decided: June 3, 1977.
THE TOWNSHIPS OF SPRINGDALE AND WILKINS, POLITICAL SUBDIVISIONS OF THE COMMONWEALTH OF PENNSYLVANIA,
GEORGE J. MOWOD, SECRETARY OF REVENUE, ROBERT P. CASEY, AUDITOR GENERAL, ROBERT P. KANE, ATTORNEY GENERAL, AND GRACE M. SLOAN, STATE TREASURER OF THE COMMONWEALTH OF PENNSYLVANIA, APPELLANTS
Melvin R. Shuster, Deputy Atty. Gen., Dept. of Justice, Craig R. Burgraff, Deputy Counsel, Dept. of Auditor Gen., Harrisburg, for appellants.
F. E. Conflenti, Cauley, Birsic & Conflenti, Pittsburgh, for appellee.
Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Former Chief Justice Jones did not participate in the decision of this case.
[ 474 Pa. Page 84]
OPINION OF THE COURT
Appellees, Springfield and Wilkins Townships, brought this class action*fn1 in equity to compel appellants, certain Commonwealth officials,*fn2 to distribute to local taxing authorities $30,506,545.00 collected in June 1970 pursuant to the Public Utility Realty Tax Act (PURTA).*fn3 The Commonwealth Court held that the failure to distribute these funds to local taxing authorities violated Pa.Const. Article VIII, section 4, and ordered appellants to make an accounting of these funds and notify each local taxing authority of its right to a share of the distribution.*fn4 This appeal followed.*fn5 We conclude that neither PURTA nor the Pennsylvania Constitution require the Commonwealth to distribute these funds, and reverse.*fn6
[ 474 Pa. Page 85]
Pa.Const. Article VIII, section 4 eliminates the historical exemption of public utility property from local real estate taxes.*fn7 Rather than authorizing local taxation, however, it provides that payment by utilities of gross receipts or other special taxes to the Commonwealth, and distribution of an amount no less than the total sum of real estate taxes which local taxing authorities could otherwise have imposed, will be in lieu of direct local taxation.*fn8 This constitutional provision was approved by the voters in 1968, to take effect July 1, 1970, unless the Legislature provided enabling legislation to make it effective earlier.
[ 474 Pa. Page 86]
The Legislature enacted PURTA, which became effective March 10, 1970, shortly before the constitutional deadline.*fn9 PURTA imposes a public utility realty tax, to be collected by the Commonwealth, and provides for annual distributions, beginning in 1971, of a minimum amount of the revenues to local taxing authorities in accordance with a formula set forth in Article VIII, section 4. Pursuant to PURTA and the constitutional amendment, payment of this tax by utilities is in lieu of direct imposition of local property taxes on public utility realty.*fn10
The first collection under PURTA was made on June 1, 1970, and raised $30,506,545.00 in revenues. These funds were deposited in the Commonwealth's general fund*fn11 and were not distributed to local taxing authorities. In accordance with section 7(b) of PURTA, 72 P.S. 3277(b) (Supp.1976), the first distribution of PURTA revenues was made by October 1, 1971, and was derived from the second PURTA collection of June 1, 1971.
Appellees assert that the passage of PURTA, effective March 10, 1970, constituted "earlier . . . enabling legislation" implementing Pa.Const. Article VIII, section 4 immediately. Because, in their view, the "exclusive purpose"
[ 474 Pa. Page 87]
of PURTA was to implement Article VIII, section 4, they urge that the constitutional amendment mandates a distribution of the 1970 PURTA revenues. We cannot agree.
We conclude that, in enacting PURTA, the Legislature did not intend to change the scheduled effective date of Article VIII, section 4. Although PURTA was designed to satisfy the constitutional mandate, nothing in PURTA suggests that the imposition of the public utility realty tax was intended to change the scheduled effective date for the distribution of funds contemplated in Article VIII, section 4. The first distribution of PURTA revenues on or about October 1, 1971, satisfied the constitutional mandate. Consequently, appellees have no right to the distribution of additional revenues.
PURTA provides that, beginning in 1971, funds are to be distributed annually to local taxing authorities by October 1, based upon a formula*fn12 derived from reports submitted to the Commonwealth by local taxing authorities the preceding April. 72 P.S. §§ 3276-77 (Supp.1976). These reports must include an annual assessment of the public utility realty within the political boundaries of each local taxing authority. The first such assessment was to be made by October 1, 1970. 72 P.S. § 3275 (Supp.1976). Each report must also include the local taxing authority's real estate tax rate for the current fiscal year. 72 P.S. § 3276 (Supp.1976). From these reports the Commonwealth determines the "realty tax equivalent"*fn13 for all the local taxing authorities throughout
[ 474 Pa. Page 88]
the state, which is the minimum amount required by Article VIII, section 4 to be distributed annually.
The first distribution of PURTA revenues was based upon the local property assessments made by October 1, 1970, and the local tax rates in force on April 1, 1971. Both dates fall within the Commonwealth's fiscal year beginning July 1, 1970 (fiscal year 1971). Act of April 9, 1929, P.L. 177, § 608, as amended, 71 P.S. § 228 (Supp.1976). July 1, 1970, was also the scheduled effective date of Article VIII, section 4. We conclude from these facts that PURTA provides for the distribution of funds collected during the fiscal year in which the local reports are filed, and was not intended to change the scheduled effective date of Article VIII, section 4 from the beginning of fiscal year 1971. Since the June 1970 PURTA collection was made prior to the effective date of the constitutional amendment, Article VIII, section 4, does not require that the 1970 revenues be distributed to local taxing authorities.
The Commonwealth Court held that, although the first distribution pursuant to PURTA was not required until October, 1971, the Commonwealth was required to distribute some or all of the 1970 PURTA collection along with the distribution from the June 1971 collection. The Commonwealth Court considered a distribution necessary based on its view that PURTA was enacted "exclusively" to raise funds for distribution to local taxing authorities in accordance with Article VIII, section 4.*fn14 We do not agree.
[ 474 Pa. Page 89]
First, the Legislature contemplated no such double distribution when it enacted PURTA. PURTA provides no means for the Commonwealth to determine either the amount to be distributed, or the proportional share due each eligible local taxing authority from the revenue collection in June 1970. Section 6 of PURTA, 72 P.S. § 3276 (Supp.1976), provides that the first annual reports from local taxing authorities, containing their local assessments and current tax rates, be submitted on or before April 1, 1971. In School Districts of Deer Lakes and Allegheny Valley v. Kane, 463 Pa. 554, 566, 345 A.2d 658, 664 (1975), we recognized that this information is essential to the implementation of PURTA's distribution scheme. We held that although the terms of the constitutional amendment mandate distribution of a minimum amount of revenues to local taxing authorities, it is not violated by a section of PURTA which provides that local taxing authorities failing to timely submit the required reports forfeit any share in the distribution. PURTA cannot be read to require a distribution without this information.
Moreover, the PURTA tax was not enacted exclusively to raise funds for distribution to local taxing authorities. In Southeast Delco School District v. Shapp, 468 Pa. 475, 478-88, 364 A.2d 292, 294-95 (1976), we held that nothing in Article VIII, section 4 prohibits the Commonwealth from utilizing PURTA as a source of general revenues for the state, as long as the realty tax equivalent is distributed. It is apparent that, in imposing the PURTA tax, the Legislature contemplated this secondary purpose of providing the Commonwealth with revenues, since a substantial excess of revenues over the constitutional minimum has been collected pursuant to PURTA since Article VIII, section 4 went into effect on July 1, 1970.*fn15
[ 474 Pa. Page 90]
Appellees argue that a determination that the Commonwealth may retain the 1970 PURTA revenues is anomalous and unfair because local taxing authorities, the beneficiaries of Article VIII, section 4, were nonetheless precluded from imposing their real estate taxes on public utility realty in 1970. This argument, however, is not constitutionally significant.
Although Article VIII, section 4 by its terms lifts the exemption from local real estate taxes of public utility realty, it was never intended to authorize direct local taxation. See Southeast Delco School District v. Shapp, 468 Pa. at 475, 364 A.2d at 294, American Telephone & Telegraph Co. v. Board of Property Assessment Appeals and Review of Allegheny County, 461 Pa. 716, 730, 337 A.2d 844, 851 (1975). Rather, it contemplates the use of local tax rates and assessments to determine the amounts to be distributed to local taxing authorities of a tax to be imposed and collected by the Commonwealth.*fn16 PURTA provides that the constitutional amendment be implemented by requiring that the necessary local assessments and reports be made and submitted during the Commonwealth's fiscal year beginning
[ 474 Pa. Page 91]
July 1, 1970, the effective date of Article VIII, section 4, and that the first distribution to local taxing authorities be made no later than October 1, 1971, based on the reports submitted. In School Districts of Deer Lakes, supra, we stated that:
"Article VIII, section 4 expressly authorizes the enactment of a special tax such as PURTA in place of local taxation of public utility realty. The nature of the tax, however, and the details of its imposition, collection and distribution are not spelled out in the constitution. It must be assumed that the framers intended that the legislature should have freedom to make reasonable provision in these respects."
463 Pa. at 564, 345 A.2d at 663. PURTA is designed to effectuate an annual distribution, according to an equitable formula suggested in the constitutional amendment itself, of the statewide "realty tax equivalent." This is all Article VIII, section 4 requires. American Telephone & Telegraph Co. v. Board of Property Assessment, 461 Pa. at 729-30, 337 A.2d at 851.
Since the 1971 distribution of PURTA revenues to local taxing authorities satisfied the mandate of Article VIII, section 4, appellees have no right to a distribution of prior PURTA revenues.
The decree of the Commonwealth Court is reversed.
Each Party pay own Costs.