Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Tuesday, May 16, 2006

OHA hails high court's rejection of Ohio case

By Ken Kobayashi
Advertiser Courts Writer

Robert Klein

spacer spacer

H. William Burgess

spacer spacer

Mark Bennett

spacer spacer

A unanimous decision by the U.S. Supreme Court in an Ohio case yesterday is being touted by the Office of Hawaiian Affairs and the state as the end of a taxpayer lawsuit challenging the use of state general funds for the Native Hawaiian organization.

But the lawyer who represents the taxpayers disagrees.

In a 9-0 ruling, the Supreme Court rebuffed efforts by a group of taxpayers in Toledo, Ohio, to challenge nearly $300 million in tax breaks for DaimlerChrysler AG's new Jeep plant.

U.S. Chief Justice John Roberts said the alleged injury to the taxpayers was mere conjecture, and that they had no standing to challenge tax or spending decisions "simply by virtue of their status as taxpayers."

"It's dead," OHA attorney Robert Klein said about the taxpayer lawsuit challenging OHA funding. "There's absolutely nothing for the district judge (in Hawai'i) to consider anymore."

But H. William Burgess, lawyer for the taxpayers group that includes former Honolulu police officer Earl F. Arakaki and about a dozen others, said the high court's decision deals with issues different from the ones raised in his challenge.

Hawai'i Attorney General Mark Bennett agreed with Klein, saying the Supreme Court "definitely stated state taxpayers standing does not exist as a doctrine."

Burgess, however, said his clients and other taxpayers are singled out for "disadvantageous treatment" because they have to pay taxes to support programs, including OHA, but are denied the right to obtain the benefits because of their ancestry.

"I'm confident that it won't have any effect (on his case)," he said.

Burgess filed the lawsuit, now called Arakaki v. Lingle, challenging the constitutionality of government funding for the Hawaiian Home Lands program and OHA because their programs are aimed at benefitting residents with Hawaiian ancestry.

In 2004, U.S. District Judge Susan Oki Mollway threw out the lawsuit, but the 9th U.S. Circuit Court of Appeals last September reinstated only part of the suit, limiting it to the taxpayers challenging state general fund money going to OHA.

OHA gets about $2.8 million a year from the state general fund, a fraction of the agency's $28.5 million annual operating budget, OHA officials have said.

Bennett's office asked that the U.S. Supreme Court essentially hold off reviewing the appeals court ruling until yesterday's decision because both cases involved the issue of whether taxpayers have legal standing to challenge how the state spends it money.

Bennett said he believes the U.S. Supreme Court will now vacate the appeals court ruling in the coming months, a move that essentially would end the taxpayer suit against OHA.

He said Hawai'i, as well as other states, filed a friend-of-the-court brief urging the Supreme Court to declare the Toledo taxpayers did not have legal standing.

Yesterday's ruling was "exactly what we were hoping for," Klein said.

The decision was characterized as a victory for business.

The message from the Supreme Court ruling is that states "will not be held hostage to lawsuits" brought by people with "no direct connection to the issue at hand," said W. Frank Fountain, DaimlerChrysler's senior vice president for government affairs and public policy.

To lure a $1.2 billion Jeep assembly plant to the area, the city of Toledo and two local school districts gave the company a 10-year exemption from property taxes, and the company received additional investment tax credits against the state's corporate franchise tax.

The court disagreed with the taxpayers' argument that their local and state tax burdens were increased by the tax breaks.

"A taxpayer-plaintiff has no right to insist that the government dispose of any increased revenue it might experience as a result of his suit by decreasing his tax liability or bolstering programs that benefit him," the chief justice wrote. "To the contrary, the decision of how to allocate any such savings is the very epitome of a policy judgment."

The Associated Press contributed to this report.

Reach Ken Kobayashi at kkobayashi@honoluluadvertiser.com.