Da dee da deee da--here we go again

"stinkin' more than anybody has a right to"

Well, I just can't believe the fodder local political reps provide for the intelligent and inquisitive. Again, Kilgore--OUR solicitor, failed to present any evidence-or logic, justifying Mt. Gretna's participation in this extortion scheme the EIT Bureau and city solicitors are calling the "over/under-payment issue"--strike that, "problem", as Kilgore clarified last night. I now suspect that there is much more "foul play" and intentional covering-up going on. And, here's why.

Again, last night Kilgore tried to shoot the messenger, rather than heed the message. While being asked more questions about the EIT--specifically, what evidence that he has that shows that there is a foundation for any sort of "settlement" agreement on this over/under allegation, he again tried to suggest, in a public forum, that I didn't know the proper facts about the EIT. Don't forget that at the Oct. meeting, he also suggested that I needed to learn about the laws authorizing the EIT by telling me to "go read the EIT laws." As he, and his best buds should certainly know by now--I do my homework. So, with great pleasure, I reminded him that I had just finished my fourth reading of them in the hour before the meeting. And, with great pleasure, I will provide here the documentary evidence that he was, once again, wrong about what's been going on with the EIT here.

But, him being wrong, even multiple times, is not really a problem. Its his willingness to be wrong in public and the triggers that bring out this behavior in him that we should all be worrying about: when challenged substantively on the legal foundation for the allegations, the law, and the "process", he tries to destroy the inquirer's credibility and will even get the law and the facts wrong to do so. In witnessing this pattern of his--his willingness to publicly show his lack of knowledge about the issue and his lack of interest in getting the facts correct, I am beginning to suspect that he is motivated to take these risks because he knows something else is at stake--something other than a settlement. In other words, he is falling on his sword. So, I think that the question that we all should have now is " who is he falling on his sword for?" More about that by the time we get to the bottom of this post.

And, because my time is as valuable as his, and because I am providing the Boro with much needed information that Kilgore is failing to provide, I will send the boro the bill.

First, as to the EIT law, it is called the Local Tax Enabling Act. CapTax provides an easily accessible version of it on their website, but I have linked to it in the Community Info list at the bottom of this blog. Kilgore told me to read it when I asked him what evidence there was indicating that the historic distribution of the EIT in Leb. Co. was incorrect--or, "arbitrary", as the Bureau and the solicitors put it. His response was, to paraphrase, ""Fixed percentages" is just not how it was done. You get 50% of what you paid in. You would know that if you read the EIT laws." Well, Mr. Smarty-Pants. I knew you would say that. So, that's why I re-read them before asking you the question in a public forum--because there is no mandate for receiving 50% of what you paid in. NONE. But, I thought I would check with you. Thanks for that confirmation.

And, that tidbit is what JQ PUblic needs to know about the solicitors' and the Bureau's assertions: there is NO mandate in the laws to distribute EIT revenue the way Kilgore asserts. Further, there is no prohibition, in those laws, against distributing the revenue according to a percentage-allocation pattern fixed within the system--which is the distribution pattern the Bureau admits existed. So, just because we didn't get back 50% of what we paid in, doesn't mean that we didn't get what we were supposed to get. And, they can't prove we didn't get what we were supposed to get.

Second, all the real evidence presented here supports the idea that its the EIT Bureau's fault if anything went missing or misdirected. The EIT laws that Kilgore is refering to also require an annual EIT audit, and require each political subdivision to annually reconcile the EIT numbers and make the necessary adjustments. Here's the text of those laws:

Section 11
…the governing body of each political subdivision which levies and collects or provides for the levying of a tax upon earned income, shall provide for not less than one examination each year of the books, accounts and records of the income tax collector..

and

13.III.B.V.h
…The political subdivisions shall not be required to request the officer to distribute the funds collected but shall at least annually reconcile their receipts with the records of the officer and return to or credit the officer with any overpayment….

Ok, so, now we at the logical point where we need to know if Kilgore or the Bureau has any evidence that Mt. Gretna did NOT do the annual reconciliation and make the necessary credits or returns. Why is it important to know this? Its important because if all evidence shows that an annual reconciliation was done, then the most we could ever "owe" is the current year's possible overpayment.

So, last night I told Kilgore that I found evidence that Mt. Gretna had indeed did some type of reconciliation one year (1969)and requested--and received, a corrective payment. I then asked him if he knew of any OTHER evidence that suggests that the legally mandated annual reconciliations were not done. Again, he told me that the system was run in such a disorganized fashion, that laws like that don't mean anything--essentially, that I shouldn't and can't rely on the LAW to figure out what, if anything, we owe. But, then he just had to end his response by saying "That [corrective payment] could not have happened. Mt. Gretna wasn't even in the EIT until the 70's."

Well, folks, also in the links list below, you will find Cornwall-Lebanon School District meeting minutes from November 3, 1969, where the school board discusses Mt.Gretna's EIT-correction request and decides to issue them a check. Further, the C-L School District EIT was adopted in 1967, and Mt. Gretna was one of the first, if not the first, municipality to return their "acceptance" to participate in the intended EIT system. I also posted a link to those meeting minutes below. Now who, again, doesn't know what they are talking about---and getting paid for their ignorance....But, I suspect that there is a reason why he is not motivated to know his "legal" stuff about this issue.

So, in short, my research, which has been confirmed by EIT Bureau statements and by solicitor statements, suggests very clearly that:
1. there is no reasonable or legally sufficient evidence of arbitrary distribution.
2. There is no reasonable or legally sufficient evidence of mis-distribution.
3. There IS evidence of missing money--a lot of it, that can't be attributed to Foltz's activities. And,
4. our solicitors are acting more like the Bureau's front man than our legal representatives.

The story line here could go something like this: "

EIT Bureau and Solicitors, not wanting to shine spotlight on clients and long-time friends involved with the collection of EIT in Lebanon County, intentionally pursued--via threats of "crushing" financial and legal entanglements, settlement of allegations for which they knew there was grossly insufficient evidence to pursue properly."

I mean, really, we need to start asking loudly, "Could it be that both of these parties have a good suspicion where to look for the missing money, or that the "missing" part happened at levels lower than Foltz--like at the municipal EIT collector level?" That would explain a lot about their curious behavior and their lack of inquisitiveness, now wouldn't it?

Our solicitor represents us AND the opposing team!!!

Keith Kilgore, our Mount Gretna Borough AND Chautauqua solicitor has been representing MGB in the pursuit of a resolution that would require us to "repay" an alleged $224000 "overpayment."

The trouble is that while he is supposed to be our advocate in this issue, he also is the municipal solicitor for South Lebanon AND North Londonderry--both municipalities that are claiming to be underpaid EIT revenues and seeking Mt. Gretnans' tax dollars to "repay them."

To make matters worse, Kilgore's partner, John Enck also represents both Millcreek and Bethel as their municipal solicitor.

In a recent Boro meeting, our council president acknowledged that kilgore "represents several other municipalities in this issue." But that seemed ok to him--he never mentioned how they dealt with this dual representation or the conflicts it creates. Perhaps they took care of that in a separate meeting and Allwein simply has not availed himself of another opportunity to paternalize us...

Let me show you PA's professional code of conduct that Kilgore, and Enck, are required to follow as licensed PA attorneys:
(you can find it yourself at http://www.pacode.com/secure/data/204/chapter81/s1.7.html)*

Rule 1.7. Conflict of Interest: Current Clients.
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

Now, that rule suggests that in Para. b, there is a way to represent both an allegedly underpaid and an overpaid in this situation. But let me present to you paragraph B and draw your attention specifically to (B)(3), which basically states one lawyer can represent two clients where a conflict may exist---BUT NOT WHERE THOSE CLIENTS OPPOSE EACH OTHER in a proceeding. In other words, they can't be direct adversaries.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: [...]

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal;
and
(4) each affected client gives informed consent.

Now, doesn't this appear to present a pretty clear motivation for Kilgore to jump straight to the position "hey give these guys your money, and let's not litigate this--because then I would be representing two adversaries on the opposite sides of a claim that is in litigation."

And, even if you want to say, "well, we really aren't adversaries in a proceeding yet, so its ok for him to do this", then I encourage you to look at this rule's Note 8. This is the question that has to be answered in order for Kilgore, Enck, or any attorney to represent more than one party in this issue. And, let me remind you that adherence to professional conduct rules is NOT an OPTION nor is it an afterthought!

Note 8

(8) Even where there is no direct adverseness, a conflict of interest exists if there is a significant risk that a lawyer’s ability to consider, recommend or carry out an appropriate course of action for the client will be materially limited as a result of the lawyer’s other responsibilities or interests.

So here, let me say my thoughts outloud:
The only reason that we are NOT in litigation or before a tribunal on this over/under allegation is because it is in the SOLICITORS' best interests--not because it may be in our best interests. I especially think this because to get us out of this issue, it really looks relatively simple--just stop participating in the meetings. Publish a nice, concise letter to whomever is organizing these "repayment" meetings, telling them that,

"while we support the proper distribution and receipt of all tax revenues, we simply can not advise our municipal client to enter into any sort of agreement at this time. However, if more or substantial evidence supporting the allegations of your claim come into your possession, we would be pleased to consider reopening discussions." End of story. No more bills from solicitors' for attending these discussions...

Based on Kilgore's results for us in this issue, I think he has made it abundantly clear that he is materially limited in his ability to consider an appropriate course of action for us--he has laid us Mt. Gretna taxpayers out like a lamb to slaughter, not even formally questioning the veracity and sufficiency of the "overpayment" claim. There is an obvious lack of evidence here, and the only document be presented as "evidence" is a report by a firm selected, instructed, and paid by the "claimant". And, that report itself has some pretty obvious deficiencies that even a first year law student would be able to spot and use to argue for a better position for his clients.

Instead, Kilgore is preserving, without flinching, apparently, his other clients' unproven claims that they have a right to reach into our pockets for more money. How convenient for him, to not challenge the claim, to not have to absolve himself from representing any entity on this EIT issue, and to be able to keep billing all these clients for both his time spent on this EIT issue AND his regular "solicitor" hours. And he will certainly be billing us for his advocacy of our Borough!

Again, our municipal leadership has set us up to foot someone else's bill, assuming they get us into a repayment agreement or raise or taxes or tack on a special assessment through the Chautauqua.

By the way, Kilgore also serves as zone hearing board solicitor for Swatara, Union, Heidelberg, AND West Cornwall Township. Enck serves as zoning hearing board solicitor for Myerstown.
You can confirm this information at http://www.lebcounty.org/lebanon/lib/lebanon/Public_Officials_Directory_2009-REV.pdf

If you would like to find out for yourself whether his representation of both sides suffers "material limitations", you can ask for someone for an answer. You can be discreet, or a straight up P'O'd taxpayer. You can ask these guys for an answer at: http://www.padisciplinaryboard.org/forms/consumer.php

or you can ask more taxpayer rights' types of questions at
http://www.auditorgen.state.pa.us/Department/Info/Investigations/

*To see more rules of professional conduct for attorneys, check out PA Title 204, Chap 81-- a peek of which is at
http://www.pacode.com/secure/data/204/chapter81/chap81toc.html

Earned Income Tax Misallocations: The Issue Explained

If any of you who attended the Annual Chautauqua meeting this year still have some questions about the recently confirmed Earned Income Tax misallocation issue, I did a little research and have more details for us. I requested from the EIT Bureau Board, and promptly received, a rather detailed presentation of the issue, including its history and a breakdown of the "financials" from 2004 to 2006 and by municipalities involved. This included numbers for Mt. Gretna Borough, which, by the way only has 207 registered voters.

The short story on how this came to light is that certain recipients of Lebanon County's EIT revenues were receiving what they thought to be significantly smaller amounts of monies than they knew they were owed, so they started making complaints, which led to an investigation/audit.

According to the attendees at last night's EIT Board meeting, the formula for determing what amount of the total EIT Revenue that a municipality is allocated in a given year is directly proportional to its contribution to that pot. Here is an example: Say the total EIT revenue for the year 2020 was $100 and Mt. Gretna Borough residents contributed $10 to that total. So, the result of the formula applied here is that half of Mt. Gretna's residents' contributions are given to the school district, and half of that contribution is given to Mt. Gretna Borough. So, in my example, for the year 2020, Mt. Gretna Borough would receive $5 from the EIT revenue (give or take a little for nominal fees/adjustments charged to the $5).

Sticking to only the numbers as they pertain the Mount Gretna Borough, it was found that, for the years 2004 through 2007:

Total Earned Income reported to the Dept. of Revenue $ 6,349,685,057

Total Mt. Gretna Borough residents' earned income $ 18,005,380

Total EI Tax reported to the DOR $ 97,673,527

Total Mt. Gretna Borough residents' EI Tax contribution $ 123,370

Applying the formula for distribution of that revenue, for the years 2004 through 2006, Mt. Gretna Borough should have received about half of its EIT contribution, so about
$ 61,000

Instead, Mt. Gretna actually received $ 256,642

This is an overpayment of $ 195,642

Now, the auditing firm's research included more years than I have included here, which is why we are told that the amount we were overpaid was really around $244,000.

The EIT Bureau Board seems to be on the right track in pursuing a fair resolution to this problem. It has moved forward from Day 1 adhering to the principals of transparency and collaboration, rather than with paternalism and heavy-handedness. The Board seems to consider communicating with the taxpaying public as an essential that is preferred over just relying on city solicitors' participation negotiating municipal agreements for "re-direction" of overpayments, and encourages us to attend their monthly meetings, held every third Wednesday, at 6:30pm at the Lebanon School District Office (just go in the door and turn to the left).

However, the next two meetings will be held at the Municipal Building's auditorium, as we have some very important voting to participate in in Sept. and Oct. They will also be publishing a new website and designating a Right-to-Know officer soon. I will keep you posted on those accomplishments as they happen.

Before I hit the publish button on this post, I want to bring up two points for thought that this tax stuff generates.

First, via a phone conversation with our Borough Office, I learned this morning that Mt. Gretna Borough does not have an "official Municipal Representative" to the tax board. While we may "manage to get someone, including our solicitor (Kilgore) to attend the important stuff", we need to have an official municipal representative. Why? Well, because this is how a taxing body establishes its constitutionality for taxing us--remember that whole "taxation without representation" thing?

And, don't we, as Borough residents, get the opportunity to vote on the issue of the Borough aqcuiring long-term debt obligations? Again, the process pursued here is not settlement negotiations in some legal action--it is the development of a contractual financial obligation, the assumption of a debt obligation. So, why aren't we being informed and brought in on this whole process? Look, I have faith that my neighbors will do the right thing when presented with factual information, so I honestly don't think that returning overpayments is something that we would avoid.

However, the scenario presented to us at the annual meeting suggests that our solicitor is making all the decisions and entering the Borough into these long-term commitments. This situation is confirmed by the Board's statements last night that they do not know who our official Municipal Representative is, but that they pass on all such communications to Bill [Care] and by the Borough administration denying that we even have an "official Municipal representative."

So, who is committing the Borough taxpayers to this debt obligation? Because this isn't a legal action, Kilgore's real role here is to profer to his or her client a legal review of an agreement's terms--it is not to act as executive officer for a municipality.

While our Borough administrators may defer to him and think that Kilgore "is really one of us", he REALLY is not, and I would not, by a long shot, be the only Mt. Gretna resident to make that assertion. And, if the response to that fact is that he "has been here long enough" or longer than I have, so that justifies placing a restriction or qualification on my requests for proper representation, or for enforcement of Borough Ordinances or state laws, then I respectfully request a pro-rated reduction on my tax burdens and Chautauqua fees. The reality is that each of us is a full-fledged resident, with attendant rights and obligations. Period. Any other heirarchy or "classification" of residents is parternalistic, and unethical.

The second point of concern is that there doesn't seem to be a "zealous representation" by our solicitor of our interests in the resolution of this Over-Under EIT issue. Kilgore himself said at the annual meeting that he was negotiating a longer payment term for us, but he made no reference to or informed us as to our alternative of challenging the total amount, especially in terms of using new residents' tax payments to pay for another person's criminal misconduct, or of using any resident's Borough contributions to pay for another person's criminal misconduct.

Arguments like that are legitimate to make on behalf of your client, and do not need to be made or pursued in a way that is adversarial or that erodes your respect for the real issue at hand: that some municipalities or school districts were underpaid and need the money. At the end of the day, we all go home to each other as neighbors, so we all have a vested interest in the health and success of our neighboring municipalities and school districts. But just as the underpaid entities seek fairness in the resolution of this issue, the overpaid entities have a right to fairness as well, and to "zealous representation" by whatever legal representative they hire. And, for us, Kilgore has assumed that job.

One thing that I learned from growing up in a rural community is that these little nuanced failings, like the ones that I have described in these last few paragraphs, will be remembered--they get talked about over card tables, over tailgates, and on porches for years, if not generations, and they contribute to aging your legacy into either wine, or into vinegar.