Opinion ID: 1137001
Heading Depth: 1
Heading Rank: 5

Heading: Public Policy Ramifications

Text: If we allow counties, school districts, and municipalities to tax special districts, four negative public policy ramifications will ensue. First, the taxpayers of special districts will be denied the benefits of their bargain. A special district with ad valorem taxing authority must have its millage rate authorized by law and then have that tax approved by a vote of those electors who are holders of freeholds within the special district not wholly exempt from taxation. Art. VII, § 9(b), Fla. Const. The creation of a special district, therefore, is similar to the creation of a contract. The voters approve a certain millage rate with the expectation that a certain level of services will be provided through the tax revenues generated. The special district's budget is constructed based upon projected revenues. If the unprecedented tax at issue in this case is approved, special districts will undoubtedly experience a budget shortfall. Special district taxpayers will then receive either a reduced level of services or a request for increased taxes. Neither is fair. Further, the type of taxation at issue deprives many special district taxpayers of input as to the expenditure of their taxes. Indeed, many of those taxpayers will receive no benefits from their taxes. This is because, in the case of multi-county special districts, the taxes will be largely paid by special district residents living outside the borders of the taxing entity. Second, the Department of Revenue and Brevard County are concerned that the lessees in this case are using governmental property for nonpublic purposes. I reiterate that this view ignores the fact that the lease revenues are being used for the public purposes of the special district. It also ignores the fact that the constitution foresees and authorizes the use of leases by port authorities. Article VII, section 10, of the Florida Constitution reads, in relevant part, as follows: Neither the state nor any county, school district, municipality, special district, or agency of any of them, shall become a joint owner with, or stockholder of, or give, lend or use its taxing power or credit to aid any corporation, association, partnership, or person; but this shall not prohibit laws authorizing: . . . . (c) the issuance and sale by any county, municipality, special district or other local governmental body of (1) revenue bonds to finance or refinance the cost of capital projects for airports or port facilities, or (2) revenue bonds to finance or refinance the cost of capital projects for industrial or manufacturing plants to the extent that the interest thereon is exempt from income taxes under the then existing laws of the United States, when in either case, the revenue bonds are payable solely from revenue derived from the sale, operation, or leasing of the projects. (Emphasis added.) There is no justification for taxing CPA simply because it has entered leases that are expressly authorized by the constitution. Third, drawing a line of distinction between special districts and counties or school districts creates a constitutional caste system. Governmental entities treated the same in the text of the constitution should not, by whim, be given varying degrees of importance. Such an outcome is analogous to a judicial decision declaring that the executive branch of government has less importance than the judicial or legislative branches. There is no more constitutional support for a finding of inequality among governmental entities at issue in this proceeding than there would be for a determination of inequality among the three branches of government. Fourth, the taxation at issue in this case, if allowed, will severely limit the use of special districts in Florida. This is not simply a prediction that the sky is falling. Instead, it is well supported by the absurd scenario presented by the Broward County amicus brief. Broward County is a successor in interest to the Port Everglades Authority. It takes the position that the authority should be immune from taxation and thereby relieved of all liability for taxes that Broward County itself assessed for the years 1990 through 1994. This situation highlights the incongruous results that would be expected if special districts are stripped of their immunity. Indeed, Broward County makes the point that it is only concerned with those taxes assessed on property leased for nongovernmental purposes between 1990 and 1994. That same property, presumptively still leased for nongovernmental purposes, is now immune because it is owned by the county. This reenforces the view that special districts will become the ugly ducklings of governmental entities if stripped of their immunity. Many will likely transfer their powers to immune entities. It makes no sense whatsoever to create a system in which the Canaveral Port Authority is liable for taxes at its port for using property in the same way that Broward County uses its port property with immunity. Needless to say, the framers of the constitution certainly did not envision such an outcome.