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ATTORNEY FOR PETITIONER:         ATTORNEYS FOR RESPONDENTS:
GENE R. LEEUW                 JEFFREY A. MODISETT
JOHN M. MEAD          Attorney General of Indiana
LEEUW & DOYLE                    Indianapolis, Indiana Indianapolis, Indiana

GREG HAHN                    ANGELA L. MANSFIELD
WILLIAM W. MATHEWS                DAVID A. ARTHUR
TABBERT HAHN EARNEST &            Deputy Attorneys General
WEDDLE                        Indianapolis, Indiana
Indianapolis, Indiana
                             TERI J. KENDRICK
                            ANDREW P. SEIWERT
                            Office of Corporation Counsel
                            Indianapolis, Indiana

                            ATTORNEYS FOR INTERVENORS:
                             THEODORE J. ESPING
                            BAKER & DANIELS
                            Indianapolis, Indiana

                             TERI J. KENDRICK
                            ANDREW P. SEIWERT
     Office of Corporation Counsel
                            Indianapolis, Indiana                   _____________________________________________________________________

IN THE
INDIANA TAX COURT _____________________________________________________________________

INDIANAPOLIS-MARION COUNTY                                        )
PUBLIC LIBRARY                                                         )    
                                                                       )                    
                                                                       )
             Petitioner,                                               )
                                                                       )
v.                                                                     ) Cause No. 49T10-9902-TA-00013
                                                                       )
STATE BOARD OF TAX COMMISSIONERS                                       )
MARTHA WOMACKS, in her capacity as                                     )
Marion County Auditor,                                                 )

                                                                              Respondents, and                                           )
                                                                       )
                                                                       )
INDIANAPOLIS-MARION COUNTY                                             ) 
CITY-COUNTY COUNCIL, and                                               )
CURTIS L. COONROD,                                                     )                                             
                                                                       )
                         Intervenors.                                  )

_____________________________________________________________________

ON APPEAL FROM A FINAL DETERMINATION OF THE STATE BOARD OF TAX COMMISSIONERS
_____________________________________________________________________

March 30, 1999

NOT FOR PUBLICATION

FISHER, J.
Indianapolis-Marion County Public Library (Library) appeals from a final determination of the State Board of Tax Commissioners (State Board) fixing the Library's 1999 budget, property tax rate, and property tax levy. This original tax appeal arises out of a dispute between the Library and the Indianapolis-Marion County City- County Council (Council) over the 1999 Library budget and the associated property tax rate and levy.
BACKGROUND AND PROCEDURAL HISTORY
In 1996, the Council, after rejecting without prejudice a “Library Capital Projects Fund Plan” adopted by the Library Board of Trustees (Library Board), adopted a resolution establishing an Ad Hoc Study Committee. This Ad Hoc Study Committee was charged with studying ways in which to support master plans for an upgrade of library services endorsed in concept by the Council. (Ex. 2, App. A at 1). In that

resolution, the Council also recognized “the need to upgrade” services offered by the Library. (Ex. 2, App. A at 1). In 1997, the Ad Hoc Study Committee published its report identifying, inter alia, a need for capital improvements to provide adequate library services to Marion County residents. (Ex. 2 at 26). The report recommended two options, both of which included the issuance of bonds. (Ex 2, App. A at 5). In 1998, the Library Board issued bonds to finance a number of long-term capital projects identified in the report.
On August 18, 1998, after publishing its budget estimates and estimated tax levy and tax rate and holding the required public hearings on these matters, see Ind. Code § 6-1.1-17-3(a) (1998), the Library presented its proposed 1999 budget and associated property tax rate and levy to the Council. See id. § 36-3-6-9 (1998). On September 9, 1998, the Library Board adopted the 1999 Library budget. The 1999 Library budget totaled $28,226,355. This budget was supported by a property tax levy of $25,830,125 with a property tax rate of $0.3065 per $100.00 of assessed valuation.See footnote 1 On September 16, 1998, the Library Board certified the adopted 1999 budget, property tax rate, and property tax levy to the Marion County Auditor (Auditor), Ms. Martha Womacks, pursuant to Ind. Code § 20-14-3-10 (1998). On September 28, 1998, the Council adopted a unanimous resolution reducing the Library's 1999 property tax levy to $22,304,428 and the property tax rate to $0.2548 per $100.00 of assessed valuation. The Council then certified this rate to the Auditor.

The Library appealedSee footnote 2 this decision to the State Board on September 30, 1998. In its appeal, the Library requested that the State Board overturn the Council's modifications to the 1999 Library budget and associated property tax rate and levy and restore the Library budget, property tax levy and property tax rate as originally adopted by the Library Board. On October 23, 1998, the Auditor published its “Notice of 1998 Tax Rates.” This notice reflected the Council's version of the Library's tax rate. The Library appealed this action to the State Board as well. See id. § 6-1.1-1-12; § 6-1.1- 17-5; § 6-1.1-29-9 (1998). These appeals were consolidated.
On February 15, 1999, the State Board issued an order denying the Library's appeal and sustaining the Council's action. The State Board also certified the 1999 Library budget, and associated property tax rate and levy as determined by the Council. The Library then filed this original tax appeal on February 26, 1999 challenging the State Board's order. On March 1, 1999, the Court entered an agreed order directing the State Board to conduct an evidentiary hearing on the consolidated appeals by the Library.See footnote 3 On that date, the Court also enjoined the Auditor from publishing the tax rates certified by the State Board until further order from the Court. On March 11, 1999, the State Board conducted the evidentiary hearing ordered by the Court, and on the next day, the State Board issued an order once again denying the

Library's appeal. In its decision, the State Board found that although the Library had presented “compelling and persuasive evidence,” the State Board could not conclude that the Library overcame the considerable deference accorded the Council's decision. On March 22, 1999, the Court held a hearing on this matter. During that hearing, the Court received into evidence the exhibits that were presented to the State Board at the March 11, 1999 hearing as well as a videotape of those proceedings. Additional information will be supplied as necessary.

ANALYSIS AND OPINION
Jurisdiction
None of the parties raise the issue of the Court's jurisdiction. However, the Court will do so sua sponte. See Matonovich v. State Bd. of Tax Comm'rs, 705 N.E.2d 1093, 1095 (Ind. Tax Ct. 1999), petition for review filed, Mar. 17, 1999; City Securities Corp. v. Department of State Revenue, 704 N.E.2d 1122, 1125 (Ind. Tax Ct. 1998). Nowhere in the statutory provisions governing the State Board's certification of budgets is there any mention of judicial review or remedies available to aggrieved parties. However, judicial review is available under Ind. Code § 33-3-5-2 (1998), which gives the Indiana Tax Court exclusive jurisdiction over cases arising under the tax laws of Indiana and that are initial appeals of State Board final determinations.See footnote 4 See Miller v.

Gibson County Solid Waste Management Dist., 622 N.E.2d 248, 252 (Ind. Tax Ct. 1993); see also State ex rel. State Bd. of Tax Comm'rs v. Marion Superior Court, 392 N.E.2d at 1165 (1979) (construing statutory provision that State Board's determination was final to facilitate rather than foreclose judicial review).
In this case, the Court's jurisdiction depends on whether this case arises under the tax laws of Indiana and whether the State Board's denial of the Library's appeal and certification of the Library's 1999 budget as adopted by the Council constitutes a final determination. In State v. Sproles, 672 N.E.2d 1353, 1357 (Ind. 1996), the Indiana Supreme Court held that a case arises under the tax laws of Indiana if: “1) an Indiana tax statute confers the right of action; or 2) the case principally involves the collection of a tax or defenses to that collection.” Because this case involves a component of the rate of property taxation in Marion County, this case involves how much tax will be collected and thereby falls under the second part of the Sproles test.
As a starting point for its analysis of whether the State Board's action in this case constitutes a final determination, the Court notes that when the State Board determines the budgets of local entities there can be some question as to whether the State Board is acting pursuant to its rulemaking authority or its authority to adjudicate cases. The distinction is important because when the State Board acts pursuant to its rulemaking authority, no appeal to this Court is possible because there is no final determination from which to appeal. Cf. Town of St. John v. State Bd. of Tax Comm'rs,

691 N.E.2d 1387, 1389 (Ind. Tax Ct.) (“It is not this Court's function to supervise, absent an appeal, . . . rules promulgated by the State Board . . . .”), aff'd in part, rev'd in part, 702 N.E.2d 1034 (Ind. 1998). In dealing with this issue, the Indiana Supreme Court has stated that where the State Board is dealing with an appeal, the State Board is acting in a quasi-judicial or adjudicatory fashion. See Eakin, 444 N.E.2d at 1202. Where the State Board is not faced with an appeal, the State Board is acting “in a manner akin to that by which administrative bodies exercise their delegated rulemaking authority.” Id. In this case, the State Board was dealing with an appeal. Eakin therefore compels the conclusion that the State Board was acting in a quasi-judicial fashion. Consequently, the State Board's action in this case constituted an adjudication “determin[ing] the rightsSee footnote 5 of . . . the parties as a consummation of the administrative process.” Mills v. State Bd. of Tax Comm'rs, 639 N.E.2d 698, 701 (Ind. Tax Ct. 1994) (citing Downing v. Board of Zoning Appeals, 149 Ind. App. 687, 691, 274 N.E.2d 542, 544-45 (1971)). This constitutes a final determination. See id. Consequently, because both statutory prerequisites for this Court's exercise of jurisdiction in this case have been met, the Court concludes that it has jurisdiction over this case.

Standard of Review
    The State Board is accorded great deference when it acts within the scope of its authority. See Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). Consequently, the Court reverses a State Board final determination only when the determination is unsupported by substantial evidence, is arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority. See id.
Discussion
    The central issue in this dispute is the extent of the Council's authority to override the Library Board in setting the Library's budget. In resolving this issue, the Court must look to the statutory provisions governing the Council as well as the statutory provisions governing the operation of libraries throughout the State. Under Ind. Code § 36-3-6-9 (1998), the Council may “review and modify” the Library's budget. The Library contends that this language, when read in conjunction with the statutory provisions governing library budgets, means that the Council has merely an advisory role in the establishment of the Library's budget and “provides a mechanism for the Library to ascertain the Council's viewpoint . . . .” (Library Br. at 23). Therefore, according to the Library, the State Board erred in affirming the Council's decision to override the Library Board's adoption of the 1999 Library budget and associated tax rate and levy because, according to the Library, the Council had no authority to change the Library's 1999 budget.
    In support of its view of the role granted to the Council in the adoption of the Library's budget, the Library points to some problems created by the operation of section 36-3-6-9 in conjunction with the statutory provisions governing the Library

Board's adoption of the Library's budget. According to the Library, the way to resolve these problems and harmonize these statutory provisions is to read the Council's role in the Library's budget process as merely advisory. The Court cannot agree.
Under section 36-3-6-9, the Council is given the authority to “review and modify” the Library budget and tax rate. In determining the meaning of this statutory provision, the Court must follow the plain meaning of the language that the General Assembly has chosen. See Cooper Indus., Inc. v. Department of State Revenue, 673 N.E.2d 1209, 1212 (Ind. Tax Ct. 1996). The General Assembly is presumed to mean what it says. See Hyatt Corp. v. Department of State Revenue, 695 N.E.2d 1051, 1053 (Ind. Tax Ct. 1998), review denied. Accordingly, it is not possible to read “review and modify” as merely giving the Council the ability to advise the Library Board on the Library budget. As the State Board correctly determined, section 36-3-6-9 unambiguously gives the Council the authority to change the Library budget. To hold that it does not would substitute the will of the Court for that of the General Assembly. Consequently, the State Board's decision to certify the Council's version of the 1999 Library budget and associated property tax rate and levy cannot be reversed on this basis.
This is not the end of the inquiry. The Court must still address the extent of the Council's authority to change the Library's budget. However, before the Court analyzes this issue, the Court finds it necessary to address some of the specific problems with the operation of section 36-3-6-9 with the statutory provisions governing the library budget process identified by the Library. The first problem identified by the Library is the fact that Ind. Code § 20-14-3-10 (1998) requires the Library Board to determine its

budget and associated tax rate and tax levy and certify the tax rate to the Auditor. In the Library's view, this requirement is problematic because if the Council is able to change the Library's budget and the tax rate, the Council too, under Ind. Code § 6-1.1- 17-5(d)(1) (1998), must certify the new tax rate to the Auditor.See footnote 6 According to the Library, the Auditor would then have to publish both tax rates.
As this case demonstrates, the solution, though not explicitly provided in the relevant statutory provisions, to this problem is simple. Under section 36-3-6-9, as the State Board points out in its brief, the Library Board does not have the last word on the Library's budget. Rather that budget is subject to the Council's authority to review it and modify it. Therefore, when the Auditor is presented with two competing versions of the Library's budget, the Auditor will publish the Council's version because the modified version of the Library's budget necessarily supersedes the Library Board's version, at least as far as the Auditor is concerned.See footnote 7
The Library also points out that section 36-3-6-9 does not contain a mechanism for the Council to adopt a Library budget that it has chosen to review and modify. The Library would have the Court believe that this omission means that the Council is

without power to adopt the Library budget. When the Council chooses to review and modify the Library Board's budget, that action makes the Library budget a part of the Council's budget. As a part of the Council's budget, the Library budget is then controlled by the statutory provisions governing the Council's adoption of its budget. No other result is possible; certainly, the General Assembly did not give the Council the authority to review and modify the Library budget, only to take that authority away by not providing a mechanism for the Council to put its modification of the Library budget into effect. See Wilson v. Pleasant, 660 N.E.2d 327, 337 (Ind. 1995) (Court will not presume that Legislature intended to enact a useless provision).
Lastly, the Library argues that the interplay between section 20-14-3-10 and section 36-3-6-9 create problems with the deadlines imposed by section 20-14-3-10. Under section 36-3-6-9, the Library Board is required to submit its adopted budget to the city clerk before September 1 of each year. Under section 20-14-3-10, the Library Board has until two days before the second Monday in September to “finally adopt” the Library budget or else the prior year's budget and tax rate become the budget and tax rate for the present year. Any conflict created by these two statutory provisions, however, is easily resolved by resort to the canon of statutory construction that provides that where a general statutory provision and a specific statutory provision are in conflict, the more specific statutory provision controls. See WorldCom Network Servs., Inc. v. Thompson, 698 N.E.2d 1233, 1239 (Ind. Ct. App. 1998); City Securities Corp., 704 N.E.2d at 1128. Because section 20-14-3-10 deals with the statewide budget adoption process for libraries and section 36-3-6-9 deals with Marion County's

library budget adoption process, section 36-3-6-9 is the more specific statutory provision. Therefore, to the extent that the two statutory provisions conflict, section 36- 3-6-9 controls. Consequently, the deadline provided in section 20-14-3-10 cannot be read to limit the Council's authority to act on a Library budget.See footnote 8
    Now the Court turns to the extent of the Council's authority to “review and modify” the Library budget. As a starting point for its analysis, the Court notes that it is dealing with two local bodies, one elected (the Council) and one non-elected (the Library Board). In addition, the Court notes that both the Council and the Library Board are local governmental units. Therefore, the general legislative policy of home rule, see Ind. Code § 36-1-3-2 (1998), will be upheld no matter what the outcome of this case is.
    On its face, section 36-3-6-9 contains no limitations on the Council's authority to “review and modify” the Library budget and tax rate. According to the Council, this authority is therefore unfettered. (Oral Arg. Tr. at 30-31). The State Board advances a somewhat different position. The State Board contends that the Council's authority is limited only by an abuse of discretion standard. See Eakin, 444 N.E.2d at 1203-04 (quoting State ex rel. State Bd. of Tax Comm'rs v. Marion Superior Court, 392 N.E.2d at 1166).
    The Court agrees with the State Board. The Council's authority to “review and

modify” the Library's budget is reviewed for an abuse of discretion.See footnote 9 However, identifying the standard of review does not end the inquiry. The Court must also look to the law governing libraries to determine what constitutes an abuse of discretion. The General Assembly is the ultimate authority on all public libraries in this State, and it would be premature to evaluate the Council's action without examining what the General Assembly has provided in this area.
    With respect to public libraries, the Indiana General Assembly has made its policy clear. Ind. Code § 20-14-1-3 (1998) provides:
        The State shall encourage the establish the establishment, maintenance,     and development of public libraries throughout Indiana as part of its provision for
    public education. Public libraries provide free library services for all individuals     in order to meet the educational, informational, and recreational interests and     needs of the public. These library services include collecting and organizing     books and other library materials and providing reference, loan, and related     services to library patrons. These library services are provided by public          libraries supported by public funds.

See also Ind. Const. art. VIII, § 1; School City of Marion v. Forrest, 168 Ind. 94, 97 (1903). Of course, neither article VIII, section 1, nor section 20-14-1-3 provide any substantive rights to library services. See Town of St. John, 702 N.E.2d at 1040. However, these provisions do shed light on the legislative intent in enacting the provisions governing public libraries as well as the legislative intent concerning the

relevant factors in determining whether an abuse of discretion has occurred.
     In carrying out this policy, the Indiana General Assembly has delegated authority to Library Boards throughout the State. Under subsection 20-14-3-10(a), the Library Board “shall determine the rate of taxation that is necessary for the proper operation of the library.” This means that the law requires a Library Board to determine the proper operating level of its library and then determine the amount of taxes that will support that operating level. As a result, any inquiry into the setting of the proper tax rate for a particular library must begin with a determination of the proper level of operation of that library. Moreover, the rate of taxation, so long as it does not exceed the maximum allowable levy, see Ind. Code § 6-1.1-18.5-3; § 6-1.1-18.5-10.3 (1998), is to be set so that the library may be properly operated. Furthermore, the Indiana General Assembly has provided:
        The library board may establish a sufficient number of libraries, branch     libraries, or stations that are conveniently located to serve the residents of the     library district within the resources available. The board may also provide     suitable rooms, structures, facilities, furniture, apparatus, and other articles     necessary for the thorough organization and efficient management of these     libraries. . . .

Id. § 20-14-3-3 (1998). By its terms, this statutory provision requires a balancing of the resources available with the needs of the public by the Library Board.
These statutory provisions place the burden on Library Boards to determine the proper level of library services to provide and the tax rates to support that level of services. In Marion County, the authority of the Library Board must be read in light of section 36-3-6-9, which gives the Council the authority to “review and modify” the

Library budget. However, the fact that the Council has the authority to “review and modify” the Library budget does not mean that the Council (or for that matter, the State Board) can ignore the clear policy choices of the Indiana General Assembly.See footnote 10 Rather, in exercising its authority, the Council must take those policy choices into consideration, and the Court, in its review, must ensure that the Council did so. See City of Indianapolis v. Clint's Wrecker Serv., Inc., 440 N.E.2d 737, 748 (Ind. Ct. App. 1982) (“We recognize that a power exercised by a city must be consistent with the public policy of the state.”); see also Lexington Insurance Co. v. American Heathcare Providers, 621 N.E.2d 332, 339 (Ind. Ct. App. 1993) (General Assembly dictates public policy of this State).
Another factor informing the Court's analysis of the Council's authority to “review and modify” the Library budget is the fact that under subsection 36-3-6-9(c), the Library may issue bonds without the approval of the Council. Because bonds are often used to finance construction of new facilities, this reservation of authority to the Library is significant. It strongly implies that the Library Board has some degree of autonomy in planning and financing long-term capital projects. This autonomy is consistent with section 20-14-3-3, which gives Library Boards the authority to establish branch libraries.
Having reviewed the statutory provisions informing the Court's analysis of the Council's authority to “review and modify” the Library budget, the Court now turns to the

facts of this case. On September 24, 1998, the Council, after a committee vote, unanimously adopted a resolution to change the 1999 Library budget as well as the associated property tax rate levy. The Council's resolution left everything intact in the Library Board's proposed 1999 Library budget,See footnote 11 except for the operating balance. (Ex. 9B). The Library contends that this change directly impacts the Library's ability to implement some of its long-term capital projects, such as the construction of new branches, as well the expansion of existing branches because the operating balance is necessary to pay the expenses associated with operating the new facilities. (Ex. 1, Testimony of Szynaka). In addition, the Library contends that it may have to institute cutbacks in services already provided. (Testimony of Syznaka). Lastly, the Library contends that the cut in the operating balance impacts the Library's ability to issue bonds because the operating balancing is necessary to support a higher bond rating. (Exs. 5 & 10).
These contentions by the Library and the evidence supporting them were unrebutted by the Council at the State Board hearing. Additionally, in its decision, the State Board acknowledged that “[t]he Library's evidence is compelling and persuasive in many respects . . . .” (State Bd. Findings at 6). However, the Council and the State Board contend that the Council's policy of keeping the tax rate level justifies the Council's action in changing the Library Board's proposed Library budget and associated property tax rate and tax levy. The Court cannot agree.

As explained above, the Indiana General Assembly has spoken on the relevant considerations in setting the Library's budget. These considerations include a determination of the appropriate amount of library services and the tax rate necessary to support that amount of library services. Although maintaining a level rate of property taxation is a laudable and often compelling goal, the fact remains that the maintenance of a level rate of property taxation has nothing to do with what is necessary to support the appropriate amount of library services. If an inappropriate amount of library services is being provided, it is no answer to say that the tax rate must be kept level.
Accordingly, the Council's invocation of level property tax rates is something of a non-sequitur. As desirable as maintaining or even lowering the property tax rate is, the property tax rate must still support what is necessary to properly operate the Library. See Ind. Code § 20-14-3-10. If the property tax rate cannot do this, it is contrary to law.See footnote 12 See id. As a result, the Council, if it is to change the Library budget and associated property tax rate and levy, cannot merely assert that its policy is to hold the line on the property tax rate.See footnote 13 Rather, the Council must determine the appropriate amount of library services and then determine the amount of property tax needed to

support that level of service.See footnote 14 In its determination, the Council will be accorded a great deal of deference. However, the fact that the Council will be accorded a great deal of deference in its determination does not mean that it does not have to make that determination at all. Cf. Kumho Tire Co. v. Carmichael, No. 97-1709, 1999 WL 152455, at *15 (U.S. Mar. 23, 1999) (Scalia, J., concurring) (where inquiry is committed to discretion of court, that court does not have discretion to abandon the inquiry).
In this case, the Council presented no evidence concerning the appropriate amount of library services at the State Board hearing. In addition, the Council did not adopt any findings concerning the proper amount of library services in its resolution changing the 1999 Library budget. This leaves the Court with the inescapable conclusion that in its action to change the 1999 Library budget, the Council did not consider the proper amount of library services, though the law required it to do so. This was an abuse of its discretion, and the State Board erred in determining that it was not.See footnote 15

This Court's conclusion is buttressed by the fact that the Council's resolution jeopardizes the long-term capital projects planned by the Library and “endorsed in concept” by the Council. (Ex. 2, App. A at 1). As noted above, the General Assembly has chosen not to subject the Library's issuance of bonds to the Council's approval. See Ind. Code § 36-3-6-9(c). As a result, where the Council's action interferes with the Library's issuance of bonds or interferes with the Library's use of the funds raised by the sale of bonds, an abuse of discretion by the Council is much more likely to occur.
In this case, the Court need not determine how much the Council's authority to “review and modify” the Library's operating and maintenance budget allows the Council to interfere with the Library's issuance of bonds and interfere with the Council's use of funds raised by the bonds because an abuse of discretion is amply demonstrated by the facts of this case. In 1996, the Council adopted a resolution establishing an Ad Hoc Library Study Committee. (Ex. 2, App. A). In that resolution, the Council recognized the need to “upgrade and expand those services and facilities offered by the Public Library to the citizens of our community.” (Ex. 2, App. A at 1) (emphasis added). The Council further concluded that “[t]he provision of these services [is] necessary due to the need to upgrade systems and equipment . . . .” (Ex. 2, App. A at 1) (emphasis added).

In 1998, after receiving the report of the Ad Hoc Study Committee, the Library issued bonds to finance a number of long-term capital projects designed to meet the needs outlined in the Council's 1996 resolution. Now the Council seeks to undercut the Library's ability to meet these needs. For the Court to allow the Council to do so would undermine the General Assembly's policy choice in providing the Library with some degree of autonomySee footnote 16 to issue bonds and engage in long-term planning to meet the needs of the citizens of Marion County. If the Council is permitted to scuttle projects financed by bonds in this manner, the Library has no autonomy in this area, and the distinction found in subsection 36-3-6-9(c) is meaningless.
Now that the Court has concluded that the State Board's decision in this case was contrary to law, the Court must evaluate the relief to be granted. At the State Board hearing, the Library presented a great deal of evidence tending to establish the needs of the Library thereby justifying its budget and the associated property tax rate and property tax levy. Instead of rebutting this evidence with a factual presentation, See footnote 17 the Council chose to rely on its policy of keeping property tax rates level. Because the

Council was successful below, this means that the State Board must have treated this policy as having more weight than the evidence that the Library presented, “compelling and persuasive” though that evidence was.See footnote 18 As stated above, this was improper. The Council was required to present evidence, not invoke a policy. See footnote 19 It did not.
In arriving at its decision, the State Board did not adopt its own version of what the Library budget should be. Had it done so, the Court would have no choice but to

remand to the State Board for further proceedings. This, however, is not necessary in this case. As stated above, the only evidence presented below supported the Library Board's version of the 1999 Library budget and associated property tax rate and levy. No evidence was offered in rebuttal. Accordingly, the Court REVERSES the State Board's decision in this case, as well as its certification of the Council's version of the 1999 Library budget and associated property tax rate and levy. The Court REMANDS this case to the State Board with instructions to certify the Library Board's version of the 1999 Library budget and associated property tax levy to the Auditor.See footnote 20 The Court also hereby makes permanent its preliminary injunction barring the Auditor from publishing the property tax rate as certified by the State Board on February 15, 1999. The Auditor is hereby ORDERED to publish the property tax rate as certified by the State Board pursuant to this Court's order in this case.
IT IS SO ORDERED.

Footnote: 1The difference between the tax levy and the budget was to be made up with finds from other sources.

Footnote: 2The Court's research has disclosed no specific statutory authority for the Library's first appeal to the State Board. In light of the fact that the Library's second appeal, discussed below, had that authority, the Court declines to address the issue.

Footnote: 3The Court retained jurisdiction over this case pending the outcome of the hearing ordered by the Court.

Footnote: 4The Court also notes that there is a constitutional right to judicial review of administrative actions in Indiana. See State v. Sproles, 672 N.E.2d 1353, 1361 n.19 (1996). This right applies to governmental entities such as the Library. See State ex rel. State Bd. of Tax Comm'rs v. Marion Superior Court, 271 Ind. 374, 392 N.E.2d 1161, 1165 (1979). Cf. Bd. of Sch. Comm'rs v. Eakin, 444 N.E.2d 1197, 1202 (Ind. 1983) (“[A] political entity's constitutional rights are rightfully less than those of an individual.”) But cf. Board of Comm'rs v. Kokomo Planning Comm'n, 263 Ind. 282, 330 N.E.2d 92,

99-100 (1975) (political subdivisions have no rights under certain provisions of Indiana Constitution).

Footnote: 5The Library has a legally cognizable interest in setting its budget. See Lake County Council v. State Bd. of Tax Comm'rs, 706 N.E.2d 270, 280-81 (Ind. Tax Ct. 1999) (tax imposing bodies have an interest in vindicating their right to determine tax rate), motion for reconsideration filed, Feb. 10, 1999. See also State Bd. of Tax Comm'rs v. Marion Superior Court, 271 Ind. 374, 392 N.E.2d at 1165. Accordingly, when the State Board certified the Council's version of the Library's budget, the State Board determined the rights of the Library.

Footnote: 6This obviates the Library's contention that section 36-3-6-9 does not provide for the certification of the modified budget and tax rate to the Auditor. When the Council chooses to modify the Library budget, that budget becomes part of the Council's budget. That budget, which includes the Library's budget, is then certified to the Auditor under subsection 6-1.1-17-5(d)(1). Therefore, there is no need for section 36- 3-6-9 to contain a mechanism for certification of a modified budget to the Auditor.

Footnote: 7That the Council's version of the budget is not the final word on the matter (because the Council's version of the budget is subject to administrative, and hence judicial, review) does not alter this conclusion.

Footnote: 8The Council must act on the Library budget within the deadlines imposed by the statutory provisions governing the Council's adoption of budgets. E.g., Ind. Code § 6- 1.1-17-5 (1998).

Footnote: 9 A court may interfere with the action of a taxing body only if the action was procured by fraudulent corrupt or illegal means, was in bad faith, was arbitrary, capricious, or a clear abuse of discretion, or was so manifestly wrong and prejudicial as to create the firm conviction that it resulted from a palpable disregard of official duty.

Eakin, 444 N.E.2d at 1203-04 (quoting State ex rel. State Bd. of Tax Comm'rs v. Marion Superior Court, 392 N.E.2d at 1166.

Footnote: 10The Court cannot find that in adopting section 36-3-6-9, the General Assembly gave the Council carte blanche to override the state-wide policy choices the General Assembly has made.

Footnote: 11Apparently, the Council had no quarrel with the Library Board's determination of how much it would cost to operate the existing facilities.

Footnote: 12This rule is, of course, subject to the tax rate restrictions adopted by the General Assembly. Additionally, the tax rate is also subject to the “within resources available” limitation. That is not an issue in this case because neither the State Board nor the Council have argued that the Library Board's property tax rate and levy exceed available resources. Moreover, the Council's bare desire to keep the tax rates level does not mean that an increase in the tax rate exceeds available resources.

Footnote: 13The policy of the Council must give way to the policy of the General Assembly. The State Board, as the administrative body charged with reviewing local budgets, must always keep this principle in mind.

Footnote: 14Because the General Assembly has given the Library Board the primary responsibility of deciding the proper amount of library services and the tax rate needed to support that amount of library services, when the Council chooses to make such a determination, it must make a thorough inquiry and support that determination with specific findings. To hold otherwise would subvert the General Assembly's choice of giving the Library Board the primary responsibility for making the required determination. In addition, the imposition of the requirements of a thorough inquiry and specific findings serves the apparent legislative purpose of insulating the Library to a certain extent from the vicissitudes of politics. This may seem anti-democratic, but any complaint along those lines is best addressed to the General Assembly, the legislative body that represents the entire state. See Mechanics Laundry & Supply, Inc. v. Department of State Revenue, 650 N.E.2d 1223, 1230 n.11 (Ind. Tax Ct. 1995).

Footnote: 15In its brief, the State Board argues that the Library is subject to a “doubled abuse of discretion burden.” (State Bd. Br. at 6). The import of this argument is that

the Library has to show that the Council abused its discretion and then that the State Board abused its discretion in determining that the Council did not abuse its discretion. This argument is without merit. Whether a tribunal or entity abused its discretion is a legal question. Therefore, the State Board was engaged in a legal inquiry when it evaluated the Council's action. Consequently, the Court's review concerns whether the State Board made an error of law.

Footnote: 16As a practical matter, the Library Board's autonomy and its expertise in this area, when coupled with the Council's authority to “review and modify” the Library budget, means that these two bodies will have to work together in the future on Library budgets and long-term plans. It is hoped that this litigation will not end the cooperation between the Library Board and the Council.

Footnote: 17Of course, where a budget is contested, the burden of production is on the party challenging the budget. The Court expresses no opinion concerning the quantum of evidence required to discharge this burden because that is not necessary to decide this case. As the State Board concluded, the Library's evidence was “compelling and persuasive in many respects.” Suffice it to say that this finding demonstrates that the Library more than carried its burden of production.

Footnote: 18The Court notes that the State Board's decision must be in accord with its written findings. See Eakin, 444 N.E.2d at 1202; cf. Whitley Prods., Inc. v. State Bd. of Tax Comm'rs, 704 N.E.2d 1113, 1118 (Ind. Tax Ct. 1998) (State Board must accurately state reasons for a decision in its written findings), petition for review filed, Jan. 20, 1999.

Footnote: 19Those unfamiliar with the budget laws may wonder about a legislative body's institutional competence to present evidence. After all, when the Indiana General Assembly adopts a tax, it is not required to present evidence in support of that tax. However, the municipal budget process is wholly different, and municipalities act in an administrative capacity when levying taxes. See Lurie v. City of Indianapolis, 245 Ind. 457, 198 N.E.2d 755, 758 (1964) (citing Zoercher v. Agler, 202 Ind. 214, 172 N.E 907 (1930)). Municipal budgets are also subject to administrative and judicial review. That review is not limited to whether the budgets were adopted according to proper procedures. Budgets are reviewed substantively, see, e.g., Ind. Admin. Code tit. 50, r. 1-1-7 (1996) (a budget can be overturned if it will spend more than the public needs require), and a substantive review is based on evidence, whether that evidence is to be weighed by the reviewer or not. Moreover, in a case, such as this, where relevant factors are required to be taken into consideration, there must be evidence that those factors were in fact taken into consideration.
In addition, the General Assembly has provided for citizen input into the budget process under chapter 6-1.1-17 of the Indiana Code. Where citizens choose to participate in the process, a local fiscal body may be required to adopt written findings concerning the budget it adopts, thus demonstrating that fiscal bodies, such as the Council, do, in fact, have the institutional competence to adopt evidentiary findings to support their positions. Therefore, although policy choices by local fiscal bodies should, as a general rule, be given deference, there has to be an evaluation of the evidence in support of a budget. Without factual evidence in support of a contested budget, how is the reviewing authority supposed to review the propriety of a budget? For these reasons, the Council could not simply rely on its policy of keeping taxes level. Rather, it had to rebut the Library's case with evidence to support its position.

Footnote: 20This order does not run afoul of State Board of Tax Commissioners v. Marion Superior Court, 392 N.E.2d at 1166, which forbids a court from ordering a judicially calculated tax rate. Cf. Town of Syracuse v. Abbs, 694 N.E.2d 284, 288 (Ind. Ct. App. 1998) (courts cannot determine what improvements are necessary for local municipalities). The Court's order merely requires the State Board to certify a budget and tax levy that was already determined by a fiscal body and that was the only budget and tax levy with any evidentiary support below.

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