Fulton County v. State of New York, 76 N.Y.2d 675 (1990)
A property owner, including the State of New York, must pay local property taxes when due, even while challenging the assessment amount in court.
Summary
Fulton County initiated an Article 78 proceeding seeking mandamus to compel the State of New York, through the Hudson River-Black River Regulating District (the District), to pay disputed property taxes. The District had challenged increased tax assessments on its land in the Town of Northampton but withheld tax payments pending resolution of the challenge. The New York Court of Appeals held that the State, like any other taxpayer, must pay its property taxes when due, notwithstanding a pending challenge to the assessment. The Court affirmed the lower court’s order compelling payment.
Facts
The State of New York acquired approximately 380 parcels of land in the Town of Northampton for the Hudson River-Black River Regulating District. In 1986 and 1987, the District’s local property tax assessment more than doubled. The District, along with the State Board of Equalization and Assessment (SBEA), initiated tax certiorari proceedings under Article 7 of the Real Property Tax Law, claiming excessive and disproportionate assessments. The District also refused to pay the disputed property taxes while the proceedings were pending.
Procedural History
Fulton County commenced an Article 78 proceeding in the Supreme Court for relief in the nature of mandamus, arguing the District had a legal duty to pay its taxes. The Supreme Court ordered the District to pay the challenged taxes. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether the State of New York, as a property owner, can withhold payment of its local property taxes while challenging the assessment amount in a pending tax certiorari proceeding?
Holding
No, because the State is not exempt from the general rule requiring taxpayers to pay their taxes even when challenging the assessment.
Court’s Reasoning
The Court of Appeals reasoned that ECL 15-2115 mandates that land owned by the State for river regulating districts be taxed “in the same manner as state lands subject to taxation” and that the assessments “shall be paid by the river regulating district.” RPTL 704(3) states that commencing a tax certiorari proceeding does not stay tax collection. Citing Grant Co. v Srogi, 52 N.Y.2d 496 (1981), the Court reiterated that a party challenging a tax assessment must continue to pay taxes, emphasizing that “taxes are the lifeblood of government.”
The Court rejected the argument that RPTL 1004(2) and RPTL 1174, which insulate the State from interest/penalties and tax foreclosure, respectively, demonstrate a legislative intent to afford the State preferential treatment. It clarified that RPTL 1174 codified the long-standing rule that State-owned lands cannot be sold for taxes. RPTL 1004(2) reflects the general principle that punitive penalties are not sensibly assessed against a governmental entity. The Court stated that “[n]either statute can be read as reflecting a broad legislative intention to exempt the State from all of the rules applicable to other taxpayers”.
The court also dismissed the argument to shield the state from mandamus noting that “mandamus was generally unavailable as a means of enforcing a governmental entity’s real property tax obligations.” The Court found unpersuasive the argument that local municipalities would fix exorbitant assessments on State lands. The court stated, “the respondents’ policy argument, which stresses the need to protect the State treasury, falls short because it fails to recognize the countervailing need to ensure continuity and predictability in the funding base available for local governmental services.” The Court held that “like citizen-taxpayers, the State must timely pay its local real property taxes as assessed, notwithstanding the pendency of an article 7 tax certiorari proceeding”.