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
TERI J. KENDRICK
ANDREW P. SEIWERT
Office of Corporation Counsel
ATTORNEYS FOR INTERVENORS:
THEODORE J. ESPING
BAKER & DANIELS
TERI J. KENDRICK
ANDREW P. SEIWERT
Office of Corporation Counsel
Indianapolis, Indiana _____________________________________________________________________
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. )
NOT FOR PUBLICATION
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.
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.
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
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
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-
must certify the new tax rate to the Auditor.See footnote
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
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
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
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
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.
support that level of service.See footnote
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
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
As stated above, this was improper. The
Council was required to present evidence, not invoke a policy.
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
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.
99-100 (1975) (political subdivisions have no rights under certain provisions of Indiana Constitution).
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 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.
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