Challenging Illegal Fees

For several years, Long Island’s Suffolk County has avoided raising general fund taxes by imposing new or increased fees on certain residents. In October 2017, the Government Justice Center, an Albany-based public interest legal center, filed a lawsuit in the state Supreme Court to put an end to the illegal practice of raising general revenue through such fees.

Faced with the tough choice between raising taxes and cutting spending, Suffolk County has skirted the law by increasing fees far beyond their legal limit. Under state law, fees charged must not exceed the cost of service. Excess fees used for general revenue purposes are unauthorized taxes. Further, these fees unfairly target a subset of the population—new homebuyers, for example—to raise revenue for everyone.

The most egregious category is fees for filing real estate documents. For example, in Suffolk County, tax map verifications were projected to bring in $65 million in 2017—from an agency that costs just over $1 million per year to run.

“When government oversteps, the Government Justice Center exists to stand up for taxpayers and ensure that government plays by the rules,” said Cameron Macdonald, executive director of the Government Justice Center. “That is exactly what this case is about—if Suffolk County wants to raise revenue, it needs to do it legally, not by levying unauthorized taxes through excessive fees on a subset of residents.”

The plaintiffs moved for summary judgment in April 2018 and Suffolk County countered with a motion to dismiss. Prior to oral argument on the motions, Suffolk County sought and received a favor from the state legislature, which added a provision in a budget bill exempting the tax map verification fees from the limits on amounts the county clerk can collect on assorted filings under the Civil Procedure Law and Rules (CPLR). The Suffolk County Supreme Court dismissed the case on that basis.

Plaintiffs argued on appeal that they alleged the fees are unauthorized taxes, and the CPLR provision did not meet the constitutional provisions for the legislature to impose new taxes. The Second Department Appellate Division agreed and reversed the order dismissing the case.

The litigation is ongoing.