Martin v. Ellis

• Decision Date: 16 October 1978
• Docket Number: No. 33678,33678
• Citation: 249 S.E.2d 23,242 Ga. 340
• Parties: MARTIN et al. v. ELLIS et al.
• Court: Georgia Supreme Court

Page 23

249 S.E.2d 23

242 Ga. 340

MARTIN et al. v. ELLIS et al.

No. 33678.

Supreme Court of Georgia.

Argued June 12, 1978.

Decided Oct. 3, 1978.

Rehearing Denied Oct. 16, 1978.

Powell, Goldstein, Frazer & Murphy, Nicholas P. Chilivis, Philip J. Marzetti, Atlanta, McCamy, Minor, Phillips & Tuggle, Daniel T. Strain, Jr., John T. Minor, III, Dalton, for appellants.

Arthur K. Bolton, Atty. Gen., James C. Pratt, Asst. Atty. Gen., Mitchell, Mitchell, Coppedge, Boyett, Wester & Bates, Dalton, for appellees.

PER CURIAM.

This appeal considers the constitutionality of the local option sales tax Act (Code Ann. § 92-3447a.1) enacted in 1975. The trial court, in a suit brought by appellees-taxpayers, ruled the Act invalid in part as a violation of the state constitutional requirement that "All taxation shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax." Code Ann. § 2-4603. We agree with the trial court that the differential rollback provision is invalid and that when the invalid part of the Act is stricken, the remainder properly effectuates the intent of the legislature.

1. The scheme of the Act allows a county, by referendum, to impose a one percent sales tax. The tax proceeds are divided among the county and all incorporated municipalities lying wholly or partially therein, on a population basis.

Subsection (i) of the Act reads as follows: "In order to provide governmental services more effectively and economically, in any county where the tax authorized by this section is levied, there is hereby created, pursuant to Article IX, Section III, Paragraph I of the Constitution of Georgia (see Const.1945, § 2-7901a), a special district of taxation for services for the calendar year following the initial year in which such tax is levied, and thereafter as determined by the governing authority of such county as authorized by law, and which shall exist only in those portions of such county which are outside the boundaries of any municipality, as herein defined, within such county, regardless whether such portions lie within or without any other special tax districts created by law."

In the second and subsequent years, the Act provides in subsection (j) for a rollback of ad valorem taxes within the special district only (i. e., the part of the county outside any municipality). Subsection (k) provides for a rollback of municipal ad valorem taxes by any municipality receiving these sales tax proceeds, for the second and subsequent years. Ga.Laws 1978, p. 1696.

The main controversy centers in subsection (j) which is conceded to authorize a county to charge county residents dwelling outside any municipality one rate for services, while charging those dwelling inside municipalities a wholly different rate for identical services.

Whitfield County commenced levy of the one percent local option tax on April 1, 1976. The appellees-taxpayers brought suit as members of the class of taxpayers of Whitfield County residing inside the City of Dalton, alleging that as a result of implementation of the "differential rollback" provision of subsection (j), the tangible property outside Dalton is not being taxed for county operations, while such property inside Dalton is taxed at 12 mills. They asserted a violation of uniformity and prayed for an injunction against further nonuniform collection of taxes. The motion of W. E. Strickland, as State Revenue Commissioner of Georgia, to intervene as a party, was granted without objection.

The Superior Court of Whitfield County decided the case upon arguments of counsel for all parties. No evidence, either oral or documentary, was introduced.

The well-reasoned order of the Whitfield Superior Court (Judge Sam P. Burtz) reads in part as follows: ". . . Defendants' motion to dismiss upon various preliminary procedural grounds, including failure to verify the complaint, estoppel, and mootness, is denied, it appearing that these grounds either do not go to the action as a whole, or are without merit.

"Counsel for defendants argue, both orally and by brief, that plaintiffs should be seeking declaratory relief as to the constitutionality of the local option sales tax act. The Court agrees and is of the opinion that the provisions of Ga.Code Ann. 110-1101, the pleadings, and the facts and circumstances shown authorize and the ends of justice require that the Court declare the rights and relations of the parties in this case. Harper v. Burgess, 225 Ga. 420 (, 169 S.E.2d 297) (1969); Aldridge v. Federal Land Bank of Columbia, 203 Ga. 285 (, 46 S.E.2d 578) (1948); Carter v. Burson, 230 Ga. 511 (, 198 S.E.2d 151) (1973); Ga.Code Ann. 37-901; 37-105;

"Proceeding to the constitutional question, it is the duty of this Court, under Article I, Section I, Paragraph VIII of the Constitution of 1976 (Ga.Code Ann. § 2-208), to declare that legislative acts in violation of the Constitution are void. The relevant constitutional authority is Article VII, Section I, Paragraph III of the Constitution of 1976 (Ga.Code Ann. § 2-4603) which mandates uniformity of taxation as follows: 'All taxation shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax.'

"The conflict between this constitutional command, if it is applicable, and the differential rollback established by subsections (i) and (j) of the local option sales tax act could not be clearer. The Constitution requires uniformity, and the statute provides for non-uniformity.

"Defendants and the State Revenue Commissioner argue that the uniformity requirement is inapplicable here, and that the statute should be measured against Article IX, Section IV, Paragraph II of the Constitution of 1976 (Ga.Code Ann. § 2-6102), which authorizes the division of a taxing jurisdiction into special taxing districts, and the levy of special taxes within the districts. The question, therefore, is whether this constitutional provision authorizes the differential tax rollback mandated by the local option sales tax act: if so, then the differential rollback is valid; if not, then the differential rollback is void.

"Georgia Code Ann. § 2-6102 provides in pertinent part as follows: 'Any county, municipality and any combination thereof, or the General Assembly, may provide for the creation of special districts within which the above services, or any portion thereof, shall be provided, and to determine and fix reasonable charges and fees for such services. In addition, the powers of taxation and assessment may be exercised by any county, municipality or any combination thereof, or within any district, for the above powers and in order to provide such services.'

"This provision contemplates a link between the service provided and the method of financing the service. Thus, the 'charges and fees' are to be made 'for such services' and not in the abstract. Similarly, the exercise of the power to tax and assess is specifically tied to its purpose: 'in order to provide such services.' Accordingly, it is proper to levy a tax within a part of a city or county to pay for special service provided to that part and not to the remainder of the city or county.

"In contrast, it is not proper simply to decide that property owners in one part of a city or county will henceforth pay more than their fair share for services provided equally throughout the taxing jurisdiction. The effect of the differential rollback in Whitfield County is that in the current fiscal year residents of the City of Dalton will receive the same county maintenance and operations services as before, and the same as are received by residents of the unincorporated areas of Whitfield County, for an Ad valorem property taxation rate of twelve mills. The residents of the unincorporated areas will likewise receive the same county maintenance and operations services as before, but they will pay no Ad valorem property taxes at all. It is clear to this Court that this could not have been what the framers of the Constitution intended. Accordingly, even giving the act the benefit of every presumption, Franklin v. Harper, 205 Ga. 779 (, 55 S.E.2d 221) (1949), the Court is compelled to the conclusion that the differential rollback of county taxes mandated by subsections (i) and (j) of the local option sales tax act is not authorized by Ga.Code Ann. § 2-6102. It follows that it establishes a nonuniform scheme of taxation in violation of Ga.Code Ann. § 2-4603 and must be declared to be void."

We agree with the foregoing reasoning and conclusions of the trial court. The constitutional authorization of Code § 2-6102 contemplated the creation of special districts for providing services, not special districts for taxing the same services at different rates.

Appellants argue in support of the Act that Art. IX, Sec. V Par. I of the Georgia Constitution of 1966 (Code Ann. § 2-6201) allowing the county to tax for any public "purpose" necessarily means that the trial court may not hold that the power to tax within a specified district must be tied to a specified service. This argument confuses "purposes" with "areas" a distinction which we have previously drawn in Richmond County Business...