Alabama Advisory Opinions June 04, 2013: AGO 2013-054 (June 04, 2013)

Advisory Opinion Text

Honorable Timothy J. Ryan

President, North Shelby Library

5521 Cahaba Valley Road

Birmingham, Alabama 35242

Exemptions - Library Boards - Service Charges - Ad Valorem Taxes - Shelby County.

The requirements of sections 40-8-1 and 40-8-4 of the Code of Alabama do not apply to the service charges collected by the North Shelby Library District.

Properties exempted from fees and charges pursuant to the provisions of chapter 9 of title 40 of the Code are exempt from the service charges of the North Shelby Library District.

Luther Strange, Attorney General.

Dear Mr. Ryan:

This opinion of the Attorney General is issued in response to your request on behalf of the North Shelby Library District.

QUESTIONS 1 AND 2

Are the percentage assessments for Class I through IV properties, set forth in section 40-8-1 of the Code of Alabama, applicable to the service charges of the North Shelby Library District ("District")?

Are the provisions of section 40-8-4 of the Code applicable to the service charges of the District?

FACTS AND ANALYSIS

Act 88-258, a local act applicable to Shelby County, authorizes the establishment of library districts upon approval of the voters in an election. 1988 Ala. Acts No. 88-258, 393. The act also provides for an "election on the question of levying a proposed service charge . . . ." Id. at 394. Pursuant to this act, a special election was held on June 28, 1988, approving the creation of the North Shelby County Library District and a schedule of service charges.

In an election held on November 6, 1990, the voters approved modifications to the service charges. Act 2000-358 amended the procedure for the election of the board members of the District and the procedure for enlarging the boundaries of the District, but did not otherwise amend the service charges authorized by Act 88-258 or the results of the elections held pursuant thereto. 2000 Ala. Acts No. 2000-358, 557. Additionally, according to information you provided to this Office, all of the service charges heretofore collected have been used exclusively to fund the costs of various functions of the District and have not been used as revenue for other governmental entities.

Section 40-8-1(a) of the Code applies "with respect to ad valorem taxes . . . ." Ala. Code § 40-8-1(a) (2011). Similarly, section 40-8-4 of the Code applies "to any ad valorem tax . . . ." Ala. Code § 40-8-4(a) (2011). Accordingly, sections 40-8-1 and 40-8-4 of the Code only apply to the service charges of the District if they are ad valorem taxes.

Act 88-258 clearly characterizes the assessments as "service charges." 1988 Ala. Acts No. 88-258, 394. Additionally, the 1988 referendum, approved by the voters of Shelby County, posed the following question: "Shall the following schedule of service charges be approved as applicable within the District?" Shelby Cnty, Ala., Official Ballot for Special N. Shelby Cnty. Library Dist. Election (June 28, 1988). Similarly, the 1990 referendum, also approved by the voters, posed this question: "Shall the Schedule of Charges of the North Shelby County Library District be revised so as to provide for the following?" Shelby Cnty, Ala., Official Ballot for Special N. Shelby Cnty. Library Dist. Election (Nov. 6, 1990).

Further, the Supreme Court of Alabama has distinguished mere fees, which are assessed for specific uses, from taxes, which are for general revenue purposes. In the case of T-Mobile South, LLC v. Bonet, the Court observed the longstanding principle that:

"'A tax is generally a revenue raising measure, imposed by a legislative body, that allocates revenue to a general fund, and is spent for the benefit of the entire community. A user fee, by contrast, is a payment given in return for a government provided benefit and is tied in some fashion to the payor's use of the service.'"

85 So.3d 963, 982-83 (Ala. 2011), citing Lightwave Techs., L.L.C. v. Escambia County, 43 F.Supp.2d 1311, 1314 (S.D.Ala.1999). The Court, in distinguishing a 911 service charge from a tax, stated the following:

In the present case, the service charge is based on providing telephone service, whether it be through a landline connection or a wireless connection, and the money from the service charge is used to fund the emergency 911 service provided via that connection. The money collected from the service charge does not provide general revenue that can be used for any purpose. Section 11-98-7 sets out the disbursements of the 911 service charge, which are used to defray the costs of implementing and operating the emergency 911 system.

Id. at 984.

Similarly, the District, in keeping with the intent of the statute and the will of the voters of Shelby County, has always used the fees collected for the specific purpose of funding costs of library services within the District. The fees are not shared with any other governmental entity and are not used as general revenues. Because the service charge is not for the purpose of general revenue for a governmental entity, it is the conclusion of this Office that the service charges of the District are fees and not ad valorem taxes. Densmore v. Jefferson Cnty, 813 So.2d 844, 853-54 (Ala. 2001); Lightwave Technologies, LLC, b. Escambia Cnty, 804 So.2d 176, 180 (Ala. 2001); Opinion of the Justices, 598 So.2d 1362, 1365 (Ala. 1992); Town of Eclectic v. Mays, 547 So.2d 96, 103 (Ala. 1989).

CONCLUSION

The requirements of sections 40-8-1 and 40-8-4 of the Code do not apply to the service charges collected by the North Shelby Library District.

QUESTION 3

Are properties exempted from ad valorem taxes pursuant to sections 40-9-1 through 40-9-38 also exempt from paying service charges to the District?

FACTS AND ANALYSIS

Section B of the Schedule and Charges approved by the voters of Shelby County in the November 6, 1990, referendum provides as follows: "Any single family residence with a homestead exemption that has been determined by Shelby County Tax Assessor to qualify as Exempt 20 or Exempt 30 shall not be subject to any service charges." Shelby Cnty, Ala., Official Ballot for Special N. Shelby Cnty. Library Dist. Election (Nov. 6, 1990). No other exemptions appear in the referendum.

Various provisions of chapter 9 of title 40 of the Code provide exemptions from ad valorem tax. See, e.g., Ala. Code §40-9-1 (2011) (exempting numerous properties from ad valorem taxation). This Office has determined, however, that mere exemption from ad valorem taxation does not provide exemption from fees. Opinion to Honorable G. Brian Patterson, Limestone County Revenue Commissioner, dated September 25, 2008, A.G. No. 2008-137.

Other provisions of chapter 9 of title 40 of the Code provide exemption from ad valorem taxation and exemption from "fees and charges of any nature whatsoever." See, e.g., Ala. Code § 40-9-13 (2011) (exempting volunteer fire departments from ad valorem taxation and fees and charges of any nature whatsoever ) (emphasis added). This Office has determined that such language exempts volunteer fire departments from building inspection fees, permit fees, entertainment fees, filing fees, and special events liquor license fees. Opinion to Honorable Marc Keahy, Member, Alabama State Senate, dated April 20, 2011, A.G. No. 2011-054.

CONCLUSION

Accordingly, it is the opinion of this Office that properties exempted from fees and charges pursuant to the provisions of chapter 9 of title 40 of the Code are exempt from the service charges of the District.

I hope this opinion answers your questions. If this Office can be of further assistance, please contact Ben Baxley of my staff.

Sincerely,

LUTHER STRANGE Attorney General By.

BRENDA F. SMITH Chief, Opinions Division.