The Capital Area Transit System will receive an additional $10 million in federal funds over the next four years that CATS officials said was made possible by leveraging new property tax revenues.

CATS will receive about $2 million this year, and an additional $2.7 million for the next three years, from the federal Congestion Mitigation and Air Quality improvement program, said Brian Marshall, CATS chief executive officer.

While CATS officials welcomed news of the additional federal funds, they also learned Monday that $470,278 in tax revenue is being withheld from the agency in escrow by the Sheriff’s Office until a lawsuit challenging the constitutionality of the tax is resolved.

Taxpayers, under state law, had until Dec. 31 to contact the Sheriff’s Office to request that their tax payment to CATS be withheld, to ensure they are refunded if the tax is declared unconstitutional by the courts.

Businessman Milton Graugnard alleges in his suit that the CATS tax violates state and federal equal protection laws because only taxpayers in Baton Rouge and Baker city limits pay, while people outside the city limits will also receive service.

A total of 1,190 properties were “paid in protest,” meaning the CATS tax for the property is being withheld from the bus service, said Casey Rayborn Hicks, spokeswoman for the Sheriff’s Office, which collects property taxes.

If the courts ultimately rule the tax is constitutional CATS will receive its money back, with interest.

“Ultimately at the end of the day, we think we are going to get that money because we believe that the tax was constitutional,” said CATS Board Chairman Jared Loftus.

CATS will receive its first property tax payment of $8,898,024 on Tuesday, Hicks said.

The agency expects to receive about $15 million in new tax revenue this year.

Delinquent tax payments will continue to be collected by the Sheriff’s Office and distributed monthly to CATS and other taxing agencies and departments, Hicks said.

Loftus said it appears the protested funds would be covered by the additional federal funds.

“It sounds like that loss will be offset by the news of getting additional money,” he said. “But we’ll plan and move forward accordingly. Where that shortfall will be directed, I can’t specifically say yet.”

In 2012 and 2011, CATS received $800,000 a year from the same CMAQ grant program, so the additional federal funding will represent a more than three-fold increase in 2014.

Louisiana received a total of about $5 million for the CMAQ grant program this year, Marshall said, which means CATS will be receiving a significant share of the state’s total annual allotment.

Since the 10.6-mill property tax was approved by voters in April, the agency has learned it would receive about $6 million less in total revenue than initially expected due to several factors, including the failure of the tax to pass in the city of Zachary and the city-parish’s decision to stop funding its $3 million contribution.

The Attorney General’s Office also said the state’s homestead exemption would apply to the tax, which further reduced the amount of revenue CATS had expected to collect.

Marshall said the new federal funds would help offset many of those losses.

“The beauty of this funding is that where we lost that funding before, this recovers some of that,” Marshall said. “This firmly puts into place the stuff in the operating plan for 2014.”

CATS will provide a local match of $675,000 this year toward the grant initiatives, and $900,000 in the following years, which was part of the requirement to receive the federal funds.

Without the additional tax revenue this year, CATS likely would not have had enough money for the local match portion of the grant, Marshall said.

“It would have been a lot more difficult to achieve,” Marshall said. “The tax made a major impact.”

This year, the grant money is outlined for three initiatives: $1,125,000 will be used to purchase 10 compressed natural gas vans, $375,000 will be spent on upgrades at the maintenance facility on Florida Boulevard, and $525,000 will be used to improve the spread of information about the bus system.

Marshall said the grant will help the system build a campaign to educate the public about upcoming service changes, including route changes and expansions.

The following three years the money is designated more generally for “service expansion,” Marshall said, which gives the agency a rare opportunity to use grant money for operational costs rather than just capital costs.

CATS expects to receive the money in February, Marshall said.

In other matters, CATS board member Thomas Govan confirmed Monday that he has resigned from the board.

Govan served as chair of the board while the agency engaged in two tax elections in recent years — the most recent one being successful. Govan quietly submitted his resignation letter on Jan. 2, effective immediately.

The Metro Council is expected to appoint someone to his seat on March 27.

Govan did not respond to a phone call and email asking why he decided to resign.

“He was with us before and during the tax, and helped see us through that,” Loftus said. “We understand he has some other obligations he has to attend to and we appreciate the work he’s done here.”