The New Indiana Supreme Court Decision on Special or Local Laws

Contents 

Special Legislation and the Indiana Constitution
South Bend v. Kimsey
Food and Beverage Taxes
New Local Laws
The Uniform Innkeeper’s Tax

Special Legislation and the Indiana Constitution
Article 4, Section 23 of the Indiana Constitution says

In all the cases enumerated in the preceding section, and in all other cases where a general law can be made applicable, all laws shall be general, and of uniform operation throughout the State.

This is known as the ban on “special legislation” or “local laws.”  This section was written by the drafters of Constitution in 1851 to keep the legislature from creating a jumble of laws applicable here and there throughout Indiana.  It also prevented the legislature from being overwhelmed with bills dealing with local issues, rather than issues important to the whole state.  Article 4, Section 22 contains a list of the kinds of local or special laws the General Assembly cannot pass.

The courts have since recognized that circumstances sometimes arise in different parts of the state that require special treatment.  For years, the General Assembly handled such special laws by using population limits, apparently with the Supreme Court’s approval.  For example, IC 36-4-3-13(g) starts,

This subsection applies only to cities located in a county having a population of more than two hundred thousand (200,000) but less than three hundred thousand (300,000).

The subsection creates a procedure for handling municipal annexations different from the procedure applied to the rest of the state.  Only St. Joseph County has a population between 200,000 and 300,000, so the special procedure for handling annexations applies only in St. Joseph.

South Bend v. Kimsey
This St. Joseph County annexation law was challenged based on the constitutional ban on special legislation, in the case South Bend v. Kimsey.  On January 15, 2003, the Indiana Supreme Court found the law unconstitutional.  In the conclusion to their decision, the court said

Despite its facial generality, this Court finds that subsection (g) does, and was intended to, specifically target St. Joseph County.  Thus, subsection (g) is special legislation.  Although reasons have been advanced to explain why annexation in St. Joseph County must be handled differently than it is in every other county in the state, no facts supporting those reasons have been set forth in the record by the proponents of the special legislation, and we are directed to judicial notice of none. 

There are roughly 600 statutes which use population limits like those disallowed in the Court’s decision, amounting to more than 500 pages of Indiana Code.  Justice Sullivan wrote in his dissent from the court’s decision,

With today’s decision, the Court renders at least suspect the validity of those 500 pages of the Indiana Code.  The only way to resolve the uncertainty will be through litigation, one statute at a time.

Laws that use population limits are not automatically nullified by the Court’s decision.  These laws remain in effect, but all of them may be vulnerable to challenge in the courts.

Food and Beverage Taxes
Food and beverage sales taxes are collected in six counties and five municipalities, and raised about $28 million for local governments in 2002.  Most of these taxes are authorized using population limits (see IC 6-9-20 through 6-9-27).  IC 6-9-20-1, for example, says

This chapter applies to a county having a population of more than one hundred seventy thousand (170,000) but less than one hundred eighty thousand (180,000).

Only Vanderburgh County has such a population.  Marion County’s food and beverage tax law (IC 6-9-12) does not use population limits, but authorizes the tax in counties with a consolidated city.  Indianapolis is the only consolidated city in Indiana, that is, the only city with Unigov.

New Local Laws
Local laws are still allowed under the court’s decision.  Simply using the population limits at the start of a bill, however, would in most cases not meet the court’s requirements.  The Court’s decision said

We agree with the view that a statute with a population category is a special law if it is designed to operate upon or benefit only particular municipalities and thus is essentially no different than if the statute identified the particular municipalities by name.

The Kimsey decision said that laws with population limits, or laws that mention localities by name, are permitted if they are “accompanied by legislative findings as to the facts justifying the legislation’s limited territorial application.”  The law’s “defining characteristics” limit the application of the law to particular places.  This is acceptable if the law’s “justifying characteristics” show that there are features of the place that make a special law necessary.

The Court’s decision early in the legislative session probably kept some local laws from passing.  An example of a local law that did pass is HEA 1811 (which became Public Law 254).  Chapter 34 of this law creates an “Entertainment Facility Admissions Tax.”  This allows a city to apply a fifty cent per admission excise tax to the admission fees of private entertainment events, with the money used for maintenance or construction of highways and sewers that serve the entertainment facility. 

The General Assembly intends this tax for the Verizon Music Center in Carmel City, Hamilton County.  Prior to the Court’s Kimsey decision, Chapter 34 might have started with a population limit of 184,000 to 190,000, which would include only Hamilton County.  Instead, the law restricts the tax to facilities with “a minimum capacity of at least ten thousand (10,000) patrons” and facilities located “in a geographic area that has been annexed by the city before the adoption of the ordinance.”  The Verizon Music Center is the only facility in Indiana which meets these criteria.

We can’t know whether the court would accept these “defining characteristics” if the law were challenged.  However, the law’s defenders could argue that only large facilities require added expenditures on highways and sewers (hence the capacity restriction), and that cities that have annexed a facility need added revenue to provide new infrastructure (hence the annexation restriction). 

The court said that a local law might be justified if it is accompanied by “legislative findings” about the characteristics of a jurisdiction that would make statewide application of a law impractical.   The 2003 General Assembly used this method in House Enrolled Act 1902, which authorized a riverboat casino in Orange County.  The law begins with a series of statements about the unique characteristics of Orange County, starting with “Whereas the West Baden Springs Hotel is an architectural jewel of Indiana. . . .”  It was one of the few bills passed in 2003 that uses population limits, however, in the section treating the distribution of riverboat revenues among local jurisdictions.

The Uniform Innkeeper’s Tax
One way to handle the problem is to make local laws general for the state.  This was done years ago with the innkeeper’s or hotel-motel tax.  Originally the innkeeper’s taxes were local laws for particular counties, identified with population limits.  From 1972 to 1982 laws were passed authorizing innkeeper’s taxes in 16 counties (IC 6-9-1 to 6-9-11 and 6-9-14 to 6-9-17). Most of these counties still operate under these laws.  Allen County, for example, operates its innkeeper’s tax under IC 6-9-9 (Section one says “This chapter applies to a county having a population of more than three hundred thousand but less than four hundred thousand.) 

In 1982, however, the legislature passed a uniform county innkeeper’s tax (IC 6-9-18), giving the remaining counties the ability to adopt an innkeeper’s tax at their option.  Thirty-five counties have adopted innkeeper’s taxes under the uniform law.  The taxes in counties operating under local laws with population limits may be vulnerable to court challenge.  That may be why the General Assembly passed House Enrolled Act 1018, which repeals Knox County’s local law (6-9-5) and requires that an innkeeper’s tax be adopted under the uniform law.