Summary
In State ex rel. Douglas v. State Board of Equalization Assessment, 205 Neb. 130, 286 N.W.2d 729 (1979), a constitutional amendment which was submitted pursuant to a resolution adopted at a special session was attacked as being in violation of the Federal Constitution, and also on the ground that the adoption of the resolution was not within the call.
Summary of this case from Opinion No. 84226Opinion
No 42862.
Filed December 28, 1979.
1. Constitutional Law: Taxation. The Equal Protection Clause of the Fourteenth Amendment to the United States Constitution is applicable to state tax legislation and imposes restraint upon state taxing power. 2. Taxation: Property. The requirement of uniformity in taxation is applicable not only to the valuation of property, but also to the rate of taxation thereon.
Original action. Judgment for relator.
Paul L. Douglas, Attorney General, and Ralph H. Gillan, for relator.
Clarence A. H. Meyer, for respondents.
Heard before KRIVOSHA, C. J., BOSLAUGH, McCOWN, CLINTON, BRODKEY, WHITE, and HASTINGS, JJ.
This is an original action brought by the relator, the Attorney General of this State, against respondents, the State Board of Equalization and Assessment, the Governor, the Secretary of State, the State Auditor, the State Treasurer, and the State Tax Commissioner, challenging the constitutionality of an amendment to Article VIII, section 1, of the Constitution of the State of Nebraska. Respondents filed an answer admitting the facts alleged in relator's petition, but denying relator's conclusions drawn from those facts. Additional facts were stipulated to between the parties. Relator then moved for summary judgment. We sustain relator's motion.
The amendment giving rise to this litigation resulted from action taken during a special session of the Eighty-fifth Legislature, which convened on June 8, 1978. This special session was called by the Governor for the purpose of considering and, if deeming it advisable, enacting legislation relating to the following subjects: (1) To extend the operative date of section 328, L.B. 38, Eighty-fifth Legislature, First Session, 1977 (the Nebraska Criminal Code), to January 1, 1979. (2) To enact spending limitations on government budgets. During the special session, the Legislature adopted Legislative Resolution 1, which proposed an amendment to add the following language to Article VIII, section 1, of the Nebraska Constitution: "[W]hen a political subdivision authorized to levy a tax or cause a tax to be levied lies in two or more counties, and one or more of such counties have not completed a general reappraisal of all land and improvements within two years of one another, the State Board of Equalization and Assessment shall fix separate and distinct tax levies so that the county which has most recently completed a general reappraisal of all lands and improvements shall provide the same percentage of the political subdivision's budget as it provided prior to such reappraisal. For all tax years commencing on or after January 1, 1981, the State Board of Equalization and Assessment shall not be empowered to fix separate and distinct levies but shall annually review and equalize assessments of property among counties." The proposed amendment was submitted to the electorate at the November 1978, general election, adopted by them, and proclaimed by the Governor to be in "full force and effect as part of the Constitution of the State of Nebraska" on December 5, 1978. Relator, following leave granted by this court, instituted this original action on June 25, 1979. The State Board of Equalization and Assessment held hearings during July and August of 1979, and on August 6, 1979, ordered the equalization of tax assessments of property in various counties in the state. On motion of the relator, this court, on August 21, 1979, entered a restraining order against the respondents prohibiting them from enforcing the provisions of the constitutional amendment in question during the pendency of the action. Respondents made no objection to the entry of the restraining order.
Under Rule 2(b) of this court, the procedure in original actions, when commenced after leave to do so has been granted, shall be the same as in the District Court except as otherwise ordered. The rules relating to the granting of summary judgments in this state are well established and need not be repeated in detail. Section 25-1332, R.R.S. 1943, provides in part: "The judgment sought shall be rendered forthwith if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The facts involved herein have been admitted and stipulated to, and are not in dispute. It is clear, therefore, that relator's motion must be granted if his position in this litigation is correct as a matter of law.
Relator's argument against the validity of the amendment rests on two principal grounds. First, relator contends that the action of the Legislature in adopting Legislative Resolution 1 was void and in violation of Article IV, section 8, of the Nebraska Constitution, in that the submitting of such a constitutional amendment to the electors was not included in the purposes for which the special session of the Legislature was convened, as set forth in the Governor's proclamation calling them into special session; and that said amendment was therefore not adopted in conformity to law, and is of no force and effect. Second, relator contends that the amendment in question is violative of several provisions of the United States and Nebraska Constitutions relating to due process and equal protection of the laws. We shall examine these contentions in reverse order.
In this connection, relator contends that the amendment in question is violative of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. It is generally held that the Equal Protection Clause of the Fourteenth Amendment is applicable to state tax legislation and imposes considerable restraint upon state taxing power. 71 Am. Jur. 2d, State and Local Taxation, 157, pp. 479, 480; 16A C.J.S., Constitutional Law, 520, p. 382; Allied Stores of Ohio v. Bowers, 358 U.S. 522, 79 S.Ct. 437, 3 L.Ed.2d 480 (1959); Kahn v. Shevin, 416 U.S. 351, 94 S.Ct. 1734, 40 L.Ed.2d 189 (1974); Hillsborough v. Cromwell, 326 U.S. 620, 66 S. Ct. 445, 90 L.Ed. 358 (1946); Sioux City Bridge v. Dakota County, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340 (1923). The amendment in question being an amendment to Article VIII, section 1, of our Nebraska Constitution, it is therefore necessary that we examine the amendment in question in light of the federal Constitution.
The effect of the Equal Protection Clause on the "uniformity" provision of Article VIII, section 1, was discussed in Sioux City Bridge v. Dakota County, supra, where the court stated: "[W]here it is impossible to secure both the standard of the true value, and the uniformity and equality required by law, the latter requirement is to be preferred as the just and ultimate purpose of the law." The court held in that case: "[T]he right [under the Fourteenth Amendment] of the taxpayer whose property alone is taxed at 100 per cent of its true value is to have his assessment reduced to the percentage of that value at which others are taxed even though this is a departure from the requirement of statute." The same rules requiring uniformity of taxation apply to rate of taxation as well as valuation.
This court has frequently interpreted the language of Article VIII, section 1, of the Nebraska Constitution. In Gates v. Howell, 204 Neb. 256, 282 N.W.2d 22 (1979), we stated: "In each instance, we have clearly and unequivocally found that the provisions of Article VIII, section 1, require not only that the valuation of property for taxation be uniform, but the rate as well. Peterson v. Hancock, 155 Neb. 801, 54 N.W.2d 85." (Emphasis supplied.) To the same effect, see, State ex rel. Meyer v. Peters, 191 Neb. 330, 215 N.W.2d 520 (1974); Grainger Brothers Co. v. Board of Equalization, 180 Neb. 571, 144 N.W.2d 161 (1966); Gamboni v. County of Otoe, 159 Neb. 417, 67 N.W.2d 489 (1954); State v. Back, 72 Neb. 402, 100 N.W. 952 (1904).
Recapitulating, therefore, it is clear that Sioux City Bridge v. Dakota County, supra, which specifically considered the provision of the Nebraska Constitution requiring uniformity in taxation, established the principle that a failure to do so would be a violation of the Fourteenth Amendment to the federal Constitution. Likewise, Nebraska cases cited above clearly establish the rule that the requirement of uniformity referred to is applicable not only to the valuation of property, but also to the rate of taxation thereon. We must therefore examine the facts admitted and stipulated to by the parties, as well as the clear language of the amendment itself, to determine whether the rate of taxation imposed under the provisions of said amendment would be uniform and proportionate upon property in the same taxing district.
An examination of the legislative history of Legislative Resolution 1, which gave rise to the submission of the amendment in question to the electorate, will be helpful in this regard. During the floor debates on the resolution, Senator Warner, the introducer of the resolution, was questioned by one of the senators with regard to differing rates of taxation within the same taxing district. The discourse between the two was as follows: "Senator Lamb: Okay, you have two counties side by side, say they have a school district which overlaps those counties A B, okay, so you adjust the mill levy in County A to reflect the lack of reappraisal in County B. Okay, County A also has a school district on the other side which is County C and which has a school district which overlaps County A and County C. Therefore you are going to have to have a different mill levy to reflect the reappraisal of County C or the lack of reappraisal. Will you not have to have a number of different mill levies in the same county to reflect the differences in the bordering counties?
"Senator Warner: I think that the answer to your question is yes. But, let me point out that the uniformity that we are trying to approach here, let me go back to the comment that I made earlier. It would be my position that the requirement for uniformity of assessment and mill levies that is now in the Constitution is essentially based upon the same . . . there shall be a uniformity of dollars paid by the individual tax payer [sic] on like property within the same taxing jurisdiction. What this amendment proposes is a continuation of that uniformity of dollars until all counties have reappraised and it would be true that if you have three counties and two different school districts with one county being in both, yes, you could conceivably have different levies. I do not see that a problem at all in terms of calculation because the known valuation of every taxing district is there and a proportionate share of the value between the two counties in a single taxing district is a readily available figure there is no problem about that." (Emphasis supplied.) This interchange demonstrates that even the sponsor of the resolution recognized that the rate of taxation might not be uniform in the same taxing district.
The stipulation of facts entered into between the parties is also helpful in demonstrating that the application of the amendment in question in multicounty taxing districts would necessarily result in a lack of uniformity of taxation and would hence constitute a violation of the Fourteenth Amendment to the U.S. Constitution, and would also constitute nonuniform taxation as prohibited by Article VIII, section 1, of the Nebraska Constitution. Although the stipulation of facts sets out numerous examples of actual fact situations in multicounty taxing districts, we shall discuss only one of the situations referred to therein, as clearly illustrative of the resulting lack of uniformity from the application of the amendment. The fact situation and illustration stipulated to by the parties involved Gage, Pawnee, and Johnson Counties, portions of each being in the same school district. It appears that in 1977, the respective percentages of the budget for that school district furnished by the aforementioned counties were 7.3, 45.3, and 47.4. Gage County reappraised its property in 1978. It also appears that territory was added to the multicounty school district in 1978 as a result of the dissolution of a separate school district in Gage County. As a result of the reappraisal and the increase in territory, the percentage of the budget of the multicounty school district furnished by the respective counties changed. In 1978, Gage County furnished 23.55 percent, Pawnee County furnished 48.2 percent, and Johnson County furnished 28.03 percent of the budget. It is further stipulated by the parties that under the constitutional amendment, 1977 would be the base year for the determination of the percentage of the budget to be provided by the counties in the multicounty school district. It follows, therefore, that Gage County, which should be furnishing 23.55 percent of the budget from property located in the multicounty school district, would, in fact, only furnish 7.3 percent of the budget for 1979. Such a result clearly contravenes the principles of taxation we have adopted in this state, and is violative of the Equal Protection Clause of the federal Constitution because of the obvious and apparent lack of uniformity in taxation.
The colloquy between the court and counsel for the respondents during oral argument with reference to the question of the uniformity, or lack thereof, which would result from the implementation of the amendment in question is also of interest and helpful in the resolution of this problem. The court inquired of counsel: "Say we have two counties side-by-side and you have a multidistrict between the two counties. In one year County A provided 60 percent of the budget for this taxing multidistrict taxing entity, and County B provided 40 percent. During the year there was a great deal of growth in County B, so that based upon valuations in County B it should now be paying 60 percent of the budget based upon the values that were there. But it doesn't reappraise. Doesn't this require that notwithstanding that fact County A has to continue paying 60 percent of the budget?"
Counsel: "Your honor, now you said two things, one that there has been a great growth in the one county in valuation. Now remember we assess as of January 1st."
Court: "Well make it whatever 12-month period you want but ultimately that fact will come into play won't it?"
Counsel: "I see no reason why the Legislature by implementing this amendment couldn't take care of that problem."
Court: "By saying that they'll not carry out the Constitution?"
Counsel: "There isn't anything in the Constitution that specifically requires that the particular manner be followed. It doesn't say * * *."
Court: "It says that County A shall pay 60 percent of the budget because they paid 60 percent of the budget before."
Counsel: "Let me point out, your honor, that the rule in this state is that the Legislature has unlimited power in the field of taxation unless limited by the Constitution."
Court: "Which says that the taxation shall be equal and proportionate among the counties."
Counsel: "That is correct."
We can see no manner in which the foregoing situation could possibly result in anything other than nonuniform and disproportional taxation. While other situations could be and were argued by the relator with regard to the lack of uniformity necessarily engendered by the implementation of the amendment, we do not deem it necessary at this point to discuss in detail the other examples and fact situations referred to by him, as we believe the foregoing examples clearly illustrate the deficiencies in the amendment in that regard.
We next comment on relator's contention that the amendment in question deprives the taxpayers in the multicounty districts of their procedural due process rights under the United States Constitution and the Nebraska Constitution, specifically the failure of the amendment to provide for an opportunity to the taxpayer to be heard in connection with a change in the amount of his levy. This court has long adhered to the rule that a taxpayer is not deprived of his property without due process of law if he has an opportunity to question its validity or the amount of such tax or assessment at some stage of the proceedings. See, Hacker v. Howe, 72 Neb. 385, 101 N.W. 255 (1904); County of Douglas v. State Board of Equalization Assessment, 158 Neb. 325, 63 N.W.2d 449 (1954); and Frye v. Haas, 182 Neb. 73, 152 N.W.2d 121 (1967). The amendment involved herein does not in any manner provide for an opportunity for the taxpayer to be heard. Such failure to provide for a hearing also illustrates the deficiencies in the amendment and is a further reason for finding the amendment to be in violation of the United States Constitution and the Nebraska Constitution.
We wish to make it perfectly clear that we consider and pass upon the constitutionality of the amendment in question in the form in which it was adopted and as presented to this court in the original action brought by the relator. Although the respondents argue that any constitutional defects existing in the amendment could be cured by supplementary legislation, assuming for the moment that the amendment could be interpreted as not being self-executing in nature, nevertheless we have no way of knowing the nature and provisions of any subsequent legislation which may be enacted, or, for that matter, if and when such may ever be adopted; those items are entirely conjectural. We might add that although it is conceivable some of the obvious procedural deficiencies in the amendment, such as the lack of notice to the taxpayer and an opportunity to be heard, might be cured by subsequent legislation, nevertheless it is difficult to conceive how any of the substantive constitutional shortcomings could be remedied by further legislation, as such legislation would of necessity violate the constitutional provision itself. The Legislature could not direct the ignoring or violation of any provision of the Constitution, including the amendment in question. We also add that if it were considered a defense to a constitutional attack that any constitutional deficiencies could be corrected by further legislation, the same argument might equally be applied to a constitutional attack upon a statute adopted by the Legislature, which reasoning, of course, is obviously fallacious. We therefore conclude that we must in this case consider only the constitutionality of the amendment itself, keeping in mind also that by the terms of the amendment the provisions for equalization by means of adjustment of levies in multicounty districts are self-executing, at least with respect to the expiration date of the amendment, which is December 31, 1980.
With the foregoing in mind, and based upon a study of the applicable law and the facts stipulated to by counsel for the parties in this action, we therefore conclude that the amendment in question violates the Equal Protection and Due Process Clauses of the United States Constitution and hence is invalid.
In view of the decision we reach here, we need not examine the other matters raised by relator bearing upon the invalidity of the amendment. The question arises, however, as to the wisdom of engrafting provisions which are of very short duration, such as the instant amendment, upon the permanent Constitution of this state. While we do not believe that this should be done, we fully realize that the matter is properly within the discretion of both the Legislature and the people. We only hold here that the purported amendment involved herein is unconstitutional and void. We therefore sustain relator's motion for a summary judgment and enter a verdict for relator in this action.
JUDGMENT FOR RELATOR.