Cash Test

Lois Anderson just wanted what she thought should rightfully belong to the people of Claycomo. Now she’s standing in the path of a lawsuit filed by Ford Motor Company.

Anderson, the village administrator who keeps the small town running, was fed up with scraping by each year while Claycomo put off making expensive repairs to its sixty-year-old clay-pipe sewer system. She was tired of seeing young police recruits, who’d been eager to aim their radar guns at speeders on U.S. Highway 69 and clean up wrecks on Interstates 35 and 435, leave for other jobs because the village retirement program stunk. She was sick of worrying that, because her firefighters were strapped with antiquated oxygen tanks, one would pass out in the heat of battle. And she was disgusted with screwups by the 911 dispatch service Claycomo was paying Pleasant Valley to handle.

She’d had enough of “crisis management budgeting,” as she calls it.

So Anderson proposed increasing the town’s “occupation license tax.” Until last April, companies doing business in Claycomo paid only a flat fee to cover the village’s emergency services. Every check was for $25 — whether it came from the proprietor of a one-woman beauty shop or from the accounting department at Ford’s third-largest auto assembly plant.

Anderson wanted to charge an amount based on each company’s revenue. Claycomo’s village board thought it sounded like a good idea and put the proposal on a ballot last March. Only 117 of Claycomo’s 1,200 residents bothered to vote on that icy day, but they passed the new tax 62-55. The village board implemented it last summer, charging .01 percent or $25, whichever was greater.

“We had no clue how much this was going to generate,” Anderson admits.

The new formula didn’t sit well with Claycomo’s largest company, which has more than four times as many employees as the town has residents.

Ford ships more than $13 billion in trucks and SUVs from its Claycomo plant each year. According to the village’s new law, that meant Ford now owed Claycomo $1.3 million instead of the $25 it had paid annually since it started building cars and trucks there in 1956.

The windfall would have almost doubled the city’s $1.8 million budget.

But the revelation woke Ford officials, who apparently had slept through discussion of the tax and the public vote. “The tax itself caught us at headquarters in the tax office completely by surprise,” says Christopher Mucke, of Ford’s office of tax counsel in Deerborn, Michigan. Mucke says Ford has no intention of paying it.

In a letter dated May 21, Mucke wrote Anderson that Ford would continue paying the village $25; because there was no Ford dealership in Claycomo, the value of the goods actually distributed there was zero. And he added that the tax was sorry thanks for the company’s decision to keep the Claycomo plant open while it closed plants across the country — including a plant outside St. Louis at Hazelwood, which is scheduled to shut down in 2005.

“The imposition of local taxes in the state of Missouri upon Ford Motor Company is the most onerous in the country; it is odd that we would be rewarded for staying in Claycomo by being assessed with another tax,” Mucke wrote.

But the relationship between Claycomo and Ford has not been close in recent years.

The village board passed enterprise zones to reduce the plant’s tax base in 1995 and 1999, but in return the plant has done little for the village.

“They pay their taxes, and that’s it,” Anderson complains.

Ford hasn’t donated equipment to the mostly volunteer Claycomo fire department, even though the firefighters could use a ladder tall enough to reach the roof of the Ford plant. Nor has Ford ever cut the police department a deal on its Crown Victorias.

Ford has taken its host for granted, and past boards have let them, says Larry Barrera, village board chairman.

Barrera says that board members and Anderson have been trying to reach Ford officials for more than a year to discuss the village’s budget woes. But their calls and letters to a local Ford government liaison were deferred to company headquarters in Michigan, where they were ignored.

Other town businesses had a chance to tweak the ordinance, Barrera says. For example, Barrera’s own restaurant is paying $130 this year. Osco Drug is handing over $444. Kings Super Store is writing a check for $320.

In May, Ford attorneys filed a lawsuit in Clay County Circuit Court to stop the tax, saying it was unconstitutional. They argued that paying a tax on the total value of trucks shipped from Claycomo would mean paying taxes on engines that were manufactured in Germany, which could have taxed the engines as well. “That’s double taxation,” Mucke says.

While it’s challenging Claycomo in court, Ford has been lecturing the village behind the scenes. Sounding like a stern father, the company put together a cost-benefit analysis of the business-license tax and presented it to the village on December 10.

“Challenging economic times dictate that business and government work collaboratively to find creative solutions to complex problems,” reads the introduction.

Ford took advantage of the opportunity to point out that it has 5,646 employees and a $400 million payroll, compared with Claycomo’s measly 26 employees and $1.8 million budget. Ford went on to recommend that the village abandon its $283,000 plan to set up its own 911 dispatching service; that it hire MAST to provide ambulance service; that it rely on the Clay County Sheriff’s Department for police protection; that it forget about better employee benefits until the economy improves; and that it seek state funding to improve local sewers.

“They were trying to shut down our city,” Anderson says.

That wasn’t the intent, Mucke insists.

“We want to do anything we have in our power to help them,” he says. “Our purpose with the cost-benefit analysis is really, let’s consider some options.”

Ford is fighting with Clay County as well. Because the automaker is protesting the county assessor’s valuation of its property taxes, Anderson won’t be able to spend $187,000 of Ford’s total property taxes until the valuation dispute is resolved.

“Do you know what they’re doing to us?” she says. “It’s putting us in a budget crunch.”

Mucke says the property-tax dispute is not connected to Ford’s legal fight with Claycomo. He is more concerned about what Claycomo is trying to do to his company.

“From Ford’s standpoint, the amount of money they are looking at is extraordinary — beyond belief,” he says.

Except if you live on the eastern side of Missouri. There, with its own occupational license tax, Hazelwood has been collecting around $1.5 million a year from the automaker.

“We’ve paid it for years,” Mucke says. This year, Mucke says, the company is protesting that tax as well.