Supreme Court Issues Ruling in Equal Protection Tax Case

Back in February, NLC signed on to an amicus curiae brief filed by the State and Local Legal Center (SLLC) in a U.S. Supreme Court case, Armour v. Indianapolis, that would decide whether the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution allows a city to forgive tax obligations to be paid in installments over time, while not refunding payments made by those who paid their tax assessments in full.

On June 4, the Court ruled 6 to 3 that Indianapolis did not violate the Equal Protection Clause when it forgave the assessments of homeowners who paid for sewer improvements in multi-year installments but issued no refunds to homeowners who paid for the same improvements in a lump sum.  The Court held that the city had a rational basis-administrative considerations-for distinguishing between lot owners who already paid for their share of the sewer improvements and those who had not.

When the City moved from one method of financing sewer improvements to another method, it forgave the debt of homeowners who paid for their sewer improvements in installments but gave no refund to lump sum payers. Lump sum payers sued, arguing the City violated the U.S. Constitution's Equal Protection Clause. Distinctions in tax classifications comply with the Equal Protection Clause if they have a rational basis.

Justice Breyer, writing for the majority, concluded that administrative considerations-in maintaining an administrative system that would collect debt for up to 30 years, for 20-plus construction projects, with monthly payments as low as $25 per month-provided a rational basis for distinguishing between those that had paid their assessments in full and those that had not. Citing the amicus brief, the Court pointed out that if the city failed to forgive installment payers' debt it would have to "keep files on old, small, installment-plan debts, and (a city official says) possibly spend hundreds of thousands of dollars keeping computerized debut-tracking systems current."

The brief was drafted by Jon Laramore and Scott Chinn of Faegre Baker Daniels in Indianapolis. In addition to NLC, it was signed by the International City/County Management Association, the National Association of Counties, the National Conference of State Legislatures and the U.S. Conference of Mayors.

The SLLC files amicus curiae briefs in support of states and local governments in the U.S. Supreme Court, conducts moot courts for attorneys arguing before the Supreme Court, and provides other assistance to states and local governments in connection with Supreme Court litigation. NLC serves as a SLLC trustee.

Related: NLC Argues for City Discretion Before Supreme Court (Nation's Cities Weekly, 2/13/12)