*1 ROOSEVELT, IV, THEODORE Respondent, Petitioner v. REVENUE,
MONTANA DEPARTMENT OF Respondent Appellant. No. 98-495. 29, 1998. Heard December February 2,
Submitted
1999.
February 19,
Decided
1999.
For Amicus Curiae: (for Halverson, PC.; Sweeney Billings Jeffrey & amicus Vern Essmann). the Court. opinion
JUSTICE TRIEWEILER delivered IV, Roosevelt, petitioner, who designated Theodore Revenue, re- designated which was the Montana Ju- petition in District Court for Tenth joint filed a spondent, County interlocutory Fergus adjudication pursu- dicial District in -305, MCA, legal issues raised before 15-2-304 ant §§ (STAB). Board asked the Dis- Appeal parties Tax Montana State phase-in changes 2% in real to determine whether the trict Court 15-7-111, MCA, value, set forth in violated the United statutory After Constitutions, law. or Montana States or Montana *3 by hearing and oral considering parties submitted the written briefs 15-7-111(1), MCA that § the District Court concluded argument, and in conflict with other statu- on face is unconstitutional real property and assessment of tory to the valuation pertaining law of the District Department appeals judgment the in Montana. The petitioner, the applied to judgment part, affirm that in as Court. We Roosevelt, IV. Theodore appeal to the of the issues raised on limit our consideration We
¶2 15-7-111(1),MCA whether, to petitioner, § the of question laws, the right equal guaran- of protection violates his 4, II, of Montana Constitution. by Article Section the teed BACKGROUND AND PROCEDURAL
FACTUAL joint petition parties’ taken from the following facts are The ¶3 the parties are They agreed upon by the and Court. are the District only of record. facts Roosevelt, IV, improvements property owns real Theodore
¶4 County, At issue Montana. Fergus are in which located that two that real improvements of 1997taxable value is the in this case property. In the market value of the at appraised
¶5 issue was $890,850. of Department Montana Revenue at De- partment $701,890. appraised same Roosevelt filed appeal Fergus County an with the Appeal Tax Board challenging the 1997 valuation. For purposes calculating value, of the 1997 county reduced $820,597, board Roosevelt’s 1996 appraised value to $658,840. and his appraised value to Pursuant to § MCA phased then in the amount change year valuation at the of 2% per beginning words, rate in 1997. In other although appraised value of Roosevelt’s declined $161,757, $3,235 given only difference, he was credit for and as- $817,362, taxes sessed based a value of rather than his $658,840. appraised county actual 1997 value of The board affirmed Department’s phase-in calculation of the 1997 value for Roose- property. velt’s appealed Roosevelt to the STAB to legality contest the of the 2% (1997).
phase-in provision parties The then joint petition filed the pursuant 15-2-305, the District Court to § MCA, provides which part relevant that:
A may interlocutory adjudication district court make an of an is- pending sue appeal before the state tax board if issue involves admissibility evidence, procedure, or a question substantive require of law and does question the determination of a of fact. agreed The parties disputed that there no were issues fact and issue to be sole decided was as follows: value, the 2% phase changes Whether as set forth in § MCA, 15-7-111, is in violation of United States and Montana requirements constitutional protection process, and due statutory and in requirement violation of Montana of property value equalization. Court,
In the District Roosevelt argued that: VIII, 1. phase-in provision violates Article Section of the Constitution, 15-9-101(1), MCA, 15-8-111(1), MCA, Montana require which equalization purposes values for of taxa- tion. VIII, provision phase-in violates Article guarantees
Montana owner the *4 and a owner appeal appraisals assessments because can- not, fact, a appeal receive reduction on based on the true market or her property. his phase-in provision The rights equal protection 3. violates
¶
guaranteed by
laws
due
the United
and
process
and
States
Montana
Constitutions,
interpreted
Department
Revenue v. Barron
100,
533,
(1990),
P.2d
and Department
245 Mont.
Revenue v.
862 P.2d
Sheehy
that:
Department responded
¶11
VIII,
3, merely
for
provides
appraisal,
1.Article
Section
assess-
¶12
value,
ment,
provided by
law.
equalization
and
appraisal
is the method of
and assessment
requirement
for
law and there is no
that
be as-
provided
at 100% of current market value.
sessed
VIII, Section of the Montana Constitution has not
2. Article
¶13
Legislature
provided
appeal
has
been violated because
through
level
15-15-101 to
procedures
government
the local
§§
15-2-301,
MCA,
MCA.
-106,
through
and to
STAB
his
equal protection
right
nor
3. Neither Roosevelt’s
every
he has been treated like
due
has been violated because
process
Sheehy,
and
in the state. Rather than Barron
other
owner
guided
by Nordlinger
on
Hahn
point
be
v.
Court should
1, 112
phase-in Due Process Protection and Montana Constitutions. and Montana of both the United States Clauses those raised arguments are similar to appeal, parties’ On additionally that argues Court, although the District as the basis for facts not in evidence assumed the District Court opinion. *5 Except necessary, where parties’ we will not repeat
¶18 the argu- detail, necessary ments in nor do we find it all address of the issues raised in the District Court or by decided the District Court since we that the District judgment, conclude Court’s as it applies par- it, ties who were before is correct based on the District appli- Court’s cation of the Protection Clause the of Montana Constitution.
Therefore, will limit we our discussion to the following issue: petitioner As and situated property ¶19 owners, equal does MCA violate the right pro- II, by guaranteed tection as Article Section of the Montana Consti- tution?
DISCUSSION VIII, Article Section Constitution, provides Montana assess, appraise, “[t]he that state shall and equalize the valuation all to be property provided taxed in the manner by law.” mandate, Pursuant to that Legislature following enacted the requirement regarding appraisal ofreal property in Montana: “The appraisal same method of and assessment shall be in county used each that comparable state to the end property with similar true mar- subject ket values and to taxation in Montana shall have substantially taxable at cyclical values the end of each program revaluation provided.” 15-7-112, hereinbefore MCA. 15-8-111, MCA, The Legislature provided, further at all that property value,
taxable must be at assessed 100% ofits market except provided, 15-9-101(1), MCA, as otherwise and at § that: adjust department shall equalize and the valuation of taxable property among the several counties and ... between individual tax- payers all things necessary fair, and shall do just, secure a eq- and all among uitable valuation of taxable property counties ... and be- taxpayers. tween individual provisions The combined effect requires these standardized
appraisal throughout methods with goal the state the ultimate property equalized among valuation oftaxable be the various coun- in and among taxpayers, ties the state individual and equal- that once ized, property purposes be assessed for tax at 100% its market value, except provided. statutory as otherwise As of that part frame- valuation, appraisal, work for and assessment of real property, § 15-7-111, required property within the State of 31, 1996, Montana be revalued December every years. revalued least three in the Montana general became concerned that increases in the Legislature State throughout of Montana in value of real State would result property, from real impose increases those taxes derived substantial appreciated whose had hardship on those value, produce necessary.1 revenue to the state than was more 15-7-111, MCA, Therefore, in- Legislature amended following which is at issue in this phase-in provision clude the case: (1) department supervise of revenue shall administer and of all within program revaluation taxable classes three, four, annually. other must revalued and ten. All three, four, complete of class and ten The revaluation 31,1996. change The amount valuation December from three, four, and ten must be year base each in classes *6 for change total in valuation. year in each at the rate phased of2% of (3) 1,2007, January department of revenue shall Beginning for the revaluation of all tax- supervise program and administer three, four, reappraisal within classes and ten.... The able three, four, and ten provide prop- that all class plan adopted must 1, 2010, county by January and each suc- erty is revalued in each years. ceeding 3 added.)
(Emphasis on those had the intended effect Legislature’s The amendment ¶24 Along in value in 1997. with reductions appreciated which properties (1997), on the mills MCA and limits tax rate at § in the 15-10-402, (1997), for tax increases be levied at MCA that could minimized for those or avoided. owners were those re- situation, would have tax decreases which in Roosevelt’s people were not in the market value of the reduction sulted from following testimony example, offered to the Senate Committee 1. For the Governor’s Office: on behalf of on Taxation urgently “Clearly, has governor tax situation indicated that escape He went and remediation.” immediate attention will not seized our unacceptable grips projected with the to indicate that “Wewill come property tax increases.” statements, targeting million of $85 for tax relief of as well as the Those reap- flowing as a result the 1997 taxes the state increased fairness governor’s commitment toward praisal, continued demonstrate system. equity Montana’s (Jan. 24,1997) Committee on Taxation Hearing Senate on S.B. 195 before See Governor). Robinson, (testimony Office of Mick fully realized. While owners whose property increased during 1997 are now taxed less than the market value property, their Roosevelt’s taxes are assessed on 124% of the market his property. question value of is whether this result violates right equal protection guaranteed by Roosevelt’s of the laws Article II, of the Montana Constitution. (1997), The District Court’s conclusion that
¶25 facially, is unconstitutional is a conclusion of law. The standard of re questions view for of law is they whether are correct. See Albright v. 196, 206, 933 Department 815, 821. Revenue 281 Mont. P.2d legislative It is all presumed that enactments are constitu party challenging constitutionality tional. The aof statute bears beyond the burden of the statute proving unconstitutional a reason Nye 505, 510, able doubt. See State v. 283 Mont. 943 P.2d legislation we compliance When review with the Equal Clause, Protection the first and often question determinative is the scrutiny level of applied. scrutiny, Strict requires a com pelling state interest for statutory classifications which treat other wise situated individuals differently, is reserved for those a statutory situations where “impermissibly classification interferes with the exercise of a right operates fundamental or a peculiar dis advantage suspect of a class.” v. Arneson Admin. 1245, 1247. 864 P.2d Roosevelt does not contend that he is suspect a member of a class, nor that a fundamental involved. adopted scrutiny We have a middle tier of important where involved,
rights though are even those rights are not fun considered *7 Rights important enough scrutiny, damental. to warrant middle-tier fundamental, although rights which, not considered include although Constitution, mentioned in the are not found in Montana’s Declara Rights. Community (1986), tion See Butte Union v.Lewis 219 Mont. 1309, 1314. 434, 712 P.2d Roosevelt contends that classifications created ¶30 15-7-111(1), (1997), implicate MCA his constitutional equal- to VIII, guaranteed valuation ized Article of the Montana and, therefore, that the statute should scrutinized with the compliance Protection Clause based on a mid- dle-tier review. impli which which do not involve classifications those cases
¶31
interests,
rights, constitutionally significant
or
fundamental
cate
class,
suspect
we will review the classifica
based on a
discrimination
a
relationship
legitimate govern
rational
for whether it bears a
tion
Arneson,
272-73,
at
¶33 Four property in three classifications of Class results MCA taxpayers: property Four owners class includes those Class The first were, and who there- declined from 1996 1997
whose market value than the market value fore, greater on a value 1997 based assessed property. of their Four owners includes those Class 2. The second class to 1997 and whose change did not from 1996 market value
whose therefore, actual market is, being based on its assessed value. Four third class includes those Class 3. The were, and who from 1996 to 1997 increased value
whose than the fair market therefore, based on value less assessed property. of their concern about Legislature’s to the Department points values, on increased in revenue based windfall 15-10-401, pro- found purpose statement of follows: part vides relevant
(1) taxation of reliance on the state ofMontana’s placed an unreason- has government and local support education in Ti- described of all on the owners classes able burden part 1. chapter tle
(2) 15-10-412, Except provided people of the state of policy Montana declare that state of Montana that property imposed no further tax increases be on property. Although agree legitimate we that there is a state interest reliance on taxes and reducing property avoiding property further increases, owners, that taxing property we conclude such as Roo sevelt, based on 124% of the market value property, of his while tax at ing others in state less than the full market value of their prop erty, rationally objectives. Furthermore, is not related to those we creating a property conclude that class of owners whose are taxes as greater sessed on a basis than the market values of their actual, other owners are while assessed based on the or less market property, than the actual values of their causes the property first class to pay disproportionate owners share of this state’s taxes, in violation of the Protection Clause found at II, by Article of the Montana as applied fact, Sheehy. Court in Barron and In the effect of the classifications by created the 1997 amendment MCA are very similar to those which this Court held unconstitutional Barron. Barron, constitutionality the issue was the provi- of a former 15-7-111, provided
sion in for “stratified sales assessment ratio studies” and assessments based on the results of studies, Following prices those studies. the actual sales of residen- in a given compared appraised tial area were values of properties previous years. those same for the three If the average as- sessed value of in that area was more than 5% less than the average price, greater sales or more than 5% than the average sales price, appraised adjusted by then all values were to be percentage of difference to arrive at the taxable value. property’s We noted that adjustment impacts had different effects on different prop- erty depending on the ratio of the appraised per- of that and, person’s property son’s market value of that therefore, persons appraised that those whose value exceeded their and, market value would be taxed at more than the market value therefore, disproportionately. gave following example: taxed We may by samples
It
be demonstrated
the above
that equalization
application
is not achieved
of the 30% factor but rather that
any inequality
appraisal
is exacerbated
the factor. For exam-
$24,000
property,
ap-
the first
which sold for
in 1989 but was
ple,
$46,497
praised is now assessed after the application ofthe fac-
tor,
$61,346.
That same overappraised
in relation
price
factor,
to its sales
at 193%
application
before the
ofthe
but is
overappraised
application.
255% after its
*9
Barron,
We from the record methodology that the by the prescribed legislature implemented by and the DOR for yearly equalization unfairly between areas against discriminates property taxpayers in Area 2.1 whose properties in 1989 were ap- praised at or above their market values. Wetherefore determine in accord with Department [v. Larson 854,]
Revenue
534 P.2d
that the use of the
tax
values derived from the ratio studies and
application
the 30% factor
properties
to residential
in Area 2.1 require cer
tain
therein to bear a disproportionate
share of
Montana’s tax burden in violation of the Equal
require
Protection
ments of the Fourteenth Amendment of the United States Consti
tution,
II, 4,
and Art.
1972 Montana
and the Due
requirements
Process
of the Fifth and Fourteenth Amendments of
II,
the United States Constitution and Art.
17 and 29 ofthe 1972
§§
Montana Constitution.
appraisal provisions
This also violates the
of our statutes which require general
appraisal,
and uniform
as
equalization
sessment and
all
taxable
in this state.
Barron,
108-11,
methodology referred to in Barron discriminated against properties and, therefore, appraised which were at or abovetheir market value re- quired disproportionate those owners to “bear a share of burden, in equal protection require- Montana’s tax violation of the ments,” 15-7-111(1), against discriminates those Class Four owners whose declined in value from 1996 to requires they disproportionate bear a share ofMontana’s II, burden, requirement of Article Section 4’s violation provided equal protection Montana’s citizens be with of the laws. Supreme contends that the United States 1, 112 U.S. S. Ct. in Nordlinger Court’s decision v.Hahn 2326, 120 requires phase-in L. Ed. 2d that we conclude that 2% enacted 1997 does not violate Roosevelt’s provision protection. Nordlinger, the issue was whether California’s constitutional value,” that real be taxed at its
requirement “acquisition value, unfairly than current market against rather discriminated purchasers in owning pieces recent favor of those similar purchased years had been earlier at a property, price. but which lower Court held that California had demonstrated at Supreme least system for its value” “acquisition two rational bases of taxation. It legitimate concluded that the state had a interest in local neighbor continuity, stability which was preservation, hood furthered longer pay progressively term owners to less than permitting new comparable property, and it held that the state could legiti owners of that a mately conclude new owner does not have the same protection against reliance on degree higher taxes as does an exist 2333, 120 12, 112 Nordlinger, See 505 U.S. at S. Ct. at ing owner. L. Ed. Nordlinger distinguishable 2d at 13-14. from this case for rea two First, “acquisition system sons. Montana does not have an value” Second, held, taxation. as we have previously this state’s discrimina tory reasonably treatment of Roosevelt is not obj related to its ective of *10 avoiding tax increases. authority We conclude to the extent that federal is persua
sive, the United States Supreme Allegheny Court’s decision in Pitts burgh County Coal Co. v. County, Commissioners Webster West Vir (1989), ginia 488 U.S. 109 S. Ct. 102 L. Ed. 2d is more case, closely In that point. County, on the tax assessor for Webster value, assessed at Virginia, appraised West 50% of its but value at the appraised fixed consideration for which the had properties recently, last sold. When had not adjustment sold some made, adjustment but the was comparable was to actual increase “[tjhis Supreme sys in market value. The Court noted that approach tematically produced peti dramatic differences in valuation between recently transferred comparable tioners’ otherwise sur 341, 109 637, 102 Allegheny, land.” at S. Ct. at L. Ed. rounding 488 U.S. 2d at 695. any system Virginia’s Without indication that West value,” “acquisition Virginia or that the state of West had
based discriminatory for the treatment of demonstrated a rational basis petitioner’s position, in the the Court held that property arriving at market value violated the county assessor’s method of Equal Protection Clause of the Fourteenth Amendment to the United 343, 109 States Allegheny, Constitution. See 488 U.S. at S. Ct. at 102 L. Ed. 2d at In language case, relevant Supreme held that: Court general adjustment
The use of a as a transitional substitute for an individual reappraisal violates no constitutional command. As long general adjustments as are enough accurate over a pe- short equalize riod of time to in proportion differences between the holders, assessments of a class of property the Equal Protection Clause is satisfied. Just as that Clause tolerates occasional errors of state law or mistakes in judgment valuing when property for tax purposes, require general adjustment does not immediate on the case, developments. basis of latest market In each the constitu- attainment requirement tional is the seasonable rough equal- of a ity similarly in tax treatment situated owners. (cita 343, 109 638, 102 Allegheny, 488 U.S. S. Ct. at L. Ed. 2d at 697 omitted). Likewise, general adjustments tions we conclude that over of time period equalize similarly a short the treatment of situated However, holders is permissible. pursuant to our Constitu tion, seasonable attainment of the equality required. The 2% phase-in provision adjust at issue this case does not values over a of time and period short does not result in seasonable attainment of equality in tax treatment of situated property owners. judgment We therefore affirm the District Court’s the extent applied that it concluded that MCA Theo- Roosevelt, IV, equal protection dore violates his of the laws. However, we reverse that part judgment of District Court’s 15-7-111( 1), held that MCA is unconstitutional on its face. To equal protection “on its face” means that “the violate law its own persons terms classifies for different treatment.” Ronald D. Rotunda Nowak, & John E. Treatise on Constitutional Law: Substance and (2d 1992). case, Procedure 18.4 ed. In this the terms of§ face, make no specific classifications. On its the statute previously is neutral. to the three classes de- scribed, imposes the statute different burdens on each class. There- *11 fore, to holding our in this case is limited our conclusion that § (1997), and, therefore, discriminatory is violates the equal protection, applied petitioner. as speculate constitutionality are we inclined to about the of Nor taxpayers. to other classes of Other than for ex- applied the statute as
253
circumstances,
case,
ceptional
present
which are not
in this
we are
authority
decision-making
limited in
to decide the issues
our
raised
or
presented
those cases
controversies
us. Based
our former
Constitution, we have concluded that we are as
as the
limited
federal
Hardy
(1983),
courts
or controversies. In
v.
to cases
206
Krutzfeldt
521,
274,
Mont.
P.2d
we
that:
explained
672
judicial power
“The
vested
the district courts and the Supreme
Montana,
provisions
Court
of
of Montana
equity’
judicial
to such ‘cases at law and in
as are within the
extend
8,
3, 11,
cognizance of the state
Article
sovereignty.
[1889
secs.
By
Constitution.]
Montana
‘cases’ and
within
‘controversies’
determine,
judicial
power
is meant real
controversies
opinion
questions.
abstract differences of
or
Neither
moot
federal
nor
granted
power.”
state Constitution has
such
526,
Hardy,
Mont. at
(quoting
P.2d at 276
v.
Chovanak
584).
(1948),
525-26,
Matthews
120 Mont.
188 P.2d
principle
judicial
We have followed this same
of
restraint since
of our
adoption
new Constitution in Olson v.Department Reve-
nue
223 Mont.
This statute, any either of a state or of the United pronounce tion to constitution, except as States, void, irreconcilable with the because litigants in actual adjudge legal rights of upon it is called to jurisdiction, by it ofthat is bound two controversies. the exercise one, rules, anticipate never to rigidly it has adhered: to which necessity decid- law in advance of the of constitutional question other, never to formulate a rule of constitutional law ing it; the ap- facts to which is to be required precise than is broader that it Very proposition is the incontrovertible significant ... plied.” every con- for this Court to consider “would indeed be undesirable application in the might possibly arise ceivable situation power The delicate comprehensive legislation.” and complex exer- Congress unconstitutional is hot to be an Act of pronouncing imagined. thus hypothetical cases with reference cised limiting construction could to the fact that pointed Court further responsible the court construction the statute given in fact con- constitutionality were of doubtful application if an this rule frees application add that cretely might We presented. on constitu- unnecessary pronouncement only from the Court of statutes issues, premature interpretations from but also tional cloudy. might be application their constitutional in areas where (ci 21-22, 80 Raines, 522-23, 4 362 U.S. at S. Ct. at L. Ed. 2d at 529-30 omitted). tations Likewise, anticipate every we will not conceivable fact situation which the phase-in provision at issue could be rationally objective
whether that statute the state’s un- related to holding those We limit der circumstances. our facts before us property taxpayers those situated Class Four whose market value from actual declined 1996 to
SUMMARY Because Roosevelt’s declined value from *13 1997, recognition and because he is denied full ofthat decline in value purposes pursuant phase-in for of assessment provision in § 15-7-111(1), (1997), MCA Roosevelt’s property taxes are based on more than the market value property, of his while the property property taxes other owners whose did property not decline value are based market on either value or than market We less value. that creating property conclude a class of whose as owners taxes are on greater sessed a basis than the values of property market their property while other owners are on assessed based the actual or less than the actual values of property, market their causes the property pay in the a disproportionate owners first class share of this state’s taxes, protection in violation the laws II, 4, guaranteed Article of the Montana Constitution. 15-7-111(1), Therefore, (1997), Roosevelt, MCA un applied § as similarly constitutional and he and other prop situated Class Four erty owners are entitled to be assessed the actual 1997 market of their purpose calculating for their prop erty taxes. holding This is limited to the facts before us and to sit- Class Four property actually whose declined
uated. value for part 1996 to 1997. We reverse that of the District Court 15-7-111(1), judgment phase-in which held that the provisions § (1997), are MCA unconstitutional on their face. Whether the statute applied of property taxpayers is unconstitutional as other classes are depends on facts which not before us and about which we decline (1997), speculate. constitutionality MCA as of § taxpayers, to other classes of will have to await an actual case applied controversy involving one of the members those classes. or judgment part We affirm the of the District Court in and reverse entry part, judgment and remand to the District Court for consis- opinion. tent with this REGNIER,
JUSTICES HUNT and GRAY concur. LEAPHART, dissenting.
JUSTICE
15-7-111, MCA,
I dissent from the Court’s conclusion that
vio
Protection Clause of the Montana Constitution
ap
lates
presumed
to Roosevelt. The statute is
to be constitutional. State
plied
505, 510, 943
96, 99.
(1997),
Nye
party challeng
v.
283 Mont.
P.2d
proving
unconstitutionality
a statute bears the burden of
be
ing
doubt,
exists,
any
and if
doubt
it must be
yond a reasonable
resolved
459,
the statute. Grooms v.Ponderosa Inn
in favor of
P.2d
The Court concludes that
is uncon-
to Roosevelt and others whose
values
stitutional
from their 1996 values. The Court holds that such
in 1997 decreased
“are entitled to be assessed at the actual 1997 mar-
property owners
purpose
calculating
for the
their 1997
ket value of their
that 100% of current mar-
taxes.” This conclusion assumes
which Class Four
can be as-
ket value is the sole standard
However, neither
the Montana Constitution nor the United
sessed.
Agricul-
a deviation from that standard.
prohibit
Constitution
States
lands,
traditionally
have
been assessed
example,
tural and forest
See,
their market values.
their
values rather
than
productive
15-8-lll(6)(c),
(d),
v. Hahn
505 U.S.
Nordlinger
MCA.
1, 13-15,
11-14,
2332-34,
the United
112 S.Ct.
120 L.Ed.2d
*14
Proposition
Court held that California’s
which
Supreme
States
value, did
violate the
upon acquisition
based
property
taxed
of the Fourteenth Amendment
to the United
Equal Protection Clause
may not
despite
acquisition
the fact that
value
States Constitution
remotely
current market value.
represent
even
1997,100%
statutory
market value was the
standard
Prior to
Montana.
the 1997
assessing
property
Class Four
in
system
the tax code to
for a
which no
Legislature
provide
amended
prop-
current market value for Class Four
relied on 100% of
longer
Rather,
system
equalized property
assessed and
based
erty.
the new
system,
the new
each
1996 market value. Under
a derivative of its
property
value. Each
was
reappraisal
a 1997
assigned
was
2% of the difference be-
plus
1996 value
or minus
then
on its
assessed
proce-
1996 value. The above
value and its
reappraised
tween its 1997
and applies equally
dure
uniform
to all Class Four is
own
equalization
It
also consistent with the
requirements
ers.
ofArticle
VIII,
of the Montana
provides:
Section 3
which
“The
assess,
equalize
appraise,
state
and
the valuation of
shall
all
VIII,
provided by
which is to be taxed in the manner
Art.
Sec.
law.”
added).
(emphasis
Accordingly,
disagree
Mont. Const.
I
with the
(1997)
assumption
Court’s
current
market value is the standard
we must determine
whether there has been a violation of
protection.
The
Protection
pro
Clause
Montana Constitution
properties
appraised
vides that
situated
must be
and as
State, Dep’t
in a uniform manner.
sessed
Patterson v.
Revenue
168, 175,
Patterson,
557 P.2d
802.
Mont.
In
we ad
5-year appraisal plan
dressed a
in which 20% of
in
property,
all
each
county,
annually.
was
appraised
appraising 1/5 of the property
year,
each
all
in the state of Montana would have been val
Patterson,
5-year cycl
174-75, 557
ued
the end theof
e.
171 Mont. at
method,
802.
taxpayers challenged
P.2d at
contending
year
properties
cycle
valued
the first
at
would be valued
a dif
property appraised
ferent market value than
and assessed
fifth
year
cycle.They argued, therefore,
theof
discrepancy
that this
would
cause
pay disproportionate
some
owners to
share
taxes.
Patterson,
176, 557
cyclical
171 Mont. at
P.2d at
In upholding
802.
method,
reappraisal
revaluation or
this Court acknowledged that
“temporary disparities
cycle
within the
between individual property
valuations both within the county and between counties are inevita
Patterson,
ble.”
provement 5-year cycle over involved in Patterson. In contrast to Patterson, the situation in 1/5 appraised where of all was year, system, appraised each under the all present property 15-7-111,MCA, year. phase-in provisions same base Under the all appraised assessed under the same standard for exactly All Montana year tax received same is, valuation treatment Roosevelt received. That the difference be- year 1997value oftheir reappraised tween the 1996 *15 per year. rate 2% phased phase-in at the That was the 1996 value. More property’s particu- added to or subtracted from (i.e., properties to larly, properties all similar Roosevelt’s which de- 1997) treatment; properties received similar such clined in value phased-in 1997 value via a 2% reduction from the had their reduced value. year’s 1996 previous at its plus All Class Four taxed 1996 value or minus and All difference between 1997 value its 1996 value.
2% of the the and ap- have treated same the same standard is been view, my this similarly situated statewide. plied to all Roosevelt, not, face, violate does on its or methodology guarantee. equal protection provision violates Arti- argues phase-in also that the Roosevelt a VIII, guarantees the Montana Section 7 of cle assessments, right appeal appraisals be- property owner cannot, 15-7-111(1), MCA, under receive cause a owner property. true value of his or her on market appeal reduction Roosevelt, fact, appeals exercised his administrative Given that adjustment to the 1997 value of his a 2% downward and received First, he appears contention is difficult to understand. this property, an has been diminished right appeal that his effective to contend argument. his prevail did on current market value he because current market value is the assumes that argument I constitutionality tax. As by which measure standard sole above, in this underlying assumption with the disagree I have stated an argue appeal he seems to unless Secondly, of argument. line result, appeal of effective has been de- desired achieves a opinion As this Court’s is merit to this contention. There no nied. illustrates, rights to have been honored appeal Roosevelt’s herein way through the Montana Su- all the administrative level from the Court. preme reasons, Dis- I reverse the decision would For above
trict Court. foregoing dissent joins TURNAGE
CHIEF JUSTICE LEAPHART. JUSTICE dissents. NELSON
JUSTICE 15-7-111(1), majority Although agree I with I grounds, disagree equal protection is unconstitutional only unconstitu- majority’s conclusion with Four similarly situated Class applies to Roosevelt as it tional disagree I also majority’s owners. with decision to re- write the statute so that other Roosevelt and situated Class Four owners are taxed the actual 1997 market value of *16 property purpose calculating their for the of their 1997 property holding, majority In so equal protection taxes. has misconstrued jurisprudence placed clause and has itself of into role Legislature. 15-7-111(1), Montana I hold that would violates § face, Equal Protection Clause on I Montana’s and dissent from our failure to do so. II, 4, Article Section of the Montana Constitution states that protection shall be of person
“[n]o
denied
The
laws.”
persons
Protection Clause
that “all
requires
be treated alike
(1997),
under
like circumstances.” Grooms
Inn
v. Ponderosa
459, 467, 942
699, 703.
P.2d
(1992),
Mont.
See also
v.
Nordlinger Hahn
(citation omitted)
1, 10, 112
2326, 2331, 120
S.Ct.
505 U.S.
L.Ed.2d 1
(stating
prohibits
that the federal Equal
gov
Protection Clause
from “treating differently persons
ernmental decision makers
who
alike.”)
all
aspects
purpose
are in
relevant
The
of the Equal Protec
ensure
subject
tion Clause
that individuals are not
to arbitrary
discriminatory
state action.
v.
Zemple
Employers’
Uninsured
(citation omitted).
(1997),
424, 428, 938
658, 661
Fund
282 Mont.
P.2d
system
This Court has
that a
ruled
tax
which causes certain
disproportionate
to bear
share of Montana’s tax burden
violates the
taxpayers’ right
equal protection laws guaran
II,
teed
Article
of the Montana Constitution. Montana
(1990),
100, 111,
v.Barron
Dept. Revenue
245 Mont.
799 P.2d
(1993),
Sheehy
540.
also Department
See
Revenue v.
Pittsburgh
It is as clear as was to District that § three results in of Class classifications taxpayers: Four
1. The first class includes those Class Four owners were, value declined from 1996 1997 and whose market who value therefore, greater assessed 1997 based on a the market property. their includes Class Four second class those change valué did not from 1996 to and whose whose market is, therefore, being based on its actual market assessed value. *17 class includes Class Four owners
3. The third those were, in increased value from 1996to 1997 and who whose the in 1997 based on a value less that market therefore, assessed fair property. their value of added.) short, majority it is clear to the as it was as
(Emphasis 15-7-111(1) terms, by that its in”1 District Court own “results the § and the in two classes of Class Four three a share ofMontana’s tax burden. pay disproportional classes of these equal that violates majority protection the concedes a statute Since majority apparent attempt phrase in” in an to buttress The uses “results §15-7-111(1), facially I two ob- is not unconstitutional. make that its conclusion First, this regard. neither District Court nor Roosevelt used in this servations notes, problem majority trial had no in dis- terminology. as the court Second, plain language. classifying its cerning effects of the statute from majority’s attempt meaning to read facial unconstitution- in” belies the “results by phrase. of: in” means “to be the cause ality use of this “Results out of statute effectuate, effect, induce, on, cause, generate, ingenerate, about, bring bring bring, off, off, trigger, bring pass, or make, occasion, secure, (up), to, stir touch set lead (3d 1995). Thesaurus, majority’s use Rogets The New ed. give to.” rise substan- only are without phrase semantical distinctions which results of this facially in” language creates or “results plain of the statute difference. tive taxpayers. classes of three when, terms, on by its face its own it persons classifies for different treatment, I cannot understand how majority, stating after that three statute results in classes of Class Four owners and acknowledging pay that two of these a disproportional classes share burden, 15-7-111(1), that reaches its conclusion is neutral § 15-7-111(1), Clearly, (and, thus, on its face. its own terms § fa- cially), classifies property disproportional owners for tax treatment. 15-7-111(1), inquiry The Court’s should therefore be whether vio- § lates Montana’s Protection on pursuant Clause its face appropriate scrutiny. level of Second, holding equal protection violates Roosevelt and other prop situated Class Four owners,
erty majority misapplies protection equal jurisprudence. protection A law equal violates “as or “in its applied” application” when law “the either shows no classification on its face or else indi legitimate, cates a classification which seems to but persons those challenging legislation governmental claim that the officials who applying degrees administer law are with different severity persons to different groups who are described suspect some Rotunda, Young, trait.” Nowak & Treatise Constitutional Law: (1986). Procedure, Substance 18.4 See also Cutone v.Anaconda 515, 524, 610 691, 697 Lodge Deer (stating P.2d to a challenge violating equal protection a statute as as applied arises in cases in which a constitutionally statute which is valid on its face arbitrary discriminatory in an fashion)(citing administered Yick 220). 356, 6 1064, 30 v. Hopkins Wo U.S. S.Ct L.Ed. In sim terms, equal pler protection applied” statute violates “as or “in its application” being when the statute is on its but neutral face en discriminatory, manner. disproportionate, forced or unfair later, Understandably, and for reasons I will discuss Roosevelt argue does not in the instant case violates theory applied. genesis solely This case protection finds majority’s partially facially in the determination to save an otherwise fact, party litigation unconstitutional statute. In no in this argued nor *18 15-7-111(1), did the District Court hold that is unconstitutional as § applied. Rather, 15-7-111(1), correctly argues Roosevelt violates § statute, Equal face
Montana’s Protection Clause on its because the terms, property taxpay- in classes Class Four its own results three of of imposes disproportional ers and tax burdens on two the classes. argue, anything does not nor there Roosevelt is in the record that in- dicates, 15-7-111(1), the Department enforcing of Revenue is in § discriminatory contrary, To disproportionate a or manner. the Roose- contends, statute, face, shows, the its deprived on that he is velt equal the protection Department of his of law because the of 7-111(1), 15- on enforcing Revenue is all Class Four owners § maimer and as mandated the statute. The in a similar result of en- 15-7-111(1), all Four forcing on Class a similar § manner, however, the taxpayer is that two of classes which the stat- disproportionate a share of the tax burden. This dis- pay ute creates a discriminatory tax treatment does not from en- proportional result Rather, part Revenue. policy forcement of of statute, tax treatment results because the on its disproportional face, an assessment method which causes two of three mandates pay disproportionate a Class Four owner classifications Thus, 15-7-111(1), holding that share Montana’s tax burden. § “in its Equal applied” applica- Protection Clause “as or violates tion,” protection juris- majority equal has misconstrued clause prudence. Moreover, agree majority needs “to speculate I cannot constitutionality to other classes of
about the of the statute as As on its face. taxpayers” protection to hold that violates above, majority it was Court it is clear to the District noted Four results in three classes Class that pay dispropor- classes a in two these owners and issue in the instant case is tax burden. The tional share Montana’s try “anticipate every conceivable majority should not whether at issue phase-in provision to which the 1997 could fact situation rationally that statute is related the state’s applied and whether Rather, the instant issue objective under those circumstances.” whether, scrutiny, appropriate under the level case mandates, to its violates Montana’s pursuant when enforced taxpayers to situated Clause because it causes Protection the tax a share of burden. pay disproportional statute, Furthermore, majority rewriting improperly 15-7-111(1). repeat- has clause into This Court severability inserts a statute provision an unconstitutional edly that when held entirety pro- if such is invalid in rejected, the statute stricken and statute, was an induce- or “necessary integrity vision is portion Thus, when an unconstitutional its enactment.” ment to
263
eliminated,
is
may
only
statute
the remainder
the statute
if
stand
“complete
capable
being
is
in itself and
executed in accordance with
apparent
legislative intent.” Newville v.
Dept.
Family
State
Ser
237,
793,
(1994),
255,
Mont.
(citing
vices
267
883 P.2d
804
Montana
311).
(1981),
Greely
378, 399,
300,
Auto. Ass’n v.
193 Mont.
632 P.2d
81,
See also White v. State
plied major- to Roosevelt situated property ity upset has whatever balance there was in this statute. The State is losing from taxpayers still revenue those whose increased in 1997, corresponding gain value in but there no in revenue from those whose decreased in value in 1997. The ma- effectively jority destroyed By has statutory scheme. excising that portion of applies the statute that Roosevelt and situated owners, the “complete itself,” statute is not in “capa- nor is it being ble in executed accordance with apparent legislative intent.” What remains and will majority opinion be enforced under the will statutory not be the same the Legislature scheme as intended in the original enactment. majority appears acting impres- be under the mistaken 15-7-111(1) (Senate amending 195,
sion that the act 463, Bill Ch. (1997)), “severability Laws of Montana contained a clause” similar to following: invalid, act part parts If a of this all valid that are severable from part the invalid remain in effect. If a part this act is invalid or applications, part one more remains effect in all applications valid that are severable from the applications. invalid Greely We “severability noted that the inclusion of a clause” an act is an indication that the drafters the voters desired that the judicial severability Greely, 399, 632 policy applied. 193 Mont. at P.2d at 311. severability S.B. did 195 not contain a clause. More severability the failure to include clause in
importantly, S.B. 195 oversight part Legislature. an on the An amendment was not containing a severability proposed early S.B. 195 clause was on in the bill, concerning but that amendment voted discussions down members of the Senate Taxation Committee. This Court 264 v. 262 Sheehy Employees
noted in Public Retirement Div. 762, clause, severability P.2d that absent a the pre Mont. 864 statute, “is the mutilation of a and that the sumption against legisla entirety.” in its except Sheehy, ture not have enacted it would (quoting P.2d at 770 State v. Holmes Mont. at 636). 256, 291, Nevertheless, this Court held Mont. P.2d has severability may be if containing clauses voided in toto that even acts White, they provisions. defects in their core contain constitutional 759 P.2d 233 Mont. at just contains such constitutional defects in *20 Moreover, by refusing severability to include a provisions.
its core 15-7-111(1), amending Legislature’s is in the act the intent § clause 15-7-111(1), except would not have been enacted its en- § clear — tirety. Legislature enacting that in S.B. the majority asserts prop- “windfall in revenue” based on increased
was about a concerned history in the of S.B. 195 is erty legislative nowhere values. addition, majority the of windfall in revenue. In a discussion a there January 24, testimony his before Senate contends that Robinson, representing on S.B. Mick Committee on Taxation Office, general pointed to a concern that increases in Governor’s pro- the State of Montana would throughout real property value of necessary. majority to the state than was duce more revenue testimony. Robinson stated: mischaracterizes Robinson’s budget presented legisla- that was to this the construction of ture, impact reap- this chose to address administration course was chosen for the statewide mills. This praisal reducing First, normally available to the variable couple a of reasons. of mills budgets their number governments setting when Second, the expenditures. fund adequately are to required Force, jointly by the appointed Task which was Policy Tax Montana Governor, studying year almost a Legislature spent and the requir- an very approach issue and recommended reappraisal this mills as the appropri- to reduce the number of governments all ing to response reappraisal. ate assertion, pointing was out
Contrary majority’s Robinson response reappraisal reduced in mills would be the statewide obtaining than was more revenue the state from thereby preventing necessary. if, Moreover, arguendo, even Legislature’s was the intention to revenue, hardly a
avoid windfall
one can
a
envision more bizarre
way
solving
problem
and circuitous
than the tax scheme set
out in S.B. 195. Rather
than enacting a statute
resulting
three
taxpayers,
classes of
two of
are required, unconstitutionally,
pay disproportionate
burden,
share of
their Class Four
tax
simple
just
it would have been a
matter
to reduce the tax rate for all
or,
bring
anticipated
down
if
revenue
too much revenue
received,
portion
refund a
of it on a pro-rata basis to all property
payers.
Indeed, it is
majority
gives
ironic that the
testament
—which
“principle
judicial
restraint” —takes it upon
effectively
itself to
15-7-111(1),
rewrite
so that Roosevelt and
other
situated
Class Four
are
owners
assessed
the actual 1997 market
value of their
for the
purpose
calculating their
prop-
erty
taxes while
other Class Four
owners are assessed
based on the scheme
Legislature.
enacted
the 1997
In rewriting
statute,
majority
has amended
so that
two of the
three classes of Class Four property
pay
tax based on the as-
1997 market
sessed
their property
remaining
while the
group pays tax on the amount below the assessed 1997 market value
Thus,
rewritten,
their property.
is no more consti-
Now,
tutional
than it was before.
one
class Class Four
own-
pay
ers will still
disproportionate
burden,
share of the tax
albeit a
disproportionally
system
low amount. Since a tax
which causes cer-
*21
tain
a
taxpayers
disproportionate
to bear
of
share
tax
Montana’s
bur-
taxpayers’ right
protection
den violates the
equal
to
the
guar-
of
laws
15-7-111(1),
by
anteed Montana’s
by
as
§
amended
the
majority, still
violates Montana’s
Protection Clause because
a
there is not even rational basis
tax
of
prop-
to
two classes Class Four
erty owners at the assessed
property
market value
their
while tax-
remaining
the
ing
class at less than the assessed market value of
the
property.2
majority’s
places
their
Since
amendment
a
Roosevelt in
argue
2. The
of Revenue could
that there is a rational basis for tax-
ing taxpayers
property
in
whose
increased
value from 1996 to 1997
on a
based
property
analogizing
value less than the assessed 1997 market value
their
to
grounds
Nordlinger.
majority
the rational
set
in
basis
out
as the
cor-
rectly points out,
system
“acquisition
Montana does not have an
value”
of taxation
Thus,
Moreover,
Nordlinger.
Nordlinger
controlling.
in
which was at issue
is
a
not
system
property
tax
which undervalues
in the same class
that class is defined
owners,
that,
is
property
apparent
Class Four
it
at
different class of
invitation, Roosevelt can now sue as to the constitu-
majority’s
15-7-111(1),
by majority,
as amended
as it
tionality
applies
to
remaining
property
two classes of Class Four
owners.
15-7-111(1),
Furthermore,
majority’s
fails
rewrite
to
another sort of unconstitutional classification inherent
solve
statutory
resulting
taxpayers
Besides
in three classes of
with
scheme.
burden,
share
tax
paying
disproportionate
a
two classes
rewritten,
statute,
and as now
still decrees that there will
originally,
taxpayers
who must
the full amount of their tax
pay
one class
be
(i.e.,
immediately
depreciated
those whose
neither
burden
those, now,
property depreciated
whose
in value and
appreciated
nor
value)
will not
a
class of
who
bear the full
and second
(i.e.,
years
those whose
of their
taxes for
burden
value). This,
obviously,
one of
reasons Roosevelt
appreciated
as applied.
that the statute was unconstitutional
argue
not
did
gets
a
to
his
gives
only
pay
him
half
loaf—he now
majority’s rewrite
depreciated
on the
value of his
while his
entire
pay
not have to
their
appreciated
do
neighbors
whose
years.
majority
simply
has
tax burden for 50
sub-
entire
for another.
form of unconstitutional statute
one
stituted
sum,
is notratio
majority
I
with the
agree
that it is un
nally
legitimate
state interest
therefore
related
a
apply
we
mid
necessary
argument
Roosevelt’s
should
to address
however,
Legislature,
is,
the function of the
not
scrutiny. It
dle-tier
Legislature
State. If
can
Court,
the tax laws for this
to write
not in
enactment of S.B. 195—it is not
right
it did
get
—and
super-legislature
as a
rewrite the
of this Court
act
the function
politically
may
perceived
a more
ac
achieve what
tax laws to
Cutone,
at
our state’s changed.
It must be ... Our homeowners and landowners must freed from the un- have, years, burdens that over the been heaped fair on their finan- shoulders. cial truly
It unfortunate this Court par- determination to facially save tially unconstitutional only scheme has prolonged exacerbated and the unfairness which the Governor cor- Moreover, rectly it Court, observes. is unfortunate that this rather Legislature, than the decided governmental that was the entity re- sponsible making the changes system. to Montana’s property tax I would hold that violates Roosevelt’s protection of the laws under Montana’s Constitution on its face. I agree majority’s cannot with the decision limit the Court’s holding to Roosevelt and other situated Class Four property owners. Accordingly, judgment. I would affirm the District Court’s I dissent. 1-2-101, MCA, provides:
4. Section statute, judge simply In the of a ofthe construction office ascertain therein, what and declare is in term or substance contained not to insert what has been or to what been omitted omit has inserted. Where particulars, is, provisions there are several or such a construction if give possible, adopted to be as will effect to all.