High Court Declines To Hear Property-Tax Appeals

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The U.S. Supreme Court last week declined to accept appeals in two cases dealing with school district property taxes.

In a case from Texas, the High Court on April 4 declined to revive a lawsuit by a group of Dallas taxpayers who sought refunds of taxes that were collected under a state law that was later ruled unconstitutional by the state supreme court.

In their appeal in Gibson v. Dallas County Education District (Case No. 93-1294), the taxpayers argued that they were denied due process of law because they did not have any means to recover the taxes paid under a 1991 Texas law that created county education districts.

The Texas Supreme Court ruled in 1992 that the school-finance law effectively created a statewide property tax in violation of the state constitution.

However, the court declined to apply its ruling retroactively and said that 1991 and 1992 tax collections should not be disrupted. The court further said that its ruling could not be used as a defense for failure to pay the taxes. (See Education Week, Feb. 5, 1992.)

The taxpayers filed a class action in U.S. District Court in Dallas, claiming that the lack of a remedy under state law to recover the unconstitutional taxes was a violation of the U.S. Constitution's guarantee of due process.

A similar class action by Travis County taxpayers was dismissed by a federal judge, who ruled that the federal Tax Injunction Act barred federal jurisdiction in state-tax matters when state courts are available to address complaints.

A federal judge dismissed the Dallas group's claims because the Travis County class action had been extended to include all Texas property taxpayers. The U.S. Court of Appeals for the Fifth Circuit affirmed the dismissal.

Pennsylvania Taxes

In a separate case, the High Court declined to disturb a ruling by the Pennsylvania Supreme Court that allows a group of taxpayers to use a 19th century federal civil-rights law to challenge a county property-tax system.

In County of Berks v. Murtaugh (Case No. 93-1278), numerous school districts joined with the Berks County government in asking the High Court to reverse the decision of the state supreme court.

The challenge was filed by land owners who contend that the county's system of reassessing property only when it changes hands puts an unfair tax burden on new owners.

The taxpayers based their challenge on the federal Civil Rights Act of 1871, a broad Reconstruction-era law that allows for the redress of constitutional violations made by anyone acting under state authority. The provision is better known as "Section 1983,'' based on its place in the United States Code.

The state supreme court rejected arguments that the taxpayers' group must exhaust state administrative and judicial remedies before raising a Section 1983 challenge to the county's tax system. It said that the federal supremacy clause of the U.S. Constitution, which specifies that federal law supersedes state law, requires that the plaintiffs be allowed to raise the federal issue in its state-court challenge.

In a friend-of-the-court brief filed with the High Court, the Pennsylvania School Boards Association said the state court's decision could expose school district treasuries to "unknown awards of damages and attorneys' fees.''

With the High Court rejecting the county's and school districts' appeal, the case will return to a state trial court.

Vol. 13, Issue 29

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