Allen County tax, annexation dispute to continue in trial court

A dispute between Allen County fire departments grounded in both annexation and tax law will continue before the Allen Superior Court after the Indiana Supreme Court denied transfer to an August decision giving the trial court jurisdiction to hear the case.

The high court unanimously denied transfer to City of Fort Wayne v. Southwest Allen County Fire Protection District, et al., 02A05-1612-PL-2883, its only transfer decision last week. The case traces all the way back to December 1987, when the city of Fort Wayne annexed a series of locations formerly within the Southwest Allen County Fire Protection District.

Though the Fort Wayne Fire Department began providing services to those locations after the annexations, Auditor Tera Klutz continued to distribute the property tax revenues from those locations to SWFD. The city challenged the distributions under Indiana Code 36-8-11-16 and -22, which it claimed required the tax proceeds from the annexed areas to be redirected to the municipal fire protection funds.

Allen Superior Judge Craig J. Bobay dismissed the city’s case in December 2016, finding the issues raised in the complaint should be resolved by the Department of Local Government Finance and the Indiana Tax Court. The city, however, argued on appeal before the Indiana Court of Appeals in July that its case was a matter of annexation, rather than tax, law.

The appellate court agreed, writing in an August opinion that the case did not require consideration of “substantive tax law” that would warrant specialized review by the Indiana Tax Court.

“No calculation to determine a specific tax assessment must be made, and no interpretation of tax laws is required,” Judge Patricia Riley wrote in August. “Rather, the City’s dispute merely centers on the intended recipient of taxes already assessed and collected, pursuant to I.C. section 36-8-11-22. This is not ‘quintessentially (a) tax matter.”

“Although annexation invariably affects the allocation of tax revenue among units of government within the annexed area, it does not automatically follow that an action for a declaratory judgment with respect to an annexation statute arises under Indiana tax law and involves a dispute as to the interpretation of a tax law,” Riley continued. “…A trial court is not ousted of its jurisdiction to interpret I.C. section 36-8-11-22, an annexation statute, merely because the Auditor and DLGF have exclusive responsibility for calculating the allocation of tax revenue within the Annexed Territories.”