G. St. Fleur v. The City of Scranton

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Gary St. Fleur; Nicholas Gettel; Casey :
Durkin; Damian Biancerelli; Rich :
Johnson; Ethan Green; Angela :
Gilgallon; and Michele McGovern :
:
v. : No. 112 C.D. 2020
: ARGUED: September 16, 2020
The City of Scranton, Mayor William L. :
Courtright; and Business Administrator :
David Bulzoni, :
Appellants
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE J. ANDREW CROMPTON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE CEISLER FILED: October 26, 2020
The City of Scranton, Mayor William L. Courtright, and Business
Administrator David Bulzoni (jointly, Scranton)1 appeal from an order of the Court
of Common Pleas of Lackawanna County (trial court). The trial court granted
peremptory judgment in favor of individual Scranton residents Gary St. Fleur,
Nicholas Gettel, Casey Durkin, Damian Biancerelli, Rich Johnson, Ethan Green,
Angela Gilgallon, and Michele McGovern (jointly, Taxpayers) in their mandamus
action against Scranton.
1
The current Mayor is Paige Cognetti and the interim Business Administrator is Patrick
Sheridan.
The trial court concluded that the provisions of The Local Tax Enabling Act
(Enabling Act)2 contained in Chapter 33 thereof, referred to by the parties here as
Act 511,4 set an aggregate limit on taxation that applies to Scranton. As a result, the
trial court ordered Scranton to escrow a total of about $50 million in local taxes to
repay taxes collected from Scranton taxpayers in excess of Act 511’s aggregate limit.
After thorough review, we reverse the trial court’s order.5
I. Background
Scranton, formerly a Second Class A city, is presently a home rule city formed
pursuant to the Home Rule Charter and Optional Plans Law (Home Rule Law).6
Scranton imposes various taxes on its residents, including taxes purportedly levied
pursuant to Act 511.7
2
Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. §§ 6924.101 – 6924.901.
3
Sections 301-330 of the Enabling Act, 53 P.S. §§ 6924.301 – 6924.330.
4
For ease of reference, we use the parties’ designation of Act 511 to refer to the provisions
of Chapter 3 of the Enabling Act.
5
The following amici have submitted briefs in support of Scranton’s position: Members
of the Pennsylvania State Senate, Jay Costa and John Blake, representing Pennsylvania citizens
and taxpayers; the Pennsylvania Department of Community and Economic Development; the City
of Pittsburgh; and the Pennsylvania Municipal League.
6
53 Pa. C.S. §§ 2901 – 2984.
7
The parties dispute whether certain taxes were imposed pursuant to Act 511. Taxpayers
point out that several of Scranton’s financial records refer to certain categories of taxes as “Act
511 taxes.” Scranton counters that such references are not legally accurate or binding, and that the
ordinances enacting the taxes refer to the Home Rule Law, not Act 511, as the enabling legislation.
The trial court determined that all of the ordinances stated they were enacted under the Home Rule
Law and any other applicable laws, and that a number of the ordinances cited both the Home Rule
Law and Act 511. Tr. Ct. Op. at 5.
In light of our resolution of this appeal, however, this issue is immaterial.
2
Among other provisions, and relevant here, Act 511 contains a limitation on
the aggregate local taxes certain municipalities may impose. Specifically, the
aggregate of the various forms of local taxes levied by a municipality subject to Act
511 may not exceed the total value of all real estate in the municipality multiplied by
12 mils (.012). Section 320(a) of the Enabling Act, 53 P.S. § 6924.320(a).
For purposes of this action, it is undisputed that the total value of all real estate
in Scranton in 2015 was $2,273,875,550. Tr. Ct. Op. at 2. Assuming the
applicability of the aggregate local tax limitation in Act 511, the total of all 2015
taxes levied by Scranton could not exceed $27,286,506 ($2,273,875,550 x .012). Id.
In 2017, the total real estate value was $2,304,080,217. Id. at 2 n.3. By our
calculation, the aggregate limitation on that amount would be $27,648,963
($2,304,080,217 x .012).
Taxpayers allege that Scranton collected aggregate Act 511 taxes of
$34,477,500 for fiscal year 2015 and budgeted $36,792,500 for 2016 and $38,045,092
for 2017. Id. at 3. Accordingly, Taxpayers contend that Scranton collected
aggregate taxes substantially exceeding the cap imposed by Act 511. In their
mandamus complaint, Taxpayers asked the trial court to order Scranton to reduce its
tax rates to comply with Act 511’s aggregate limit and to deposit all excess taxes
collected into a separate account for expenditure in the following fiscal year.
Scranton argues that Act 511’s aggregate tax limit does not apply to home rule
municipalities. Scranton asserts that the Enabling Act, of which Act 511 is a part,
expressly does not apply to home rule municipalities. Scranton further posits that
Act 511 is not a statute applicable in every part of the Commonwealth, and therefore,
its purported limitation on aggregate taxes is not an exception to the general
inapplicability of the Enabling Act. In addition, Scranton points out that it is a
3
distressed city pursuant to the Municipalities Financial Recovery Act (Act 47),8 and
as such, is statutorily authorized to impose additional taxes in order to support its
plan for financial recovery. Scranton insists that applying Act 511’s aggregate tax
limit would defeat the purpose of Act 47 and prevent Scranton’s financial recovery.
The trial court was persuaded by Taxpayers’ argument that Act 511’s
aggregate limitation applies to Scranton. Accordingly, the trial court granted
peremptory judgment in favor of Taxpayers. The trial court ordered Scranton to
reduce its tax rates to comply with the aggregate limit and to place in a separate
account the excess taxes collected for 2015, 2016, 2017, and 2018. Tr. Ct. Op. at
10. As the figures above indicate, the resulting tax loss for Scranton would be
approximately $10,000,000 per year. See id.
This appeal by Scranton followed.9
8
Act of July 10, 1987, P.L. 246, as amended, 53 P.S. §§ 11701.101-11701.501.
9
While this case was pending, the legislature amended Act 511 to add the following:
(d) Local Tax Limitations.
The calculation of the aggregate amount of all taxes imposed under this section
shall not include the following:
(1) Any revenues derived from a tax rate in excess of the tax rates authorized
under this chapter which is levied under the act of July 10, 1987 (P.L. 246, No.
47) [Act 47], known as the “Municipalities Financial Recovery Act,” or the act of
December 18, 1984 (P.L. 1005, No. 205), known as the “Municipal Pension Plan
Funding Standard and Recovery Act.”
(2) Any revenues derived from the levy of a tax by a home rule municipality in
compliance with 53 Pa.C.S. § 2962(b) (relating to limitation on municipal powers).
53 P.S. § 6924.320(d) (emphasis added). Thus, the new subsection (d), added by the Act of July
23, 2020, P.L. 76, effective September 21, 2020, provides expressly that the aggregate tax
limitation of Act 511 does not apply to taxes imposed under either Act 47 or a home rule charter.
(Footnote continued on next page…)
4
II. Issues
On appeal,10 Scranton raises three issues, which we paraphrase as follows.
First, Scranton asserts that as a home rule municipality, it is not subject to
limitations in the Enabling Act, and likewise is not subject to Act 511’s aggregate
limit on local taxes. Although Scranton may continue to exercise powers granted to
cities in its former classification (a Second Class A city), limitations in the Enabling
Act, including Act 511, no longer apply to Scranton.
Second, Scranton argues that the Home Rule Law precludes limits on the tax
rates set by a home rule municipality unless those rates are contrary to powers
“granted by statutes which are applicable in every part of this Commonwealth.” 53
Pa. C.S. § 2962(c)(2). Scranton posits that Act 511 expressly applies only to certain
municipal categories rather than to all municipalities. See Section 301.1(a) of the
However, although the amendment is dispositive of the issue going forward, it does not
govern the outcome of this appeal. A statutory amendment during the pendency of an appeal,
clarifying how the legislature views the statutory issue raised in the appeal, is not determinative of
the outcome of the appeal, even though it dictates how the statute will apply in the future.
Hanaway v. Parkesburg Grp., LP, 168 A.3d 146, 157 (Pa. 2017). Our Supreme Court has
observed: “‘We cannot discern the legislative intent of the General Assembly that passed the
relevant, prior version of the . . . statute by examining the intent of the General Assembly that
amended that statute.’” Id. at 157-58 (quoting Commonwealth v. Lynn, 114 A.3d 796, 827 (Pa.
2015)). See also Wayne M. Chiurazzi Law Inc. v. MRO Corp., 97 A.3d 275, 277 (Pa. 2014)
(quoting Commonwealth v. Diodoro, 970 A.2d 1100, 1108 (Pa. 2009) (“the legislative actions of
a later General Assembly are not probative of the legislative intent of a prior General Assembly”),
cert. denied, 558 U.S. 875 (2009)); Commonwealth v. Shaffer, 734 A.2d 840, 843-44 (Pa. 1999)
(quoting St. Joseph Lead Co. & Koppers Co. v. Potter Twp., 157 A.2d 638, 642 (Pa. 1957) (“the
legislature cannot create authority retroactively simply by passing ‘clarifying’ legislation. The
intent of the legislature must be determined as of the time the original act was passed”)).
10
Because our review involves solely the interpretation and application of statutory
provisions, our standard of review is de novo. Pilchesky v. Lackawanna Cty., 88 A.3d 954, 965
(Pa. 2014) (citing In re Carroll, 896 A.2d 566, 573 (Pa. 2006)).
5
Enabling Act, 53 P.S. § 6924.301.1(a). Therefore, Act 511’s aggregate tax limit
does not apply to Scranton.
Third, Scranton contends that as a distressed city authorized to impose
additional taxes under Act 47, it is exempt from Act 511’s aggregate tax limit.
Pursuant to Act 47, Scranton may seek court authorization to impose additional taxes
and charges in order to emerge from its distressed status. Scranton argues that
applying Act 511’s aggregate tax limit would undermine the purpose of Act 47 and
Scranton’s ability to recover from its distressed status.
III. Discussion
A. The Enabling Act and Act 511’s Aggregate Tax Limit
The Home Rule Law provides generally that the subjects of taxation by a
home rule municipality may be limited by statute, but the rates of taxation may not:
[A] municipality which has adopted a home rule charter shall have the
power and authority to enact and enforce local tax ordinances upon any
subject of taxation granted by statute to the class of municipality of
which it would be a member but for the adoption of a home rule charter
at any rate of taxation determined by the governing body. . . . The
governing body shall not be subject to any limitation on the rates of
taxation imposed upon residents.
53 Pa. C.S. § 2962(b). See also 53 Pa. C.S. § 2962(h) (home rule municipality may
levy any tax it would have power to levy if it had not adopted home rule charter), (i)
(no statute shall limit home rule municipality’s authority to establish its own tax
rates regarding all authorized subjects of taxation).
Act 511 authorizes Pennsylvania municipalities to impose various forms of
taxation on municipal residents, and in some instances on nonresidents within the
municipality. See, e.g., 53 P.S. § 6924.301.1(a), (a.1). As explained above, Act 511
includes an aggregate limitation on the total taxes a municipality may impose.
6
The primary dispute in this appeal is whether Act 511’s aggregate tax limit
applies to a home rule municipality. Resolution of this issue requires analysis of the
interplay of Act 511, the Enabling Act generally, and the Home Rule Law.
The Pennsylvania Constitution grants a home rule municipality all powers not
denied by the Constitution, the General Assembly, or the municipality’s home rule
charter. PA. CONST., art. IX, § 2. Therefore, the Home Rule Law is broadly
construed, and any uncertainty is resolved in favor of the municipality and against
statutory limits on the municipality’s power. See 53 Pa. C.S. § 2961; Pa. Rest. &
Lodging Ass’n v. City of Pittsburgh, 211 A.3d 810 (Pa. 2019). “From this, it
necessarily follows that a home-rule municipality cannot, except where specified
clearly by statute or the municipality’s own charter, find itself vested with less
power than a non-home-rule counterpart.” Pa. Rest. & Lodging, 211 A.3d at 824
(emphasis added). Accordingly, “‘a home-rule municipality’s exercise of legislative
power is presumed valid, absent a specific constitutional or statutory limitation.’”
Id. (quoting Se. Pa. Transp. Auth. v. City of Phila., 101 A.3d 79, 88 (Pa. 2014)).
Once a municipality adopts a home rule charter, it is no longer a municipality
of its former class. Danzilli v. Lomeo, 944 A.2d 813, 815 (Pa. Cmwlth. 2008). This
does not mean, however, that a municipality electing home rule status thereby loses
its former statutory powers. “The whole purpose of home rule was to allow citizens
of local political subdivisions to decide how local matters were to be addressed, and
how the local democracy was going to be organized and not be governed by one of
the municipal or county codes.” Id. (citing Cox’s v. Municipality of Monroeville,
484 A.2d 737 (Pa. 1984)) (additional citations omitted). In Pennsylvania Restaurant
& Lodging, our Supreme Court observed that “the legislature intended
municipalities electing home rule to enjoy as much or more authority than
7
municipalities that decline to do so.” Pa. Rest. & Lodging, 211 A.3d at 825.
Therefore, the Court concluded, “a home-rule municipality can invoke the authority
that any municipality in the Commonwealth has been granted.” Id. Nonetheless,
any limits in a municipal code are no longer applicable once a municipality elects
home rule. “‘[A]lthough home rule cities may not be limited or restrained by their
former municipal codes, there is no law preventing a home rule charter from
exercising powers bestowed by its former code.’” Id. (quoting Ziegler v. City of
Reading, 142 A.2d 119, 134 (Pa. Cmwlth. 2016)). To find otherwise, the Court
reasoned, would result in a home rule municipality having less power than before it
elected home rule, contrary to both our Constitution and the intent of the legislature.
Scranton was formerly a Second Class A city, and as such, it was subject to
the Enabling Act, including Act 511. According to our Supreme Court’s reasoning
in Pennsylvania Restaurant & Lodging, once Scranton elected home rule status, it
retained all powers conferred upon it by the Enabling Act, but was no longer subject
to the Enabling Act’s limitations. See also 53 Pa. C.S. § 2962(b), (h), (i). Therefore,
we conclude that while Scranton may impose any type of tax authorized by the
Enabling Act, including Act 511, the aggregate tax limitation contained in Act 511
does not apply to Scranton.
B. The Home Rule Law and Act 511’s Aggregate Tax Limit
As set forth above, the Home Rule Law provides that a home rule municipality
is bound by statutory limits on subjects of taxation, but not limits on rates. Taxpayers
alternatively contend, however, that Act 511’s aggregate limit is not a limit on any
individual tax rate, and therefore, the aggregate limitation is not proscribed by the
Home Rule Law. Scranton counters that because it would have to reduce the rate of
one or more types of tax in order to comply with Act 511’s aggregate limit, the effect
8
of Act 511’s application is to limit one or more of Scranton’s tax rates, contrary to
the Home Rule Law and the Pennsylvania Constitution. We agree with Scranton.
As discussed in section A above, both the Pennsylvania Constitution and the
legislature have endowed home rule municipalities with the broadest possible power.
To the extent there is any uncertainty whether Act 511’s aggregate tax limitation is
a limit on tax rates, Act 511 must be construed to favor Scranton as the home rule
municipality. Therefore, any doubt must be resolved in favor of concluding that the
aggregate tax limit is impermissible as applied to Scranton. See authorities cited in
section A; see also Cty. of Delaware v. Twp. of Middletown, 511 A.2d 811, 813 (Pa.
1986) (in analyzing a home rule municipality’s exercise of power, all ambiguities
are resolved in favor of the municipality).
Moreover, even if this Court were to conclude that Act 511’s aggregate limit
is not a limit on a tax rate, it is indisputably still a limitation. As explained in Section
A above, statutory limitations that would have applied to Scranton as a Second Class
A city are no longer applicable under home rule. Thus, the aggregate tax limit is
inapplicable in any event.
Further, Scranton asserts that the Home Rule Law does not limit the tax rates
imposed by a home rule municipality unless those rates are contrary to powers
“granted by statutes which are applicable in every part of this Commonwealth.” 53
Pa. C.S. § 2962(c)(2). Act 511 expressly applies only to certain municipal categories
rather than to all municipalities. See 53 P.S. § 6924.301.1(a). Accordingly, Scranton
reasons that Act 511 does not apply “in every part” of Pennsylvania and does not
limit Scranton’s taxing power. We agree.
Court decisions have not been fully consistent in determining which statutes
are “applicable in every part of this Commonwealth.” Accord In re Condemnation
9
of Tax Parcel No. 38-3-25 Valley Station Road, Coatesville, PA 19320, 898 A.2d
1186, 1191 (Pa. Cmwlth. 2006) (“[w]hether a provision contained in a city or county
code applicable to that particular class of city or county is a statute that is ‘uniform
and applicable in every part of this Commonwealth’ has been decided somewhat
inconsistently”).
Nonetheless, we find Act 511’s inapplicability here is clear. Act 511 applies
only to specified categories of municipalities. Although it applies to Second Class
A cities – Scranton’s former status – it does not apply to home rule municipalities.
See Section 301(a) of the Enabling Act, 53 P.S. § 6924.301(a). Thus, Act 511’s
aggregate tax limitation is likewise inapplicable to home rule municipalities.
Taxpayers argue that Act 511 should be construed as applicable to home rule
municipalities because it applies in every part of the Commonwealth, even though it
facially does not apply to home rule municipalities. This argument is without merit.
C. Act 47 and Act 511’s Aggregate Tax Limit
Scranton argues in the alternative that applying Act 511 to limit taxes
authorized by Act 47 would undermine the purpose of Act 47 and endanger
Scranton’s financial recovery from its distressed city status. Because we find that
Scranton is not subject to Act 511’s aggregate tax limit, we need not reach this
alternative argument. Nevertheless, we address it briefly for completeness.
The purpose of Act 47 is “to foster fiscal integrity of municipalities so that
they provide for the health, safety and welfare of their citizens; pay due principal
and interest on their debt obligations when due; meet financial obligations to their
employees, vendors and suppliers; and provide for proper financial accounting
procedures, budgeting and taxing practices.” Section 102(a) of Act 47, 53 P.S.
§ 11701.102(a); see Borough of Wilkinsburg v. Dep’t of Cmty. & Econ. Dev., 728
10
A.2d 389, 390 (Pa. Cmwlth. 1999) (quoting 53 P.S. § 11701.102(a)). Act 47 applies
to all municipalities in Pennsylvania, including home rule municipalities. Section
103 of Act 47, 53 P.S. § 11701.103. Among other things, Act 47 empowers a
distressed municipality, once it has adopted a recovery plan, to petition the relevant
court of common pleas for authorization to impose earned income taxes, real
property taxes, or both, in excess of limits otherwise imposed by law. See
Wilkinsburg, 728 A.2d at 390 n.4 (citing Section 123(c)(1) of Act 47, 53 P.S.
§ 11701.123(c)(1)).
Scranton argues that applying Act 511’s aggregate limit to force repayment of
taxes will endanger the city’s recovery from its distressed status under Act 47. We
reject this argument.
Scranton has availed itself of distressed status since 1992. See In re City of
Scranton, 638 A.2d 379, 380 (Pa. Cmwlth. 1994). According to the Pennsylvania
Economy League of Central PA, LLC (PEL), the entity appointed by the Secretary
of Community and Economic Development as the coordinator of Scranton’s
recovery, Scranton “was confronted with a poor economy and declining population
in the 1980s. [Scranton] responded by increasing taxes significantly, which
produced a non-competitive tax structure. The overall result was self-defeating and
further depressed [Scranton’s] economy.” Id. at 382. After 28 years, Scranton still
has not recovered from its distressed status.
Scranton fails to explain how Act 511’s aggregate tax limit would curtail its
ability to recover from distressed status. Regardless of Act 511’s applicability,
Scranton may still seek additional tax authority under Act 47. See id. at 383 (taxes
limited by other laws are not exempt from a grant of authority under Act 47). Indeed,
the very purpose of the additional tax provision of Act 47 is to allow a distressed
11
municipality, with court approval, to impose taxes in amounts exceeding any limits
imposed by other laws. See 53 P.S. § 11701.123(c)(1). Therefore, Act 511’s
aggregate tax limitation is irrelevant to Scranton’s distressed status or its recovery
efforts.11
Nonetheless, because we find Act 511’s aggregate limitation inapplicable on
other grounds, the absence of merit in Scranton’s Act 47 argument is not fatal to its
appeal.
IV. Conclusion
For the reasons discussed above, we find that Scranton is entitled under the
Home Rule Law to collect taxes from its residents in amounts exceeding the
aggregate tax limitation set forth in Act 511. Accordingly, we reverse the trial
court’s order.
__________________________________
ELLEN CEISLER, Judge
Judge Covey concurs in the result only.
11
Of course, the court of common pleas may decline to authorize additional taxes if it finds
they are unnecessary to Scranton’s recovery. A court’s review of a tax request under Act 47 “is
designed to establish both the existence of an actual deficit and the absence of any abuse of
discretion on the part of the municipality.” In re City of Scranton, 638 A.2d 379, 382 (Pa. Cmwlth.
1994).
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Gary St. Fleur; Nicholas Gettel; Casey :
Durkin; Damian Biancerelli; Rich :
Johnson; Ethan Green; Angela :
Gilgallon; and Michele McGovern :
:
v. : No. 112 C.D. 2020
:
The City of Scranton, Mayor William L. :
Courtright; and Business Administrator :
David Bulzoni, :
Appellants
ORDER
AND NOW, this 26th day of October, 2020, the order of the Court of Common
Pleas of Lackawanna County dated December 16, 2019 is REVERSED.
__________________________________
ELLEN CEISLER, Judge