OK Supreme Court returns tax case back to Maxwell

On December 13, the Oklahoma Supreme Court (OSC) issued a mandate returning jurisdiction over the 2% lodging tax to Judge Emily Maxwell in McCurtain County District Court.

The high court recently ruled that Maxwell did not have jurisdiction over the case when in June 2023 she issued a ruling finding in favor of the hospital and county, respectively, by granting a joint motion for summary judgment in the 2% lodging tax.

The December 13 order now returns jurisdiction to Maxwell and she is expected to now re-issue her previous order with now having authority to do so.

Litigation began in January 2023 when incorporators of the town of Hochatown sought out a Dallas, Texas man who they could name as Plaintiff in a lawsuit to challenge the 2% lodging tax passed by voters in November 2022. Michael Cathey, owner of Vonderosa Properties, LLC, allowed his name to be slapped to the lawsuit that was spearheaded and funded by Hochatown incorporators. Cathey, who has attended only one hearing in the case as a result of subpoena, argues that the Board of County Commissioners failed to comply with state law by not publishing the ballot in a local newspaper for four straight weeks.

The Commissioners and the hospital joined together in a friendly suit to challenge Cathey's position and showed at court this summer that the law was substantially complied with and Maxwell agreed. She ultimately granted summary judgment.

Dian Jordan, Hochatowns mayor and largest drivers to incorporate the town of just over 200 people, admitted soon after the litigation was filed she was behind it. Jordan said that Hochatown was a supporter of the hospital but would not be collecting the new lodging tax. Jordan said she felt the passage of the lodging tax was unfair to her town despite the fact the vote passed by over 65% of the vote, passing in all 30 precincts, including Hochatown.

"The voters did not vote for a new tax to build a hospital," Jordan said this summer, "they voted for Hoachatown to pay for it." Jordan believes her town is double-taxed.

Under Oklahoma law, a lodging tax cannot be assessed on an incorporated town, like Idabel, Broken Bow or Wright City, if a lodging tax exists. Hochatown was not incorporated when the vote passed in 2022, so therefore, the taxation against cabins in the area was legal.

Jordan and the towns newly formed leadership passed their own lodging tax after incorporation. Jordan seems to argue that even if found to be legal, the tax cannot apply to her small town because now, the town has its own.

The 2% lodging tax was to fund a new hospital. Land was purchased earlier this year at the Idabel airport to host the new hospital. With the litigation, the start of the project has been stalled.

Jordan, who met with hospital CEO Brian Whitfield this summer on several occasions, said even if the hospital is successful in winning the tax litigation, she has "at least four other lawsuits [she] can file." It is estimated the litigation thus far has cost the hospital and tax payers over a half-million dollars.

The lodging tax would have came from tourist and not Jordan's coffers in Hochatown. Meanwhile, the hospital and county residents continue to deal with aging infrastructure and equipment at the current hospital while the case progresses through the courts. While it is expected Maxwell will re-issue her order soon, the case will go back to the states highest court on appeal - a process that could take two more years.