School Dist. of City of East Grand Rapids, Kent County v. Kent County Tax Allocation Bd.
Decision Date | 22 December 1982 |
Docket Number | Docket No. 63962,No. 1,1 |
Parties | The SCHOOL DISTRICT OF the CITY OF EAST GRAND RAPIDS, KENT COUNTY, Plaintiff-Appellee, v. KENT COUNTY TAX ALLOCATION BOARD, Defendant-Appellant. Calendar415 Mich. 381, 330 N.W.2d 7, 9 Ed. Law Rep. 663 |
Court | Michigan Supreme Court |
Varnum, Riddering, Wierengo & Christenson by Eugene Alkema, Randall W. Kraker, Grand Rapids, for plaintiff-appellee.
Dickinson, Wright, McKean, Cudlip & Moon by John R. Axe, James A. Samborn, Mark A. Kellman, Detroit, for defendant-appellant.
This is a taxation case.
We are asked to invalidate 1933 P.A. 162, M.C.L. Sec. 211.251 et seq.; M.S.A. Sec. 15.511 et seq., which authorizes so-called "variable millage", as a violation of the uniformity of taxation provision of Const. 1963, art. 9, Sec. 3.
We hold that act 162 is unconstitutional.
Plaintiff, The School District of the City of East Grand Rapids, encompasses both the entire City of East Grand Rapids and a portion of Grand Rapids Township. It is an independent taxing unit authorized to levy ad valorem property taxes on property located within the school district boundaries.
Article 9, Sec. 6 of the Michigan Constitution of 1963 limits the rate of taxation which may be levied against property to 15 mills "on each dollar of the assessed valuation of property as finally equalized", and exempts from this limitation taxes imposed upon property in communities for which different tax limitations are provided by local charter or general law. 1 At the time of the events involved in this case, the City of East Grand Rapids, as a municipal corporation, was exempt from the 15-mill limitation and the Township of Grand Rapids was not.
The defendant, Kent County Tax Allocation Board, is a creature of statute, M.C.L. Sec. 211.205; M.S.A. Sec. 7.65, which is obligated to examine the budgets of the several taxing authorities in Kent County, including the plaintiff school district, and to determine the tax rates that may be imposed by each taxing unit in the county in order that each might meet its budget requirements. If the board determines that the total millage requested by all of the county taxing units, cumulatively, exceeds the 15-mill limitation of Const. 1963, art. 9, Sec. 6, the board is required to allocate the 15 mills among the various taxing units. M.C.L. Sec. 211.211; M.S.A. Sec. 7.71.
Stated differently, if the budget submissions of the county, a school district, a community college district, an intermediate school district, and a township other than a charter township, reflect a cumulative need for a tax rate which in the aggregate exceeds 15 mills, the defendant board is required to decide the tax rate or millage amount that it will permit each of the taxing units to impose, so that the total of the tax rates to be imposed by all the affected units will not exceed 15 mills.
Taxes levied by a municipal corporation, because of the exemption provision of the second paragraph of Const. 1963, art. 9, Sec. 6, 2 are not subject to the 15-mill limitation and may be imposed in addition to those taxes levied against city property by other taxing units in the county. See M.C.L. Sec. 211.203(2); M.S.A. Sec. 7.63(2).
Property taxes imposed by a township, in this case Grand Rapids Township, do not enjoy this exemption, however, and must be imposed at a rate which, together with all other taxes levied on the same property, will not exceed 15 mills. The result, in this case, is an excess taxing capability in the City of East Grand Rapids as compared with adjacent Grand Rapids Township.
Act 162 was enacted to enable a school district, such as the plaintiff, which embraces a city and a township, or part of each, to take advantage of an incorporated municipality's excess taxing capability and exemption from the 15-mill limitation by imposing a higher tax rate on city property than upon non-city property. Specifically, Sec. 2 of act 162 authorized the defendant to establish a "regular tax rate" to be levied against all of the property located within the school district, and a maximum additional tax rate, not to exceed 15 mills, to be assessed against all property lying within that portion of the school district which is also encompassed within the city limits of East Grand Rapids. 3 Such a school millage differential within a single school district is commonly referred to as "variable millage". Pursuant to act 162, the board has regularly authorized variable millage within the plaintiff school district.
For a number of years prior to 1979, the defendant board regularly allocated tax rates for levies against Grand Rapids Township and the City of East Grand Rapids as follows:
Township Property City Property ----------------------------------- ----------------------------------- Kent County Taxes 4.8 mills Kent County Taxes 4.8 mills Kent County Intermediate Kent County Intermediate School District Taxes .1 mills School District Taxes .1 mills Township Taxes 1.0 mills --------- --------- Sub-total 5.9 mills Sub-total 4.9 mills
There being no obligation to include the East Grand Rapids city tax rate in the 15-mill ceiling formula, the board was free to authorize an extra mill, or 10.1 mills, for school district taxes upon property in the City of East Grand Rapids. As a result, the board historically authorized this so-called "variable millage" of 9.1 mills upon property in Grand Rapids Township and 10.1 mills on property in the City of East Grand Rapids for the same school district levy.
In 1979, contrary to its historical practice of allocating variable millage, and upon the advice of its counsel, the defendant board announced that it would no longer authorize variable millage within any school district in Kent County because the board believed that act 162, which authorized the practice, was unconstitutional. Plaintiff then commenced this action in the Kent Circuit Court, praying for a writ of mandamus to compel the defendant to continue to allocate millage pursuant to act 162. 4 After a hearing, an order was issued directing the defendant to make the findings and determinations required by act 162. The Court of Appeals affirmed in a per curiam opinion, 5 declaring that it was bound by this Court's decision in Thoman v. Lansing, 315 Mich. 566, 24 N.W.2d 213 (1946).
Thoman was a 1946 challenge to act 162 in which it was claimed that the statute violated the 1908 Michigan Constitution for the identical reasons for which it is claimed today to violate the 1963 Constitution, and was held to be constitutional. In affirming the judgment of the trial court in this case, the Court of Appeals stated that the controlling constitutional provisions of the 1908 and 1963 Constitutions were "almost identical" and that Thoman, therefore, was decisive. We granted leave to appeal in order to reconsider the Thoman holding.
Because we find the reasoning of that case to be unpersuasive and inaccurate, it is overruled, and we hold that, in authorizing non-uniform general ad valorem taxation of property lying within a single school district, or so-called variable millage, act 162 contravenes Const. 1963, art. 9, Sec. 3, and is invalid.
Before discussing the constitutionality of act 162, however, there are two threshold questions, neither of which is decisive of the controversy, which merit our attention:
1. Whether the issue of the constitutionality of act 162 is moot, and
2. Whether the defendant has standing to assert the invalidity of act 162.
The plaintiff suggests two reasons for the asserted mootness:
1) That the plaintiff has obtained the relief for which it originally filed suit because, after losing its case before the trial court and the Court of Appeals, the defendant board made the requisite findings and determinations and issued an order authorizing variable millage in the East Grand Rapids School District for the 1979 tax year in accordance with the mandate of the trial court, and
2) That Grand Rapids Township became a charter township in 1980 and, as such, like the City of East Grand Rapids, is no longer subject to the 15-mill tax limitation, rendering act 162 and variable millage inapplicable in that township.
While the defendant board concedes the facts of both assertions, it insists that the Court is presented, nevertheless, with a justiciable issue.
We agree with the defendant.
It is correct, of course, that, as a general rule, this Court will not entertain moot issues or decide moot cases. LaBello v. Victory Pattern Shop, Inc., 351 Mich. 598, 88 N.W.2d 288 (1958). A case is moot when it presents "nothing but abstract questions of law which do not rest upon existing facts or rights". Gildemeister v. Lindsay, 212 Mich. 299, 302, 180 N.W. 633 (1920).
Addressing the plaintiff's first asserted ground for mootness, we conclude that the defendant's obedience to the trial court's writ of mandamus in September, 1979, did not moot the controversy between the parties for that year. Defendant is bound by a statutory timetable with respect to its taxing duties each year. 6 This timetable was extended in 1979 to enable the Court of Appeals to pass upon the issue which was before it. That Court issued its decision on October 2, 1979. Further postponement of the board's allocation duties, in the form of a stay from this Court, would necessarily have carried final tax authorization over into a subsequent tax year, wreaking financial havoc in the East Grand Rapids School District. The exigencies of orderly annual tax collection required that the board provide county taxpayers with some notice of the amount of their annual tax levies. We believe that the board's compliance with the trial court's mandate, while pursuing an appeal to this Court, was a...
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