City Wins Gas Tax Fight in Court

(This article appears in the 6/8/10 issue of the Nugget Newspaper) Judge Alta Brady ruled last Friday that the City of Sisters' gas tax is legitimate. That means Sisters gas stations owe the City of Sisters the three-cents-per-gallon gas tax for the period of April 9 through April 30, 2010. The due date for their first payment was May 25 but, to date, only two stations in Sisters have paid their bill. Both of the Shell gas stations have paid their bills, sending payments of approximately $1,100 and $1,200 to the City of Sisters. The remainder of the stations, Sisters Pump House (McMeekin Enterprises), Space Age Fuel (Pliska Investments LLC), and the Sisters Mainline Station were advised by the Oregon Petroleum Association's attorney, Paul Romain, not to pay in advance of the pending court date with Judge Brady. "I have told them (the local fuel dealers) not to pay it," Romain told The Nugget on May 21. The stations that have not paid are now accruing a penalty for nonpayment. "If dealers do not pay, the penalty is 1 percent of the tax and increases to 10 percent if payment is not received by the end of the month in which payment is due," said Eileen Stein, Sisters city manager. The Sisters City Council passed an ordinance creating the gas tax back on August 13, 2009, as a means of generating funds to maintain and improve city streets. This was prior to a statewide moratorium on local gas taxes scheduled to take effect after September 28, 2009. The Oregon Petroleum Association (OPA) took issue with the ordinance passed in August, immediately circulating a petition on behalf of the local gas station owners, getting the issue on the March 2010 ballot as a referendum. OPA's position was that the council's ordinance passed back in August should not be enacted until the people voted on it. And, with a vote not scheduled until March 2010, the ordinance would not be valid because it would be after the moratorium date for new local gas taxes. "When does an ordinance get enacted, when the council votes on it or when the people vote on it? I believe it's when the people vote," said Romain. In the March 2010 ballot Sisters voters approved the gas tax, paving the way for the city to set the payment schedule. Judge Brady's ruling confirmed Sisters city attorney Steve Bryant's argument that the city council's action back in August "enacted" the gas tax ordinance - and the March referendum merely placed on hold the effective date of the ordinance. "When the ordinance was successfully referred, i.e. qualified for the ballot, the implementation (collecting the three-cents-per-gallon from the stations) was suspended. After the election we indicated we would implement the ordinance immediately. Legal counsel clarified that would be 30 days after the election date, or April 9," said Stein. Thus the first gas tax collection period of April 9-30, 2010, with payment due May 25. The OPA has the right to appeal Judge Brady's decision but, at press time, there was no indication an appeal was in the works. Phone calls to station owners owing gas taxes were not returned by press time. Council President Bill Merrill feels strongly that a gas tax was the right means of generating the necessary revenue. "We made a decision based on what's best for the people. We are elected to do the people's business and that's what we did," said Merrill. For the fiscal year 2010/2011, which starts July 1, 2010, the council budgeted $126,000 in gas tax revenue for city streets.