One Court of Justice

In Wolf v. City of Detroit, No. 279853 (published Jan. 21, 2010), the Court of Appeals concluded that the solid waste inspection fee imposed by the City of Detroit was not a disguised tax and therefore did not violate the Headlee Amendment, which prohibits imposing a tax without a vote of the City’s electorate.

The inspection fee covers the costs of inspections conducted by the City to ensure that businesses that rely on private waste collectors (as opposed to the Department of Public Works) are complying with the city’s waste-disposal regulations.  The Court of Appeals concluded the fee was not a tax after considering three criteria:  whether it served a regulatory purpose, whether it was proportionate to the costs of the service being provided, and whether it was voluntary.  As to the first, although the City did not complete inspections for more than 2,000 properties for which it had charged the fee, the Court concluded this failure did not mean the fee was designed to generate revenue, but merely that the regulatory program lacked the time and resources to inspect all of the properties, and the Court noted that the City is attempting to improve its inspection process.  As to the second, the Court concluded the fee was in fact disproportionate, but that the lack of proportionality reflected not an attempt to gain revenue but a “lack of preparedness” and the “inept launching of the inspection process.”  And third, the fee was voluntary because businesses can avoid it by having the Department of Public Works handle their waste collection.  Balancing these factors, the Court concluded the fee “constitutes a poorly launched, but nonetheless permissible, regulatory fee.”