MASTRANGELO v. BUCKLEY

Opinion by

Me. Justice Roberts

Concurring in Part and Dissenting in Part :

I fully concur in the Court’s determination that City Council is totally and completely without power to enact any interim taxes for City purposes under any circumstances. The imposition by City Council of any such city tax for use during its current budget period is specifically and unequivocally prohibited by the Home Rule Charter.¹ I also concur with the Court’s disposition of the appropriations transfer ordinances. However, I dissent from the majority’s decision that Bills Nos. 828 and 829, designed to raise funds for the School District’s budget, are invalid.

I

At the outset it is not inappropriate for this writer — the author of the dissenting opinion in Phillips v. Tate, 431 Pa. 124, 128, 244 A. 2d 774, 776 (1968) (joined in by Mr. Chief Justice Bell and Mr. Justice O’Brien) — to observe that this second round of the City Administration’s budget-tax maneuvering does not come as an unanticipated controversy. Nor am I at all surprised by the City’s present position that since the majority of this Court in Phillips judicially approved the City’s deficit-surplus-budget device by glossing over the annual balanced budget mandate provisions of the Home Rule Charter, we should now go the whole way — undeterred by Charter or other legal “technicalities” — and hold permissible the imposition of the present interim City taxes.

In the Fall of 1967 the City Administration prepared a twelve month’s budget for 1968 which called for $24,000,000 more in appropriations than in receipts. Faced with this unbalanced deficit budget and the necessity for either reducing expenditures or increasing taxes, the City Administration chose to ignore the existence of a $24,000,000 deficit and proceeded to create in its stead the appearance of a $24,000,000 surplus by the simple but entirely unsound expedient of changing its annual budget to an eighteen month fiscal budget. See Phillips v. Tate, dissenting opinion. What the City did in effect was to join a twelve month unbalanced deficit budget with an additional six month surplus budget and thereby create an eighteen month budget showing a $24,000,000 surplus. In reality the City joined together two unbalanced budgets (each bad, because one is for a deficit and the other for a surplus). It is indeed a fundamental and well-established principle of local governmental tax and budgeting practice that precludes the taxing and budgeting authorities from budgeting for a deficit or for a surplus. In the former the City is proposing to spend more than its receipts and in the latter it is taxing more than is required to balance its expenditures. Either a deficit budget or a surplus budget is obviously an unbalanced budget. Each is equally contrary to sound and acceptable governmental administration. In 1967 the City by joining together two unbalanced budgets paved the way for its present fiscal predicament.

I am delighted that this Court has now emphatically rejected the City’s appeal for further approval to conduct its budgeting and taxing responsibilities in derogation of tbe Charter. The Court’s decision today restores meaning and vitality to the fiscal provisions of the Charter and goes a long way toward insuring compliance with the budgeting and taxing provisions of the Charter and maintaining the integrity of the Charter.

What was really involved in both rounds of this budgeting-tax controversy was (1) in the first round (Phillips) the City Administration sought to avoid the consequences of an unbalanced deficit budget and the necessity of a tax increase in the Fall of 1967 and (2) in the present round the City sought to make its diagnosis (a $38,000,000 deficit for City purposes — the exhaustion of the $24,000,000 surplus plus the 13.8 million dollars in new taxes), prescribe the medicine and divide the dosage of increased taxes to the taxpayer by a substantial increase of taxes in January 1969 and another such increase in taxes in July 1969.

Unfortunately, the total number of tax dollars Philadelphia taxpayers will be required to pay is precisely the total of all the budget appropriations. The only way the taxpayer pays less taxes is if there is a reduction in expenditures; he pays no less because of budget changes as in Phillips or because of a two-step January and July tax increase as in the present case. All that that technique achieves is to permit the City Administration to decide the amount or portion of the dosage of increased taxes and the time it deems it most advantageous to administer it to the taxpayers with a minimum of adverse damage to its image.

II

Turning to my differences with the majority opinion, I believe that the court below correctly concluded that Bills Nos. 828 and 829, which establish taxes for School District purposes, were not interim taxes and thus were not within the Charter prohibition that bars the City from at this time passing taxes for its own purposes. It is absolutely clear that the School District fully complied with the requirements of the Charter by' submitting to the Mayor and Council in April a lump sum statement of anticipated receipts, and expenditures for its ensuing fiscal year (July .1, 1968 to June 30, 1969), together with a request for authority to levy taxes. Since the School District was on an independent budget schedule² from the City (and its departments) these taxes would have been perfectly proper and within the Charter at the time when they were requested by the School District. Council, for whatever reason, chose to do nothing about this until December, when it also attempted to pass taxes for current City purposes. But while the city taxes were unquestionably interim taxes, the School District taxes were nothing more than the taxes which the School Board properly requested in the Spring. The school taxes are in no way “interim” — they are merely late.³ They are, as -the School District points out, measures that are separate and distinct from the tax ordinances which aim at raising money for City purposes.

Perhaps the City thought that it could gain sympathy by creating the appearance that the school taxes were inextricably tied to the city-deficit tax package. This of course is not the case, but by the same token, neither is it propér in effect to penalize the School District, which has at all times complied with the Charter (by timely submitting its budget to City Council, from which it needed authority to balance its budget for a full school year), because the City has painted itself into a corner.

As to Bill No. 826, which “balances” the real estate tax increase in Bill No. 829, by decreasing the rate of the real estate tax for City use, I believe that the court below and the majority opinion have incorrectly invalidated the measure. Bill No. 826 provides for a tax decrease. Thus this is not a. measure of interim taxation, since it really is nontaxation, and. I believe that viewed in this light, it is permissible under the Charter at any time.

In summary then, I would:

Affirm the court below as to its holdings concerning Bills Nos. 822, 823, 824, 825, 827, 828 and 829.

Reverse the court below as to Bill No. 826.

I therefore would strike down all the measures passed except: the parking fines (Bills Nos. 822-23); the School District taxes (Bills Nos. 828-29);⁴ and the decrease in the real estate tax for City use (Bill No. 826).

1 Tlie relevant parts of the Charter and the reasons why they bar interim taxation are more than adequately set out in Justice Jones’ opinion.

2 Under Phillips v. Tate, the City is on an 18 month budget commencing on January 1, 1968 and terminating on June 30, 1969. The City’s announced aim in having an 18 month budget was to convert to a (presumably 12 month) July 1st fiscal year. The School District however has been and still is on a July 1 fiscal year. Thus the School District’s new budget and request for additional taxes came at the end of its usual 12 month budgetary period and at the proper time for the preparation of the budget for the new period.

3 As to the real estate taxes, since these are levied on a calendar year and do not become effective until January 1st, the delay by Council will not adversely affect the interests of the School District or the taxpayers.

4 On February 4, 1969, a three judge Philadelphia Common Pleas Court unanimously struck down Bill No. 828 (the stock transfer tax) as excessively vague. That issue is not before us in this case, and nothing in this opinion is meant to reflect any view as to this issue.