New Orleans v. Assessors' Retirement Fund
| Citation | 986 So.2d 1 |
| Decision Date | 01 October 2007 |
| Docket Number | No. 2005-CA-2548.,2005-CA-2548. |
| Parties | The CITY OF NEW ORLEANS and the Honorable C. Ray Nagin, Mayor, In His Individual Capacity v. The LOUISIANA ASSESSORS' RETIREMENT AND RELIEF FUND and John Kennedy, Treasurer for the State of Louisiana, In His Official Capacity. |
| Court | Supreme Court of Louisiana |
Randy Patrick Zinna, Baton Rouge, and Ellis Paul Adams, Jr., for amicus curiae, District Attorneys' Retirement System.
This matter arises from a challenge to the constitutionality of the statutory funding provisions of the Louisiana Assessors' Retirement Fund ("Fund"). The case is before us on direct appeal from a judgment declaring LSA-R.S. 11:1481, 2004 La. Acts No. 860, unconstitutional on grounds that it improperly distributes revenue sharing funds to an entity not entitled to receive those funds in violation of La. Const. art. VII, § 26(C), and improperly diverts taxes dedicated to other purposes in violation of La. Const. art. VI, §§ 26(B) and 32.
After reviewing the record, the statute, and the constitutional provisions at issue, we find, contrary to the conclusions of the district court, that LSA-R.S. 11:1481 does not require a percentage of taxes dedicated to other purposes to be diverted from those purposes for which the taxes were enacted in order to finance the Fund; therefore, the statute does not violate the principles of La. Const. art. VI, §§ 26(B) and 32.
We also find that the statute does not distribute revenue sharing funds to an entity not entitled to receive those funds, in contravention of La Const. art. VII, § 26(C). Accordingly, we reverse the judgment of the district court granting in part the motions for partial summary judgment declaring LSA-R.S. 11:1481, as amended by Act 860, unconstitutional and denying the Fund's cross-motion for summary judgment, and remand this matter to the district court for further proceedings consistent with the views expressed herein.
This dispute arises out of a demand by the Fund for monies allegedly owed to the Fund by the City of New Orleans ("City"). The dispute is not unfamiliar to this court, having been before us on several occasions in related litigation.1
While the related litigation was pending, the legislature passed 2003 La. Acts No. 1276, LSA-R.S. 11:1481, the statutory funding provision for the Assessors' Retirement Fund. In particular, the Act reduced the City's contribution to the Fund from one percent of its ad valorem taxes to one-quarter of one percent and added an enforcement mechanism whereby the Fund could recover the monies allegedly owed by the City directly from the state treasurer from revenue sharing monies due to the City and/or Parish of Orleans.
On September 23, 2003, the City and Mayor C. Ray Nagin, in his individual capacity, instituted the present proceeding, a "Petition for Declaratory Judgment to Invalidate Louisiana Act No. 1276 and for Injunctive Relief." Filed in the 19th Judicial District Court, the petition seeks a declaratory judgment invalidating Act 1276 and a permanent injunction against enforcement of the statute as amended. The petition alleges that LSA-R.S. 11:1481, as amended by Act 1276, is unconstitutional on several grounds: the amendment is an impermissible special or local law adopted without the required notice; it violates separation of powers, equal protection, and due process; it interferes with the City's Home Rule Charter; it impermissibly diverts revenue from dedicated taxes; and it operates as an unlawful bill of attainder.
Before any substantive proceedings could be conducted in this matter, the legislature enacted 2004 La. Acts No. 860, which again amended LSA-R.S. 11:1481. As amended by Act 860, LSA-R.S. 11:1481 now provides a method for financing the Fund as well as a procedure for obtaining amounts due to the Fund from governmental entities that fail to make their required contributions. Essentially, the statute, as amended, requires the official responsible for tax collection in each parish to deduct and remit to the Fund a certain percentage of the total amount of taxes shown to be collectible by the tax rolls. If that official fails to deduct the required contributions and remit them to the Fund, the statute authorizes the Fund to make amicable demand upon the state treasurer for the amounts due from revenue sharing funds.
The City responded to this legislative action by amending its petition to plead the unconstitutionality of LSA-R.S. 11:1481, as amended by Act 860. The City asserted that although some of the constitutional infirmities of Act 1276 had been cured by Act 860, numerous defects of constitutional dimension remain in the amended statute.
On March 7, 2005, relying on the provisions of LSA-R.S. 11:1481 as amended by Act 860, and in particular, LSA-R.S. 11:1481(1)(a)(ii)(cc), the Fund sent a letter to the state's legislative auditor certifying that the City was delinquent in remitting amounts due the Fund for the 2005 tax year, totaling $1,132,016.15. The legislative auditor confirmed that the amount the Fund claimed to be owed by the City/Parish of Orleans for the 2005 tax year was correct. When the City failed to remit the required sums, the Fund made demand upon the state treasurer for the amounts due from the City's 2005 revenue sharing fund allocation, pursuant to LSA-R.S. 11:1481(1)(a)(iii)(bb). Because of the pending litigation questioning the constitutionality of the statute under which the Fund was proceeding, the state treasurer moved for and was granted leave to deposit the monies claimed by the Fund into the registry of the court. The Fund subsequently moved to withdraw the funds from the court's registry.
In response, the City filed a "Motion for Partial Summary Judgment Declaring Louisiana Act No. 860 Unconstitutional and to Enjoin Future Efforts to Divert the City's Revenue Sharing Funds, and for Distribution of Funds Being Held in Registry of Court." The motion, and its accompanying memorandum, avers that LSA-R.S. 11:1481, as amended by Act 860 is unconstitutional because: it violates the separation of powers doctrine established by the Louisiana Constitution; violates equal protection; violates La. Const. art. VII, § 19, which establishes a ceiling on state ad valorem taxes; is an unconstitutional diversion of dedicated taxes in violation of La. Const. art. VI, §§ 26 and 32; amounts to an unconstitutional seizure of public funds in violation of La. Const. art. XII, § X(C); and unconstitutionally diverts revenue sharing dollars in violation of La. Const. art. VII, § 26.
The Board of Commissioners of the Orleans Levee District ("OLD") intervened in the lawsuit and filed a motion for partial summary judgment, adopting the City's arguments. The Fund filed a cross-motion for summary judgment seeking a declaration that LSA-R.S. 11:1481 is constitutional and that the Fund is entitled to the monies deposited into the registry of the court.
Following a hearing on August 1, 2005, the district court found LSA-R.S. 11:1481, as amended by Act 860, unconstitutional on grounds that it improperly distributes revenue sharing funds in violation of La. Const. art. VII, § 26(C), and improperly diverts taxes dedicated to other purposes in violation of La. Const. art. VI, §§ 26(B) and 32. In reaching its conclusion, the court rejected the City's argument that the statute violates the separation of powers doctrine, constitutes an illegal seizure of public funds, and improperly imposes a state ad valorem tax. As to the City's equal protection argument, the district court found that the City had failed to meet its evidentiary burden.
Consistent with its findings, the court signed a written judgment in which it: (1) granted in part the motions for partial summary judgment filed by the City and OLD, and declared LSA-R.S. 11:1481, as amended by Act 860, unconstitutional as violating La. Const. art. VII, § 26(C), and La. Const. art. VI, §§ 26(B) and 32; (2) denied the Fund's cross-motion for summary judgment; and (3) denied the motions for distribution of the funds being held in the registry of the court. The court designated its judgment as final pursuant to the provisions of LSA-C.C.P. art. 1915(B)(1).
On October 3, 2005, the Fund suspensively appealed the district court judgment to this court, which has jurisdiction over the appeal pursuant to La. Const. art. V, § 5(D) and (F).2
The issue before this court is whether the funding mechanism of the Louisiana Assessors' Retirement Fund set forth in LSA-R.S. 11:1481, as amended by Act 860, violates the provisions of the Louisiana Constitution.
The Fund is one of nine statewide retirement systems. Established by the legislature in 1950,3 the Fund was created to provide retirement allowances and other benefits to the state's assessors, their employees, and employees of the Fund.4
In the late 1980's, the state experienced a cash flow crisis. Louisiana Municipal Association v. State, 04-0227, p. 7 (La.1/19/05), 893 So.2d 809, 818, citing Strickland v. State, Office of Governor, 534 So.2d 956 (La.1988). In order to ensure the...
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