Hillsborough County’s transport sales tax struck down by Supreme Court
March 9, 2021
More than two years after voters approved a transportation sales tax in Hillsborough County, the Florida Supreme Court has ruled the tax unconstitutional.
On Feb. 25, the Florida Supreme Court found in a 4-1 decision that the Hillsborough County 1-cent sales surtax passed in November 2018 is unconstitutional. In December 2018, Hillsborough County Commissioner Stacy White filed a lawsuit to stop the tax from happening.
With the new ruling, more than $500 million of collected tax revenue is sitting in limbo. Supporters of the tax are already moving to have an amended version of the tax on the next general election ballot.
Hillsborough County’s sales tax
The tax in question was passed during the November 2018 general election by a 57.3% vote. Not satisfied with the local government’s handling of transportation issues, a grassroots group called All for Transportation was able to get the measure on the ballot.
The amendment created a 1-cent sales surtax levied for 30 years and deposited in an audited trust fund with independent oversight. Estimated annual revenue is $276 million, with $552 million in the first two years.
According to the original amendment, 54% of proceeds were to go toward roads and safety, including reducing congestion, improved intersections, fixing potholes, crash reduction and new walking/biking options.
Another 45% was set aside for expanding transit options, with the remaining 1% of funding for independent oversight. None of the revenue was to be used for expanding right of way or width of the interstates or constructing any facility not related to transportation, including a sports facility.
The surtax went into effect on Jan. 1, 2019.
On Dec. 4, White filed a lawsuit against the amendment approved by voters. According to the complaint, White claimed that the creation of the surtax is in conflict with his duties and obligations as commissioner. In particular, it takes away power given to commissioners to distribute funds as they see fit. The lawsuit also challenges the independent oversight created by the passage of the amendment.
White said the surtax cannot be created unless it is consistent with Florida statutes regarding county taxes. Article 11, he claimed, violates several of those statutes. White said he wanted to stop the collection of taxes before they are “invalidated,” and the county is left with “a mess to clean up,” according to the lawsuit.
With proceeds likely to exceed billions, the county could be on the hook for a significant amount of money if the surtax is invalidated after collections have already begun.
Specifically, White took issue in his lawsuit with the independent oversight, which would include “an unelected, unbonded and unpaid committee of private citizens who are given substantial powers over the huge fund,” the lawsuit stated.
Article 11 prevents the Board of County Commissioners from using any of the money for certain additional lanes or to build certain new roads for the next three decades, even if the board unanimously agrees it would be needed.
White also argued that the charter violates a rule that requires only one subject per charter, claiming Article 11 addressed several subjects.
Lastly, White claimed the ballot measure language was misleading, stating that the summary did not tell voters that the Hillsborough Area Regional Transit will always receive 45% of funds regardless of what the board deemed necessary and appropriate. Also, the summary did not include the exclusion of new roads and lanes.
To avoid any future conflicts with the transportation surtax that may arise, White asked the courts to deem Article 11 unlawful, invalid and unenforceable.
What’s next for Hillsborough County?
The Supreme Court’s opinion calling the tax unconstitutional reverses a lower court’s ruling that upheld the tax in June 2019. Now that the tax is dead, the question is what to do with the money that has been collected.
About half a billion dollars has been collected from the 1-cent sales tax since January 2019. Although the state Supreme Court ruled that unconstitutional, the court justices did not address what is to be done with that revenue.
However, the fight for transportation funding in Hillsborough County is not over. All for Transportation’s co-chair Tyler Hudson has said a new referendum will be introduced in the 2022 ballot.
“The Florida Supreme Court’s decision to overturn the will of Hillsborough County voters and invalidate All for Transportation, a one-cent sales tax for transportation improvements, is a terrible disappointment,” Hudson said in a statement. “But it is not the final word. The desperate need for money to pay for road projects, safety measures and transit options remains, and public officials and the voters will have to mount another effort to re-approve All for Transportation in 2022.”
On March 3, the Hillsborough County Board of County Commissioners voted 6-0 to direct staff to work with the Department of Revenue and the clerk’s office and any other body to create the judicial process to refund the money collected from the sales tax as quickly as practical.
The county commissioners also voted unanimously to begin the process to create a new 1% transportation surtax. A presentation of the timeline, including public hearing dates, audit, workshops, date of election and date the supervisor of elections will receive the ballot information will take place on April 21. LL