City Can Assess Utility Fee to Churches for Fire Prevention Costs

Fee covers expense of a service, court says.

Church Law and Tax 1995-01-01 Recent Developments

Taxation – Church Property

Key point: A city’s attempt to recover the cost of providing water for public fire protection by adding a fee to utility bills may be applied to churches without violating the first amendment guaranty of religious freedom.

A Wisconsin court ruled that a city could assess a fee against all utility customers, including churches, to pay for the cost of providing water in the event of a fire.. The city provides water services as a public utility under state law, and is authorized to recover its costs by charging each utility customer a fee based on property value. The city simply adds the fee to each customer’s water bill. A church refused to pay the additional fee, arguing that it amounted to an unconstitutional “tax” on religion in violation of the first amendment. A trial court disagreed, and its decision was affirmed on appeal. The appeals court observed that “the primary purpose of a tax is to obtain revenue for the government, while the primary purpose of a fee is to cover the expense of providing a service.” It concluded that the additional charge added to utility customers’ bills was a fee rather than a tax:

Here, the purpose of the [additional charge] is to cover the public utility’s expense of making water available, storing the water and ensuring that water will be delivered in case it is needed to fight fires at the utility customers’ properties …. Because the purpose of the [additional charge] is to cover the public utility’s expense of making water available, storing the water and ensuring that water will be delivered in case it is needed to fight fires at the utility customers’ properties, its substance is consistent with a fee, not a tax.

The court pointed out that the additional charges lacked some of the common characteristics of a property tax. For example, the statute authorizing the additional charge was not part of a property tax law, and liens could not be imposed on properties of customers who did not pay the additional charge. The court concluded that “because we concluded that the [additional charge] is a fee and not a tax, the church’s constitutional challenge … must fail.” River Falls v. St. Bridget’s Catholic Church, 513 N.W.2d 673 (Wis. App. 1994).

See Also: Property Taxes

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