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Home My WebLink AboutO-2005-2837-B REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Re~u.ested June 7, 2006 Requested By: City Attorney Appropriation Source of Funds: Department: Ci~' Attgmey'll Office Account Number: Report: Resolution: Ordinance: x Amount Budgeted: - ..-. Amount Requested: Exhibits: Ordinance and E-Mail Memo Budgeted Item: YES NO Exhibits: SUMMARY & RECOMMENDATION Recently it was brought to the City's attention that the tax imposed on coin-operated machines by City Hall might be in excess of the maximum allowable rate prescribed under State law (Texas Occupations Code - Chapter 2153). Currently the City Code of Ordinances imposes a $25 yearly tax, per machine. The City Attorney's office handled the matter by I) reviewing the requirements of the Texas Occupations Code and 2) contacting an official with the State Comptroller's Office. During the course of the review it was confirmed that the City's $25 annual, per machine tax rate is higher than the maximum allowable rate, which under the Occupations Code is required to be no more than ~ of the rate of the State annual tax of $60. As a result, the maximum rate the City can assess against a coin-operated machine is $15 per year. Furthermore, the City is required to pro rate this amount based on guidelines contained in the Occupations Code, in the case of machines that are first displayed either in the second, third, or fourth quarter of the calendar year. Thus, the allowable City tax rate to be imposed for a machine displayed in the first quarter is $15; for a machine displayed in the second quarter, $11.25; for a machine displayed in the third quarter, $7.50; for a machine displayed in the fourth quarter, $3.75. The City Attorney notified the City Secretary of the discrepancy after the review, to alert City staff to the proper tax and to cease any collections above the maximum rate. An amendment to Chapter 10 and Appendix A- Fees of the Code of Ordinances has been prepared for your consideration, which incorporate the necessary changes to bring the City in compliance with State law. Also provided for your review is the written notice sent to the City Secretary. Action Required bv Council: Recommendation is to approve the ordinance amending Chapter 10 of the Code of Ordinances and Appendix A- Fees to harmonize City of La Porte coin.operated machine tax rate with requirements of Texas Occupations Code. A ~- & -~l 'O&:J Date ORDINANCE NO. 2006 . ~ ~ 3'7 <8 AN ORDINANCE AMENDING DAPPENDIX A, FEES, D OF THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CONTAINING A REPEALING CLAUSE, CONTAINING A SEVERABILITY CLAUSE, FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW, AND PROVIDING AN EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE: Section 1. Section 10-51 of the Code of Ordinances of the City of La Porte, "Levy; maximum amount; registration of machines", is hereby amended and shall hereafter read as follows, to-wit: "Sec. 10-51. Levy, maximum amount, registration of machines. The city council hereby shall levy and collect the maximum yearly occupation tax authorized by state law on each coin-operated machine exhibited in the city, on an annual basis, at the rate established in Appendix A -- Fees, of this Code, for each machine so exhibited. Each machine upon which this occupation tax must be paid shall be registered with the city by the owner, such registration to contain the make, model and serial number of each machine; each such machine registered with the city shall also be subject to an annual registration fee at the rate established in Appendix A -- Fees of this Code, due for each calendar year, or any part of a calendar year, in which a machine is exhibited. Every machine so registered shall display a decal issued by the city, securely fixed to a noninterchangeable part of the machine. All ad valorem taxes on any and all property, personal or real, necessary to the operation of any business must be paid prior to the issuance of any decal for such operation. (Code 1970, ~ 4 1/2-6(c)) State law references: Authority to levy, Texas Occupations Code Chapter 2153" Section 2. Chapter 10 of Appendix A -- Fees, "Amusements," Article II, "Coin Operated Machines", Division 2. "Occupational Tax", subparagraph (a), is hereby amended and shall hereafter read as follows, to-wit: "(a) Occupational Tax (1) Machine displayed before April 1 ........................ (2) Machine displayed after March 31 ....................... 15.00 11.25 (3) Machine displayed after June 30 ........................ 7.50 (4) Machine displayed after September 30 ................... 3.75" Section 3. All ordinances or parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict only. Section 4. If any section, sentence, phrase, clause, or any part of any section, sentence, phrase, or clause, of this Ordinance shall, for any reason, be held invalid, such invalidity shall not affect the remaining portions of this Ordinance, and it is hereby declared to be the intention of this City Council to have passed each section, sentence, phrase, or clause, or part thereof, irrespective of the fact that any other section, sentence, phrase, or clause, or part thereof, may be declared invalid. Section 5. The City Council officially finds, determines, recites, and declares that a sufficient written notice of the date, hour, place and subject of this meeting of the City Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government Code; and that this meeting has been open to the public as required by law at all times during which this ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 6. This Ordinance shall be in effect from and after its passage and approval. The fees in this ordinance shall be effective upon passage and approval of this ordinance, unless otherwise indicated. 2 PASSED AND APPROVED, this Jkt day of 91l~- CITY OF LA PORTE ~LY~ , 2006. By: Alton E. Porter Mayor ATTEST: t!ld1lL~fl ~. Matha A. Gillet City Secretary A~ . ~r~ CI rk T. Askins Assistant City Attorney 3 RE: Coin-operated machine tax ~ Subject: RE: Coin-operated machine tax From: "Gillett, Martha" <GillettM@ci.la-porte.tx.us> Date: Wed, 19 Apr 2006 08:29:28 -0500 To: "Clark T. Askins" <ctaskins@swbel1.net> CC: "Reff, Richard" <ReffR@ci.la-porte.tx.us>, "Feazelle, Debra" <FeazelleD@ci.la-porte.tx.us>, "Sabo, Wayne" <Sabo W@ci.la-porte.tx.us>, "Alexander, Cynthia" <AlexanderC@ci.la-porte.tx.us>, "Harris, Sharon" <HarrisS@ci.la-porte.tx.us> Clark, thanks. Also, please be advised this was reviewed by your office prior to the implementation of this fee. Do they need to go back and refund those who have been charged? Martha A. Gillett, TRMC,CMC City Secretary/Public Information Officer City of La Porte 604 West Fairmont Parkway La Porte, Texas 77571 281-471-5020 ext. 5019 .--- From: Clark T. Askins [mailto:ctaskins@swbell.netJ Sent: Tuesday, April 18, 2006 5:49 PM To: Gillett, Martha Subject: Coin-operated machine tax Martha: -2. Recently I spoke with Michelle at ChiefReffs office about a complaint frOln a John Kolaski, of Max Amusement Co., in which it was alleged that the city was charging above the maximum allowable tax, under State law, for coin-operated machines. I believe he said the city is charging $25, which would sound right, as Appendix A-Fees of our Code establishes the yearly tax at $25. I looked into this matter by talking to Randy Pitts of the State Comptroller's Office and reading through the Tx. Occupations Code, which actually says that the maximum tax that can be assessed by a municipality is 1/4 "of the rate" of the 1 of2 .1n1 !')nnh ,.'")11 md X, which is currently $60. Hence, the maximum allowable tax per year the ~n charge is $15. Moreover, as the state is required to prorate the $60 tax to 4. of the $60 rate (or $15) for each quarter in the calendar year remaining where the operator first displays the machine after March 31, the city may actually charge only 1/4 of the State's prorated tax, where applicable. (That is, if an operator starts a machine in the second quarter, the state tax is $45 / city tax $11.25; where the machine is started in the third quarter, state tax is $30/ city tax $7.50; where the machine is started in the fourth quarter, state tax is $15 / city tax $ 3.75). See Texas Occupations Code Secs. 2153.401,2153.403, and 2153.451. Therefore, by this email I would like to ask you to alert any city officials that collect taxes on coin-operated machines to suspend procedures for collecting the $25 tax currently applied, and to institute the formula discussed in the above paragraph. Regarding the $25 registration fee also authorized under Appendix A - Fees, we are not prohibited or otherwise limited in collecting the full $25 fee, since the Occupations Code or other State law does not address this specific area. In my opinion we may continue to assess our current yearly fee, and are not required to prorate. Finally, I will prepare an ordinance amending Section 10-51 of the City Code and Appendix A-Fees, which the Chief has said he will present to council. Thanks, Clark 20f2 4/21/2006 5 :24 PM