Could St. Tammany Parish share district sales tax proceeds with Covington without voter approval?

Plain-English summary

Covington's mayor proposed an agreement under which a St. Tammany Parish sales tax district would share proceeds with the city based on where sales arose. The district covered unincorporated parish areas; the city was outside it. In Opinion 03-0140, the Attorney General said the district proceeds could not be allocated directly to Covington because the voter-approved tax proposition did not authorize that division or an allocation formula for the city.

The proposition dedicated revenue to constructing, improving, repairing, and maintaining roads, streets, and bridges in the district. The AG distinguished sharing the tax receipts themselves from a local-services agreement for road and bridge work. He said the parish and city could use that separate agreement route under the Local Services Law, with terms set out in each body's ordinance or resolution and published as other proceedings were.

Currency note

This opinion was issued in 2003. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant at issuance

Parish and district officials

The AG treated the approved tax proposition as controlling where the district's proceeds could go. It named district roads and bridges, not a direct allocation to Covington. The opinion said voters would have had to approve both a division of proceeds and its allocation method for direct revenue sharing.

Covington officials

The opinion did not foreclose cooperation on roads and bridges. It described an intergovernmental local-services agreement as a route the parish and city could use, with each governing body recording the terms in an ordinance or resolution and publishing it.

Common questions

Q: Could the district pay Covington a share of its sales tax collections under the proposed formula? A: No. The AG said the voter-approved proposition did not authorize an allocation to the city, so the parish could not share those proceeds directly.

Q: Did the answer depend on where a sale occurred?
A: The proposed agreement did use defined areas tied to potential annexation or city impact. The AG said the controlling fact was the absence of voter approval for the revenue division and allocation method.

Q: Could the parish and city work together on roads?
A: Yes. The opinion said they could make a local-services agreement for road and bridge construction and maintenance despite the limit on dividing the tax proceeds themselves.

Q: Was a signed contract necessary for that local-services agreement? A: The AG said the agreement could be perfected without one if each body's ordinance or resolution set out its terms and was published in the usual way.

Background and statutory framework

The mayor's request concerned Sales Tax District No. 3 and Covington. The opinion quoted R.S. 33:2723, which required a voter-submitted tax question to state any division formula and each allocation's purpose; the approved proposition controlled expenditure. It also discussed R.S. 33:172's former growth-management agreement authority, which the opinion said had expired April 1, 2003, and the Local Services Law at R.S. 33:1321 et seq. The latter supplied the separate cooperation route for roads and bridges.

Citations and references

Statutes in the opinion: R.S. 33:2723, R.S. 33:172, and R.S. 33:1321 et seq. The opinion also cited Louisiana and federal appellate cases on the sales tax issue; their names contain OCR defects in the extract and are omitted from metadata.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/03-0140

Original opinion text

DEPARTMENT OF JUSTICE
One American Place
301 Main Street, Suite 600
CIVIL DIVISION
P.O. Box 94005
BATON ROUGE
TEL.: (225) 342-7013
FAX: (225) 342-2090
RICHARD P. IEYOUR
70804-9005
AI-EORNEY GENERAL

APR 2 2’003
OPINION NUMBER 03-0140

71 MUNICIPALITIES
84 PARISHES
160 SALES TAXES
Mayor Keith J. Villere
La. R.S. 33:2723; La. R.S. 33:1321, et seq.;
City of Covington
La. R.S. 33:172
603 N. Columbia Street
P. O. Box 778
Sales tax revenues can only be divided between
Covington, LA 70434
parish and municipality if voters approve the
division and the method of allocation of the proceeds.
Dear Mayor Villere:

You requested the opinion of this office concerning a proposed revenue sharing agreement (the "Proposed Agreement") between Sales Tax District Number 3 of St. Tammany Parish (the "District") which is comprised of the unincorporated areas of St. Tammany Parish (the"Parish") and the City of Covington (the "City"). Under the Proposed Agreement, the District would share sales tax revenues with the City depe~nding upon which defined area generates the sales tax. All of these areas are geographically defined and are purported to be areas of potential annexation or impactto the Cit~. You ask:

May the District, comprised of the unincorporated areas of the Parish, share sales tax revenue generated with the District with the City that adjoins the District but is not included within the geographic boundaries of the District?

R.S. 33:172(3)(a) authorized a parish council and the governing authority of each municipality within the parish to establish operating agreements to govern annexation procedures and/or other matters related to growth management issues between and among themselves; however, this authority expired on April 1, 2003. R.S. 33:172(3)(b).
The use of the proceeds of a sales tax adopted at an election in the State of Louisiana is dictated solely by the proposition approved by the voters. R.S. 33:2723; R.S. 33:2714; R.S.
39:704; Op.Atty.Gen. Nos. 02-0365, 01-269, 98- 421, 98-287, 96-246, 95-145, 94-540, 94-346, 93-424, 93-47 and 92-50.

The proposition which you supplied to this office provides that the proceeds of the District’s tax are to be dedicated and used for the following purposes:

"1. Constructing, overlaying and improving Priority I and Priority II roads, streets and bridges in the District ...; and

Page 2

Mayor Keith J. Villere
OPINION NUMBER 03-0140
Page -2-

2. Repairing and maintaining roads, streets and bridges in the District ..." (Emphasis added)

R.S. 33:2723 provides, in pertinent part:

"The resolution imposing any tax hereunder, or amendments hereto, may specify that the avails or proceeds of the tax after payment of collection costs shall be divided by the governing authority of the parish between the parish, the padsh school board and the several incorporated cities, towns and villages in the parish, or any one or more of them, in accordance with a formula or method of allocation set forth in the question or proposition which must be submitted to the qualified electors of the parish approving the levy of the tax in compliance with the requirements of R.S. 33:2722. Also, the purpose or purposes for which each allocation shall be appropriated and expended shall be stated in the question or proposition submitted to the qualified electors. The question or proposition approved at said election shall constitute a full and complete dedication of the avails or proceeds of said tax and its provisions shall control the allocation and expenditure thereof." (Emphasis added)

It is the opinion of this office that Louisiana’s statutory sales tax scheme provides that sales tax revenues cannot be divided between a parish and a town unless the voters have approved the division of the proceeds and the method of allocation of the proceeds at an election called and conducted in accordance with law. See, Town ofBrusly v. West Baton Rouge Parish Police Jury, 283 So.2d 288 (La.App. 1st Cir.1973), and Town of Ball v. Rapides Parish Police Jury, 597 F.2d 43 (5th Cir. 1979). Since the above quoted sales tax propositions do not authorize an allocation of revenues to the City, it is our opinion lhat the Parish cannot directly share those revenues with the town. See also, Op.Atty.Gen. 93-216.

However, despite the prohibition against sharing of tax proceeds without voter approval, the Parish and Town are authorized to enter into an intergovernmental agreement regarding the construction and maintenance of roads and bridges pursuant to the Local Services Law (R.S. 33:1321, et seq.). A local services agreement can be perfected even if no formal, written contract is executed by the parties, as long as the terms of the agreement are set out in an ordinance or resolution of each of the governing bodies of the parties to the agreement. The ordinance(s) or resolution(s) must also be published in the same manner as are the other proceedings of each governing body.

Trusting this adequately responds to your request, we remain

Page 3

Mayor Keith J. Villere
OPINION NUMBER 03-0140
Page -3-

Yours very truly,

RICHARD P. IEYOUB
Attorney General

BY:
S. HESS
Assista

RPI/MSH