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July 2017 Column - Reflecting on a 19th Century Judge


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oneilj - Posted on 11 July 2017

It’s known as Dillon’s Rule and is named after John Forrest Dillon, who was appointed a Federal Circuit Court of Appeals Judge by President Ulysses S. Grant in 1869.  Prior to this appointment, Dillon served as the Chief Justice of the Iowa State Supreme Court.  It was in this capacity that Dillon’s Rule was born in an1868 decision.  This 150-year-old decision has direct bearing today on Erie County and local governments throughout the nation. 

 

Dillon’s Rule basically states that “local governments are creatures of the state.”  This means that unlike the state and federal governments, local governments have no powers except those granted them by their state governments.  Many states, including New York, grant their local governments a considerable amount of “home rule.”  This allows Erie County government and other local governments to conduct our own affairs without running to Albany every 10 minutes to ask “mother may I?”  Even so, these powers are subject to a variety of limitations set forth in the New York State Constitution and a slew of state laws.  Every few years, for instance, Erie County must ask the state’s permission to raise additional sales tax beyond the “permanent” 3 percent.  If they did not grant this request, the total sales tax would drop to 7 percent, composed of the state’s 4 percent and the county’s 3 percent.  While this might seem appealing, it would be disastrous for the county’s property taxpayers.  This is because we would have to raise property taxes to cover the lost revenue to meet our expenses.  The lion’s share of these expenses, of course, is to fund state mandates, another remnant of Dillon’s Rule.

 

All of this came to a head earlier this month in Albany’s end of legislative session annual madness.  Requests by Erie and many other counties to continue their “temporary” higher sales tax rates were somehow tied in with an issue involving New York City’s schools.  In effect, upstate interests were being held hostage by downstate ones.  If our state legislators did not give the New York City politicians exactly what they wanted then chaos would ensue as property taxes would skyrocket to make up for the absence of the additional sales tax.  In the end, the sales tax extension was approved.  Even so, this is no way to run a railroad, let alone a state.

 

Now our eyes are on Washington, as the federal government wrestles with reform of health care.  One proposal championed by former Erie County Executive and now Congressman Chris Collins, would grant relief to New York State Counties from the state mandate that we pick up roughly half of the non-federal share of Medicaid costs.  At first glance this would seem great for county officials, as we could eliminate almost all of our county property taxes.  Upon further review, however, the state could then impose other expensive mandates or constrain our ability to raise sales tax.  After a century and a half, for better or worse, Dillon’s Rule is alive and well.

 

If you have thoughts you would like to share, I would love to hear from you.  I can be contacted by phone at 858-8672 or via email at kevin.hardwick@erie.gov.