Morningstar v. Bush
2011 Ark. 350
| Ark. | 2011Background
- City of Hot Springs adopted Ordinance No. 5629 creating a Stormwater Utility Fund and imposing a $6 monthly Fee for commercial/industrial accounts and $3 for residential accounts within city limits.
- Approximately 40% of municipal utility accounts are outside city limits and are not charged; residents with wells or undeveloped properties are similarly exempt.
- City sought NPDES permit compliance under Clean Water Act; mandates prompted creation/funding of the Stormwater Utility.
- Fee revenues fund operation and assets of the Stormwater Utility; 2008 costs $414,698 with $684,009 revenue; 2009 costs $206,771 with $521,658 revenue.
- Appellants challenge the Fee as (i) violating Ark. Code Ann. § 14-235-223(a)(1) (illegal exaction) and (ii) constituting a tax requiring voter approval; circuit court upheld the ordinance.
- Court reviews solely the face of the ordinance, presuming constitutionality; evidence about cost/benefits is weighed to determine reasonableness and relationship to benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Fee complies with Ark. Code Ann. § 14-235-223(a)(1). | Appellants: Fee violates statutory authorization. | City: Fee authorized as stormwater service charge within ordinance. | Not clearly erroneous; ordinance facially constitutional under statute. |
| Whether the Fee is a tax requiring voter approval. | Appellants: Fee is an illegal tax, not a fee. | City: Fee is a police-power fee for services; not a tax. | Fee is not a tax; supported by police-power authority and purpose. |
| Whether charging outside-city residents or uncharged groups renders the exaction invalid. | Appellants: Broad imposition beyond city limits violates authorization. | Court: Charging within jurisdictional reach of stormwater utility is permissible. | Imposition within the City’s jurisdictional control upheld. |
Key Cases Cited
- Harris v. City of Little Rock, 344 Ark. 95 (2001) (distinguishes fee vs. tax; presumption of validity for ordinances)
- Holman v. City of Dierks, 217 Ark. 677 (1950) (insecticide fogging fee deemed a fee for services, not a tax)
- City of North Little Rock v. Graham, 278 Ark. 547 (1983) (public-safety fee treated as tax; distinction based on function)
- Maddox v. City of Ft. Smith, 346 Ark. 209 (2001) (surplus in a utility fund does not convert a fee into a tax)
- Robinson v. Villines, 2009 Ark. 632 (2009) (illegal exaction framework; two types: public funds vs. illegal tax)
- Dachs v. Hendrix, 2009 Ark. 542 (2009) (statutory-interpretation approach; give effect to legislative intent)
- Graham (cited as City of North Little Rock v. Graham), 278 Ark. 547 (1983) (public-safety fee analysis (repetition for emphasis))
- Baioni, 312 Ark. 423 (1993) (fee vs. tax distinction in utility context)