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Supreme Court upholds the fleecing of Indiana utility customers

Eight years ago, the city of Indianapolis decided to implement a new payment plan for sewer hookups.   A major project to connect about 180 homes to the city’s sewage system left homeowners looking at a $9,278 assessment.   A few of them chose to pay the full assessment up front, but the city also offered installment plans, allowing payments to be made monthly, for up to 30 years.

As it turns out, the 30-year installment plan was a very wise choice, while people who paid up front got utterly and totally screwed.   As the Washington Post explains:

The very next year, the city changed its mind about how to pay for new sewage projects, reasoning that the old method discouraged people from abandoning septic systems for the healthier city sewage lines. By that point, some people had paid as little as $309, and more than a quarter of affected properties had paid less than $1,000.

Under the new financing scheme, the outstanding payments were forgiven, but the city denied refunds to those who paid in full.

Thirty-one homeowners sued for the refund and won in lower state courts. The Indiana Supreme Court, however, upheld the city’s decision as rational.

The new payment plan involved a much lower up-front cost for all homeowners of only $2,500.   The rest of the cost was folded into slightly higher rates and fees.   This makes sense from the standpoint of persuading residents to hook up to the city sewer system, because even when a $9000 assessment is spread over a 30-year installment plan, the total sum still causes many people to recoil.   Of course, they’re not really paying any less under the new system – in fact, if those elevated sewer fees remain in place forever, long-term residents would eventually end up paying more – but they won’t feel bad, because the bulk of the cost is hidden from them.   Much of modern government operates according to this principle.

The United States Supreme Court settled the matter in a 6-3 decision today, upholding the Indiana Supreme Court and telling the poor saps who forked over the $9,278 up front to consider it an expensive lesson in the folly of surrendering a single nickel to the government before it’s absolutely necessary to do so.

The fleeced homeowners argued for relief under the Equal Protection Clause, since it’s manifestly unfair to charge one person nine thousand dollars for the exact same service his neighbor obtained for just over three hundred bucks.   That sounded reasonable to Justices Roberts, Alito, and Scalia, but the rest of the Supreme Court decided it was simply too much to ask the city government to either issue refunds to those who paid up front, or maintain parallel payment systems for its old and new projects.   They had a “rational basis? for giving those early payers the shaft, as Justice Steven Breyer explained in the majority opinion.

There were also concerns that ruling in favor of the plaintiffs would open the floodgates for countless other aggrieved taxpayers to seek redress for unequal treatment by official bodies? and we can’t have that, because much of government relies on arbitrarily treating groups of citizens unequally, just as it depends on the ability to hide its true cost from them.

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Written By

John Hayward began his blogging career as a guest writer at Hot Air under the pen name "Doctor Zero," producing a collection of essays entitled Doctor Zero: Year One. He is a great admirer of free-market thinkers such as Arthur Laffer, Milton Friedman, and Thomas Sowell. He writes both political and cultural commentary, including book and movie reviews. An avid fan of horror and fantasy fiction, he has produced an e-book collection of short horror stories entitled Persistent Dread. John is a former staff writer for Human Events. He is a regular guest on the Rusty Humphries radio show, and has appeared on numerous other local and national radio programs, including G. Gordon Liddy, BattleLine, and Dennis Miller.

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