Can a Taxpayer Sue for Illegal Municipal Expenditures Without Showing Pecuniary Harm?
The answer is....
It depends (in this case, on the Circuit in which the taxpayer resides)
In Highway J Citizens Group v. Village of Ritchfield, a citizens group challenged an annexation by the Village of Ritchfield, Wisconsin of certain property located in the Town of Polk. Plaintiffs claimed that the annexation did not meet the statutory contiguity requirement and resembled a "balloon on a string," contrary to state annexation laws. The complaint alleged that the annexation caused damages to members of the citizens group who resided in the Town of Polk due to lost property tax revenue and to members of the group who reside in the Village of Ritchfield (the annexing municipality) because the Village was required to make substantial annual payments to the Town as a result of the annexation.
The trial court dismissed the case, finding that plaintiffs lacked standing to challenge the annexation. The appellate court affirmed on the same basis. The appellate court held that a taxpayer cannot "simply challenge an ordinance merely because he or she disagrees with the legislative body." Instead, a taxpayer must have "sustained, or will sustain, some pecuniary loss before he or she has standing." Because the members of the citizens' group were not owners of property within the annexed territory, they had no direct, legal interest in the annexation. According to the court, plaintiffs' allegations of pecuniary harm were no different than the harm suffered by any other taxpayer in the Town of Polk or Village of Ritchfield.
So, why do we care about an unpublished decision out of Wisconsin? Well, just last month, plaintiffs filed a petition for certiorari to the United States Supreme Court. In their brief, plaintiffs argue that the Supreme Court and five of the Circuit Courts of Appeal (First, Second, Sixth, Ninth, and D.C.) do not require actual pecuniary harm to establish municipal taxpayer standing. According to plaintiffs, the Third, Fourth, and Seventh Circuits do require a showing of actual pecuniary harm. It is this alleged Circuit split that forms the basis for plaintiffs' writ of cert to the Supreme Court.
While this particular case focuses on the narrow issue of whether a municipal taxpayer has standing to challenge an annexation, the question presented to the Supreme Court could have broader application in taxpayer challenges to any municipal expenditure.
It remains to be seen whether the Supreme Court will grant cert and answer the plaintiffs' question: Does a taxpayer have standing to sue for illegal municipal expenditures without having to show pecuniary harm?
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