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Decision No. 15,662

Appeal of THE CROTON FREE LIBRARY, INC., from action of the Board of Education of the Croton-Harmon Union Free School District and Kathleen Ryan, Assistant Superintendent for Finance and Administration, regarding withholding of funds.  

Decision No. 15,662

(September 20, 2007)

Turner & Turner, Esqs., attorneys for petitioner, Frederick W. Turner, Esq., of counsel

Keane & Beane, PC, attorneys for respondents, Judson K. Siebert and Lawrence Praga, Esqs., of counsel

MILLS, Commissioner--Petitioner, The Croton Free Library, Inc. (“library”), is a free association library which was granted a provisional charter by the Board of Regents in 1938, and an absolute charter in 1948 (see Education Law §253[2]).  It challenges the determination of the Board of Education of the Croton-Harmon Union Free School District (“respondent board” or “board”) to withhold certain monies that it claims should have been paid to it in February 2007.  The appeal must be sustained.

It appears that for many years the library has received substantial financial support from respondent board.  The library alleges, and respondent board admits, that at the district’s annual meeting on May 16, 2006, district voters approved the library’s budget of $657,758 for the 2006-2007 school year.  (While the parties have used this terminology, for purposes of this appeal I will assume that the library’s trustees properly adopted a budget that called for district financial support of $657,758; that they transmitted this information to respondent board; and that respondent board properly placed a separate resolution on the ballot at the annual meeting seeking voter approval to appropriate that sum for library purposes, all in accord with Education Law §259[1][a].)  The library’s director states that its total budget for the 2006-2007 school year was $839,257.

In accordance with long-standing practice, respondent board has placed a separate line on its tax bills showing the amount of tax attributable to library purposes.  It appears that the taxes for library purposes, together with school district taxes, are actually collected by the towns of Cortlandt and Yorktown and paid to the district, which in turn pays over to the library that portion attributable to library purposes in installments in February and October each year.

A decade ago, a property owner in the district, Hudson National Golf Club, Inc. (“Hudson”), initiated a series of tax certiorari proceedings against the Town of Cortlandt challenging its assessments for the tax years 1997 through 2005, in which the district intervened.  The proceedings remained unresolved until March 2006, when they came to trial in Supreme Court, Westchester County.  In the course of the proceedings, the parties reached a settlement which was reduced to a judgment dated June 13, 2006.  As a result, Hudson’s assessments were substantially reduced for the years in question, and both the town and the district became obligated to pay substantial tax refunds.  The judgment provided that interest on that portion of the refund owed by the district would be waived if the district paid one-half of the refund it owed by December 31, 2006, and paid the remaining half by December 31, 2007.  The library was not a party to these proceedings, and did not participate in the settlement.

In December 2006, the district paid the first half of the refund it owed to Hudson, but refused to pay the amount it calculated as taxes voted for library purposes, in the amount of $10,548.28.  It appears that Hudson’s attorney then contacted the library, and demanded that it pay that amount to Hudson, without success.  Hudson’s attorney then demanded that the district pay that amount, and threatened the district with a contempt proceeding if it failed to do so.  The library and the district had discussions regarding which entity should pay this amount, but no agreement was reached.  Finally, on February 12, 2007, respondent board voted to pay the $10,548.28 to Hudson, and to withhold that same amount from the payment of taxes attributable to library purposes to be made to the library later that same month.  Respondent Ryan, as Assistant Superintendent for Finance and Administration, complied with that directive and withheld $10,548.28 from the payment to the library.

The library protested, and timely commenced this appeal on March 14, 2007.  The library’s request for interim relief was denied on March 26, 2007.

The library contends that it was not a party to the litigation involving Hudson, the Town of Cortlandt, and the district; that it was not advised or consulted concerning the potential settlement in Supreme Court; and that it was not a party to the settlement of the tax certiorari proceedings.  It contends that, pursuant to certain opinions of the New York State Comptroller, particularly Opn. No. 95-15, dated July 5, 1995, it has no obligation under the Real Property Tax Law (“RPTL”) to share in the refund which the district must pay to Hudson.

Respondents contend that the Comptroller’s opinions are not on point, because they involved school district public libraries, not free association libraries.  Respondents further contend that it would be inequitable to allow the library to keep all of the funds it received during the period Hudson was being overtaxed, without contributing to the refund, and would amount to a gift of public funds to a private corporation in violation of the New York State Constitution, Article VIII, §1.

In Opinion No. 95-15, the Comptroller was asked to reconsider two prior opinions (79-103 and 75-1210) in which the Comptroller concluded that a school district making a real property tax refund may not recover from a school district public library an amount equal to the proportionate reduction of taxes levied for library purposes.  In a thorough analysis, the Comptroller affirmed the earlier opinions, citing the absence of statutory authority for a school district to charge back to a public library any portion of such real property tax refunds.  I find the Comptroller’s reasoning persuasive, and I find that the library’s appeal must be sustained.

The opinion points out that school districts possess only those powers delegated by statute or necessarily and reasonably implied therefrom.  For purposes of the RPTL, a school district is a “municipal corporation” (RPTL §102[10]), while a school district public library is neither a municipal corporation nor a “special district” (RPTL §102[16]).  A free association library is also neither a municipal corporation nor a special district.

The Comptroller reasoned that taxes levied by a school district for library purposes pursuant to Education Law §259 are “taxes of such district” (RPTL §§726[1][c],     734).  Pursuant to RPTL §556, governing the refund of taxes, subdivision 6(a) provides:  “The amount of any tax refunded or credited pursuant to this section shall be a charge upon each municipal corporation or special district to the extent of any such municipal corporation or special district taxes that were so refunded.”  The RPTL further provides in §726 for taxes that must be refunded as the result of a tax certiorari proceeding.  Section 726 (1)(a) provides generally that where the tax refund is for taxes imposed by a county for city, town, village, or special district purposes, the amount refunded shall be “charged to” such city, town, village, or special district as appropriate.  Section 726 (1)(b) provides generally that where a tax refund is for taxes imposed by a city, town, or village, for city, town, village, or special district purposes, the amount refunded shall be “charged to” such city, town, village, or special district as appropriate.

RPTL §726 (1)(c), however, provides:

Any final order in a proceeding under article seven of this chapter, which orders or directs the correction or striking of an assessment appearing on that portion of a city, town or county assessment roll applicable to a school district, shall be binding on such school district.  Any amount of taxes of such school district at any time collected upon such assessment in excess of the amount which would have been paid had such assessment been made as determined by such order, shall be refunded by the school authorities of such school district, together with interest thereon computed as provided in subdivision two of this section.

Significantly, (c) does not provide for charging the amount of such refund by a school district to any other entity.

Comptroller’s Opn. No. 95-15 involves a school district and a school district public library, not a free association library.  However, in Appeal of the Board of Trustees of the Earlville Free Library (30 Ed Dept Rep 172, Decision No. 12,423), the Commissioner stated:

Although controlled principally by private individuals, a “free association” library has been defined to perform “an entirely public function in that it provides library services to ‘all the people of the community’ without charge” (72 Op Atty Gen 24).  Education Law §253(1) states that all provisions of Education Law §§253 – 271 “apply equally to libraries, museums, and to combined libraries and museums ...”.

I further note that Education Law §259 provides that moneys received by a municipality or school district from taxes or other public sources are to be paid over to the treasurers of public libraries, free association libraries, or cooperative library systems, with all three types of libraries treated equally.  I further note that RPTL §1322 (1) requires that where a school district has levied a tax for library purposes, the amount of such tax must be separately stated on the school tax bill, whether the tax is for a public library, a library district created by special act, or a free association library, with all types of libraries treated equally.

I conclude from the above that, once the voters of a school district have approved an appropriation for library purposes, a free association library and a school district public library should be treated in the same manner, at least for purposes related to the refund of taxes.  As a result, I agree with the Comptroller that the library is not required to refund taxes attributable to library purposes, and that respondents lack authority to charge such refund to the library.

As the Comptroller noted in 95-15:

While a proportionate chargeback of school district tax refunds to school district public libraries may be consistent with the overall philosophy of this legislation, there does not appear to have been any intent to affect tax refund procedures.

. . .

Finally, with respect to whether this conclusion results in any inequity, we recognize that, as a rule, statutes should not be construed in a manner which will work hardship or injustice  . . . .  In this reqard, we note that a literal reading of sections 556, 726 and 734 of the Real Property Tax Law requires the cost of refunds of taxes levied for library purposes to be borne by the taxpayers in the entire school district.  However, this result would not change if the statutes were construed as permitting school districts to charge back portions of tax refunds to school district public libraries (see Education Law §259[1]).  The only difference that such a broad construction would make is that the cost of such refunds would generally be included in the appropriation for library purposes and, hence, reflected in the separate statement of library taxes on school tax bills.  In our view, however, this is not a sufficient basis for concluding that sections 556, 726 and 734 necessarily and reasonably confer implied authority on school districts to make such chargebacks.

With respect to respondents’ further argument that allowing the library to retain the taxes collected for library purposes would violate the New York Constitution, I decline to consider the matter.  An appeal to the Commissioner is not the proper forum to adjudicate novel issues of constitutional law or to challenge the constitutionality of a regulation (Appeal of Murray, 43 Ed Dept Rep 400, Decision No. 15,031; Appeals of American Quality Beverages, LLC, et al., 42 id. 144, Decision No. 14,804; Appeal of Finkel, 41 id. 74, Decision No. 14,619).  A novel claim of constitutional dimension should properly be presented to a court of competent jurisdiction (Appeals of American Quality Beverages, LLC, et al., 42 Ed Dept Rep 144, Decision No. 14,804).  See also Appeal of Goltz, (39 Ed Dept Rep 766, Decision No. 14,374).


IT IS ORDERED that respondents pay over to petitioner the amount wrongly withheld from its February 2007 payment in the amount $10,548.28.