Klein v. Flanery
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The 2008-2010 biennial budget bill, enacted by the General Assembly, provided for the transfer to the State’s general fund of over $10 million from funds created within the Department of Housing, Buildings and Construction (HBC) and the transfer or $700,000 from the fund dedicated to the Department of Charitable Gaming (DCG). In two separate actions, licensed building contractors (collectively, “Klein”) and licensed non-profit organizations (collectively, “Soccer Alliance”) brought suit challenging the transfers. In Klein, the trial court ruled that the transfer of funds was lawful. In Soccer Alliance, the trial court ruled that the transfer transformed a lawful regulatory fee into an unlawful tax. The court of appeals panels affirmed in Klein and reversed in Soccer Alliance, concluding that the challenged transfers were lawful and did not constitute an unconstitutional tax. The Supreme Court affirmed, holding that the budget-bill transfers did not cross the line from lawful surplus to unlawful tax.
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