Nov. 17, 2015 – In a dispute between the Town of Hoard and Clark County, a state appeals court has ruled that the county must pay the town an ordinance-imposed fee for the cost of fire protection services relating to a county-owned medical center within the town.
The county argued that counties are exempt from general taxes under state law, and the town’s annual fire protection fee was really a general tax on property owners. In addition, the county said the town may only charge for services actually provided.
The Clark County Circuit Court granted summary judgment, ruling in favor of the town. In Town of Hoard v. Clark County, 2015AP678 (Nov. 12, 2015), the District IV Appeals Court affirmed, ruling the town’s fee was not a tax and was allowed under state law.
“[W]e conclude that the undisputed facts demonstrate that the charge is a fee, not a tax,” wrote Presiding Judge JoAnne Kloppenburg for a three-judge panel.
The panel noted that a charge is not a tax if the fees cover expenses for specific activities. Here, the town was charging a fee specifically for fire protection services.
It also rejected the county’s argument that the annual fee was a general tax because the town imposed it, not a public utility, and failure to pay resulted in a tax lien. In making that argument, the county had relied on City of River Falls v. St. Bridget’s Catholic Church of River Falls, 182 Wis. 2d 436, 513 N.W. 2d 673 (Ct. App. 1994).
“Nowhere in City of River Falls did we suggest that these facts – whether a municipality is acting as a public utility and whether non-payment results in a tax lien – are part of the test used to determine whether a charge is a tax or a fee,” Kloppenburg wrote.
The applicable test, the panel noted, asks “whether the primary purpose of the charge is to cover the expense of providing services, supervision, or regulation.”
The Town of Hoard showed that the primary purpose of the charge was to provide fire protection services, the panel explained. The 2013 ordinance it passed calculates a property’s fire protection fee based on square footage and type of property.
The fees are used only to fund the fire department, shared by numerous municipalities, and municipal contributions depend on the number of “domestic user equivalent” (DUE) units within the municipality. Annual contributions are “divided by the total number of DUE units in the funding system to then allocate amongst the property owners.”
Based on the formula, the town charged the county $3,327 to provide fire protection services to the county’s medical center. In its ruling, the panel noted that state statute requires municipalities to provide fire protection services within their boundaries.
Wis. Stat. section 60.55(2)(b) allows town boards to “charge property owners a fee for the cost of fire protection provided to their property … according to a written schedule established by the town board.” But the county said “provided” means actually rendered in response to a fire or other emergency, not for merely being “available.”
The county also argued that the town already has the power to levy a general tax to pay for making fire protection services “available,” so the statute requires “actual” service.
“[T]he County wrongfully assumes that a fee cannot be assessed for making fire protection ‘available,’” Judge Kloppenburg wrote. “Here, the presence of a fire district standing by ready to extinguish fires constitutes a fire protection service for which a fee may be assessed.”