Judge Rules Pleasant Grove Imposed an Illegal Tax

In late 2018, Libertas Institute organized a lawsuit against Pleasant Grove over its adoption of a transportation utility fee that was really a tax.

Yesterday, Judge Jared Eldridge of the 4th District Court ruled against Pleasant Grove regarding the key issue in the lawsuit.

Despite recognizing that cities have “broad authority to pass ordinances which are reasonably and appropriately related to the objectives of providing for the public safety, health, morals, and welfare”—which the court notes includes authority to “create a transportation utility and implement a fee or tax”—the court nevertheless ruled, as we had argued, that the fee imposed by the city was actually a tax:

This Court is persuaded while the City has authority to implement a TUF, the TUF that was implemented here is clearly a tax and therefore improperly collected…

To be a fee, there must be a “specific charge in return for a specific benefit to the one paying the fee,” as noted by the Court. The judge continued:

However, no matter how you look at the purpose of those funds, the benefit of an improved road system is a general benefit rather than a specific benefit to those who pay the fees. The benefit not only accrues to the individual property owners in the City but also to anybody who happens to use the City’s road system whether they are a city resident or not. Given the nature of the benefit, the Court cannot conclude there is a “specific benefit” that returns to those who pay the fee, rather the benefit is general in nature benefitting the public at large.

In short, Pleasant Grove imposed an illegal tax as a fee, evading the requirements enacted by the Legislature to increase taxes.

Over a dozen other cities impose similarly illegal taxes on their residents via a transportation utility fee.

Read the full order here.