Delaware’s Supreme Court heard appeals Monday from the landlord group arguing against split tax rates for residential and commercial properties post-reassessment.
The group of landlords filed their lawsuit with the Court of Chancery in September, alleging split tax rates are unconstitutional. That failed last month, and their appeal went before the Delaware Supreme Court Monday.
The landlords’ attorney argued House Bill 242, which permits split rates, implements a policy change.
Attorney Michael Hoffman, arguing for the state, said that is not the case, according to Green v. Sussex County in 1995.
“The Superior Court specifically held, quote, ‘the law in Delaware has been clearly established and it is that governments may classify persons and property differently for taxation so long as the classification is reasonable,’” Hoffman said.
The plaintiff’s attorney Mary Schnoor claimed the bill is unlawful in two ways. She said school districts expect to collect more in taxes after implementing the change and the bill violates the state’s uniformity clause.
“The basic principle here is that tax burdens should be born equally by value, not piled on or shirked for political gain. And again, this is particularly important in the context of property taxes,” Schnoor said.
Projected tax collections show an estimated $4 million increase in taxes collected after split rates are imposed. Hoffman countered the county is actively cross-referencing data to correct errors, and the errors do not justify reversing the split rates.
Hoffman added the bill doesn’t require strict revenue neutrality.
The expedited appeal will also see its decision on a fast track. The justices expect to deliver their opinion quickly, before New Castle County’s property tax bills are sent out by the county Nov. 18 or 20.
State lawmakers’ Special Committee on reassessment plans to resume hearings once the lawsuit comes to a close.
The tax payment deadline will move from Nov. 30 to Dec. 31 if the House passes a bill approving an extension Thursday. Senate approved the bill last week.
