The Morgan County Commission has until mid-December to file written arguments about why it considers a local law redirecting online sales tax dollars unconstitutional, according to filings in a lawsuit over the money.
Montgomery County Circuit Judge James Anderson will hear arguments Feb. 12 in the lawsuit led by Hartselle City Superintendent Dee Dee Jones and four others against the commission.
At the crux of the litigation is a local bill Sen. Arthur Orr, R-Decatur, sponsored that redirects thousands of dollars of online sales taxes from commission coffers to Morgan County’s three public school systems and volunteer fire departments. The lawsuit seeks to have the commission comply with the new law.
While the case is ongoing, Anderson has ordered that the county's online sales taxes be held in an interest-bearing account at ServisFirst Bank in Montgomery.
Commission Chairman Ray Long — a defendant in the lawsuit — said the county last week sent $121,523.94 to the Montgomery County Circuit Clerk’s office as directed by the judge.
“We’ll send the money as ordered until this is resolved,” he said, adding that the county stands by its position that the local law is unconstitutional.
The commissioners refused Sept. 24 to pass a resolution allowing the funds to be distributed to schools and volunteer fire departments after an attorney the county hired said the law violated Section 105 of the state constitution, which deals with conflicts between state and local laws.
In addition to Jones, the lawsuit was brought by Hartselle school board member Venita Jones, the Hartselle City Education Association, the Decatur Education Association and the Morgan County Education Association, which the complaint describes as organizations for public school education workers.
Alabama Education Association UniServe Director Wendy Lang said all of the plaintiffs are AEA members “in good standing” and are represented by attorneys the AEA is paying.
Long said the county’s insurance carrier is paying lawyers to represent the county.
Until this month, the commission had used online sales taxes distributed by the state. The distributions began following the Legislature's passage of the 2015 Simplified Sellers Use Tax Remittance Act, which allows online sellers who ship to Alabama to collect sales taxes the state and local governments otherwise would not get.
The local bill allows the commission to keep only 5% of the online sales tax it receives for “administrative purposes.” From the remaining money, the law required the commission beginning this month to send 85% of the funds to the three public school systems, to be distributed proportionally based on enrollment. Another 1.5% of the funds will go to certified volunteer fire departments and 13.5% to Morgan County Schools. The bill’s formula mimics how the county divides sales tax collections from brick-and-mortar stores.