School District No. 25 v. State Tax Commission

612 P.2d 126, 101 Idaho 283, 1980 Ida. LEXIS 462
CourtIdaho Supreme Court
DecidedApril 23, 1980
Docket12904
StatusPublished
Cited by22 cases

This text of 612 P.2d 126 (School District No. 25 v. State Tax Commission) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
School District No. 25 v. State Tax Commission, 612 P.2d 126, 101 Idaho 283, 1980 Ida. LEXIS 462 (Idaho 1980).

Opinion

SHEPARD, Justice.

This is an appeal by defendant-appellant State Tax Commission from a declaratory judgment sought and obtained by plaintiffs-respondents Bannock County, the City of Pocatello, School District No. 25, and several individual taxpayers. Following trial, judgment issued declaring I.C. § 63-707 unconstitutional as violative of the Fourteenth Amendment to the United States Constitution and Art. 3, § 19 and Art. 7, § 5 of the Idaho Constitution. Plaintiffs-respondents contended at trial and the district court issued judgment on the basis that I.C. § 63-707 is unconstitutional because it provides a different tax treatment of the operating property of electric public utilities as contrasted with the tax treatment of the operating property of all other utilities and railroads.

Prior to a 1915 legislative amendment of I.C. § 63-707, the operating property of all public utilities was valued and apportioned by the same method. In 1915, the legislature amended that statute to read as it does today that the operating property of all public utilities and railroads is to be assessed by the State Tax Commission. The Tax Commission determines the value of all the operating property 1 of a public utility vhich is located within the State of Idaho. The Tax Commission then determines the portion of that total statewide value which is attributed to each county and taxing district within which that utility owns operating property. Certification of estimates of market value for assessment purposes and assessed values are made by the Tax Commission annually to each taxing entity *285 which in turn imposes a levy. The tax is then collected by the county to which a portion of that operating property has been apportioned.

I.C. § 63-707 sets forth the method to be used by the Tax Commission in apportioning the value of utility operating property among the counties and taxing districts throughout the state. 2 It provides that all utilities and railroads, with the exception of electric utilities, will have their operating property apportioned on a statewide value per mile basis or, as it is often termed, a “unit value concept.” That method provides that the Tax Commission initially assesses the total value of the operating property of a public utility located within the state. The value per mile is then determined by dividing that total statewide assessed value by the number of miles of line (wire, track or pipeline) within the state. The miles of line within each taxing entity is then multiplied by the value per mile and that result is then apportioned to each respective county and taxing entity.

I.C. § 63-707 prescribes, however, a different method of electric utility operating property apportionment. All operating property of an electric utility, including transmission and distribution lines, is apportioned as it is located in a county. Thus, for example, the entire assessed value of a power generating facility is apportioned only to the county in which it is located. A county “value per mile” is determined by calculating the total value of the utility operating property within a county and dividing that figure by the number of miles of line within that county. Thereafter, the value of the total property within the county is apportioned among the cities and other taxing entities within that county on the basis of the number of line miles within each taxing entity. The district court *286 termed this method of apportioning assessed value the “situs” method.

The district court found no rational basis for the distinction made by I.C. § 63-707 between electric utilities and all other utilities for tax apportionment purposes. The court further found that the effect of the statute is to arbitrarily favor some citizens and taxing entities of Idaho over others, without any rational or permissible justification. It concluded that because of the unconstitutional statute, the Tax Commission should assess all utilities and apportion the revenues resulting from utility taxation in a consistent manner, using either a “situs” or “unit value concept.” The court determined that it should not rule whether all utilities should be apportioned on a situs or unit value concept, but it did enter findings and conclusions of law to be implemented if the Tax Commission should utilize the unit value concept.

Under the present practice of the Tax Commission, separate values per mile are established in each county for both transmission and distribution lines of electric public utilities. The Commission has ruled that all electric power lines of more than 44,000 kilovolts are to be categorized as transmission lines and all lines carrying below that voltage are to be characterized as distribution lines. Th„e district court concluded that if the Tax Commission is to utilize the unit value concept, it should be placed upon all transmission and distribution lines. The court ruled that the value per mile of a transmission line should be the same as a distribution line. 3

Before embarking upon analysis, we deem it necessary to point out what is not involved in the instant action. This action does not involve an action by a taxpayer claiming that his property is taxed at an unfair, disproportionate or inequitable amount by reason of a statutory requirement or the application of a statute in a capricious or discriminatory manner as contrasted with like property of other taxpayers. Rather, the instant case involves beneficiaries of the ad valorem system of taxation in Idaho. As to the government entities involved, they contend that they do not receive as much money from their taxation of electric utilities under the statutorily mandated “situs” method of apportioning property within counties as they would if electric utilities operating property was apportioned amongst the counties in the state under a “unit value concept.” It is the contention of the individual and association plaintiffs that they are being deprived of benefits in the form of increased tax revenues which would otherwise flow to them, primarily in the field of education, if electric utility operating property were not apportioned among the counties on a “situs” methodology as required by the statute.

Plaintiffs below asserted, and the trial court held, that the statute in question here was violative of the Equal Protection Clause of the United States Constitution. We do not agree. It has long been held that our legislature possesses plenary power in the area of taxation. E. g., Boise Cascade Corp. v. Dept. of Employment, 94 Idaho 721, 496 P.2d 958 (1972); Anderson v. Rayner, 60 Idaho 706, 96 P.2d 244 (1939). *287 As part of this power, the legislature may declare exemptions from taxation in the absence of constitutional inhibition. E. g., Boise Cascade Corp. v. Dept. of Employment, supra. It is not argued that any constitutional infirmity attaches to the basic legislation enabling the State Tax Commission to determine the assessed valuation of a public utility’s operating property on a statewide basis. That authority was conferred by the 1913 legislature (1913 Idaho Sess. Laws ch. 58, § 86), and our Court in 1916 in Northwest Light Company v.

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Bluebook (online)
612 P.2d 126, 101 Idaho 283, 1980 Ida. LEXIS 462, Counsel Stack Legal Research, https://law.counselstack.com/opinion/school-district-no-25-v-state-tax-commission-idaho-1980.