Appeal from the order of the Court of Common Pleas of Allegheny County, in case of Springdale Township v. Allegheny County Board of Property Assessment, Appeals and Review and West Penn Power Company and County of Allegheny, No. G.D. 80-29431.
Lawrence A. Demase, with him, C. Andrew McGhee, Rose, Schmidt, Chapman, Duff & Hasley ; Of Counsel: Thomas K. Henderson, for appellant.
No appearance for appellees.
Judges Craig and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Senior Judge Barbieri.
[ 116 Pa. Commw. Page 150]
West Penn Power Company (West Penn) appeals an order of the Allegheny County Court of Common Pleas denying its motion for post-trial relief from an order holding that some or all of West Penn's Springdale generating plant was subject to local real estate taxes for the years 1978 to the present.
Springdale Township (Township) appealed assessments for West Penn's Springdale plant for 1978 and subsequent years to the Allegheny County Board of Property Assessment, Appeals and Review (Board). The Township claimed that portions of the plant property are not used in furnishing public utility service and therefore subject to local realty tax. The Board held that the property was taxable under the Public Utility Realty Tax Act*fn1 (PURTA) for the years in question and therefore exempt from local real estate taxes.
[ 116 Pa. Commw. Page 151]
On appeal, the trial court held that property at the plant which was not in actual use was not taxable under PURTA and remanded the case to the Board to determine what property was not in actual use during the years in question. This appeal followed.*fn2
Prior to 1968, real property essential to the operation of a public utility was generally exempt from local real estate taxes.*fn3 Article VIII, Section 4 of the Pennsylvania Constitution was adopted at the Constitutional Convention of 1967-68.*fn4 The Constitutional amendment was adopted in response to a concern on the part of local taxing authorities that the exemption was depriving them of a substantial source of revenue. See, American Telephone and Telegraph Co.
Article VIII, Section 4 of the Pennsylvania Constitution provides in pertinent part, as follows:
[ 116 Pa. Commw. Page 152]
The real property of public utilities is subject to real estate taxes imposed by local taxing authorities. Payment to the Commonwealth of gross receipts taxes or other special taxes in replacement of gross receipts taxes by a public utility and the distribution by the Commonwealth to the local taxing authorities of the amount as herein provided shall, however, be in lieu of local taxes upon its real property which is used or useful in furnishing its public utility service. The amount raised annually by such gross receipts or other special taxes shall not be less than the gross amount of real estate taxes which the local taxing authorities could have imposed upon such real property but for the exemption herein provided. (Emphasis added.)
Article VIII, Section 4 was designed to permit local taxation of public utilities while avoiding the imposition of real estate taxes directly upon the utilities by local taxing authorities. Payment of real estate taxes to the local taxing authority where a public utility was located would result in a windfall to the locality. This is because the taxation would be reflected in the utility's rates to consumers both inside and outside of the locality where the utility is situated.*fn5
There was an existing gross receipts tax on intrastate activities of most public utilities*fn6 at the time Article VIII, Section 4 was adopted. Rather than expanding the existing gross receipts tax in order to implement the
[ 116 Pa. Commw. Page 153]
Constitutional provision, the Legislature enacted PURTA, "which imposed a state-wide property tax upon the 'depreciated value' of the real estate of public utilities." American Telephone and Telegraph Co. at 723, 724, 337 A.2d at 848 (citations omitted). Under Section 1107-A of PURTA, 72 P.S. § 8107-A,*fn7 the Pennsylvania ...