phoenix metro area as of 2022, double the number in 2021. If they were all built in 2022, there are thousands more being built in 2023. There's at least 1000 units going up about a half mile from my house. And I haven't looked up golf courses or housing.

I seem to remember that the Phoenix city council put in place a halt on issuing new building permits because of the water and power issues that it is starting to experience, but that the city couldn't revoke any of the hundreds of permits it already issued. Perhaps it was some other southwest city. But whichever city it is, that kind of action shows just how dire things are starting to get.

 

[Tax Counsel]

Our future is being planned by short-sighted nitwits!

If they do any planning, it's usually just far enough out to get to the next election. You're right that long term planning is something that most governments (and other big institutions like some large publicly traded corporations) just don't do well, if they do it at all. It's all about the next election or the next earnings call so that the people on top won't get fired by the restless citizens/shareholders that don't have the patience to see long term projects through.