Per Curiam.
This is an appeal from the findings and order of the State [358]*358Board of Equalization and Assessment (Board) dated August 15, 1989, denying claims for property tax relief submitted by various centrally assessed and locally assessed claimants. Pursuant to this court’s order of September 11,1989, the parties filed a “case stated” in accordance with Neb. Ct. R. of Prac. 5L (rev. 1989), separately setting forth the rulings of the Board complained of by the appellants and the exceptions and contentions of the parties with respect to those issues. In view of a community of issues and counsel, we have consolidated the appeals of Natural Gas Pipeline Company of America (NGPL) (case No. 89-901) and Trailblazer Pipeline Company (Trailblazer) (case No. 89-902) for disposition.
I. BACKGROUND
NGPL and Trailblazer are the owners of centrally assessed property in the State of Nebraska and operate natural gas transmission pipelines in Nebraska. The appellants’ property in Nebraska includes real estate and personal property.
After our opinion in Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989), cert. denied 493 U.S. 1078, 110 S. Ct. 1130, 107 L. Ed. 2d 1036 (1990), was filed on July 14, 1989, NGPL and Trailblazer sought equalization by the Board of the value of their property for Nebraska taxation. See Neb. Rev. Stat. § 77-506 (Reissue 1990).
A. 1988 Tax Year
In Northern Natural Gas Co., this court considered the effect of Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir. 1988), which construed § 306(1)(d) of the Railroad Revitalization and Regulatory Reform Act of 1976, Pub. L. 94-210, 90 Stat. 31, 54, codified as amended at 49 U.S.C. § 11503(b)(4) (1988) (the 4-R Act). Section 306(1)(d) prohibits the states from imposing a tax on transportation property when the tax “results in discriminatory treatment of a common carrier by railroad____”
In reviewing the 4-R Act, the U.S. Court of Appeals noted that the act prohibits imposition of a tax which discriminates against railroads, and considered personal property tax exemptions in determining whether there was discriminatory [359]*359tax treatment of railroads by the Nebraska tax structure. The court concluded: “When the exemptions apply to three-fourths of the commercial and industrial property in Nebraska, and do not apply to rail cars, the tax system in Nebraska discriminates against Trailer Train and violates § 306(1)(d) of the 4-R Act.” 885 F.2d at 418. The federal court then affirmed the injunction, granted by the trial court, which prevented the State of Nebraska from “collection of the discriminating tax.” Id.
In Northern Natural Gas Co., supra, considering the effect of the Trailer Train Co. decision, we concluded that disproportionality in taxation within a class of property required this court to
correct [a] constitutional inequity by lowering the complaining taxpayer’s valuation to such an extent so as to equalize it with other property in the state. [Citations omitted.] This being the case, no logical reason exists why the same requirement of valuation reduction should not be imposed when the disproportionality is brought about by a final judgment of the federal court exempting the personal property of the railroads and car companies from the imposition of a state tax.
232 Neb. at 815, 443 N.W.2d at 256.
In Northern Natural Gas Co., we also considered whether a gas transmission pipeline was a fixture and, therefore, real estate taxable pursuant to Neb. Rev. Stat. § 77-103 (Reissue 1986). To resolve that issue, we employed a three-part common-law test to determine whether an item was a fixture: “(1) actual annexation to the realty, or something appurtenant thereto, (2) appropriation to the use or purpose of that part of the realty with which it is connected, and (3) the intention of the party making the annexation to make the article a permanent accession to the freehold.” 232 Neb. at 817, 443 N.W.2d at 257. Applying the foregoing test, we concluded that a natural gas transmission Une was not a fixture, since “the pipeline is not adapted to the use to which the ground in which it is embedded is applied,” 232 Neb. at 821, 443 N.W.2d at 259, and concluded that the taxpayer’s intention “was not to convert its annexations into fixtures. Consequently, we find the pipelines to be personal property,” 232 Neb. at 822, 443 N.W.2d at 259.
[360]*360Therefore, this court reversed the decision of the Board, which had refused Northern Natural Gas Company and Enron Liquids Pipeline Company’s request that their property be equalized with property of railroads and car companies operating in Nebraska, and remanded the matter to the Board for further proceedings.
In the companion cases of Trailblazer Pipeline Co. v. State Bd. of Equal., 232 Neb. 823, 442 N.W.2d 386 (1989), also decided July 14, 1989, this court held the rights of Trailblazer and NGPL regarding their equalization requests in 1988 were determined by Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989), and remanded those causes to the Board for further proceedings.
B. 1989 Tax Year
In the proceedings after remand of the appellants’ causes, the Board received evidence on August 11, 1989, pursuant to a stipulation among the parties, regarding the appellants’ requests for equalization. Much of the stipulated evidence was the same as that presented in the 1988 hearing which was the basis for Trailblazer’s and NGPL’s previous appeals reported in Trailblazer Pipeline Co., supra. The parties have stipulated that NGPL’s property in Nebraska was valued at $19,147,520 and that Trailblazer’s property was valued at $95,070,376. Approximately 92 percent of NGPL’s property in Nebraska is personal property and approximately 99 percent of Trailblazer’s property in Nebraska is personal property.
At the equalization hearing on August 11, the Board set the equalization rate at 91.91 percent of actual value and, in its order of August 15,1989, construed the appellants’ requests for equalization as applications for tax exemption, stating:
Equalization is the process by which the State Board assures that all tangible property and franchises, which are subject to tax, are assessed at a uniform level of value. The State Board does not have the authority to consider a claim for equalization of one class or subclass of property to a level of another class or subclass of property that is exempt or is not subject to tax, as this is a claim for exemption. While a claim as to the propriety of an [361]*361exemption may have merit, it is not properly raised before the State Board, and the claimants should seek other avenues of redress.
The claims brought before the State Board . . . are . . . claims to have the valuation of a subclass of personal property, commonly known as business personal property, equalized to the level of value of the personal property of car companies and railroad companies____
The State Board finds that the state of Nebraska is preempted from taxing the personal property of car companies and railroad companies pursuant to a federal adjudication of section 306(l)(d) of the Railroad Revitalization and Regulatory Reform Act, commonly referred to as the 4-R Act. 49 U.S.C. section 11503(b)(4). As a result of such federal preemption, the State Board finds that the personal property of car companies and railroad companies is not subject to tax and, therefore, cannot be the basis for a claim of equalization.
The State Board finds that in reality the claims of these centrally assessed claimants and locally assessed claimants are claims requesting to have their business personal property and/or real property exempt from taxation. The State Board finds that it has no statutorial [sic] or constitutional authority to rule upon such a claim.
II. ISSUES ON APPEAL
After the Board denied the claimants’ equalization requests, NGPL and Trailblazer appealed, contending that the equalization rate of 91.91 percent violated Neb. Const, art. VIII, § 1, concerning uniform and proportionate values for taxation, and violated the equal protection clause of U.S. Const, amend. XIV. The appellants also contend that the Board erred by not granting the requested equalization in conformity with the uniformity and proportionality provision of the Nebraska Constitution and that the Board erred in its conclusion that it lacked authority to act on the appellants’ requests for equalization.
Without responding to the appellants’ assignments of error, the State filed its briefs and referred to events which occurred [362]*362after the Board’s decision of August 15, 1989, and which occurred after the appellants filed their briefs in this appeal, namely, L.B. 1 and L.B. 7, which were passed on November 17, 1989, during a special session of the Nebraska Legislature and which, with an emergency clause, were signed by the Governor on November 21, 1989. In its briefs, the State contends that L.B. 1 and L.B. 7 render these appeals moot.
A. L.B. 1 and L.B. 7
L.B. 1 provides in part:
Section 1. That section 77-103, Reissue Revised Statutes of Nebraska, 1943, be amended to read as follows:
77-103. The terms real property, real estate, and lands shall include mean city and village lots and all other lands, and all buildings, fixtures, improvements, cabin trailers or mobile homes which shall have been permanently attached to the real estate upon which they are situated, mines, minerals, quarries, mineral springs and wells, oil and gas wells, overriding royalty interests and production payments with respect to oil or gas leases, units of beneficial interest in trusts, the corpus of which includes any of the foregoing, and privileges pertaining thereto, and pipelines, railroad track structures, electrical and telecommunication poles, towers, lines, and all items actually annexed to such property, and any interest pertaining to the real property or real estate.
The sole test for determining whether an item is a fixture or an improvement shall be whether there is actual annexation to the real property or real estate or something appurtenant thereto. Unless specifically enumerated in this section, real property and real estate shall not include machinery and equipment used for business purposes or center pivot or other irrigation systems of a type used for agricultural or horticultural purposes.
Sec. 2. The changes made to section 77-103 by this legislative bill are expressly intended to apply to all litigation concerning ad valorem property taxes for the 1989 calendar year, including all litigation pending on the effective date of this act. [Sections 1 and 2 underscoring indicates amendatory new language.]
[363]*363Sec. 3. This act shall become operative on January 1, 1989.
Sec. 4. If any section in this act or any part of any section shall be declared invalid or unconstitutional, such declaration shall not affect the validity or constitutionality of the remaining portions thereof. [Sections 3 and 4 are amendatory new language.]
The State concedes that the Legislature cannot, by definition, create a class of exempt personal property under the authority granted under Neb. Const, art. VIII, § 2, by defining property which clearly constitutes real property to be personal property.
L.B. 7, § 1, which is entirely new legislation, provides:
(1) The Legislature finds and declares that the levy and collection of property taxes upon the personal property of car line companies, which is composed of railroad rolling stock, has been enjoined by federal court order as a discriminatory tax in violation of section 306(l)(d) of the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. 11503(b)(4).
(2) The Legislature finds and declares that, as a result of such court action, the Nebraska Supreme Court has ordered that the personal property of certain other taxpayers must be treated the same as that of such car line companies, which is in the same class for taxation purposes, but not taxed by virtue of federal court order, thereby diminishing to a potentially substantial degree the property tax base of local governmental subdivisions and consequently jeopardizing the continued adequate funding of essential public services provided by those subdivisions.
(3) The Legislature further finds and declares that some types of agricultural and manufacturing products and natural resources must or can more efficiently be transported over rails due to size, weight, and other restrictions or conditions and the transportation of such products is vital to the commerce and industry of the state and that therefor it is in the best interests of the state to enact legislation to encourage the maintenance in and [364]*364through the state of railroad rolling stock which is the means of transporting such products.
(4) Therefor, the Legislature finds and declares that a rational basis exists to classify railroad rolling stock as a separate and distinct class of property and to exempt the class from property taxation pursuant to the authority granted under Article VIII, section 2, of the Constitution of Nebraska.
(5) It is the express intention of the Legislature that the changes made by this legislative bill shall affect all state litigation pending as of the effective date of this act.
This language has been codified at Neb. Rev. Stat. § 77-202.47 (Reissue 1990).
L.B. 7, § 2, amended Neb. Rev. Stat. § 77-202 (Cum. Supp. 1988) regarding personal property which is exempt from taxation. In its first 10 subsections, L.B. 7, § 2, reiterated the same exemptions which existed under § 77-202 (Cum. Supp. 1988), amended by L.B. 7, while subsection (11) (§ 77-202(11) (Reissue 1990)) provided for a new exemption of personal property as follows:
(11) Railroad rolling stock shall be exempt from the personal property tax. Railroad rolling stock shall mean locomotives, freight cars, and other flanged-wheel equipment operated solely on rails and owned, leased, or used for or in railroad transportation. For tax year 1989, this subsection shall apply to railroad rolling stock upon which no levy has been made or upon which no tax may lawfully be collected.
L.B. 7, § 9, states: “This act shall become operative on January 1, 1989.” L.B. 7, § 10, recites: “If any section in this act or any part of any section shall be declared invalid or unconstitutional, such declaration shall not affect the validity or constitutionality of the remaining portions thereof.”
The State contends that L.B. 1 and L.B. 7 render these appeals “moot,” and argues:
[T]he enactment of LB 7 effectively eliminates and moots any claim of a lack of “equalization” of appellant’s personal property with the personal property of railroads and car companies for tax year 1989 as, by virtue of the [365]*365Legislature’s establishment of a separate class of exempt personal property consisting of railroad rolling stock under the authority granted pursuant to Article VIII, Section 2, of the Nebraska Constitution, appellant’s claim improperly seeks equal treatment with property which is separately classified and exempted from taxation under state law, and not “other taxable property in the same class.” ... In short, LB 7 removes any basis for appellant to assert a lack of “equalization” with regard to the taxation of its personal property under Nebraska law in relation to the personal property of railroads and car companies operating in Nebraska for 1989, as found in the Court’s prior decision in [Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989)].
Briefs for appellee at 13-14.
Regarding L.B. 1, the State presents an argument much in the same vein as its argument for retroactivity of L.B. 7, that is, the statutory definition of “real estate,” contained in L.B. 1 as an amendment to § 77-103 (Reissue 1986), renders these appeals “moot.”
The State’s reliance on events subsequent to the Board’s action in August 1989 has presented an unusual procedural aspect to these appeals. Responding to the State’s position of mootness, the appellants’ reply brief contains several propositions on the mootness issue raised for the first time in the State’s briefs. In our reading of the appellants’ reply brief, we construe the various legal propositions stated by the appellants to be assignments of error which would have been asserted in their initial briefs if L.B. 1 and L.B. 7 had been in existence and, therefore, relied upon by the Board in its action taken in August 1989.
B. Application of L.B. 1 to 1989 Tax Year
The State’s arguments concerning L.B. 1 and L.B. 7 presuppose that the two pieces of legislation could be properly applied in the 1989 tax year. We reach the opposite conclusion (1) because the subject matter of L.B. 1 is irrelevant to the matter of equalization and (2) because the application of L.B. 1 [366]*366for the 1989 tax year would result in the commutation of a tax, in violation of Neb. Const, art. VIII, § 4.
As noted above, L.B. 1 changes the definition of “fixture,” apparently to avoid the characterization of certain pipeline property as personal property rather than real estate. The practical effect of L.B. 1, therefore, would be to increase the proportion of pipeline property taxable as real estate. See, e.g., Northern Natural Gas Co., supra. In this action, the appellants requested “equalization.” For purposes of equalization, however, it is immaterial whether the appellants’ property is categorized as personal property or real estate.
Neb. Const, art. VIII, § 1, provides that, except for motor vehicles, “[t]axes shall be levied by valuation uniformly and proportionately upon all tangible property ...” The purpose of equalization of assessments is to bring the assessment of different parts of a taxing district to the same relative standard, so that no one of the parts may be compelled to pay a disproportionate part of the tax. Gordman Properties Co. v. Board of Equal., 225 Neb. 169, 403 N.W.2d 366 (1987); Hacker v. Howe, 72 Neb. 385, 101 N.W. 255 (1904). Accordingly, Neb. Rev. Stat. § 77-201 (Reissue 1990) provides that “all tangible property and real property in this state, not expressly exempt therefrom, shall be subject to taxation and shall be valued at its actual value. Such actual value shall be taken and considered as the taxable value on which the levy shall be made.” The State agrees that “both real property and taxable personal property are within the class of ‘ all tangible property’ under Article VIII, Section 1, of the Nebraska Constitution.” Briefs for appellee at 47.
Since these causes must be remanded to the Board for further proceedings, we further observe that L.B. 1 cannot be constitutionally applied for the 1989 tax year because such application would result in the commutation of a tax, in violation of Neb. Const, art. VIII, § 4, which provides:
Except as to tax and assessment charges against real property remaining delinquent and unpaid for a period of fifteen years or longer, the Legislature shall have no power to release or discharge any county, city, township, town, or district whatever, or the inhabitants thereof, or any [367]*367corporation, or the property therein, from their or its proportionate share of taxes to be levied for state purposes, or due any municipal corporation, nor shall commutation for such taxes be authorized in any form whatever; Provided, that the Legislature may provide by law for the payment or cancellation of taxes or assessments against real estate remaining unpaid against real estate owned or acquired by the state or its governmental subdivisions.
The power to tax is exercised when the tax is levied. See Am. Prov. of Servants of Mary Real Estate Corp. v. County of Douglas, 147 Neb. 485, 23 N.W.2d 714 (1946). In the present case, the entire process for levying taxes on valuations established in 1989 had been fully completed by the time L.B. 1 was enacted.
Pursuant to Neb. Rev. Stat. § 77-509 (Reissue 1990), the Board must certify its order pertaining to valuation and equalization to county officials on or before August 15. The county boards must then levy taxes for all political subdivisions by September 15. Neb. Rev. Stat. § 77-1601 (Reissue 1990). Section 77-1601 contains a special provision for further extension of budgets and levies, but such must be completed prior to November 1.
The county officer responsible for preparing the tax list must extend the levies and prepare the tax list for all property prior to November 1. See Neb. Rev. Stat. § 77-1613 (Reissue 1990). Such tax lists must, for personal property, be delivered to the county treasurer on or before November 1. See Neb. Rev. Stat. § 77-1616 (Reissue 1990). Those personal property taxes are due and become a lien on November 1. See Neb. Rev. Stat. § 77-205 (Reissue 1990).
The tax year is, therefore, completed on November 1, and the collection process cannot be changed without violating the provisions of Neb. Const. art. Ill, § 18, and Neb. Const. art. VIII, § 4. See, Steinacher v. Swanson, 131 Neb. 439, 268 N.W. 317 (1936); Lynch v. Howell, 165 Neb. 525, 86 N.W.2d 364 (1957) (“ [t]he power to tax is determinable as of the date the tax is levied” (syllabus of the court)).
In Steinacher v. Swanson, supra, this court determined that [368]*368an act which provided that, under certain conditions, delinquent personal taxes could be paid in five equal annual installments and delinquent realty taxes could be paid in ten annual installments was a violation of Neb. Const, art. VIII, § 4, and the prohibition against a commutation for taxes “in any form whatever.” In Steinacher, the court referred to a definition of “commutation” expressed in Woodrough v. Douglas County, 71 Neb. 354, 361, 98 N.W. 1092, 1095 (1904):
[C]ommutation is a passing from one state to another; an alteration, a change; the act of substituting one thing for another; a substitution of one sort of payment for another, or of a money payment in lieu of a performance of a compulsory duty or labor or of a single payment in lieu of a number of successive payments, usually at a reduced rate.
Steinacher provides an insight into the types of statutes which are prohibited by Neb. Const, art. VIII, § 4:
It is quite apparent that the framers of the Constitution of 1875, the one first containing this provision, and the members of all subsequent constitutional conventions, have been imbued with the idea that all taxpayers are entitled to the same treatment by the government they support. For this reason they have expressly written into our Constitution that the legislature not only shall have no power to release or discharge any one from the payment of his share of taxes, but a commutation for taxes in any form whatever is prohibited. From an examination of the definitions of the word “commutation” hereinbefore set out, and the use of the words “in any form whatever,” contained in our constitutional provision, it is quite apparent that the legislature is prohibited by the Constitution from changing the method of payment of any tax once levied. Clearly, under this constitutional provision, the legislature cannot reduce the amount of the tax, extend the time of payment, or in any manner change the method of payment.
(Emphasis in original.) Steinacher, supra at 446, 268 N.W. at 321.
The real and personal property involved in these cases is [369]*369centrally assessed. As we noted above, the effect of L.B. 1, if applied retroactively to the 1989 tax year, would be to go back in time, increase the proportion of appellants’ property that would presumably be taxable as real estate under our decision in Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 443 N.W.2d 249 (1989), and significantly decrease the proportion of the appellants’ personal property. However, the 1989 levy on both real and personal property was completed, and the taxing power exercised, 20 days before L.B. 1 was enacted.
Although the total amount of property subject to levy would remain the same, the effect of applying L.B. 1 in the 1989 tax year would involve the substitution of one sort of payment for another — the payment of a tax on real estate for a tax on personal property. This substitution, in effect, amounts to a commutation of the tax levied on the appellants’ personal property and is prohibited by Neb. Const, art. VIII, § 4.
C. Application ofL.B. 7 to 1989 Tax Year
As stated above, L.B. 7, § 2, amending § 77-202 at new subsection (11), exempts railroad rolling stock from taxation. The bill contains a specific legislative finding that
the levy and collection of property taxes upon the personal property of car line companies, which is composed of railroad rolling stock, has been enjoined by federal court order as a discriminatory tax in violation of section 306(1 )(d) of the Railroad Revitalization and Regulatory Reform Act, 49 U.S.C. § 11503(b)(4).
Accordingly, the Legislature specifically found and declared that “a rational basis exists to classify railroad rolling stock as a separate and distinct class of property and to exempt the class from property taxation____”
The appellants argue that the exemption of railroad rolling stock is a discriminatory classification which is unjustified and arbitrary.
We first note that the Legislature’s declaration that taxation of railroad rolling stock was found to be a discriminatory tax in violation of federal law is incomplete. In Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir. 1988), the court held only [370]*370that exemptions in Nebraska’s personal property tax system favored the property of a majority of possible taxpayers in Nebraska and denied similar favorable treatment to the property of rail carlines; hence, Nebraska’s personal property tax system imposed an unfair and discriminatory tax on railroads, in violation of the 4-R Act. Therefore, taxation of railroad property does not, in and of itself, violate federal law, as the Legislature seems to suggest. As noted in Trailer Train Co., when property of a majority of possible taxpayers is exempted from taxation and railroad property is not exempt, there is discrimination against railroads which results in a violation of the 4-R Act.
In subsection (3) of L.B. 7, § 1, the Legislature attempts to justify the tax exemption of railroad rolling stock through the statement that
some types of agricultural and manufacturing products and natural resources must or can more efficiently be transported over rails due to size, weight, and other restrictions or conditions and the transportation of such products is vital to the commerce and industry of the state and that therefor it is in the best interests of the state to enact legislation to encourage the maintenance in and through the state of railroad rolling stock____
In State, ex rel. Cone v. Bauman, 120 Neb. 77, 82-83, 231 N.W. 693, 695 (1930), this court stated:
The rule is well established that the legislature may, for the purpose of legislating, classify persons, places, objects or subjects, but such classification must rest upon some difference in situation or circumstance which, in reason, calls for distinctive legislation for the class. The class must have a substantial quality or attribute which requires legislation appropriate or necessary for those in the class which would be inappropriate or unnecessary for those without the class.
“A legislative classification must operate uniformly on all within a class which is reasonable. Exemptions are allowed where they are made applicable to all persons of the same class similarly situated.” Casey’s Gen. Stores v. Nebraska Liq. Cont. Comm., 220 Neb. 242, 243, 369 N.W.2d 85, 87 (1985). See, [371]*371also, State ex rel. Meyer v. Knutson, 178 Neb. 375, 133 N.W.2d 577 (1965).
The Legislature’s exemption of railroad rolling stock is not based on any real distinction between railroads and other common carriers. If “size” and “weight,” mentioned in the Legislature’s stated justification for the classification, refer to things which are large and heavy and the “restrictions or conditions” means that speed is not required, then the expressed legislative justification could just as easily refer to trucks and trucking companies as to railroads. On the other hand, if one thinks in terms of things which are small and light and must be moved quickly, the expressed justification could just as easily refer to airlines and airline companies.
The Legislature’s stated justification is illusory. We fail to see any real and substantial difference between personal property used for income production by one type of business and the same type of income-producing personal property used by another type of business.
The Legislature’s effort to exempt railroads is not based on a reasonable classification and violates both the proportionality and special legislation requirements of the Nebraska Constitution. There is no reasonable basis for treating railroads differently from other common carriers; therefore, the distinction, as a classification and basis for an exemption from personal property tax, reflected in L.B. 7, results from special legislation, prohibited by Neb. Const, art. Ill, § 18, and violates the uniformity clause of Neb. Const, art. VIII, § 1.
III. INITIAL ASSIGNMENTS OF ERROR
Having determined that L.B. 1 cannot constitutionally be applied to the 1989 tax year and that L.B. 7 is invalid as special legislation and in violation of the uniformity clause, we now address the assignments of error raised in the appellants’ initial briefs.
A. Authority of the Board
First, there is the question concerning the Board’s authority to act on the appellants’ requests for equalization. The Board found that “the state of Nebraska is preempted from taxing personal property of car companies and railroad companies [372]*372pursuant to federad adjudication” of the 4-R Act. The Board then concluded that “the personal property of car companies and railroad companies is not subject to tax and, therefore, cannot be the basis for [the appellants’] claim of equalization.”
The Board’s conclusion as to “preemption” is clearly erroneous. As we read Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir. 1988), and the 4-R Act, the State of Nebraska is prohibited by federal law from discriminatorily taxing railroad companies. In other words, federal law prohibits Nebraska from “[t]he imposition of any... tax which results in discriminatory treatment of a common carrier by railroad...” § 306(1)(d) of the 4-R Act.
For that reason, in Trailer Train Co., the State of Nebraska was enjoined from “collection of the discriminating tax,” 885 F.2d at 418, but is not prohibited from levying a lawful tax on a common carrier by railroad. In many respects, the effect of the 4-R Act is very similar to and substantially no different from the effect to be achieved through the uniformity and proportionality clause in Neb. Const, art. VIII, § 1.
Therefore, whereas the Board concluded that it could not consider the appellants’ requests for equalization in view of the 4-R Act and interpretational decisions by federal courts, we conclude that § 306(l)(d) of the 4-R Act, as interpreted by the federal courts, prohibits a discriminatory tax against a railroad but does not prevent a state’s nondiscriminatory taxation of a railroad. A nondiscriminatory tax is what is required by the 4-R Act, not the abolition of legitimate state taxation of railroads.
B. Appellants’ Requests for Equalization
Second, the Board construed the appellants’ requests as a claim for exemption from taxation. We do not deny that the actual extent of the actual taxation of the appellants’ property may be greatly affected by the impact of the 4-R Act and federal court decisions such as Trailer Train Co. However, to describe the appellants’ requests for equalization as requests for exemption from taxation is unrealistic and arbitrary. The fact remains that the appellants requested equalization of their property, which must be considered in the light of applicable law, state and federal, statutory, and declared by judicial [373]*373interpretation of controlling statutes.
The basic principles pertaining to equalization of assessments are found in Kearney Convention Center v. Board of Equal., 216 Neb. 292, 302, 344 N.W.2d 620, 625 (1984):
[I]t is permissible to reasonably classify property for tax purposes and to use different methods to determine assessed values for different classifications of property. To comport with our Constitution’s requirement that “ [t]axes shall be levied by valuation uniformly and proportionately upon all tangible property,” however, the results obtained by such permissible different methods must be in some way correlated so that the results reached shall be uniform and proportionate and shall not exceed actual value.
Furthermore,
if the Board arbitrarily undervalues a particular class of property so as to make another class of property disproportionately higher, or achieves the same result because of legislative action, this court must correct that constitutional inequity by lowering the complaining taxpayer’s valuation to such an extent so as to equalize it with other property in the state.
Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 815, 443 N.W.2d 249, 256 (1989).
We therefore remand these causes to the Board for further proceedings consistent with this opinion and other applicable law, which includes Northern Natural Gas Co. v. State Bd. of Equal., supra, and Trailblazer Pipeline Co. v. State Bd. of Equal., 232 Neb. 823, 442 N.W.2d 386 (1989).
Reversed and remanded for
FURTHER PROCEEDINGS.
White and Fahrnbruch, JJ., concurring.
While we concur in the result of the court’s judgment, we wish to point out that the entire property tax base for school districts and other local units of government may be at risk.
The controlling federal law in Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir. 1988), was § 306(1)(d) of the Railroad Revitalization and Regulatory Reform Act of 1976, which prohibits any state from imposing “any other tax [374]*374which results in discriminatory treatment of a common carrier by railroad . . . .” The court, in discussing the Nebraska statutory pattern of exemptions, simply held that “[w]hen the exemptions apply to three-fourths of the commercial and industrial property in Nebraska, and do not apply to rail cars, the tax system in Nebraska discriminates against Trailer Train and violates ... the 4-R Act.” 885 F.2d at 418. There are similar federal statutes affecting interstate commerce in regard to air carriers, 49 U.S.C. § 1513 (1988); motor carriers, 49 U.S.C. § 11503a (1988); national banks, 12 U.S.C. § 548 (1988); federal savings and loan associations, 12 U.S.C. § 1464(h) (1988); and federal credit unions, 12 U.S.C. § 1768 (1988).
This state’s response to Leuenberger, supra, was to enact L.B. 7, providing an additional exemption, this time for railroad rolling stock, thereby creating even greater discriminatory treatment against that commercial and industrial property which is not exempted.
It becomes obvious, therefore, that railroad rolling stock cannot be taxed at anything approaching the commanded “actual value,” Neb. Rev. Stat. § 77-201 (Reissue 1990), absent legislative repeal of the exemptions set out in Neb. Rev. Stat. § 77-202 (Reissue 1990), or at least those of which it cannot be said that a justifiable and reasonable classification exists for the exemption. On the face of the statute, those exemptions that appear justifiable relate to exemptions of property whose tax proceeds would not justify the costs of collection, e.g., household goods, and to exemptions of property owned by nonprofit religious, educational, charitable, horticultural, or cemetery organizations, which property is used for those purposes.
If the system of ad valorem taxation is worthy of surviving as a method of supporting local units of government, then under our constitutional system, all property, except household goods and property owned by nonprofit educational, charitable, horticultural, or cemetery organizations, which property is used for those purposes, must be taxed or no property may be taxed.
This court in Stahmer v. State, 192 Neb. 63, 218 N.W.2d 893 (1974), wrongfully justified the partial exemption from [375]*375taxation of an entire class of personal property, agricultural machinery, holding that the power to exempt personal property from taxation granted by the 1970 amendment to Neb. Const, art. VIII, § 2, to wit: “ ‘The Legislature may classify personal property in such manner as it sees fit, and may exempt any of such classes, or may exempt all personal property from taxation' ” (emphasis in original), 192 Neb. at 67, 218 N.W.2d at 896, prevails over the uniformity requirement of Neb. Const, art. VIII, § 1, and is subject only (if at all) to the reasonableness of the classification of exempt property.
It has been said that “[t]axes are what we pay for civilized society,” Compania de Tabacos v. Collector, 275 U.S. 87, 100, 48 S. Ct. 100, 72 L. Ed. 177 (1927) (Holmes, J., dissenting), and that “governmental costs not shared by one group of taxpayers must necessarily be shifted to and be borne by the remaining taxpayers . . . .” Equitable Life v. Lincoln Cty. Bd. of Equal., 229 Neb. 60, 62, 425 N.W.2d 320, 322 (1988). When property, regardless of whether it is real or tangible personal property, is classified so that it provides exemption from taxation to all but a small amount of property, the classification and exemption may well be unreasonable and arbitrary and may fall within the prohibition of Neb. Const, art. Ill, § 18, which is this state’s “equal protection clause.”
But, even if this state’s present classification of property as exempt and not exempt was to be found valid under Nebraska’s Constitution, it could not withstand muster under federal law. SeeLeuenberger, supra. See, also, Trailer Train Co. v. State Bd. of Equalization, 511 F. Supp. 553 (N.D. Cal. 1981) (stating that § 306 of the 4-R Act preempts discriminatory state tax law), modified 697 F.2d 860 (9th Cir. 1983), cert. denied 464 U.S. 846, 104 S. Ct. 149, 78 L. Ed. 2d 139; State of Tenn. v. Louisville & N. R. Co., 478 F. Supp. 199 (M.D. Tenn. 1979) (upholding supremacy of federal law), aff’d 652 F.2d 59 (6th Cir. 1981), cert. denied 454 U.S. 834, 102 S.CL 135,70 L. Ed. 2d 114.
The principles in Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir. 1988), in regard to discriminatory treatment of property, if followed to their logical conclusion, might well be applied not only to personal property, but also to real estate.
U.S. Const, art. VI provides in relevant part:
[376]*376This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
In Leuenberger, supra, the U.S. Court of Appeals applied the provision of the Railroad Revitalization and Regulatory Reform Act of 1976, Pub. L. 94-210, 90 Stat. 31, 54, § 306(1)(d). The court condemned as discriminatory Nebraska’s constitutional and statutory scheme of taxation of 25 percent of personal property and exemption of the remaining 75 percent. The personal property tax simply could not be enforced against railroad rolling stock while the exemptions exist. It is more than mere speculation that the court of appeals might well rule similarly in regard to other taxpayers who are also protected from tax discrimination by federal legislation.
In view of the numerous exemptions currently granted by Nebraska, the supremacy clause makes it impossible to levy taxes “by valuation uniformly and proportionately” on most real and tangible property, as commanded by Neb. Const, art. VIII, § 1. The 4-R Act and its companions in the supreme federal law prohibit taxation without taking into account exempt property, thus reducing the valuation of the protected properties to at least something less than true value, if logically any value at all.
At the same time, the boards of equalization cannot exercise their duty of valuing uniformly if the federally protected property and exempt property are not taxed and nonprotected and nonexempt property is valued and taxed.
The decision in Leuenberger, supra, has sounded the death knell for personal property taxation in this state unless the preferential treatment to certain classes of personal property is abandoned. Taxation of real estate may also be at risk for the same reasons.