Kansas Court of Appeals says Mission’s “driveway tax” is illegal

In the eyes of many businesses and residents of Mission, the so-called “driveway tax” is a nuisance.

In the eyes of Mission policymakers, what they prefer to call the transportation utility fee an essential revenue stream to cover transportation costs

In the eyes of judges on the Kansas Court of Appeals, it’s an illegal moneymaking scheme for the city.

The appellate court on Thursday voided what Mission calls a fee, saying instead that it’s actually a tax, and an impermissible one at that.

The decision reversed a Johnson County District Court judge’s decision in 2013, which said that the fee was a sound measure.

First passed in 2010, the tax generates between $700,000 and $800,000 a year. For a city of Mission’s size, it’s not an insignificant amount. Mission’s general fund for 2015 was $10 million. The driveway tax was earmarked for transportation-related costs.

For the owner of a single-family residence, the driveway tax would cost about $72. For a commercial property, the average charge was about $16,000 (although larger developments, like that city’s Target store, paid about $64,000).

The appellate court’s decision rested on whether the driveway tax was a tax in the traditional sense, or a fee, as Mission city leaders claimed.

The difference between taxes and fees is somewhat nuanced. Taxes, generally, are assessed uniformly and meant to increase municipal revenues for specific or general purposes. Fees, on the other hand, are typically charged to someone using a specific service. Money collected from fees are used to fund that specific service (a water bill is a good example of a fee). 

The court found it hard to argue that the driveway tax is a fee because it’s applied to all property owners (except churches), and that it hits property owners with charges if they pay it late. The court went further and determined that it functions like an excise tax, which is generally outlawed in Kansas (although with some exceptions).

Mission spokeswoman Emily Randel says city leaders are still determining what to do in light of Thursday’s ruling.

“The City is currently reviewing the decision on the transportation utility fee,” Randel writes in an email to The Pitch. “We are evaluating all of our options, including a review of the Court of Appeals’ decision by the Kansas Supreme Court.”