Mountain States Tel. & Tel. Co. v. City of Colorado Springs, 27513

• Decision Date: 27 December 1977
• Docket Number: No. 27513,27513
• Citation: 572 P.2d 834,194 Colo. 404
• Parties: MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, Plaintiff-Appellee, v. CITY OF COLORADO SPRINGS, Defendant-Appellant.
• Court: Colorado Supreme Court

Page 834

572 P.2d 834

194 Colo. 404

MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, Plaintiff-Appellee, v. CITY OF COLORADO SPRINGS, Defendant-Appellant.

No. 27513.

Supreme Court of Colorado, En Banc.

Dec. 27, 1977.

Spurgeon, Haney & Howbert, W. Allen Spurgeon, Colorado Springs, for plaintiff-appellee.

Gordon D. Hinds, City Atty., Tad S. Foster, Deputy City Atty., Colorado Springs, for defendant-appellant.

LEE, Justice.

The city of Colorado Springs appeals from a decision of the El Paso County District Court declaring its Ordinance No. 3590 to be unconstitutional. We affirm the trial court's judgment.

On December 26, 1967, the city of Colorado Springs enacted Ordinance No. 3590, entitled: "An Ordinance Imposing a Utility Occupation Tax on Certain Public Utilities Operating Within the City of Colorado Springs; and to Provide Penalties Thereto." The tax was assessed at three percent of the "gross revenues received by such public utility from its operations within the City." As applied to appellee, it was comprised of three percent of "revenues received from local exchange telephone service."

Pursuant to this ordinance, the city has been collecting the so-called "occupation tax" from appellee Mountain States Telephone and Telegraph Company since 1968. On May 10, 1976, this court decided the case of Board of Trustees of the Town of Minturn v. Foster Lumber, Colo., 548 P.2d 1276. That case held that a municipal ordinance which assessed an "occupation tax" on the basis of total gross revenues derived from sales was, in fact, the levy of an income tax in excess of the powers constitutionally delegated to Colorado municipalities. On June 11, 1976, appellee filed a lawsuit seeking a declaratory judgment that Ordinance No. 3590 was unconstitutional, and thus invalid.

On November 16, 1976, the district court granted appellee's summary judgment motion. The court held that the Minturn decision was controlling and that the "occupation tax" was in reality an invalid income tax imposed by the city on the appellee.

We agree with the trial court that the Minturn decision is dispositive of this case. As in Minturn, appellant has denominated its tax to be an "occupation tax." Similar to the ordinance in Minturn, Ordinance No. 3590 assesses the tax as a percentage of gross revenues derived from services rendered within municipal limits. The difference between Minturn and the instant case is that the municipal ordinance in Minturn applied to sales by construction and building materials businesses, while this municipal ordinance applies to local services by public utilities. In our view, however, this difference in the subjects of the tax does not alter the legal principles involved.

We note that an occupation tax is a tax on the privilege of doing business. See section 31-15-501(1)(c), C.R.S.1973 (1975 Supp.). We reaffirm our statement in Minturn that an occupation tax "does not fluctuate from month to month depending upon...