B-168024, OCTOBER 27, 1969, 49 COMP. GEN. 284

B-168024: Oct 27, 1969

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CHARGES THAT ARE INCLUDED IN REAL ESTATE TAXES AND NOT DIRECTLY ASSESSED ON TAXABLE PROPERTY. MAY NOT USE APPROPRIATED FUNDS TO PAY FOR SERVICE CHARGES IMPOSED BY A CITY ORDINANCE UNLESS EXTRA PROTECTION IS PROVIDED FOR SPECIAL EVENTS SUCH AS FOOTBALL GAMES. 1969: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 26. THE QUESTION HERE IS WHETHER THE FEDERAL GOVERNMENT IS LIABLE FOR PAYMENT OF THE SERVICE CHARGES ASSESSED BY THE CITY OF NEW LONDON. OR WHETHER SUCH SERVICE CHARGES ARE ACTUALLY A TAX ON THE FEDERAL GOVERNMENT. IT IS CLEAR THAT THE UNITED STATES IS EXEMPT FROM LOCAL TAXATION UNLESS CONGRESS AFFIRMATIVELY PROVIDES OTHERWISE. THAT DOCTRINE IS TREATED AS AXIOMATIC. IT WAS FIRST ENUNCIATED IN MCCULLOCH V MARYLAND.

B-168024, OCTOBER 27, 1969, 49 COMP. GEN. 284

STATES -- MUNICIPALITIES -- SERVICES TO FEDERAL GOVERNMENT -- SERVICE CHARGE V TAX A CITY ORDINANCE THAT ESTABLISHES CHARGES ON TAX EXEMPT PROPERTIES FOR SEWER SERVICES, REFUSE INCINERATION AND DISPOSAL SERVICES, AND POLICE, FIRE AND EMERGENCY AMBULANCE SERVICES, CHARGES THAT ARE INCLUDED IN REAL ESTATE TAXES AND NOT DIRECTLY ASSESSED ON TAXABLE PROPERTY, LEVIES A TAX HOWEVER LABELED, AND THE UNITED STATES EXEMPT FROM LOCAL TAXATION UNLESS CONGRESS AFFIRMATIVELY PROVIDES OTHERWISE, HAS NO LEGAL OBLIGATION TO PAY FOR PROTECTIVE SERVICES A MUNICIPALITY HAS THE DUTY TO PROVIDE. THEREFORE, THE COAST GUARD ACADEMY, LOCATED WITHIN THE CITY LIMITS OF NEW LONDON, CONNECTICUT, AND ENTITLED TO THE PROTECTIVE SERVICES OF THE MUNICIPALITY, MAY NOT USE APPROPRIATED FUNDS TO PAY FOR SERVICE CHARGES IMPOSED BY A CITY ORDINANCE UNLESS EXTRA PROTECTION IS PROVIDED FOR SPECIAL EVENTS SUCH AS FOOTBALL GAMES.

TO THE COMMANDANT, UNITED STATES COAST GUARD, OCTOBER 27, 1969:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 26, 1969, AND ENCLOSURES (YOUR REFERENCE F-2), CONCERNING AN ORDINANCE ADOPTED BY THE CITY COUNCIL OF NEW LONDON, CONNECTICUT, ON AUGUST 4, 1969, ESTABLISHING SERVICE CHARGES FOR TAX EXEMPT PROPERTIES IN THE CITY OF NEW LONDON FOR SEWER SERVICES, REFUSE INCINERATION AND DISPOSAL SERVICES, AND POLICE, FIRE AND EMERGENCY AMBULANCE SERVICES. THE COAST GUARD ACADEMY HAS BEEN ASSESSED SERVICE CHARGES FOR THE PERIOD AUGUST 19, 1969, TO JUNE 30, 1970, TOTALING $37,765, PAYABLE IN TWO INSTALLMENTS OF $15,897 (AUGUST 19, 1969) AND $21,868 (JANUARY 1, 1970).

THE QUESTION HERE IS WHETHER THE FEDERAL GOVERNMENT IS LIABLE FOR PAYMENT OF THE SERVICE CHARGES ASSESSED BY THE CITY OF NEW LONDON, PURSUANT TO THE ORDINANCE ADOPTED BY THE CITY COUNCIL ON AUGUST 4, 1969, OR WHETHER SUCH SERVICE CHARGES ARE ACTUALLY A TAX ON THE FEDERAL GOVERNMENT.

IT IS CLEAR THAT THE UNITED STATES IS EXEMPT FROM LOCAL TAXATION UNLESS CONGRESS AFFIRMATIVELY PROVIDES OTHERWISE. THAT DOCTRINE IS TREATED AS AXIOMATIC. IT WAS FIRST ENUNCIATED IN MCCULLOCH V MARYLAND, 17 U.S. (4 WHEAT) 316 (1819), AND IT HAS BEEN CONSISTENTLY FOLLOWED. SEE ALSO VAN BROCKLIN V TENNESSEE, 117 U.S. 151 (1886); UNITED STATES V POWER COUNTY, IDAHO, 21 F. SUPP. 684 (1937); AND UNITED STATES V CITY OF DETROIT, 355 U.S. 466, 469 (1958). IN ADDITION TO THE ABOVE-CITED COURT DECISIONS, CONNECTICUT HAS, BY STATUTE, EXEMPTED PROPERTY BELONGING TO THE UNITED STATES FROM TAXATION. GENERAL STATUTES OF CONNECTICUT, VOLUME II, SEC. 12 -81.

THE CITY OF NEW LONDON TAKES THE POSITION THAT THE AMOUNT BILLED IS NOT IN ANY WAY A TAX, BUT IS A SERVICE CHARGE FOR SERVICES RENDERED. THE ORDINANCE IN QUESTION ESTABLISHES A SERVICE CHARGE FOR SEWER SERVICE, REFUSE INCINERATION AND DISPOSAL, AND POLICE, FIRE AND EMERGENCY AMBULANCE SERVICE. IT HAS BEEN HELD THAT THE CONSTITUTIONAL IMMUNITY OF THE FEDERAL GOVERNMENT FROM STATE AND LOCAL TAXATION DOES NOT EXTEND TO PAYMENT OF CHARGES FOR SEWER SERVICES WHERE THE AMOUNT THEREOF IS DETERMINED PURSUANT TO THE QUANTITY OF WATER FURNISHED OR THE AMOUNT OF SEWAGE DISPOSED OF, SINCE SUCH CHARGES ARE REGARDED AS THE PRICE OF THE PRODUCT OR SERVICE RENDERED. STATE V TAYLOR, 79 N.E. 2D 127 (1948); 29 COMP. GEN. 120 (1949); 31 COMP. GEN. 405 (1952). THIS SAME PRINCIPLE WOULD BE APPLICABLE TO A CHARGE FOR REFUSE, INCINERATION AND DISPOSAL. THE DIFFICULTY IN THE INSTANT CASE IS THAT THE ORDINANCE IN QUESTION AUTHORIZES THE CITY MANAGER TO CHARGE THE OWNERS OF "TAX EXEMPT FEDERAL, NON-CHURCH AFFILIATED EDUCATIONAL INSTITUTIONS, FEDERAL INSTITUTIONS, MEDICAL INSTITUTIONS AND PUBLIC UTILITIES" A SERVICE CHARGE FOR THE ABOVE-MENTIONED SERVICES WHILE THE INDIVIDUAL TAXPAYERS OF NEW LONDON PAY INDIRECTLY FOR THESE SERVICES THROUGH THEIR PROPERTY TAXES. IN OTHER WORDS THE TAXPAYERS OF NEW LONDON ARE NOT CHARGED A SEPARATE SERVICE CHARGE FOR THESE SERVICES BASED ON THE QUANTUM OF SERVICES RENDERED, INSTEAD THE ASSESSMENT FOR SUCH SERVICES IS INCLUDED IN THE CITY'S PROPERTY TAX. IN A LETTER TO THE SUPERINTENDENT OF THE COAST GUARD ACADEMY, DATED AUGUST 19, 1969, THE CITY MANAGER OF NEW LONDON POINTED OUT THAT:

PROPERTY OWNERS IN NEW LONDON HAVE CARRIED THE BURDEN OF THE COST OF LOCAL GOVERNMENT ALMOST EXCLUSIVELY, THE TIME HAS COME TO SEEK NEW REVENUES *** FOR PAYING FOR THE SERVICES THAT WE ALL NEED AND USE. ***

WE HAVE HELD THAT WHERE CHARGES FOR SEWAGE DISPOSAL ARE INCLUDED IN REAL ESTATE TAXES LEVIED ON A CITY-WIDE BASIS RATHER THAN A QUANTUM BASIS FOR SERVICES RENDERED, SUCH CHARGES CONSTITUTE A TAX FROM WHICH THE FEDERAL GOVERNMENT IS IMMUNE. SEE 31 COMP. GEN. 405 (1952). THIS PRINCIPLE WOULD APPLY WITH EQUAL FORCE TO THE OTHER CHARGES UNDER THE ORDINANCE.

IN ADDITION, REGARDING THE CHARGE FOR FIRE, POLICE, AND EMERGENCY AMBULANCE SERVICE, WE HAVE CONSISTENTLY HELD THAT A CHARGE AGAINST APPROPRIATED FUNDS FOR FIREFIGHTING SERVICES RENDERED BY A MUNICIPALITY IS PRECLUDED WHERE THERE IS NO LEGAL OBLIGATION UPON THE UNITED STATES TO PAY FOR SUCH SERVICES. THIS IS BASED UPON THE PREMISE THAT A MUNICIPALITY IS REQUIRED BY LAW TO RENDER FIRE PROTECTION OR FIREFIGHTING SERVICES TO PROPERTY WITHIN ITS LIMITS, WITHOUT COST TO THE PROPERTY OWNERS. BELIEVE THAT SUCH DUTY EXTENDS TO PROTECTING THE PROPERTY OF THE UNITED STATES LOCATED WITHIN SUCH LIMITS AND, CONSEQUENTLY, SINCE THE GOVERNMENT THUS IS LEGALLY ENTITLED TO FIRE PROTECTION OR FIREFIGHTING SERVICE THERE IS NO AUTHORITY TO CHARGE APPROPRIATED FUNDS WITH THE COST THEREOF. SEE OUR DECISIONS OF FEBRUARY 7, 1945, 24 COMP. GEN. 599, AND OF DECEMBER 2, 1946, 26 COMP. GEN. 382.

THE PRINCIPLES SET FORTH IN THE DECISIONS CITED ABOVE AND IN OTHERS ARE SUMMARIZED IN OUR DECISION OF JULY 2, 1965, 45 COMP. GEN. 1. WHILE WE RECOGNIZED IN THIS LATTER DECISION THAT THERE IS SOME DOUBT THAT LOCAL FIRE DEPARTMENTS HAVE AN OBLIGATION TO FURNISH FIRE PROTECTION SERVICES TO WHAT ARE DESCRIBED THEREIN AS "FEDERAL ENCLAVES" THERE IS NOTHING OF RECORD HERE TO INDICATE THAT THE FEDERAL INSTITUTION IN QUESTION IS SUCH A FEDERAL ENCLAVE.

THE RATIONALE OF THE DECISIONS CITED ABOVE CONCERNING FIREFIGHTING SERVICE CHARGES AND IT CANNOT LEVY DIRECT CHARGES ON THE COAST GUARD LANCE SERVICE. THE CITY OF NEW LONDON DOES NOT MEET THE EXPENSE OF POLICE AND FIRE PROTECTION AND EMERGENCY AMBULANCE SERVICE BY USE OF SERVICE CHARGES AND IT CANNOT LEVY DIRECT CHARGES ON THE COAST GUARD ACADEMY, FOR THESE PROTECTIVE SERVICES, SINCE THE ACADEMY IS LOCATED WITHIN THE NEW LONDON CITY LIMITS, AND, HENCE, IS LEGALLY ENTITLED TO SUCH PROTECTION. ONE EXCEPTION TO THE ABOVE-STATED PRINCIPLE WOULD BE WHERE THE ACADEMY HAS OCCASION TO REQUIRE EXTRA NUMBER OF POLICE FOR SPECIAL EVENTS SUCH AS FOOTBALL GAMES. IN THIS INSTANCE, A CHARGE WOULD BE PROPER UNDER CONNECTICUT LAW. SEE GENERAL STATUTES OF CONNECTICUT, VOLUME IA, SECTION 7-284. HOWEVER, SUCH A CHARGE IS NOT JUSTIFIED FOR ORDINARY FIRE AND POLICE PROTECTION.

IN DETERMINING WHETHER THE FEDERAL GOVERNMENT'S CONSTITUTIONAL IMMUNITY TO TAXATION HAS BEEN VIOLATED, ONE MUST LOOK THROUGH FORM AND BEHIND LABELS TO SUBSTANCE. CITY OF DETROIT V MURRAY CORPORATION OF AMERICA, 355 U.S. 489 (1958). THE PRACTICAL EFFECT OF THE SERVICE CHARGES INVOLVED HERE IS TO TAX THE FEDERAL GOVERNMENT IN THAT THE GOVERNMENT WOULD BE FORCED TO PAY DIRECTLY FOR SERVICES PROVIDED TO OTHER CITIZENS OF NEW LONDON WITHOUT A DIRECT SERVICE CHARGE.

IN SUMMARY, ON THE FACTS PRESENTED, WE CONCLUDE THAT THE ORDINANCE IN QUESTION DOES, IN EFFECT, LEVY A TAX FROM WHICH THE UNITED STATES IS EXEMPT, AND THEREFORE, THE COAST GUARD ACADEMY IS NOT LIABLE FOR, AND MAY NOT PAY SUCH SERVICE CHARGES.

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