Wis. Prop. Taxpayers v. Town of Buchanan

• Docket Number: 2022AP1233
• Decision Date: 29 June 2023
• Citation: 2023 WI 58
• Parties: Wisconsin Property Taxpayers, Inc., Plaintiff-Respondent, v. Town of Buchanan, Defendant-Appellant.
• Court: Wisconsin Supreme Court

1

2023 WI 58

Wisconsin Property Taxpayers, Inc., Plaintiff-Respondent, v. Town of Buchanan, Defendant-Appellant.

No. 2022AP1233

Supreme Court of Wisconsin

June 29, 2023

SUBMITTED ON BRIEFS ORAL ARGUMENT: March 13, 2023

ON BYPASS FROM THE COURT OF APPEALS

APPEAL from a judgment and an order of the Circuit Court for Outagamie County L.C. No. 2021CV712, Mark J. McGinnis, Judge.

For the defendant-appellant, there were briefs (in the court of appeals) filed by Richard J. Carlson and Town Counsel Law &Litigation, LLC, Kaukauna. There was an oral argument by Richard J. Carlson.

For the plaintiff-respondent, there was a brief (in the court of appeals) filed by Richard M. Esenberg, Luke N. Berg, Lucas T Vebber and Wisconsin Lnstitute for Law &Liberty, Tnc Milwaukee. There was an oral argument by Lucas T. Vebber.

JUSTICES: REBECCA GRASSL BRADLEY, J., delivered the majority opinion for a unanimous Court.

REBECCA GRASSL BRADLEY, J.

¶1 The Town of Buchanan appeals the circuit court's grant of summary judgment in favor of Wisconsin Property Taxpayers, Inc. (WPT). The circuit court declared the Town's Transportation Utility Fee (TUF) to be a property tax subject to the Town's levy limit.^[1] Wisconsin Stat. § 66.0827 (2021-22)^[2] authorizes municipalities to establish utility districts to fund highways, sewers, and other "public improvement[s] provided in the district." The funding for a utility district must be provided through "taxation of the property in the district [.] "§ 66.0827(2). The levy limit statute, Wis.Stat. § 66.0602, limits how much, and under what circumstances, a political subdivision may increase its property tax levy. The circuit court reasoned a "taxation of property" and a property tax are effectively the same and therefore concluded the money raised for the district fund is subject to the Town's property tax levy limit. After the Town appealed, the parties filed a joint petition for bypass of the court of appeals, which this court granted.

¶2 WPT contends the TUF is unlawful on three grounds. First, Wisconsin Statutes do not authorize municipalities to impose a TUF on property owners based on estimated use of the municipality's roads. Second, the Town did not reduce its property tax levy to account for the TUF and accordingly has exceeded its levy limit. Third, the fee structure implemented by the TUF violates the Uniformity Clause under Article VIII, Section 1 of the Wisconsin Constitution. We reach only the first two arguments, with which we agree and hold that funds raised for utility districts under Wis.Stat. § 66.0827 are property taxes subject to municipal levy limits. Accordingly, we affirm the decision of the circuit court.

I. BACKGROUND

¶3 The rising costs of maintaining public roads within the Town have become a long-term concern for the Town's board. The board anticipated needing to reconstruct as much as 44% of the Town's roads over the next ten years. Consequently, the board decided it needed to raise money beyond its current levy limit. The board submitted a referendum to Town residents, giving them a choice of raising the property tax levy, imposing a special assessment on all property, or imposing a TUF. After voters chose a TUF, the board adopted Town ordinance § 482 in December 2019 to fund future road construction projects through a transportation utility fee. In relevant part, the ordinance states:

A. The Town of Buchanan is hereby establishing a Transportation Utility District. The operation of the Transportation Utility District shall be under the day-to-day management of the Town Administrator and under the supervision of the Town Board. He/she, or a designated representative, shall provide an annual estimate to the Town Chairperson by October 1 of each year.

B. The Town, acting through the Transportation Utility District, may, without limitation due to enumeration, acquire, construct, lease, own, operate, maintain, extend, expand, replace, repair, manage and finance such transportation facilities and related facilities, operations and activities, as are deemed by the Town to be proper and reasonably necessary to provide safe and efficient transportation facilities within the Town. The following activities to be funded by the transportation utility fee are the cost of utility district highways, stormwater management, sidewalks, street lighting, traffic control and the cost of any other convenience or public improvement provided in the District and not paid in full by special assessment.

Town of Buchanan Ordinances § 482-3 (2021). To raise funds for the utility district, the Town implemented the TUF:

A. Every developed property within the Town of Buchanan shall pay a transportation utility fee.

B. The Town Board shall by resolution determine the annual amount to be funded by a transportation utility fee, formulas for the calculation of the fee and specific use category classifications. Changes in formulas and classifications may be made by further resolution of the Town Board. All fees established pursuant to this section shall be fair and reasonable. A schedule of current fees shall be maintained and on file in the office of the Town Clerk.

§ 482-4.

¶4 After enacting the ordinance, the Town administrator set the TUF target funding amount at $875,000 annually. The board then announced a formula and fee based on estimated use of the Town's roads by each developed property within the municipality. Under the Town's funding scheme, all residential properties must pay the same fee, while commercial properties must pay a variable fee based on the size and type of business and the number of estimated "trips" on municipal roads the business is expected to generate. These fees range from roughly $300 for residential properties to more than $8,000 annually for some commercial properties. In total, the TUF collected more than $855,000 in 2020.

¶5 Before adopting ordinance § 482, the Town paid for road construction on a "pay as you go" basis from its general property tax levy. The Town's total property tax levy for 2020 was $2,374,348. In 2021, after enacting the ordinance, the Town's property tax levy was $2,490,680, reflecting the maximum increase allowed under Wis.Stat. § 66.0602. That year, the Town Board again set the "annual amount to be funded" by the TUF at approximately $855,000. The Town handled funds collected under the TUF separately and in addition to the general tax levy in 2021, resulting in a net increase in municipal tax revenue of approximately 34% beyond the levy limit.

¶6 In September 2021, WPT brought this action against the Town, seeking declaratory and injunctive relief. The parties stipulated to the facts, and both parties moved for summary judgment. WPT alleged the TUF is a property tax subject to municipal levy limits under Wis.Stat. § 66.0602; therefore, any revenue raised through the TUF must be offset by a reduction in the Town's general property tax levy. WPT also sought a declaration that the adopted method of taxation, based on estimated use of municipal roads, violates the Uniformity Clause of the Wisconsin Constitution because the Town ordinance does not allocate the TUF based on property value. In response, the Town argued Wis.Stat. § 66.0827 authorizes a special tax not subject to levy limits or the requirement of uniformity.

¶7 The circuit court granted summary judgment in favor of WPT, declaring the TUF to be a property tax subject to the Town's levy limit. It also permanently enjoined the Town from levying, enforcing, or collecting the TUF in any amount above its levy limit. This appeal followed.

II. STANDARD OF REVIEW

¶8 In this case, we "independently review a grant of summary judgment using the same methodology of the circuit court [.] "Kemper Indep. Ins. Co. v. Islami, 2021 WI 53, ¶13, 397 Wis.2d 394, 959 N.W.2d 912 (quoting Talley v. Mustafa, 2018 WI 47, ¶12, 381 Wis.2d 393, 911 N.W.2d 55). "Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law." Id. (quoting Talley, 381 Wis.2d 393, ¶12).

¶9 This case also requires us to interpret and apply several Wisconsin statutes. "The interpretation and application of statutes present questions of law that we review independently, benefitting from the analyses of the circuit court [.] "Eau Claire Cnty. Pep't of Human Servs. v. S.E., 2021 WI 56, ¶13, 397 Wis.2d 462, 960 N.W.2d 391 (citing State v. Stephenson, 2020 WI 92, ¶18, 394 Wis.2d 703, 951 N.W.2d 819).

III. DISCUSSION

¶10 Despite being labeled a "fee," the parties do not dispute the TUF is in fact a tax on Town residents. "The purpose, and not the name it is given, determines whether a government charge constitutes a tax." Bentivenga v City of Delavan, 2014 WI.App. 118, ¶6, 358 Wis.2d 610, 856 N.W.2d 546 (citing City of Milwaukee v. Milwaukee & Suburban Transp. Corp., 6 Wis.2d 299, 305-06, 94 N.W.2d 584 (1959)). A "fee" imposed for the purpose of generating revenue for the municipality is a tax, and without legislative permission it is unlawful. Id., ¶11 (citing Milwaukee & Suburban Transp. Corp., 6 Wis.2d at 306) . The parties are correct; the TUF is a tax because the Town imposed it on a class of residents for the purpose of generating revenue. The parties do, however, dispute its lawfulness. Specifically, the parties disagree on (1) whether Wis.Stat. § 66.0827, which governs the formation and funding of utility districts, authorizes the Town's taxation scheme and (2) whether the taxation of property to fund a utility district is nonetheless subject to property tax levy limits under Wis.Stat. § 66.0602. WPT argues the "taxation of the property in the district" under § 66.0827 is a property tax subject to other requirements of the ...