State v. Hoovler

• Decision Date: 07 August 1996
• Docket Number: No. 79S00-9509-CV-1085,79S00-9509-CV-1085
• Citation: 668 N.E.2d 1229
• Parties: STATE of Indiana and Indiana Department of Revenue, Appellants, (Defendants Below), v. Charles HOOVLER, Patricia Ann Palmer, Jeff Symmes, Linda L. Okos, Martin Okos, and Robert M. Stwalley, III, Individually and as Representatives for and on behalf of all other taxpayers similarly situated, Appellees, (Plaintiffs Below).
• Court: Indiana Supreme Court

Page 1229

668 N.E.2d 1229

STATE of Indiana and Indiana Department of Revenue, Appellants, (Defendants Below), v. Charles HOOVLER, Patricia Ann Palmer, Jeff Symmes, Linda L.

Okos, Martin Okos, and Robert M. Stwalley, III, Individually

and as Representatives for and on behalf of all other

taxpayers similarly situated, Appellees, (Plaintiffs Below).

No. 79S00-9509-CV-1085.

Supreme Court of Indiana.

Aug. 7, 1996.

Rehearing Denied Dec. 31, 1996.

Pamela Carter, Attorney General of Indiana, Jon Laramore, Chief Counsel, Beth H. Henkel, Deputy Attorney General, Indianapolis, for Appellants.

Thomas J. Herr, Linda Nearing, Truitt & Herr, Lafayette, for Appellees.

Arthur P. Kalleres, Thomas K. Downs, Michael J. Lewinski, Ice, Miller, Donadio & Ryan, Indianapolis, for Amici Curiae, The City of Lafayette, The City of West Lafayette and Tippecanoe County.

Renee R. McDermott, Nashville, for Amici Curiae, The Indiana Manufacturers Assoc.

On Direct Appeal

DICKSON, Justice.

Public Law 44-1994 authorizes Indiana counties having a population of more than 129,000 but less than 130,600 to increase the county economic development income tax rate for certain purposes. According to the 1990 census, only one of Indiana's ninety-two counties falls within the statute's population parameters. The trial court found this enactment to be an unconstitutional local or special law in violation of sections 22 and 23 of Article IV of the Indiana Constitution. We reverse. ¹

The following findings by the trial court provide the pertinent facts of this case:

1. On March 2, 1994, the Indiana General Assembly enacted Public Law 44-1994 (HEA 1398), and on March 17, 1994, P.L. 44-1994 was signed into law by Governor Evan Bayh.

2. P.L. 44-1994 authorizes the county income tax council of a county "having a population of more than one hundred twenty-nine thousand (129,000) but less than one hundred thirty-thousand six hundred (130,600)" (P.L. 44-1994, Section 6(h)) to impose a county economic development income tax rate which, when added to the county option income tax rate for that county equals "up to one and twenty-five hundredths percent (1.25%)" (P.L. 44-1994, Sec. 6(h)(2)), if the county income tax money is needed in the county to fund substance removal or remedial action, including the repayment of bonds or other debt incurred for substance removal or remedial action, and the actions taken to fund substance removal and remedial action serve a public purpose by promoting public health, welfare, and safety. (P.L. 44-1994, Sec. 10(b)).

3. Based on the 1990 United States census, Tippecanoe County is presently the only county that comes within the population classification established by P.L. 44-1994, Section 6(h). Madison County, with an official population of 130,669 and Porter County, with an official population of 128,932, are presently excluded from the classification, as are all other counties in Indiana.

4. P.L. 44-1994 allows the county income tax council of a county that falls within the population classification of 129,000 to 130,600 to impose a higher rate of tax than that which counties outside the population classification may impose pursuant to Ind.Code § 6-3.5-7-5.

5. The Tippecanoe County Sanitary Landfill ("Landfill") is a privately owned landfill in Tippecanoe County, Indiana, and has been placed on the U.S. National Priorities List by the United States Environmental Protection Agency ("U.S.E.P.A."). Potentially Responsible Parties ("PRPs") may be required to pay the cost of the cleanup of the Landfill by the U.S. E.P.A. or may do the necessary cleanup at their expense. Tippecanoe County, the City of Lafayette, the City of West Lafayette, Purdue University, and a number of private businesses have been designated as PRPs by the U.S. E.P.A.

6. The Tippecanoe County Income Council has made a determination that economic development income tax money is needed in the county to fund substance removal and remedial action, including the repayment of bonds or other debt incurred for substance removal and remedial action pursuant to P.L. 44-1994, Sec. 10(b) and has adopted an ordinance increasing the Tippecanoe County economic income tax by 0.25%, pursuant to P.L. 44-1994, Sec. 6(h)(2).

7. The ordinance of the Tippecanoe County Income Council adopted by the Local Governments provides that the economic income tax money collected pursuant to the rate increase is needed in Tippecanoe County "to fund substance removal and remedial action, including the repayment of bonds or other debt incurred for substance removal and remedial action."

8. Neither P.L. 44-1994 nor the ordinance of the Tippecanoe County Income Tax Council make reference to the Landfill or the purposes for which the funds generated by the tax rate will be expended.

9. The goal of P.L. 44-1994 is to provide a funding mechanism through a county economic development tax to pay for substance removal and remedial action.

10. The Indiana Department of State Revenue is the agency of state government designated to collect the county economic development income tax. It has no other role in the administration of the law.

11. Tippecanoe County is the only county in Indiana where the county and other local governments have been identified by the U.S. E.P.A. as operators of a "Superfund" site, the Landfill, and, therefore, are potentially responsible parties for the cleanup of the site.

12. The Landfill does not require removal of toxic industrial wastes but requires the completion of an impermeable cover and a leachate collection system. The problems of the Landfill are those of a typical sanitary landfill that has not been properly closed.

13. The situation regarding the cleanup of the Landfill is unique in that the PRPs are cooperating in the funding of the cleanup.

14. If the U.S. E.P.A. accepts the proposal of the PRPs, the cost of the cleanup may be minimized. If the proposal cannot go forward because the funding mechanism for the cleanup is not in place, the cost of the cleanup may increase.

15. Under the Superfund law, if the potentially responsible parties do not agree on a method for cleanup within 120 days following the issuance of the U.S. E.P.A.'s record of decision, the U.S. E.P.A. will undertake the cleanup and ultimately seek reimbursement for the cleanup from the PRPs.

Record at 751-54.

Based upon its findings of fact, conclusions of law, and explanatory memorandum, the trial court concluded that Public Law 44-1994 "is a local and special law providing for the assessment and collection of taxes for county purposes and therefore violates Article IV, Section 22," and further that the statute "is a special law violating Article IV, Section 23." Record at 760. Because this appeal involves a state statute that has been declared unconstitutional, jurisdiction rests with this Court. ² Ind.Appellate Rule 4(A)(8).

The State contends that the statute is a valid and constitutional exercise of the legislative power to cure a unique local problem and does not fall into any category of prohibited special legislation or, in the alternative, that the statute is general, not special, legislation.

In appellate review of claims tried by a court without a jury, the findings and judgment of the trial court shall not be set aside unless clearly erroneous. Ind.Trial Rule 52(A). However, the final determination of issues of law is a matter for this Court. See Indiana Indus. v. Wedge Products, 430 N.E.2d 419, 422 (Ind.Ct.App.1982). We will presume a statute to be constitutional, and a challenger, against whom all doubts are resolved, must overcome that presumption by clearly demonstrating the provision to be invalid. State v. Rendleman, 603 N.E.2d 1333, 1334 (Ind.1992); Ruge v. Kovach, 467 N.E.2d 673, 677 (Ind.1984); Johnson v. St. Vincent Hosp., 273 Ind. 374, 381, 404 N.E.2d 585, 591 (1980).

A local or special statute, as the words imply, is one that--unlike a statute of general applicability--applies not to the entire state but to a particular area, person, class of persons, or set of circumstances exclusively. ³ Because Public Law 44-1994 authorizes a special tax rate to be available to only one Indiana county, it is a local and special law. However, local or special laws are not ipso facto unconstitutional. While the drafters of Indiana's Constitution "expressed a preference for general laws, ... they also recognized that special laws were sometimes necessary." Indiana Gaming Comm'n v. Moseley, 643 N.E.2d 296, 300 (Ind.1994). The issue before us is whether P.L. 44-1994 is a constitutionally permissible special law.

Article IV, Section 22

Article IV, Section 22 prohibits local or special laws on subjects falling in any of sixteen categories. The State contends that the trial court erred in finding the statute to be a prohibited local and special law providing for the assessment and collection of taxes for county purposes. ⁴ Section 22 provides in pertinent part:

The General Assembly shall not pass local or special laws ... [p]roviding for the assessment and collection of taxes for State, county, township, or road purposes....

Ind. Const. Art. IV, § 22. Resolution of this issue depends upon the meaning given to "assessment and collection."

In interpreting a particular provision of the Indiana Constitution, we seek "the common understanding of both those who framed it and those who ratified it." Bayh v. Sonnenburg, 573 N.E.2d 398, 412 (Ind.1991), cert. denied, 502 U.S. 1094, 112 S.Ct. 1170, 117 L.Ed.2d 415 (1992). Contemporaneous with the 1851 adoption of our constitution, the relevant definitions of the word "assessment" included: "[a] valuation of property or profits of business, for the purpose of taxation"; "a valuation made by authorized persons according to their discretions, as opposed to a sum certain or determined by law"; "a valuation of the property of those who are to pay the tax, for the purpose of fixing the proportion which each man shall pay; on which...