Fitzpatrick v. Thomas , 311 Pa. 191 ( 1933 )

Mr. Justice KEPHART filed a dissenting opinion.

Argued March 30, 1933. On a bill in equity filed by taxpayers of the City of Sharon, a city of the third class in this Commonwealth, the court below, by its final decree, enjoined the municipal authorities from assessing the taxes for 1933 at the rate fixed in a duly enacted ordinance, solely because, in estimating the gross amount of revenue which would be received under that assessment, allowance was made for such a proportion of the taxes assessed as long experience had shown would probably not be collected during the ensuing fiscal year, wherein the money collected was to be expended for municipal purposes. This appeal by the municipal authorities followed. The decree must be reversed.

The good faith of appellants and the accuracy of their calculations was expressly found by the court below, and the only reason for its conclusion is that "The presumption is that all taxes will be collected, and from the reading of the law it is apparent that it was so regarded by the legislature when the law was enacted." There is no presumption, however, that all taxes will be collected during the year for which they are assessed, nor does the applicable statute here give the slightest intimation of a recognition of this supposed presumption, which, so far as concerns collections during the ensuing fiscal year, is greatly at variance with all experience.

The applicable provision is section 1810 of the Third-Class City Law of June 23, 1931, P. L. 932, 985, which is as follows: "When all estimates for the receipts, liabilities, and expenditures for the ensuing year shall be made, council shall proceed to make the annual appropriations, and shall fix the tax rate at such figure as, with all sources of revenue, will fully meet and cover the aggregate amount of such estimate." The "receipts" there referred to, do not mean the sums which ought to be received during "the ensuing year," but those which probably will be received, and these must "fully meet and cover" the estimated expenditures of that year. This conclusion is borne out also by a later clause of the same section, which says: "and no appropriation shall be made for any purpose in excess of the estimated receipts for the fiscal year for which such appropriations are made."

Article VI, section 10, of the Act of June 27, 1913, P. L. 568, 593, from which the provision under consideration was taken, provides as follows: "When all estimates for the expenditures for the ensuing year shall be finally made, council shall fix the tax rate at such figure as, with all sources of revenue, will fully meet and cover the aggregate amount of such estimate." It will be noticed that the Act of 1931 requires estimates for receipts and liabilities to be made, when fixing the tax rate, as well as estimates for expenditures, the clause now reading "When all estimates for the receipts, liabilities and expenditures for the ensuing year shall be made," etc., etc. It is reasonable to suppose that the purpose of the change was to make certain that only the estimated receipts — and not the hoped-for receipts, — as well as the estimated expenditures, will be the factors in fixing the tax rate.

In view of the foregoing considerations, perhaps a better construction of the section under consideration than that asserted by the court below would be to say that it is intended to provide for the rule of "pay as you go"; but it is not necessary to decide at this time whether or not it has done so. What we do decide is that, under it, the municipal authorities are vested with a sound discretion in determining, in good faith, what tax rate will be needed to enable the municipality thereby to collect a sum sufficient, with other estimated receipts, to "fully meet and cover the aggregate amount" of the estimated expenditures for the ensuing fiscal year. Admittedly they so acted in the present instance.

The decree of the court below is reversed, and plaintiffs' bill in equity is dismissed at their costs.