Greater Poughkeepsie Library Dist. v. Town of Poughkeepsie

• Decision Date: 08 July 1993
• Citation: 601 N.Y.S.2d 94,618 N.E.2d 127,81 N.Y.2d 574
• Parties: , 618 N.E.2d 127 GREATER POUGHKEEPSIE LIBRARY DISTRICT et al., Respondents, v. TOWN OF POUGHKEEPSIE, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 94

601 N.Y.S.2d 94

81 N.Y.2d 574, 618 N.E.2d 127

GREATER POUGHKEEPSIE LIBRARY DISTRICT et al., Respondents, v. TOWN OF POUGHKEEPSIE, Appellant.

Court of Appeals of New York.

July 8, 1993.

[81 N.Y.2d 575] [618 N.E.2d 128] Corbally, Gartland & Rappleyea, Poughkeepsie (Jon Holden Adams, of counsel), and Robert Cohen, Ballston Lake, for appellant.

Thomas P. Halley, Poughkeepsie, for Greater Poughkeepsie Library District, respondent.

[81 N.Y.2d 576] Richard I. Cantor, Corp. Counsel, for City of Poughkeepsie, respondent.

OPINION OF THE COURT

KAYE, Chief Judge.

Under a statute creating the Greater Poughkeepsie Library District (L.1987, ch. 524), the City of Poughkeepsie and the Town of Poughkeepsie must levy a tax to fund the Library District in an amount fixed by the trustees of the Library District. The Town of Poughkeepsie contends that the statute violates the State Constitution because it delegates the power to tax in violation of articles III, IX and XVI; fails to contain a Home Rule message as required by article IX, § 2(b)(2); and fails to require equalized values among the two assessing units that make up the Library District (see, art. XVI, § 2). Both Supreme Court and the Appellate Division, 187 A.D.2d 703, 590 N.Y.S.2d 285, held the statute constitutional. We disagree, concluding that the statute improperly delegates the power to tax.

The Statute

Established by special act as a joint endeavor of the Town of Poughkeepsie and the City of Poughkeepsie, the Library District has all the powers and duties of public libraries set forth in the Education Law, and additionally has authority to fix the amount of tax revenue to be raised and appropriated by the Town to fund the library. The Library District is governed by a board of 11 trustees, 7 appointed by the Town Supervisor, 4 by the City Mayor. The trustees set the budget, as well as the sources for funding the budget, which include appropriations from the City and Town (L.1987, ch. 524, § 3).

A complicated formula determines the amounts to be appropriated from the City and Town. The trustees begin by dividing their budget into two portions--an amount to be funded by real property taxes in the City and Town, and an amount to be funded by other sources. Initially, the amount that the trustees determine should be funded by City and Town taxes is divided between the City and Town in proportion to the assessed valuation of property in the Library District. If 75% of the District's assessed valuation is within the Town, for example, the Town will be responsible for 75% of the library budget allocated to the City and Town, with the City responsible for 25%. This is the "apportionment formula."

Once the City's allocated amount exceeds $300,000, for that year and thereafter the City and Town are responsible for appropriating the amount of the budget allocated by the trustees according to the apportionment formula (L.1987, ch. 524, §§ 3-4). Thus, continuing the example, the Town would have to appropriate 75% of the amount allocated and the City 25%. In this event, however, the library budget is subject to approval by the City and Town legislative bodies, and if either fails to approve, the preceding year's budget is used. To date, the City's allocated amount has not exceeded $300,000.

If the City's allocated amount is $300,000 or less--which has thus far been the case-- the apportionment formula is not used to determine the appropriation. Instead, a formula hypothesizing contributions of 60% from the Town and City and 40% from other sources is used. Under that formula, the City is responsible for appropriating $300,000 and the Town 60% of the over-all library budget minus $300,000. If the amounts obtained from other sources exceed 40% of the over-all budget, the amount the Town must actually contribute is correspondingly reduced. No approvals are required and neither the Town nor City can contest the amount to be appropriated (L.1987, ch. 524, § 3).

The Controversy

In 1991 the library trustees set the budget at $1,448,570, determining that $612,570 would be raised from other sources and $836,000 would be obtained from the City and Town. With the Town having 71.23% of the total assessed value in the Library District, under the apportionment formula the Town would have been responsible for $595,482.80 ($836,000 X .7123) and the City $240,517.20 ($836,000 X .2877). Since the amount allocable to the City was less than $300,000, however, the apportionment formula was inapplicable. Instead, the City was responsible for $300,000 and the Town for a maximum of $569,142--obtained by subtracting $300,000 from $869,142 (60% of $1,448,570). Since the trustees needed a total of $836,000 from the Town and City and the City was responsible for the set amount of $300,000, the Town was ultimately responsible for $536,000.

The Town refused to pay that amount, claiming it could raise only $423,309. However, the statute provides no authority for the Town to review--let alone reduce--its designated contribution. The Library District brought this action to compel the Town to pay the difference, and the City intervened. As an affirmative defense, the Town challenged the statutory method of determining its required appropriation, contending it is unconstitutional.

Analysis

Analysis of this statutory scheme requires two steps. First, we must determine whether the statute delegates taxing power to the Library District, or merely delegates the administration of a tax fixed by the Legislature. Delegation of purely administrative functions is constitutionally permissible (Matter of Levine v. Whalen, 39 N.Y.2d 510, 515, 384 N.Y.S.2d 721, 349 N.E.2d 820). If, however, the power to tax has been delegated to the Library District, we must then decide whether such delegation falls within constitutional limitations.

I.

Under the statutory scheme as it has operated to date, the Library District sets the library budget with no input from the Town or the City. Under that budget, the City is responsible for a fixed sum--$300,000. Thus, the Legislature has set the amount and rate for the City. However, the amount that must be raised by the Town fluctuates with the total budget, the amount to be obtained from other sources, and the relative assessed values of property within the District. The Library District controls two of those variables: it alone sets the budget, and it alone estimates the amount of funds available from other sources. Therefore, although a complicated formula determines the actual amount the Town must raise, the simple fact is that the library trustees control the end result and thus effectively set the tax rate for the Town.

Respondents urge that the Library District is not exercising taxing powers because the amount the Town will have to pay--and therefore the Town's effective tax rate--is capped by the statutory formula. It is argued that the Library District may constitutionally be given the discretion to set the tax rate so long as it remains below the cap (see, Gautier v. Ditmar, 204 N.Y. 20, 30, 97 N.E. 464 [where Legislature fixed maximum interest on tax liens at 12% purchasers' acceptance of lower rates of interest is permissible].

This argument does not withstand analysis. First, Gautier addressed the interest rate on unpaid taxes, not the tax rate itself. Second, unlike Gautier, here there is no fixed cap on the tax rate. Instead, the "cap" varies depending on figures set by the Library District. By controlling its estimated expenses and alternative sources, the Library District can effectively fix the Town's tax rate. Thus, there is a delegation of taxing power to the Library District.

II.

The power to tax, of course, lies solely with the Legislature (N.Y. Const., art. III, § 1; art. XVI, § 1; Sonmax, Inc. v. City of New York, 43 N.Y.2d 253, 257, 401 N.Y.S.2d 173, 372 N.E.2d 9; Matter of United States Steel Corp. v. Gerosa, 7 N.Y.2d 454, 459, 199 N.Y.S.2d 475, 166 N.E.2d 489). This power is inherent in our form of government and justified by legislative accountability to the electorate. "The People have conferred upon their legislative body an unlimited power of taxation * * * and if legislators abuse their power in enacting some new plan of taxation, or act unwisely in imposing some new form of tax, it is to the People that they are answerable" (People ex rel. Eisman v. Ronner, 185 N.Y. 285, 291-292, 77 N.E. 1061). "In imposing a tax the legislature acts upon its constituents. This is in general a sufficient security against erroneous and oppressive taxation." (M'Culloch v. Maryland, 4 Wheat [17 U.S.] 316, 428, 4 L.Ed. 579.)

The taxing power may be delegated to legislative bodies of municipalities and quasi-municipal corporations (Foss v. City of Rochester, 65 N.Y.2d 247, 253, 491 N.Y.S.2d 128, 480 N.E.2d 717; Matter of United States Steel Corp. v. Gerosa, 7 N.Y.2d 454, 459, 199 N.Y.S.2d 475, 166 N.E.2d 489, supra; Gautier v. Ditmar, 204 N.Y. at 27, 97 N.E. 464; see also, 16 McQuillin, Municipal Corporations § 44.07, at 26 [3d ed.]. Such delegation preserves legislative accountability since "the municipalities or political divisions * * * are through the local authorities representatives of the people and participants in the government of the state" (Gautier v. Ditmar, 204 N.Y. at 27, 97 N.E. 464). To prevent local usurpation of the taxing power, such delegation must specify the types of taxes which may be imposed and provide for some type of administrative or judicial review (N.Y. Const., art. XVI, § 1; 1938 Const. Convention, 2 Revised Record, at 747; vol. 3, at 2439-2440).

The power to tax may not, however, be delegated to administrative agencies or other governmental departments (Gautier v. Ditmar, 204 N.Y. at 27-28, 97 N.E. 464; Matter of Brooklyn Children's Aid Socy. v. Prendergast, 166 App.Div. 852, 861, 151 N.Y.S. 720, affd. 215 N.Y. 705, 109 N.E. 1066). "[I]t would be incompetent for the legislature to leave to a state officer or...