City of River Falls v. St. Bridget's Catholic Church of River Falls

• Decision Date: 15 February 1994
• Docket Number: No. 93-2637,93-2637
• Citation: 513 N.W.2d 673,182 Wis.2d 436
• Parties: CITY OF RIVER FALLS,d Plaintiff-Respondent, v. ST. BRIDGET'S CATHOLIC CHURCH OF RIVER FALLS, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 673

513 N.W.2d 673

182 Wis.2d 436

CITY OF RIVER FALLS,d Plaintiff-Respondent, v. ST. BRIDGET'S CATHOLIC CHURCH OF RIVER FALLS, Defendant-Appellant.

No. 93-2637.

Court of Appeals of Wisconsin.

Submitted on Briefs Jan. 31, 1994.

Opinion Released Feb. 15, 1994.

Opinion Filed Feb. 15, 1994.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

MYSE, Judge.

St. Bridget's Catholic Church of River Falls appeals a judgment ordering it to pay to the City of River Falls charges associated with the cost of providing water for public fire protection (PFP) under § 196.03(3)(b), STATS. ¹ The church contends that the trial court erred by concluding that § 196.03(3)(b) imposes a fee and not an unconstitutional tax on otherwise tax exempt properties. The church argues that PFP charges under § 196.03 constitute a tax because the primary purpose and effect of the charge is to raise revenue and not to collect charges for services rendered. The church further argues that allowing the city to assess a PFP charge on the church under § 196.03 results in the church's property being partially exempt and taxed without uniformity, in violation of the uniformity clause of Art. VIII, § 1 of the Wisconsin Constitution. Because we conclude that the PFP charge is a fee and not a tax, we affirm the judgment.

The relevant facts are undisputed. The city provides water services as a public utility under § 196.01, STATS. Among the services the city provides is water production, storage and transmission for public fire protection. Prior to the enactment of § 196.03(3)(b), the city paid for the expenses of providing water for public fire protection out of general property tax revenues under ch. 70, STATS. After § 196.03(3)(b) was enacted, the city elected to collect PFP charges as part of each utility customer's water bill. In 1989, the Public Service Commission approved two methods of apportioning the cost of providing water for public fire protection. One method the PSC approved is to calculate the amount of PFP charge each customer pays according to the customer's property value. The city uses this method to calculate the amount of PFP charge each customer pays. Since January 1990, the city has included a PFP charge in all city water utility bills.

The church sent a letter to the PSC "Requesting a Public Hearing on (PFP) 196.03." The PSC responded, explaining that the city was authorized by § 196.03(3)(b), STATS., and the PSC's 1989 order to assess PFP charges on utility customers according to the customers' property values. The PSC advised the church that concerns about being assessed a PFP charge and the timing of implementation should be raised before the city's common council. The PSC noted that it could not address these issues because the statute expressly granted the city authority to assess utility customers a PFP charge. The PSC also advised the church that it could request a formal review of the city's rates if it desired.

The church refused to pay the PFP charge, claiming that § 196.03(3)(b), STATS., is unconstitutional. The city subsequently filed a complaint with the trial court seeking a declaration that § 196.03(3)(b) is constitutional and a judgment ordering the church to pay the PFP charge. The trial court concluded that § 196.03(3)(b) is constitutional because the PFP charge is a fee, not a tax. The trial court noted that (1) the charge could be imposed by either a public or a private water utility, (2) the city imposed the charge in its capacity as a utility to pay its operational expenses, not as a municipality to collect revenue and (3) nonpayment of the charge does not result in a lien on the customer's property.

Section 196.03(3)(b), STATS., provides in part:

In the case of a public utility furnishing water, the retail charges for the production, storage, transmission, sale and delivery or furnishing of water for public fire protection purposes not included in general service charges shall be included in the water utility bill of each customer of the public utility in a city ... unless the governing body of that city ... adopts a resolution providing that the city ... will pay those charges to the public utility furnishing the water.

Whether a statute is constitutional is a question of law that we determine independently of the trial court. Phillips v. WPC, 167 Wis.2d 205, 224, 482 N.W.2d 121, 128 (Ct.App.1992). Statutes "carry a heavy presumption of constitutionality and the challenger has the burden of proving unconstitutionality beyond a reasonable doubt." Id. (Citation omitted If doubt exists as to a statute's constitutionality, it must be resolved in favor of constitutionality. State ex rel. Hammermill Paper Co. v. LaPlante, 58 Wis.2d 32, 45-46, 205 N.W.2d 784, 792 (1973). Moreover, if any reasonable basis exists upon which a statute may be found constitutional, we must presume the legislature enacted the statute on that basis. Id. at 46, 205 N.W.2d at 793 (citation omitted). A statute should be found constitutional if at all possible. Id. at 47, 205 N.W.2d at 793.

The church contends that § 196.03(3)(b), STATS., is unconstitutional because it authorizes a partial tax on tax-exempt organizations. We therefore must first determine whether the PFP charge is a tax imposed on property owners or a fee assessed for services provided to utility customers.

A tax is an enforcement of proportional contributions from persons and property, imposed by a state or municipality in its governmental capacity for the support of its government and its public needs. Buse v. Smith, 74 Wis.2d 550, 575, 247 N.W.2d 141, 153 (1976). Our supreme court explained the difference between taxes and fees: the primary purpose of a tax is to obtain revenue for the government, while the primary purpose of a fee is to cover the expense of providing a service or of regulation and supervision of certain activities. State v. Jackman, 60 Wis.2d 700, 707, 211 N.W.2d 480, 485 (1973).

The church concedes that a municipality that furnishes water and collects charges for furnishing that water is acting in its proprietary capacity as a public utility. The church also concedes that such a charge is a fee assessed for services rendered to utility...