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Minnesota Supreme Court ruling on St. Paul fees already having statewide impact

Last year Center of the American Experiment decided to get involved in a legal challenge to St. Paul’s right-of-way maintenance fee and filed an amicus brief because we believed the resolution of the case could help protect local taxpayers statewide.  We were right.

St. Paul had been charging a fee to all property owners to fund their portion of the city’s road maintenance budget.  By calling it a fee, the city was able to avoid certain constitutional limitations on taxation, including uniformity requirements, limits on special assessments, and exemptions for churches and other nonprofit organizations.

Cities across the state are using fees more and more to fund general public services like road maintenance, usually in the form of utility franchise fees and special service district fees.  This trend not only bypasses constitutional limitations on taxation, but it obscures the true cost of government and makes it harder for citizens to hold their elected officials accountable.  When revenue is diversified across multiple fees, it becomes incredibly hard for citizens account for how it is collected and used.

In August, the Minnesota Supreme Court issued a landmark ruling that declared the fee charged by the City of St. Paul to fund road maintenance was in fact a tax that was subject to the state constitution’s limitations on taxation.

Less than three weeks from the Court’s ruling, Duluth mayor Emily Larson proposed a budget that would shift current funding for streets raised from utility franchise fees to the property tax levy.  She cited the Court’s ruling against St. Paul as the reason for the shift.

The Duluth News Tribune reports that “Larson referred to the decision as ‘unambiguous’ and said it also threw Duluth’s use of the street fees into question.”  The city’s chief administrative officer offered these additional comments on the impact of the court decision, “While Duluth’s street fee has differences from St. Paul, this ruling puts our current street funding at risk, and if continued, exposes Duluth taxpayers to potential liability.”

This immediate realization of what the ruling means for city budgets and how cities can and cannot use fees is an incredibly positive development.   It shows at least one city is falling in line with the rule of law without needing to resort to further litigation to protect taxpayers.  Hopefully, other cities quickly follow Duluth’s lead.

 

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