Matter of Baldwin Union Free School Dist. v. County of Nassau, 22 N.Y.3d 602 (2014)
A county’s power to legislate on tax matters is limited by the State Constitution and Municipal Home Rule Law, and a county cannot supersede a special state tax law without express authorization from the state legislature.
Summary
This case concerns Nassau County’s attempt to shift the obligation to pay real property tax refunds from the County to its individual taxing districts via Local Law 18, which purported to repeal the County Guaranty. The Court of Appeals held that Nassau County exceeded its authority by enacting Local Law 18, as it attempted to supersede a special state tax law (the County Guaranty) without express legislative authorization. The Court emphasized that the State Constitution vests taxation power in the state government, and any delegation of that power to a locality must be explicit. Because Local Law 18 was a tax-related local charter law that purported to supersede a special state tax law, and because the County lacked specific authority to enact such a law, it was deemed unconstitutional and void.
Facts
Nassau County, facing financial difficulties, enacted Local Law 18 (the “Common Sense Act”) in 2010. This law aimed to repeal the “County Guaranty,” a special state law (Nassau County Administrative Code § 6-26.0 [b] [3] [c]) that required the County to pay real property tax refunds resulting from erroneous assessments. Local Law 18 sought to shift this burden to the individual taxing districts within the County and also required tax petitioners to serve notice on the superintendent of any relevant school district. The County Guaranty originated in 1948 when the state legislature, responding to a home rule message from the County, amended the Administrative Code to designate real property tax refunds as a county charge, because the county was responsible for assessment errors.
Procedural History
Various school districts, towns, special districts, and taxpayers challenged the validity of Local Law 18 in three separate actions in Supreme Court, Nassau County. The Supreme Court denied the petitions and granted summary judgment to the County, upholding Local Law 18. The Appellate Division, Second Department, reversed, granted the plaintiffs’ summary judgment motions, and declared Local Law 18 unconstitutional and in violation of the Municipal Home Rule Law. The County appealed to the Court of Appeals as of right.
Issue(s)
Whether Nassau County had the authority, under the State Constitution and the Municipal Home Rule Law, to enact Local Law 18, which purported to repeal the County Guaranty and shift the obligation to pay real property tax refunds from the County to its individual taxing districts.
Holding
No, because the State Constitution and the Municipal Home Rule Law prohibit the County from superseding a special state tax law without express legislative authorization. The Court held that Local Law 18 was unconstitutional, invalid, unenforceable, and void.
Court’s Reasoning
The Court of Appeals reasoned that the State Constitution vests the power of taxation in the state government, and any delegation of that power to a political subdivision must be express and unambiguous. Nassau County’s authority to pass local legislation derives solely from Article IX of the Constitution. While Article IX allows localities to make laws related to the levy, collection, and administration of local taxes, such laws must be “consistent with laws enacted by the legislature” (NY Const, art IX, § 2 [c] [ii] [8]). The Court found that Local Law 18 was a tax-related local charter law that purported to supersede a special state tax law (the County Guaranty), which it could not do without explicit authorization. The Court emphasized that Municipal Home Rule Law § 34 (3) (a) prohibits charter laws that supersede any special law of the State relating to the judicial review or distribution of tax proceeds. The Court rejected the County’s argument that its charter powers were not subject to the restrictions contained in the amended version of Article IX passed in 1963. The court stated, “the very purpose and effect of an amendment is to amend the relevant portion of the Constitution, effectively repealing and voiding any prior version of the particular section so amended.” The Court also rejected the argument that the phrase “consistent with laws enacted by the legislature” should be interpreted to mean “consistent with general laws.” The court reasoned that the legislature consciously omitted the term “general” from the prohibition against local tax laws that are not consistent with “laws enacted by the legislature,” thereby revealing an intent to broadly ban any local tax law that conflicts with a state law, whether general or special. The court distinguished Sonmax, Inc. v City of New York, noting that it involved a conflict between a local law and a general state law, as well as the Constitution’s requirement that local tax laws be “consistent with laws” passed by the legislature, neither of which was at issue in Sonmax, Inc.