Kansas Supreme Court Justices take their seats to hear oral arguments in this file photo from Dec. 10, 2015.

Topeka ? Is it a fee, or is it a tax? That’s the question the Kansas Supreme Court is being asked to decide in a case that could have implications for local governments throughout the state.

In 2010, the city of Mission enacted what it calls a “transportation utility fee,” or TUF, but which many people refer to as the “driveway tax.” The fee is levied against all improved property in the city, based on the number of vehicle trips that property generates. The money is used to pay for street maintenance, bicycle paths and other transportation projects.

Single-family homes are charged a flat $72 per year, but multifamily homes and commercial property are charged more, based on a formula that estimates how many vehicle trips the property generates.

Mission is a city of about 9,500 people in Johnson County. Because it is surrounded on all sides by other cities and the state of Missouri, it cannot grow geographically, and the city argues that it doesn’t have enough revenue from traditional sources like property and sales taxes to adequately maintain its city streets.

The TUF has typically generated nearly $800,000 a year for Mission, money the city says could only be replaced with higher property taxes.

Thomas Murray, an attorney for the city, argued Wednesday that the fee is no different from stormwater utility fees, which most cities in Kansas now charge and which pay the cost of storm drain improvements and the cost of maintaining a federal permit for discharging stormwater into public waterways.

But Heartland Apartment Association Inc., an organization that represents apartment owners and managers in Kansas, challenged the law, arguing it is not a fee, but instead an illegal “excise tax.”

Attorney Mary Jo Shaney said the TUF “falls readily into the classification of a tax” because it is used to pay for “a classic, traditional function of government.”

Under Kansas law, cities and counties have only limited power to levy excise taxes, which are essentially taxes on anything other than real estate value or retail sales. The only excise taxes they can levy are utility franchise fees, occupation taxes and license fees, development taxes that were in place before 2006, and excise taxes on tickets sold for concerts or other events at municipally owned facilities.

The Kansas Association of Realtors and the National Federation of Independent Businesses filed friend of the court briefs in the case supporting the apartment association’s challenge.

The city argued that the TUF is not an excise tax, but rather a user fee that is based on the amount of benefit a property owner derives from the city’s transportation network.

A Johnson County judge ruled in the city’s favor in 2013, saying the TUF was not an excise tax.

But the Kansas Court of Appeals last year reversed that decision, saying, “There is, at most, only a tangential relationship between the amount charged for the street maintenance of the streets abutting the developed property and the property owner’s actual use of those city streets.”

Mission City Administrator Laura Smith said that because of last year’s Court of Appeals decision, the city’s governing body elected not to levy the fee for 2016 or 2017 while it waits for the Supreme Court to resolve the issue.

Erik Sartorius, executive director of the League of Kansas Municipalities, said he is not aware of any other city in Kansas that levies a transportation fee similar to Mission’s, but he said local governments throughout the state are watching the Mission case closely.

Brian Kidney, finance director for the city of Lawrence, said Lawrence currently does not levy any fees similar to Mission’s driveway tax, but he and local government officials in other cities have been following the case with interest because if the Supreme Court rules in favor of Mission, it could open up a new source of revenue for local governments, one that other cities may want to tap into.