Prodell v. State

• Decision Date: 18 July 1996
• Parties: , 111 Ed. Law Rep. 1314 Albert G. PRODELL et al., Respondents, v. STATE of New York et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 589

645 N.Y.S.2d 589

222 A.D.2d 178, 111 Ed. Law Rep. 1314

Albert G. PRODELL et al., Respondents, v. STATE of New York et al., Appellants.

Supreme Court, Appellate Division,

Third Department.

July 18, 1996.

Dennis C. Vacco, Attorney General (Frank K. Walsh, of counsel), Albany, for State of New York, appellant.

Schapiro & Reich (Perry S. Reich, of counsel), Lindenhurst, for Town of Brookhaven, appellant.

Lewis & Greer (J. Scott Greer, of counsel), Poughkeepsie, for respondents.

Before CARDONA, P.J., and MERCURE, WHITE, CASEY and PETERS, JJ.

CARDONA, Presiding Justice.

Appeal from an order and judgment of the Supreme Court (Kahn, J.), entered August 3, 1995 in Albany County, which, inter alia, declared unconstitutional Suffolk County Tax Act, article I, § 3 as amended by the Laws of 1983 (ch. 1018).

In 1980, the Suffolk County Tax Act (hereinafter the Act) was amended by the State Legislature to require towns in Suffolk County to pay for school tax refunds stemming from court-ordered assessment reductions (see, L. 1980, ch. 837, § 3) (hereinafter the 1980 Amendment). In 1983, the Act was again amended to provide that upon any assessment reductions of nuclear power electrical generating facilities, the school districts in which such facilities were located would be responsible for the school tax refunds (L. 1983, ch. 1018, § 3) (hereinafter the 1983 Amendment). Although couched in general terms, the only school district affected by the 1983 Amendment was plaintiff Shoreham-Wading River Central School District (hereinafter the District) because that is where Suffolk County's only nuclear facility, the Shoreham Nuclear Power Plant (hereinafter Shoreham), is located. In June 1993, Supreme Court reduced Shoreham's assessment and directed Suffolk County to pay a refund of $38,145,885 plus interest to Shoreham's owner, Long Island Lighting Company. Plaintiffs, comprised of Suffolk County real property taxpayers (hereinafter collectively referred to as plaintiff taxpayers) and the District, commenced this action seeking, inter alia, a judgment declaring the 1983 Amendment unconstitutional under the Equal Protection Clauses of both the Federal and State Constitutions (see, U.S. Const. 14th Amend.; N.Y. Const., art. I, § 11). Following joinder, plaintiffs moved for summary judgment and defendants cross-moved for the same relief. ¹ Supreme Court granted plaintiffs' motion as it found that the 1983 Amendment was unconstitutional. Defendants appeal.

We turn first to the claim by defendant Town of Brookhaven (hereinafter the Town) that neither the District nor plaintiff taxpayers have standing to maintain the action. Although this issue was never raised by defendants in their cross motions and was not addressed by Supreme Court, defendants did allege as affirmative defenses in their answers that plaintiff taxpayers lacked standing. These defenses, however, related solely to plaintiff taxpayers and not the District. Therefore, the issue of the District's standing is not properly before this court. As to plaintiff taxpayers' standing, this court specifically determined in Board of Educ., Shoreham-Wading Riv. Cent. School Dist. v. State of New York, 111 A.D.2d 505, 488 N.Y.S.2d 887, appeals dismissed 66 N.Y.2d 603, 498 N.Y.S.2d 1023, 489 N.E.2d 256, 66 N.Y.2d 854, 498 N.Y.S.2d 366, 489 N.E.2d 253, that the concerns of the District's taxpayers over the impact of the 1983 Amendment on them were sufficient to gain them standing to challenge the constitutionality of the statute (id., at 507, 488 N.Y.S.2d 887; see, Boryszewski v. Brydges, 37 N.Y.2d 361, 372 N.Y.S.2d 623, 334 N.E.2d 579). Accordingly, we reject the Town's lack of standing argument.

Turning to the merits, we begin by noting that the challenged statute must be upheld if its classification is rationally related to achieving a legitimate State purpose (see, Western & S. Life Ins. Co. v. State Board of Equalization, 451 U.S. 648, 657, 101 S.Ct. 2070, 2077, 68 L.Ed.2d 514). In addition, taxing statutes enjoy a strong presumption of constitutionality (see, Trump v. Chu, 65 N.Y.2d 20, 25, 489 N.Y.S.2d 455, 478 N.E.2d 971, appeal dismissed 474 U.S. 915, 106 S.Ct. 285, 88 L.Ed.2d 250). The burden is on the one challenging the distinction to show by the "clearest demonstration that [the statute] discriminates invidiously" as well as "to negate every conceivable basis which might support it" (Matter of Cove Hollow Farm v. State of New York Tax Commn., 146 A.D.2d 49, 53, 539 N.Y.S.2d 127; see, Trump v. Chu, supra ). Our scope of review in the field of taxation is narrow and the Legislature is accorded large leeway in making classifications and drawing lines (see, Trump v. Chu, supra, at 25, 489 N.Y.S.2d 455, 478 N.E.2d 971). Keeping these principles in mind, we find that, in this case, plaintiffs have not overcome their burden.

In reaching this conclusion, we look first to the 1983 Amendment's stated purpose, which was to prevent school district taxpayers from reaping unwarranted windfalls. According to the Assembly memorandum in support of the legislation, nuclear-powered electric generating facilities create "tax havens" resulting in lower taxes for residents of school districts which contain them, and taxpayers not located in those tax havens "should not have to pay school tax refunds to the power facilities receiving assessment reductions" (Assembly Mem., Bill Jacket, L. 1983, ch. 1018). In striking down the 1983 Amendment, Supreme Court did not question the statute's purported purpose. Indeed, plaintiffs specifically concede that the Legislature has a legitimate interest in eliminating tax windfalls. What the court found fault with was the method used by the Legislature to achieve its purpose. The court found that "the classification and the goal, the 'means' and the 'end', are wholly disconnected". We disagree.

In the year preceding the enactment of the 1983 Amendment, the record indicates that the District's tax rate was $18.84 per $100 of assessed value while nearby school districts averaged $43.20 per $100 of assessed value. The Legislature specifically found that nuclear power facilities "due to their high value, pay substantial taxes" (Assembly Mem., Bill Jacket, L. 1983, ch. 1018). As such, they created tax havens resulting in lower taxes in the school districts which contained them. Therefore, should a nuclear power facility ultimately be determined to be overassessed and entitled to a refund, the Legislature...