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A Better Partnership
August 02, 2013

COA holds that storm-water-management charge violated the Headlee Amendment

In County of Jackson v. City of Jackson and Jackson Coffee Co. v. City of Jackson, taxpayers challenged the City of Jackson’s imposition of a storm-water-management charge, arguing it was a new tax imposed in violation of the Headlee Amendment.  The Amendment prohibits local governments from levying a new tax without voter approval; new fees, however, do not require voter approval.  The Court of Appeals sided with the taxpayers, holding that the charge was a tax, not a fee. 

The Court considered three primary factors in making its determination: (1) whether the charge served a regulatory or a money-raising purpose; (2) whether the charge was proportionate to service’s cost; and (3) whether the charge was voluntary.  The Court determined that the charge was primarily to raise revenue, relying heavily on the fact that the City’s storm-water system was formerly paid for out of the City’s general funds.  The Court next held that the charge was not calculated in proportion to its costs.  Most residents were charged a flat fee.  Lastly, the charge was not voluntary.  Every City property owner had to pay it.  Accordingly, the Court entered a declaratory judgment in favor of the plaintiffs, and directed the City to cease collecting the charge and to reimburse plaintiffs for charges paid to date.

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