Levy v. Parker
| Decision Date | 28 June 1972 |
| Docket Number | Civ. A. No. 70-243. |
| Citation | 346 F. Supp. 897 |
| Parties | Bernard B. LEVY et al., Plaintiffs, v. Honorable Mrs. Mary Evelyn PARKER, Treasurer of the State of Louisiana, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Louisiana |
Blake G. Arata, Beuker F. Amann, Ernest L. Salatich, David S. Cressy, J. B. Kiefer, New Orleans, La., for plaintiffs.
William Guste, Atty. Gen. of La., Thomas W. McFerrin, Melvin L. Bellar, Kenneth C. DeJean, Asst. Attys. Gen., for defendants.
Before WISDOM, Circuit Judge, and WEST and RUBIN, District Judges.
This taxpayer suit asserts the unconstitutionality of a Louisiana statute and of provisions of the Louisiana constitution that, in conjunction with the assessment practices of Louisiana officials, regulate the distribution of state funds to the various Louisiana parishes for the purpose of reimbursing those parishes for revenues lost as a result of the state exemption of homesteads from ad valorem taxation. The petitioners contend that the distribution with respect to taxpayers owning homes and paying income and alcoholic beverage taxes in Orleans parish is unequal compared to that made with respect to taxpayers owning like property and paying like taxes in other parishes, that the inequality of appropriation lacks any rational basis, and hence denies the plaintiffs equal protection and due process of law. The plaintiffs, suing not only as homeowners but also as taxpayers contributing to the Property Tax Relief Fund from which appropriations are made, seek a declaratory judgment and, in addition, an injunction to prevent the distribution of disproportionately greater sums to those parishes allegedly receiving them.
The suit does not seek to enjoin the assessment or collection of any state tax. It assumes the constitutionality and validity of the Louisiana Homestead Exemption, La.Const. Art. X, § 4, ¶ 9, relieving homes from a portion of the burden of ad valorem property taxes. The challenge relates solely to the Louisiana constitutional provisions, statutes and practices that determine the manner of distributing state funds. Jurisdiction of this suit is conferred by the Civil Rights Act. 28 U.S.C. § 1343(3).
It has been abundantly demonstrated that Louisiana's present plan for distributing the Property Tax Relief Fund denies the plaintiffs the equal protection of the laws. Therefore, we declare unconstitutional the formula by which the state presently disburses PTR funds. Because the plaintiffs are entitled to relief under the Equal Protection Clause, we do not consider the alleged lack of due process.
The suit arises out of a pattern that has developed over a period of 37 years. During the depression of the thirties the ad valorem property tax imposed hardship on property owners, and unemployed working men who owned their own homes were in a particularly serious predicament: unable to find jobs, they could not even raise money to pay property taxes. Many had lost their homes at tax sales, and many more faced this threat.
Pursuant to proposals made by Governor Huey P. Long, the Louisiana Constitution was amended to provide an exemption from state, parish and special ad valorem property taxes for the bona fide homestead of each head of a family, up to an assessment of $2,000. The amendment authorized the legislature to create a fund (the Property Tax Relief Fund) with revenues derived from other state taxes, and to use this fund to reimburse the parochial governments for the sums they lost by reason of the homestead exemption. In 1946 an additional Constitutional Amendment, La. Const. Art. X, § 4, ¶ 9(b), increased the exemption for veterans of World War II to $5,000. The same benefits were later accorded veterans of the Korean War.
At the same time that it proposed the constitutional amendment, the legislature created the PTR Fund, La. Act 54 of 1934, now LSA-R.S. 39:251 et seq., so that the constitutional amendment would be implemented immediately upon its ratification by the voters. The money in the PTR Fund was derived from three taxes: (1) the state income tax, La. Act 21 of 1934, now LSA-R.S. 47:21; (2) the public utility tax, La. Act 13 of 1934, LSA-R.S. 47:1001; and (3) the alcoholic beverage tax, La. Act 15 of 1934, LSA-R.S. 26:241.
Thus, Louisiana adopted a plan of revenue sharing whereby the state collected income and excise taxes at uniform statewide rates and used them to assist local governments. The constitutional provision and the implementing legislation purported to base the measure of revenue sharing on the amount of revenue each local government unit lost by virtue of the homestead exemption.
The Parish of Orleans and the City of New Orleans were treated differently from other local government units in one significant regard: since that City and Parish were coterminous, the reimbursement to Orleans was for losses from both city and parish ad valorem taxes.
There are constitutional or statutory limitations on the total taxes that may be levied by each local government body. The limitations with respect to the Parish of Orleans and the City of New Orleans are set by the Louisiana Constitution. The total millage that may be collected by that City and Parish and any governmental agency providing direct service to it is 40.5 mills.1 In all other parishes, while the general alimony and other general parochial taxes are limited, the tax rate on particular properties can be increased considerably by creating special districts for special governmental purposes, such as schools, roads, drainage, or sewerage. Thus the tax rate is not uniform parishwide in any of Louisiana's other 63 parishes, but a fair idea of the differing parochial rate structures can be gained by examining data compiled in a report made by the nonpartisan Louisiana Public Affairs Research Council, Property Tax Inequities, October, 1971, p. 12, which was received as evidence, pursuant to stipulation. This study shows rates in representative districts in four other parishes to be as follows:
Caddo 42 mills
East Baton Rouge 49 mills
Jefferson 109 mills
Rapides 87 mills
Because the existing tax rates in each parish were unequal when the PTR Fund was created, the amount of reimbursement to each parish was unequal. But each parish could substantially eliminate these differences because it had the right to levy new taxes, and, in actual practice, to increase the ratio of assessment to fair market value, thus increasing its reimbursement from the PTR Fund. As time passed, the inequities were, however, magnified rather than reduced because some parishes with already high tax rates created even more special districts and imposed even higher tax burdens while, at the same time, manipulating assessments on homestead properties.
To prevent further aggravation of the situation, the Louisiana Legislature adopted Act 465 of 1956, which limited use of the PTR Fund to reimbursement for revenues lost by virtue of the exemption of property from taxes authorized on a parishwide basis, taxes on a district basis for certain restricted purposes, and to other taxes only if they had been authorized prior to the effective date of that statute, August 1, 1956. Other limitations were placed on the kinds of taxes enacted after the statute became effective that would be eligible for reimbursement from the Fund.
Inequality exists not only with respect to tax rates. As everyone knows and the state readily admits, property is assessed on different standards in the various parishes.
Louisiana does not have an effective statewide assessment procedure. Property is assessed by parochially elected assessors (save in New Orleans where assessors are elected by districts). There is some review by the Louisiana State Tax Commission, La.Const. Art. X, § 2, La.R.S. 47:1988-90, of the assessment of other types of property but there appears to be no real effort to equalize local assessments of homesteads.
Thus, although Louisiana law requires property to be assessed at its actual cash value, La.R.S. 47:1957, the departure of practice from law is demonstrated by the PAR Study. It revealed that in 1970 parishwide average assessments ranged from 5.7% of market value to 24.5% of market value.2
The homestead exemption program disposes some assessors to assess all homes at approximately the exemption level, be it $2,000 or $5,000, thus creating a high assessment ratio for low priced homes and a lower assessment ratio for high priced homes. Once homeowners in a given parish are satisfied that few homes will be assessed at much above the exemption level, there is a further impetus for the locality to impose a high millage rate because these property taxes will be substantially subsidized by the state at little or no cost to the homeowner.
The combined action of these factors produces an inequitable distribution of state funds. In Jefferson Parish in 1969 urban residential property was assessed on the average at 8.1% of its retail sale value, and the parish as a whole had only 6.4% of the state's total residential assessments. But it received 17.3% of the total PTR Fund in that year. Caddo Parish, with a residential assessment ratio of 25.3%, received only 7.9% of the PTR Fund.
The 1956 statute reduced the likelihood of the creation of further disparities, but it also prevented the parishes that had not created certain types of special tax districts from doing so.
The result of the pattern thus created is that the PTR Fund reimburses Orleans Parish by paying it $96.67 per homestead exemption while, for each such exemption, it pays Jefferson Parish $179.76, East Feliciana $35.15, and St. Bernard Parish $198.20. The distribution to these four parishes illustrates an inequality that applies to almost every parish.
There are no precedents applying the guarantee of equal protection to state revenue...
To continue reading
Request your trial
-
Town of Ball v. Rapides Parish Police Jury
...which its citizens are required to pay nor fight for a portion of those revenues in the state courts.Id. at 46. Cf. Levy v. Parker, 346 F.Supp. 897, 904 (E.D.La.1972) (Sec. 1341 does not bar a suit that does not seek to enjoin the collection of taxes but that challenges only the unequal dis......
-
Tarter v. James
...classification lacks any rational basis. Pennsylvania Bank & Trust Co. v. Hanisek, 426 F.Supp. 410, 416 (W.D.Pa.1977); Levy v. Parker, 346 F.Supp. 897, 902 (E.D.La.1972); Kaelin v. Warden, 334 F.Supp. 602, 608-09 (E.D.Pa.1971). In applying this rational relation test, the state statute must......
-
Rocky Mountain Oil and Gas Ass'n v. State Bd. of Equalization
...never contested this constitutional diminution. As examples, see McCarthy v. Jones, 449 F.Supp. 480 (S.D.Ala.1978); Levy v. Parker, 346 F.Supp. 897 (E.D.La.1972), aff'd 411 U.S. 978, 93 S.Ct. 2266, 36 L.Ed.2d 955 (1973); Thorn v. Jefferson County, Ala., 375 So.2d 780 (1979); Bonnet v. State......
-
Ridgefield Women's Political Caucus, Inc. v. Fossi, Civ. No. B-74-425.
...municipal expenditures. See Northwestern School District v. Pittenger, 397 F.Supp. 975, 979-80 (W.D.Pa.1975); see also Levy v. Parker, 346 F.Supp. 897, 904 (E.D.La.1972), aff'd, 411 U.S. 978, 93 S.Ct. 2266, 36 L.Ed.2d 955 (1973). It is not necessary to determine whether a challenge to publi......