This bill directs expenditure of $775,000 from the general fund in payment of
a claim made by the city of Superior against the state. Under s. 70.40, 1977 stats.,
the state imposed a tax on iron ore concentrates handled by or over docks in this
state. The tax was collected by municipalities. In
Burlington Northern Railroad Co.
v. City of Superior, 131 Wis.2d 564 (1986), the Wisconsin supreme court held that this
tax violated the commerce clause (art. I, sec. 8) of the U.S. constitution and required
the city to refund all taxes paid by the railroad to the city, plus interest from the date
of payment. Under this statute, the city was required to transfer 30% of its tax
collections to the state. In
1987 Wisconsin Act 414, the legislature reimbursed the
city for the refunded amount that the city transferred to the state through June 1,
1988, plus 5% interest to that date. The act provided that acceptance of that payment
releases this state from any claim resulting from the invalidity of s. 70.40, 1977
stats., or expenses incurred by the city in defending its validity. In 1985, s. 70.40,
stats., was amended and the city again began collecting the tax. In
Burlington
Northern Railroad Co. v. City of Superior, 932 F.2d 1185 (7th Cir., 1991), the U.S.
court of appeals held that s. 70.40, 1985 stats., was unenforceable under the federal
railroad revitalization and regulation reform act [
49 USC 11503 (b) (4)], which
prohibits states and municipalities from imposing a tax that discriminates against
certain rail carriers. The city was again required to refund all taxes paid by the
railroad, plus interest from the date of payment. The city then sought to challenge
the constitutionality of the federal act. Its suit was dismissed and it was required
to pay the railroad's defense costs.
Burlington Northern Railroad Co. v. City of
Superior, 962 F.2d 619 (7th Cir., 1992). In addition, the railroad contended that it
was entitled to 12% interest on all refundable taxes paid since 1977, and in
Burlington Northern Railroad Co. v. City of Superior, 159 Wis.2d 434 (1991), the
Wisconsin supreme court held that s. 815.05 (8), stats., requires such payment. The
attorney general did not appear to defend either the 1977 or the 1985 statute; he did,
however, file a brief in support of the 1977 statute. The city claimed $1,366,819.47,
representing 30% of all judgments it was required to pay since 1977, less the amount
that the state paid in 1988, including 12% interest ($1,159,194.89), plus its legal
expenses incurred since 1988 ($207,624.58). The claims board recommended
payment of this claim in the reduced amount of $700,000 on May 3, 1994 (see 1993
Senate Journal, p. 993). On October 25, 1995, the claims board, after rehearing
recommended denial of this claim (see
Senate Journal), pp. 416-417. On March 1,
1996, the claims board, after rehearing, recommended payment of this claim in the
reduced amount of $775,000 (see
Senate Journal, p. 666).
SB643, s. 1
1Section
1.
Claim against the state. Notwithstanding
1987 Wisconsin Act
2414, there is directed to be expended from the moneys appropriated under section
320.505 (4) (d) of the statutes $775,000 in payment of a claim against the state made
4by the city of Superior, as reimbursement for occupational tax proceeds under section
570.40, 1985 stats., that were transferred to this state, plus the costs of certain
6judgments and interest, and legal expenses incurred by the city in defending section
770.40, 1977 stats., and section 70.40, 1985 stats. Acceptance of this payment releases
8this state from any claim resulting from the invalidity of section 70.40, 1977 stats.,
9or section 70.40, 1985 stats., or expenses incurred by the city in defending their
10validity or in asserting the invalidity of any federal act which these sections may be
11held to contravene.
