Baltimore Gas & Elec. Co. v. Board of County Com'rs of Calvert County

• Decision Date: 01 September 1976
• Docket Number: No. 11,11
• Citation: 278 Md. 26,358 A.2d 241
• Parties: BALTIMORE GAS AND ELECTRIC COMPANY v. BOARD OF COUNTY COMMISSIONERS OF CALVERT COUNTY et al. ,
• Court: Maryland Court of Appeals

Page 26

278 Md. 26

358 A.2d 241

BALTIMORE GAS AND ELECTRIC COMPANY v. BOARD OF COUNTY COMMISSIONERS OF CALVERT COUNTY et al.

No. 11, Sept. Term, 1976.

Court of Appeals of Maryland.

June 1, 1976.

James A. Biddison, Jr., Baltimore (Paul W. Davis, Baltimore, and Larry D. Lamson, Prince Frederick, on the brief), for appellant.

Eugene E. Pitrof, Prince Frederick (J. Frank Boyd and Stephen Clagett, Prince Frederick, on the brief), for appellees.

Argued before MURPHY, C. J., and SMITH, DIGGES, LEVINE and ELDRIDGE, JJ.

LEVINE, Judge.

The question presented for decision in this case is the validity of a county ordinance allowing discounts in the real property tax scaled according to the size of the tax bill, which, it is argued, is violative of the laws and Constitution of this State and the Federal Constitution. The Circuit Court for Calvert County (Bowen, J.) upheld the ordinance and because of the importance of the issues being raised, we granted certiorari prior to consideration by the Court of Special Appeals and advanced the case for argument. We reverse.

So free of dispute are the relevant facts that the parties were able to arrive at a comprehensive stipulation which made it unnecessary to present any evidence in the circuit court. We shall make liberal use of the stipulation in reciting the facts.

Purportedly acting pursuant to Maryland Code (1957, 1975 Repl.Vol.) Art. 81, § 48, ¹ the Board of County Commissioners for Calvert County (the county commissioners), appellee herein, enacted in December 1975, Resolution No. 51-75, entitled: 'An Ordinance Establishing a Graduated Scale of Discounts for Payment of County, Real Estate Taxes Prior to October 1.' The ordinance established for the 1977 fiscal year a 40 percent discount on county real estate taxes up to and including the amount of $1,000 if paid by August 1, 30 percent if paid by August 15, 20 percent if paid by September 1, and 10 percent if paid by September 15; a 20 percent discount on such taxes in excess of $1,000 up to and including $10,000 if paid by August 1, 15 percent if paid by August 15, 10 percent if paid by September 1, and 5 percent if paid by September 15; and a 5 percent discount on all such taxes above $10,000 if paid by August 1, 4 percent if paid by August 15, 3 percent if paid by September 1, and 2 percent if paid by September 15.

The county commissioners, though professing in the ordinance 'to encourage the payment of County real estate taxes prior to October 1 to enable the county to use and/or invest the taxes collected for the benefit of the County,' concede that the true purpose of the scheme of graduated discounts allowed in the ordinance was to alleviate the property tax burden on those with moderate or lower incomes, who would be apt to own residential or agricultural property assessed at significantly lower values than would be large commercial or industrial properties.

Appellant Baltimore Gas & Electric Co. (BG&E) is the owner of a 1,135 acre tract of land in Calvert County on which has been constructed the Calvert Cliffs Nuclear Generating Station Unit No. 1 at a cost of $430 million, and on which is being constructed Unit No. 2 at an estimated cost of $325 million to be completed in 1977. For fiscal year 1976, BG&E paid Calvert County $6,852,873 in real estate taxes, which was 63 percent of the $10,952,739 levied for all such taxes in that year, thereby conferring upon BG&E the distinction of being the largest single real estate taxpayer in the county.

In fiscal year 1976, there were 18,634 real property taxpayers in Calvert County of whom 18,443, constituting 98.97 percent, paid tax bills of $1,000 or less and, assuming the same property tax bills, would therefore be eligible under the ordinance to receive the maximum 40 percent reduction in those total bills in fiscal year 1977. A total of 184 taxpayers, or .99 percent, paid tax bills ranging between $1,000 and $10,000 and would be eligible to receive as a maximum only a 20 percent discount on the amount over $1,000. BG&E was one of seven taxpayers, representing .04 percent, who paid tax bills exceeding $10,000 and would qualify only for a maximum 5 percent discount on amounts over $10,000.

Pursuant to Art. 81, § 48(b), Calvert County allowed all taxpayers during the fiscal years 1957 to 1963 a uniform and equal two percent discount on all real property taxes based solely on the time of payment. During the fiscal years 1964 to 1975, the county allowed no discount for real property taxes. At the time of enactment of the ordinance in question here, 19 political subdivisions in Maryland were providing discounts, ranging up to five percent, based in each instance on promptness of payment. Prior to the enactment of the Calvert County ordinance, no political subdivision in Maryland had allowed discounts in the real property tax which varied according to the size of the tax bill.

It was further established by the stipulation that no investment lawfully available to the county commissioners could be expected to yield Calvert County a 40 percent return in 60 days, more than 240 percent annually, which would be necessary to offset the benefit extended to those eligible for the 40 percent discount. Moreover, no study had been conducted prior to enactment of the ordinance which related promptness in the payment of tax bills to their size, or which showed any significant changes in promptness of payment at the level of either $1,000 or $10,000. It was also conceded that the county commissioners could have produced the same real property tax revenue as they would have raised under the ordinance, with taxpayers taking advantage of the maximum discounts thereunder, by simply decreasing the county real property tax rate of $2.55 per $100 to $2.10 per $100 of assessed valuation without allowing any discounts. Finally, the stipulation established the obvious, that the taxpayers who would benefit from the 40 percent discount rate are individual property owners in the agricultural or residential category, while those paying more than $10,000 and eligible only for the maximum five percent discount on the excess are in the commercial bracket.

At the conclusion of the hearing on BG&E's petition for declaratory judgment and injunctive relief, the court ruled that the ordinance violated neither the Federal nor the State Constitutions, and that the county commissioners had not exceeded the statutory authority conferred upon them to grant discounts in the real property tax. As it did below, BG&E contends that the discount ordinance exceeds the statutory authority conferred by the General Assembly, and also that it violates both the uniformity requirement of Art. 15 of the Maryland Declaration of Rights and the Equal Protection Clause of the Fourteenth Amendment. Since we agree that the discounts established under the ordinance are not authorized by statute, it is unnecessary for us to reach the constitutional issues.

The contention by BG&E that the ordinance lacks statutory authority rests on the argument that the Legislature intended tax discounts to be established solely for the purpose of inducing prompt payment of property taxes, and that the discounts allowed here, rather than effectuating that lawful objective, are merely a device aimed at redistributing the tax burden in circumvention of the limitations imposed by the General Assembly.

Whether the discounts being challenged are permitted by law must be determined in the first instance by a careful examination of the statute on which they ae founded, since the...