OPINION
STATEMENT OF THE CASE
Thе State Compensation Fund (the Fund) filed this special action directly in this court seeking to have §§ 1, 2, and 8 of House Bill 2001 declared unconstitutional. It became effective June 30, 1992, see 1992 Ariz. Legis.Serv. 7th Spec.Sess., ch. 3. The challenged provisions: (1) amend the method of calculating the federal equivalency tax payable by the Fund; (2) impose an annual alternative minimum tax of $500,000 on the Fund; and (3) apply both of these new tax provisions retroactively to January 1, 1990. The Fund advances several bases to support its claim of unсonstitutionality. The *190 state 1 responds that the challenged provisions are valid and urged the court to decline to exercise its special action jurisdiction. Following oral argument, we accepted special action jurisdiction to resolve the issues presented by this case. We now hold that the alternative minimum tax sought to be imposed on the Fund is unconstitutional special legislation under the Arizona Constitution. Because the federal equivalency tax cannot be severed from the invalid alternative minimum tax, all three of the tax sections of the statute are invalid.
FACTS
When the Arizona Constitution was adopted, it directed the state legislature to enact a workers’ compensation law. Ariz. Const. art. XVIII, § 8. The legislature responded by enacting the comprehensive statutory scheme, 1925 Ariz.Sess.Laws, ch. 83, which now appears at A.R.S. §§ 23-901 through 23-1091. The legislature created the State Compensation Fund for the express purpose “of insuring employers against liability for compensation under this act, and of assuring to the рersons entitled thereto the compensation herein provided by this act.” 1925 Ariz.Sess. Laws, ch. 83, § 30. The current statutes governing the Fund are in A.R.S. §§ 23-981 through 23-1006.
The Fund and all private workers’ compensation carriers are required to deposit money with the state treasurer before conducting any business in Arizona. A.R.S. § 23-961(C). The Fund and all private carriers also must, “in lieu of all other taxes on workers’ compensation insurance,” pay an annual tax of three percent on all premiums collected. A.R.S. § 23-961(G). The Fund, unlike private carriеrs, is exempt from federal income tax because of its status as a state agency.
See O’Neil v. Valley Nat’l Bank of Phoenix,
In 1983, the legislature passed A.R.S. § 23-987, which required the Fund to calculate the “amount of federal tax due on all premiums collected or contracted for during the [preceding year] as if the state compensation fund was a private insurance carrier and was required to pay such federal tax.” 1983 Ariz.Sess.Laws, ch. 275, § 4, codified at A.R.S. § 23-987. Under this statute, the Fund was not required to pay the equivalency tax; the statute merely required calculation and reporting of the amount. In 1990, the legislature amended the 1983 statute to require payment of the amount previously required only to be calculated and reported. 1990 Ariz.Sess. Laws, ch. 249, § 7. The Fund, however, determined that it would owe no federal taxes on the premiums collected or contracted for during 1990 and 1991.
The most recent amendment to A.R.S. § 23-987 is under attack here. On March 17, 1992, Governor Symington convened a special session of the legislature to consider balancing the budget for fiscal year 1991-92.
2
House Bill 2001 was enacted in response to the governor’s call and is primarily a fund-transfer bill directing the transfer of funds from various special funds to the general fund. Other provisions of House Bill 2001, as well as House Bill 2002, also enacted during the special session, have been the subject of an earlier special action in this court.
Rios v. Sym-ington,
At issue in this case are §§ 1, 2, and 8 of House Bill 2001. 3 These sections amended *191 the method of calculating the federal equivalency tax under A.R.S. § 23-987 so that the calculation is based on “аll income” of the Fund rather than on “all premiums.” In addition, House Bill 2001 imposes an annual alternative minimum tax of $500,-000 payable if the amended federal equivalency tax would not give rise to a greater payment. 4 Both provisions were made retroactive to January 1, 1990, in order to recoup a minimum of $1.5 million to balance the 1991-1992 budget. Both parties acknowledge that the legislative intent of these sections was to help balance the budget and to level the playing field between the federally tax-exempt Fund and private carriers.
The Fund concedes that the federal equivalency tax standing alone (at least absent any retroactivity issue) is not discriminatory. However, the Fund asserts that the alternative minimum tax violates Arizona’s constitutional prohibition against special legislation, Ariz. Const. art. IY, pt. 2, § 19. Accordingly, this opinion focuses on the alternative minimum tax. Because we find the special legislation issues dispositive, we do not address alternative challenges based on the federal equal protection clause, the “single subject rule” (Ariz. Const. art. IV, pt. 2, § 13), the statute’s retroactivity, or the claim that the statute constitutes a taking of private property for a public use.
ISSUES
1. Whether this court should accept and exercise special action jurisdiction.
2. Whether the alternative minimum tax constitutes special legislation under the Arizona Constitution.
3. Whether the alternative minimum tax, if invalid, is severable from the federal equivalency tax. Whether the two tax provisions, if not severable from each other, arе nevertheless severable from the remaining provisions of House Bill 2001.
DISCUSSION
A. Special Action Jurisdiction
“This court has original jurisdiction over the issuance of extraordinary writs against state officers.”
Rios,
The combinatiоn of the foregoing considerations led us to accept jurisdiction of this special action after oral argument and to retain it now to resolve these questions of statewide importance.
Cf. Summerfield v. Superior Court,
In accepting jurisdiction, we have considered but rejected the state’s contention that the petition should be dismissed as untimely. The Fund filed this petition for special action one day after House Bill 2001 became effective. In
Northern Propane Gas Co. v. Kipps,
We also have considered and rejected the state’s contention that A.R.S. § 42-204(A) requires us to decline jurisdiction. That statute requires taxpayers to pay taxes under protest before challenging them in court. This requirement, however, applies only to property taxes.
See RCJ Corp. v. Dpt. of Revenue,
B. Special Legislation
The Arizona Constitution expressly prohibits certain types of special legislation. Article IV, pt. 2, § 19(9) provides that “No local or special laws shall be enacted in any of the following eases ... 9. Assessment and collection of taxes.” The purpose of proscribing special or local legislation is to prevent the legislature from providing benefits or favors to certain groups or localities.
See Eastin v. Broomfield,
A law is special and, therefore, unconstitutional if it “applies only to certain members of a class or to an arbitrarily defined class which is not rationally related to a legitimate legislative purpose.”
Arizona Downs v. Arizona Horsemen’s Found.,
The prohibition against special laws does not necessarily prohibit the enactment of laws that aрply only to a certain class. Legislation may distinguish between *193 classes or groups, but to be valid, the classification must be a rational one.
In
Republic Inv. Fund v. Town of Surprise,
In analyzing the special legislation challenge, we have “a duty to construe a statute so as to give it, if possible, a reasonable and constitutional meaning.”
Arizona Downs,
Applying the special legislation test, we first consider whether the classification has a rational basis. The classification scheme found in the legislation must be rationally related to a legitimate legislаtive purpose.
See Republic Inv. Fund,
We next consider whether the classification drawn by the legislature is rаtionally related to achieving the legitimate legislative goals. The classification distinguishes between the Fund on one hand and all other workers’ compensation carriers on the other. “We will uphold the classification if there exists any set of facts under which the classification rationally furthers a legitimate legislative purpose.”
Eastin,
It is clear that the $500,000 alternative minimum tax was imposed only on the Fund because it is a “state agency,” 8 and the legislature believed that the Fund’s assets were available to help balance the budget. No private carriers are subject to this minimum tax. The state argues that because the Fund is a state agency it is reasonable to classify it differently than private carriers for the purpose of imposing the alternative minimum tax and that the classification is reasonable because it defeats the economic advantage enjoyed by the Fund as a result of its federal tax exemption.
We find, however, that the discriminatory imposition of the alternative minimum
*194
tax does not rationally further the goal of balancing the budget or equalizing the economic disparity between the Fund and private carriers. The fact that the Fund is a state agency does not provide a legitimate basis for such disparate treatment. The case most closely on point is
State Tax Comm’n. v. Dpt. of Fin.,
We find
State Tax Commission
persuasive. Although the Utah Supreme Court based its opinion on state and federal equal protection grounds, its analysis of whether the classification had a rational basis is directly applicable here. One test for rеasonableness of a classification is “whether there is a substantial difference between those within and those without the class.”
Pastore v. Arizona Dpt. of Economic Sec.,
Although the Fund is a statutorily created state agency, it is not subject to other statutory provisions that govern state agencies. A.R.S. §§ 23-981.01(0), 23-986(E). The principal benefit enjoyed by the Fund as a “state agency” is its federal tax exempt status. We do not find this distinction a legitimate basis upon which to impose a mandatory minimum tax solely on the Fund. In all other respects the Fund is no different than the private carriers.
We also find that the alternative minimum tax does not rationally further the purpose of levelling the playing field because it imposes a mandatory flat tax, payable regardless of the amount of federal tax that would have been owed if the Fund were a private carrier. It does not account for the possibility that the Fund, if it were a private carrier, might owe no federal taxes in a given year or might owe some amount less than $500,000 in a given year. Regardless, the Fund, under the Act, is required to pay a minimum of $500,000 annually.
Because we find that the classification scheme lacks a rational basis, the alternative minimum tax violates Arizona’s constitutional prohibition on special legislation. The state suggests that if we declare the alternative minimum tax provision invalid as special legislation, all legislation that apрlies only to the Fund must be equally unconstitutional. Although no other statutory provisions applicable only to the Fund are before us, we note that the constitutional prohibition against special legislation *195 applies only to certain types of legislation. The constitutional prohibition applicable in this case prohibits special legislation relating to “assessment and collection of taxes.” The statutory provisions applicable only to the Fund that are cited by the state do not fall within аny of the constitutionally prohibited types of special legislation.
C. Severability
Having found the alternative minimum tax provision of the act invalid, we must next determine whether the federal equivalency tax provisions of the act may nevertheless stand. This requires a determination as to whether the two provisions are severable. We must also determine whether other features of House Bill 2001 are affected by our rulings involving the tax provisions. 10 We conclude that the two tax provisions applicable to the Fund are nоt severable from each other but are severa-ble from the other, unrelated provisions of House Bill 2001.
The law regarding severability is well-settled. “An entire statute need not be declared unconstitutional if constitutional portions can be separated.”
Republic Inv. Fund,
In
State v. Prentiss,
[W]here the valid parts of a statute are effective and enforceable standing alone and independent of those portions declared unconstitutional, the court will not disturb the vаlid law if the valid and invalid portions are not so intimately connected as to raise the presumption the legislature would not have enacted one without the other, and the invalid portion was not the inducement of the act.
However, “the whole statute will be declared invalid where the constitutional and unconstitutional provisions are so connected and interdependent in subject matter, meaning, and purpose as to ... justify the conclusion that the legislature intended them as a whole and would not have enacted a part only.”
Millett v. Frohmiller,
1. Severability of the Alternative Minimum Tax and the Federal Equivalency Tax
House Bill 2001 was enacted at a special session of the legislature called by Gоvernor Symington to balance the state budget for fiscal year 1991-92. It is clear that the overriding legislative purpose in enacting House Bill 2001 was to balance the budget.
The legislature was well aware that under the former method of calculating the federal equivalency tax, the Fund would owe nothing. See Appendix E to Respondents’ Brief. The method of calculating the federal equivalency tax was amended retroactively, and, in an attempt to raise $1.5 million for fiscal year 1992 and additional sums for future years, the аlternative minimum tax was also made retroactive. Id. at E-l. It is unlikely that the legislature would have amended only the federal equivalency tax had it known that it could not add the alternative minimum tax. In fact, a staff memorandum from the Joint Legislative Budget Committee stated that “a minimum in lieu tax is the only way to ensure that legislative intent is followed.” Id. The alternative minimum tax was thought to guarantee that a minimum of $1.5 million would be transferred *196 to the state general fund. What revenue, if any, the amended federal equivalency tax would have produced standing alone cannot be determined from the record.
On the basis of these facts, we cannot determine whether the amended federal equivalency tax would have been enacted in House Bill 2001 had the legislature known that the alternative minimum tax — which it thought would automatically raise $1.5 million — was unconstitutional. Therefore, these two tax provisions in House Bill 2001 are not severable, and both must fall because the alternative minimum tax falls. Because we find both tax provisions invalid on other grounds, we do nоt reach any other constitutional issues presented, including those based on the retroactivity features of the statute.
2. Severability of Sections 1, 2, and 8 From Remaining Sections in House Bill 2001
The state argues that if the sections relating to the Fund are unconstitutional, then all other transfers in House Bill 2001 are similarly unconstitutional as special legislation. We disagree. If the unconstitutional part of a statute can be eliminated and the remaining constitutional part is independent and still workable, then “only that part which is оbjectionable will be eliminated and the balance left intact.”
State v. Coursey,
Clearly, in enacting House Bill 2001, the legislature intended to transfer funds from various state agencies to balance the state budget. We discussed some of those other transfers in
Rios,
Our finding that the legislature intended that the remaining provisions be given effect does not end our inquiry. “To be capable of separate enforcement, the valid portion of an enactment must be independent of the invalid portion and must form a complete act within itself. The law enforced after separation must be reasonable in light of the act as originally drafted.”
Millett,
DISPOSITION
The alternative minimum tax on the Fund in House Bill 2001 violates the special legislation prohibition of the Arizona Constitution. Because the federal equivalency tax on the Fund is not severable from the alternative minimum tax, it, too, is invalid. The invalidity of those tax sections does not affect the validity of other sections of House Bill 2001. Respondents are enjoined from taking any action to enforce §§ 1, 2, and 8 of House Bill 2001.
Notes
. The named respondents, Fife Symington, Governor of Arizona, Tony West, State Treasurer, аnd John Elliott Hibbs, Director of the Arizona Department of the Administration, hereinafter will be referred to as “the state.”
. The subjects to be considered at the special session shall be the following:
The adjustments necessary to produce a balanced state budget for fiscal year 1991-1992 through, but not limited to, adjustments to appropriations, transfer of funds and amendment of related statutes; and [t]o make appropriations and necessary statutory changes to address the overcrowding situation in the state’s prison system.
Proclamation of March 10, 1992. 1992 Ariz. Legis.Serv. v. 2, A-26.
. The relevant provisions of House Bill 2001 follow:
*191 Section 1. Section 23-987, Arizona Revised Statutes, is amended to read:
The state compensation fund shall determine the amount of federal tax due on all ... sources of income during the year ending December 31 of the preceding year as if the state compensation fund was a private insurance carrier and was required to pay such federal ntax. The fund shall transmit monies in this amount or five hundred thousand dollars, whichever is more, to the state treasurer for deposit in the state general fund before April 15.
Sec. 2. ...
On the effective dаte of this act, amounts owed under section 23-987, Arizona Revised Statutes, as amended by this act, for 1990, 1991, and 1992, but in no event less than one million five hundred thousand dollars, shall be transferred from the state compensation fund to the state general fund.
Sec. 8. ...
Section 23-987, Arizona Revised Statutes, as amended by this act, is effective retroactively to January 1, 1990.
1992 Ariz.Legis.Serv. 7th Spec.Sess., ch. 3.
. The Fund argues that the $500,000 alternative payment is a "tax” for purposes of the special legislation claim. It argues, alternatively, that even if the $500,000 payment is considered a "fund transfer” rather than a “tax,” House Bill 2001 would violate constitutional provisions other than the provision against special legislation. In its brief, the state repeatedly refers to the alternative payment as an "assessment”; but does not argue that its characterization as a "tax” is improper. We find that the $500,000 alternative payment is a "tax.”
Ariz. Dpt. of Revenue v. Transamerica Title,
. The traditional writs of certiorari, mandamus, and prohibition are now оbtained by "special action.” See Rule 1, Ariz.R.P.Spec.Act. [Footnote renumbered].
. The Fund also challenges the alternative tax on federal equal protection grounds. Indeed, the state argues that the Fund’s special legislation challenge is really an equal protection challenge because the Fund receives a detriment, not a benefit, from the alternative minimum tax. We reject the state’s argument. We have previously distinguished equal protection provisions from the special legislation provisions of the Arizona Constitution.
See, e.g., Republic Inv. Fund,
. Petitioner’s Reply Brief at 5-6, 11.
. Both parties concede that the Fund is a state agency. See Respondents' Brief at 26-28; Petitioner’s Reply Brief at 3.
. The supreme court of Oregon has held that a similar transfer of funds from the state workers’ compensation insurance fund did not violate Oregon’s equal privileges and immunities clause.
Eckles v. State,
. There is no severability clause in House Bill 2001 that affects our analysis.