Coppell Chronicle Vol. 4, No. 34
Sales Tax Lawsuit Finally Going to Trial • Coppell ISD Trustees Won’t Get New Options • Lewisville ISD May ‘Retire’ Some Schools • City Council Debates Motorcycle Prices
Sales Tax Lawsuit Finally Going to Trial
After years of waiting, the City of Coppell may soon learn whether a large chunk of its revenues are safe or in jeopardy.
In July of 2021, Coppell and a few other cities sued Texas Comptroller Glenn Hegar over his proposed changes to the distribution of sales taxes for online transactions. Hegar wants those dollars to shift from the sellers’ cities to the buyers’ cities. Given the large number of fulfillment centers on the west side of town, Coppell would lose tens of millions if that shift takes effect.
Hegar’s proposal, also known as Rule 3.334, has been on hold since Judge Karin Crump issued a temporary injunction in September of 2021. A trial on the lawsuit’s merits has been delayed many times, but it is finally set to begin at 9 a.m. on Monday in Crump’s 250th District Court in Austin.
Last March, the attorneys for Coppell and its fellow plaintiffs — Carrollton, DeSoto, Farmers Branch, and Humble — turned in a fourth version of the suit. (They have since submitted fifth and sixth versions of the suit, but I have not seen those because I waited too long to request copies.) That fourth version said Hegar’s proposal would harm Coppell and its fellow plaintiffs because “distribution centers, warehouses, and fulfillment centers all require city-supplied infrastructure and services that are more expensive than the cost of infrastructure and services provided for residential and retail development.”
Last June, Hegar submitted a motion for partial summary judgment, asking Crump to rule that fulfillment centers are not places of business. During an Aug. 29 virtual hearing on that motion, attorney Ray Langenberg, who works for the comptroller, said this: “Not all warehouses are fulfillment centers, but all fulfillment centers are warehouses.”
(Langenberg had to say that twice to make sure he said it correctly. It’s kind of a tongue twister.)
Langenberg also said Coppell and its fellow plaintiffs “need to establish that all of these fulfillment centers are a place of business as defined by the statute.” Jim Harris, the lead attorney for Coppell and the other cities, countered that the referenced statute was adopted in 1979, when nobody in Texas — or anywhere else — had ever heard of a fulfillment center.
“We say it’s a store; they say it’s a warehouse,” Harris said.
The fourth version of the lawsuit referenced Hegar’s “incorrect understanding of e-commerce” and listed 16 “incorrect factual presumptions” on the comptroller’s part. Here are a few examples:
“The Comptroller presumed that website orders are ‘forwarded.’ They are not.”
“The Comptroller presumed that fulfillment centers do not ‘receive’ ‘orders.’ They do receive orders.”
“The Comptroller presumed that every computer connected to a seller’s e-commerce program receives an order for an item. They do not.”
“If you create a rule that’s based on the moon being made out of green cheese, and the moon is in fact not made out of green cheese, then the rule is arbitrary,” Harris said during the Aug. 29 hearing.
Crump ruled against Hegar’s motion for partial summary judgment, and the decision about the lawsuit’s merits will also be hers; this week’s trial will not include a jury. We don’t know when Crump will issue her ruling, but she definitely has a deadline.
Crump challenged incumbent Justice Thomas Baker for his seat on the Austin-based 3rd Court of Appeals, and she won the Democratic primary last March. Because there were no Republican candidates, Baker’s seat on the appeals court will be hers in January. She has to take care of all pending business in the 250th District Court before then.
Coppell ISD Trustees Won’t Get New Options
Coppell ISD trustees have a choice: consolidate the Dual Language Immersion (DLI) program at Denton Creek Elementary or don’t consolidate it. Those are their only options.