Two state legislators have proposed a solution to a fight dozens of Missouri communities face concerning millions of dollars in tax revenue.

House Majority Leader Steven Tilley, R-Perryville, and Sen. Kevin Engler, R-Farmington, announced last week that they will propose a resolution in the upcoming legislative session to resolve disputes concerning the use of “stacked” sales taxes.

A stacked tax refers to the practice of communities passing multiple taxes of the same type. For example, St. Joseph has separate general sales taxes of one cent and one-half cent.

The Circuit Court of Jefferson County ruled in May 2008 that the city of Iberia, Mo., near Lake of the Ozarks, had illegally stacked two capital improvement taxes. That decision invalidated one of Iberia’s two Capital Improvements Program taxes and forced the city to pay court costs for the individual taxpayer who filed suit. The lawyer who tried the Iberia case, Tom Burcham, of Farmington, Mo., has since filed similar cases in cities across Missouri.

Mr. Burcham formerly served as a state representative in the 106th District — the district Mr. Tilley currently represents.

Repayment would force the city to give back the $33.25 million it has collected since passing the tax in 2001.

Mr. Capell said St. Joseph had yet to face a court case challenging its stacked general sales taxes.

“We know it’s coming our way, given that we’re the largest city in the state that has a stacked sales tax,” Mr. Capell said. “We might not be next in line, but we’re certainly a big target.”

The resolution would protect cities from the threat of lawsuit, as they believed a 1999 letter from the Missouri Department of Revenue condoned the taxes. However, the two legislators want to cap general sales taxes at one cent and other authorized sales taxes — such as St. Joseph’s CIP tax — at one-half cent.

The loss of the one-half cent general sales tax would cost St. Joseph more than $5 million per year.

“I might overuse this word, but both of them would be devastating,” Mr. Capell said. “Paying it back would be almost impossible and limiting future revenue would cripple us.”

Mr. Capell said he suspects the state may want to cap local jurisdictions’ tax rates so the state can seek a bigger share for itself.

“We’re all competing for the same tax dollar,” Mr. Capell said.

The Missouri General Assembly’s legislative session begins Jan. 6, 2010. Legislators may pre-file bills starting Dec. 1.

Clinton Thomas can be reached

at clintonthomas@npgco.com.