Lakeside lodging tax districts seek review of Supreme Court ruling

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Counties that impose a lodging tax on Lake of the Ozarks have filed a petition for review with the state Supreme Court, which previously ruled that the law authorizing the tax was unconstitutional.

The cases the court has examined — Laura Salamun v. Camden County Clerk and Gail Griswold v. Miller County — came about because a law required business districts in the lake to provide government money to a private entity.

As Missouri Lawyers Media previously reported, the law was passed in 1993 and created business districts in the Lakes Region. These districts were required to have an advisory board to govern them. The board must be a nonprofit organization whose members are elected by the district’s business owners.

This advisory board can introduce a tax that tourists from the area pay. This tax can be spent by the board on improvements in the business districts of the Lake area.

The owners of Bluff Winery in Miller County and Pointe View Management in Camden County are suing their respective counties, claiming that the law under which the counties were created violates the state constitution.

Matthew Jacober of Lathrop GPM said the business owners contacted the company after learning that the advisory board planned to double the tax from three percent to six percent and that they wanted to use the money to purchase a new soccer stadium.

“That proposal might have brought additional people into the lake region, but it would not have benefited their establishment at all,” Jacober said. “It would certainly hurt them because of the additional taxes that their visitors or guests would have to pay while they were there.”

Jacober argued that the entire intent of the law and the collection of tax revenues violated the Missouri Constitution, which states: “No county, city, or other political corporation or subdivision of the State shall hold or subscribe stock in any corporation or association, or lend credit or furnish public money or anything of value to or for the support of any corporation, association, or individual, except as provided in this Constitution.”

A district court changed part of the law in an attempt to restore constitutional validity, but the state Supreme Court reversed that decision.

On June 25, the court issued a unanimous decision finding that the lower court had erred in amending section 67.1175.1 (RSMo 2016). According to Chief Justice Mary Russell’s opinion, “That section, as amended, and section 67.1177 continue to require political subdivisions to provide public funds to a private entity, in violation of Article VI, Section 23 of the Missouri Constitution.”

Although the Supreme Court agreed with Jacober’s argument that the law is unconstitutional, the defense argued that it stood up to scrutiny. They have since filed a motion for review with the court.

“The core of their argument is that this is a public entity whose voting system that was created by law has withstood the test of the Missouri Constitution,” Jacober said. “Now they’re asking the Supreme Court in their motion for review — which we haven’t been invited to respond to yet, so we don’t know what the Supreme Court is going to do, at least not yet — to essentially hold off on doing anything until the next legislative session so that the Legislature can address this and fix the entire lodger district and comply with the Constitution.”

Without review and based on the current court ruling, Jacober said the tourist tax has effectively been abolished.

“It basically means that control of the tax dollars and control of what happens has been returned to the voters,” Jacober said.

That would be beneficial for businesses in the area, as it would allow tourists to rent a hotel room, Airbnb or other rental accommodation in the lake region more cheaply, he said.

“I know many people are having to make difficult decisions about how to spend their vacation money and this will make it a little more affordable to rent a place in the Lake of the Ozarks area,” Jacober said.

The districts’ attorneys did not respond to requests for comment on the request for review.