Radiofone, Inc. v. City of New OrleansRadiofone, Inc. v. City of New Orleans
Donald Theriot, Ashton R. Hardy, and Regina S. Wedig, Walker, Bordelon, Hamilin, Theriot & Hardy, New Orleans, for respondent.
Concurring Opinion by Chief Justice Calogero April 30, 1993.
DENNIS, Justice.*
Plaintiff, Radiofone, Inc. (Radiofone), sues for a judgment declaring unconstitutional one section of a New Orleans municipal ordinance imposing a 1% charge on subscribers of intrastate telecommunications services, including local telephone service, private communication service, toll telephone service, teletypewriter or computer exchange service, cellular mobile telephone or telecommunications service, specialized mobile radio or paging service, and any other form of mobile or portable one-way or two-way communications (hereafter referred to as the Municipal Telecommunications Subscriber Charge or Section 52-202). Radiofone claims that Section 52-202 is a nullity because the circumstances of its enactment violated (1) the constitutional requirement that a municipal ordinance
The district court agreed with the plaintiff‘s argument and held that the Municipal Telecommunications Subscriber Charge was unconstitutionally adopted because it was not approved by a majority of the electors at a public election held for that purpose as required by
The parties have agreed for purposes of this appeal that the Municipal Telecommunications Subscriber Charge embodied in Section 52-202 is a sales tax. The City, however, contends that the charge is not a new tax but is a continuation of a 1968 tax levied on consumers or subscribers for telephone rentals, teletypewriter local service and private line service provided by South Central Bell Telephone Company, by name, and located within the City of New Orleans. The City argues that because the 1974 Constitution and
FACTS AND PROCEDURAL HISTORY
On November 27, 1968, the City of New Orleans adopted Ordinance 3973, M.C.S., to create a municipal subscriber charge on consumers of intrastate telephone services provided by South Central Bell Telephone Company. By its express terms, the ordinance affected only telecommunications services provided by South Central Bell; that is, the ordinance burdened South Central Bell alone by explicit reference. The ordinance provided a 1% municipal subscriber charge on subscribers of rental telephones, teletypewriter local service and private line services located within the City of New Orleans. The 1% charge was to be added to the bill sent to each subscriber by South Central Bell. In its capacity as agent for the City of New Orleans, South Central Bell was to collect and remit the municipal subscriber charge to the City in quarterly installments. The ordinance was to take effect on January 1, 1969 and would have expired on July 1, 1970, but was continued to December 31, 1970 by Ordinance 4317, M.C.S. and was ultimately continued indefinitely by Ordinance 4428, M.C.S.
On November 29, 1990, the City of New Orleans adopted the tax ordinance in question, Ordinance 14211, M.C.S. (the Ordinance) without submitting the proposition to a vote of the electors of the City. Designated as Chapter 52 of the City Code and purporting to amend and re-enact the 1968 tax, the Ordinance vastly expanded the scope of taxable telecommunications services and telecommunications service providers subject to the City‘s taxing authority.
Section 52-200 defines “telecommunications services” as including local telephone service, private communication service and toll telephone service, as well as teletypewriter or computer exchange service, cellular mobile telephone or telecommunications service, specialized mobile radio or paging service, and any other form of mobile or
The Ordinance became effective on December 7, 1990. The City began to levy the Municipal Telecommunications Subscriber Charge on January 1, 1991. The City later repealed sunset clauses originally contained in the ordinance. Ordinance 14884, M.C.S. As a result, the tax continued to be levied rather than expiring at the end of 1991.
Radiofone, Inc. (Radiofone) is a Louisiana corporation licensed by the State of Louisiana to provide intrastate cellular mobile telephone and paging services and has provided telecommunications services in Louisiana since the 1950‘s. In its suit for declaratory judgment, Radiofone attacked the constitutionality of Section 52-202 of the Ordinance and another section not at issue in this direct appeal. Radiofone averred that the Municipal Telecommunications Subscriber Charge is in reality a prohibited sales tax in violation of the 1974 Constitution because the proposed tax was not submitted for public approval at an election held for that purpose. Radiofone further contended that the Municipal Telecommunications Subscriber Charge violated
On direct appeal to this court pursuant to
LAW AND ANALYSIS
This court has repeatedly noted that the City‘s broad taxing authority under the Home Rule Charter of 1954 and its predecessor, Act 159 of 1912, as amended, allows the City to levy taxes which are “not prohibited by or inconsistent with the constitution.” Reed v. City of New Orleans, 593 So.2d 368 (La.1992); Hildebrand v. City of New Orleans, 549 So.2d 1218 (La.1989), cert. denied, 494 U.S. 1028, 110 S.Ct. 1476, 108 L.Ed.2d 613 (1990); City of New Orleans v. Scramuzza, 507 So.2d 215 (La.1987); ACORN v. City of New Orleans, 377 So.2d 1206 (La.1979) (ACORN I); City of Lake Charles v. Henning, 414 So.2d 331 (La.1982); Mouledoux v. Maestri, 197 La. 525, 2 So.2d 11 (La.1941). One of the constitutional restrictions on a municipality‘s exercise of taxing powers is the requirement that a proposed sales and use tax be approved by a majority of the electors at a public election held for that purpose.
The City properly concedes that the Municipal Telecommunications Subscriber Charge is a sales tax. Reed v. City of New Orleans, 593 So.2d 368 (La.1992). First, the charge is due and payable at the time of the sale or purchase of the telecommunications services; the charge is added to and constitutes a part of a bill sent to the subscriber by the telecommunications service provider. Second, the charge is assessed against the ultimate consumer of the telecommunications services, the subscriber. Ordinance 14211, Section 52-202. Third, the telecommunications service provider, the functional equivalent of the retail dealer, is obliged to collect and remit the municipal charge to the City as the City‘s agent. Compare
It is undisputed that the sales tax ordinance at issue in the present case was not approved by a majority of electors at a public election. Therefore, the tax is unconstitutional if the only basis for its validity is
First, the 1990 Ordinance vastly expands the scope of taxable telecommunications services as well as the class of telecommunications services providers who are bound
Second, the City asserts that the 1990 Ordinance was intended not as a substantive expansion of the earlier municipal subscriber charge but, in effect, merely as a clarification that the tax covers recent improvements in technology and continues to affect telecommunications services providers despite the 1982 federally mandated break-up of AT & T. However, it is self-evident that the 1990 Ordinance affects telecommunications services different in character from those available within the tax jurisdiction before 1968, and the City has not shown otherwise. The narrow focus of the 1968 ordinance is underscored by the fact that from 1969 until 1990, the City did not attempt to collect the tax from nonutility telecommunications services providers or from regulated utilities other than South Central Bell. For instance, although Radiofone began providing paging services in the New Orleans area during the 1950‘s, it was not considered a taxable telecommunications services provider by the City before 1990. Nor were its paging services taxable under the 1968 ordinance. Moreover, the expansive definition of “telecommunications service provider” contained in the 1990 Ordinance as including “any person who furnishes telecommunications services for compensation” sharply contrasts with the earlier ordinance which obligated only South Central Bell, by name, to collect and remit the tax. The 1990 Ordinance conceivably seeks to reach even non-traditional telecommunications service providers, such as hotels, that provide guests or customers special telecommunications services for compensation.
Third, the language of the preamble of the Ordinance indicates that the City‘s argument is erroneous. The preamble notes that the Ordinance imposes taxes on previously untaxed nonutility providers: “WHEREAS, the enactment of Act No. 388 of the 1990 Regular Session of the Louisiana Legislature has extended the breadth of taxable telecommunications service providers permitting the city to realize revenue from previously untaxed nonutility telecommunications service providers ...” Ordinance 14211 (Preamble). The fact that nonutility telecommunications services providers were required to neither collect nor pay the 1% municipal subscriber charge before the enactment of the 1990 Ordinance indicates that Section 52-202 embodies a new charge upon subscribers of new categories of telecommunications services furnished by a broadened class of providers rather merely continuing the pre-existing 1968 tax.
In sum, we conclude that because the 1990 Ordinance taxes telecommunications services and entities distinguishable from those taxed under the pre-existing 1968 ordinance, this new tax, in order to be valid, must meet the constitutional and statutory requirements in effect at the time of its enactment, including the requirement that a proposed sales tax be submitted to the public for approval by majority vote.
In the alternative, the City has argued that in the event this court concludes that Section 52-202 of Ordinance 14211 is unconstitutional, the court should sever the
The test for severability is whether the unconstitutional portions of the ordinance are “so interrelated and connected with the constitutional parts that they cannot be separated without destroying the intention manifested” by the enacting body. State v. Azar, 539 So.2d 1222, reh‘g denied 539 So.2d 1226 (La.1989). If the remaining portion is separable from the offending portion, this court may strike only the offending portion and leave the remainder intact.
In the present case, severability is not possible despite the severability clause contained in Section 52-208. Severing the unconstitutional aspects of the Section 52-202 of the 1990 Ordinance and preserving the remainder would require this court to rewrite entirely not only Section 52-202 but also other sections of the Ordinance to single out South Central Bell as the only telecommunications service provider subject to the Ordinance. Redefining “telecommunications services” subject to the tax would also be required. Because this would produce a result counter to the intent of the City to tax equally and without discrimination the broadest possible array of telecommunications services and providers, Section 52-202 of the Ordinance must fail in its entirety.
CONCLUSION
The New Orleans Municipal Telecommunications Subscriber Charge (Section 52-202 of No. 14211, M.S.C.) constitutes an attempt to levy and collect a tax upon the sale at retail, the use, or the consumption of telecommunications services, or the sales of such services as defined by law, without approval by a majority of the electors voting thereon in an election held for that purpose, as required by
The judgment of the district court declaring the New Orleans Municipal Telecommunications Subscriber Charge (Section 50-202 of No. 14211, M.S.C.) unconstitutional is affirmed.
AFFIRMED.
CALOGERO, C.J., concurs and assigns reasons.
MARCUS, J., concurs in part, dissents in part and assigns reasons.
MARCUS, Justice (concurring in part and dissenting in part).
I agree with the majority‘s conclusion that Section 52-202 is unconstitutional; however, in light of the City Council‘s express intent to amend and reenact Ordinance No. 3973 M.C.S. as stated in Ordinance No. 14211 M.C.S. and the continued effect of Ordinance No. 3973 M.C.S., I believe that the majority could have retained the one percent charge on South Central Bell Telephone Company originally imposed under Ordinance No. 3973 M.C.S.
CALOGERO, Chief Justice, concurs.
I agree with the majority that Section 52-202 is unconstitutional. Nonetheless, I concur in order to express my view that Ordinance No. 3973 M.C.S., enacted November 27, 1968, may have survived the Council‘s attempt in 1990, although unsuccessful as it now turns out, to amend and reenact, within Ordinance No. 14211 M.C.S., Section 52-202.