No. 90-416 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

THE MONTANA DEPARTMENT OF REVENUE, Petitioner,

PATRICIA C. BARRON, and the STATE TAX APPEAL BOARD, Respondents.

ORIGINAL PROCEEDING:

COUNSEL OF RECORD: For Petitioner: David W. Woodgerd, Chief Legal Counsel, Geralyn Driscoll, Tax Counsel, Department of Revenue, Helena,Montana For Respondents: J. Vaughn Barron, Great Falls, Montana; State Tax Appeal Board, Helena, Montana; Charles A. Smith,Attorney for STAB, Helena, Montana;

Filed: submitted: September 7, 1990 Decided: October 12, 1990Justice John C. Sheehy delivered the Opinion of the Court.

On September 11, 1990, this Court in this cause handed down

a temporary order declaring that the applicationby the Department of Revenue of the stratified sales assessment ratio study inArea 2.1 (Great FallsDowntown) to thevaluation of PatriciaC. Barron's propertywas invalid for reasons tobe later explained;we ordered that for all other properties in the state to which the Department's stratifiedsalesassessment ratio studies for tax year 1990 had been applied, except for those instances now pending on appeal or properly appealed by the property owners, the effective date and application of our temporary order was prospectively continued until December 31, 1990; and we reserved for future decision the proper valuation of the property of Patricia C. Barron. The effect of the prospective stay in the Order of September 11, 1990, is that as to all property affected by the stratified sales assessment ratio studies except for those stated in the Order, the appraised values for property tax purposes for the tax year 1990 shall be those found and applied by the Montana Department of Revenue (DOR) under said studies. Under our stateconstitutionalduty topronounce ourdecisions in writing (Art. VII, 5 3, 1972 Mont. Const.), as an aid to the legislature in its future enactments and by way of explanation to affected Montana taxpayers, we come now to make permanent the provisions of our temporary order and to set out the facts and conclusions which form the basis for the temporary order. 2This is an original proceeding in this Court brought by the DOR which petitioned for a writ of review, a writ of supervisory control, or other appropriate emergency writ for relief from an order of STAB dated August 3, 1990. In that order, STAB had concluded, upon the protest of Patricia C. Barron, that the DORIS implementation of 55 15-7-111(4)(8), MCA, was unconstitutional. (STAB contended here that it did not find the implementation unconstitutional, but only that a court would find it unconstitutional.) DORIS petition pointed to imminent statutory deadlines in the property tax collection process which created an emergency situation and said that a prompt ruling from this Court

was necessary to end theuncertainty. DOR contended that no other adequate remedyexisted thatwas speedy enoughand that irreparable harm to taxpayers and governmental entities would occur if the controversywasnot resewedwell inadvance of the issuance of tax notices that had to be mailed by October 25, 1990. On receipt of DORIS application, we ordered that we would treat the proceedings as one for declaratory relief under Ch. 8, Title 27,MCA, obtain a response from the respondents, and set an oral argumentdate. Responses were filed and served,oral argument was had, and thereafter, on consideration,we issued a temporary order to which we have above adverted. OVERVIEW The Montana Constitution provides that the state shall appraise, assess,and equalize thevaluation of all property which is to be taxed in a manner provided by law (Art.VIII, § 3). Thestatemust establish the assessed valuations (Art. VIII, 5 4) and the legislature must provide independent appeal procedures for taxpayer grievances, appraisals, assessments, equalization and taxes, with a reviewprocedure at the local government unit level (Art.VIII, 5 7). To implement the constitutional provisions, the legislature provided forproperty appraisals in Ch. 7,Title 15,MCA. In 1975,

a scheme was adopted whereby the state would evaluate under a comprehensive reappraisal plan all taxable property in the state at least every five years. The DOR was required to adopt a plan

so that all property in each county was revalued at least every five years or that no less than 20% of theproperty in each county

was revalued each year. Section 15-7-111,MCA (1987). The current five-year cycle for reappraisal began in 1986. The legislature extended that cycle period in 1989 for an additional two years, to end December 31, 1992, and postponed the commencement of another fiveyear revaluation cycle until January 1, 1993. Section 15-7-133,MCA. The DOR was given an additional two years to complete the current revaluation cycle. Section 15- 7-132,MCA. 

### Inthe lasttwo legislative sessions, however,the legislature substantially amended the revaluation cycle. Ch. 613, Laws of Montana (1987); Ch. 636, Laws of Montana (1989). While keeping the five-yearprovision in effect, it provided in amended 5 15-7- 111, MCA, that for every taxable year beginning January 1, 1990, and each taxable year thereafter, the DOR is to conduct a"stratified sales assessment ratio studyff of all residential land and improvements (and other property not pertinent here). Under the amendment, the DOR was to partition the State into asmany as 100 areas of residential property, and asmany as 20 of commercial property. The areas in each are to be separately studied. Under the study, the actual sales prices of real property parcels sold for threetaxableyearsprior to the studywere comparedwith their appraised values then in effect, and a ratio determined. If the average appraised values of the properties in the study, compared to the average of the actual sales amounts were less than 95% or

more than 105%, the assessments for each stratum within each area

were to be rescaled to bring all ratios to common value 1. The criteria for establishing the residential areaswere that they should contain statistically sufficient numbers of sales and be as economically and demographically homogenous as practicable. Section 15-7-111(6), MCA. For tax year 1990, the DOR established 47 residential areas in the state, of which Area 2.1 (Great Falls Downtown) was one. Criteria for obtaining statistically valid samples of sales in each area were also set out in the 1989 amendment. It is enough to say that only armfs-lengthsales were to be considered in the ratio study. The sales of remodeled residences were not to be considered and sales which showed assessment ratios of less than 50% or greater than 200% were to be excluded. If the result of the study in each area produced sales assessment ratios of less than minus 5% of common value 1, orgreaterthanplus 5% of common value 1,then all of theassessments in the areawere tobe adjusted tobring the ratios to commonvalue 1. Section 15-7-111(8)(a)

## , MCA. If the ratio for any area was withinplus orminus 5% of the commonvalue 1,then theassessments in the area were considered equalized and no rescaling was necessary. Section 15-7-111(8)(c), MCA. The legislature required the sales assessment ratio studies to commence for the taxable years beginning January 1, 1990, and for every taxable year thereafter and further provided that the ratio so determined vtmust be used to determine appraisals for the immediately succeeding tax year." Section 15-7-111(4), MCA. FACTSPatricia C. Barron isthe owner of a residence inGreat Falls, Cascade County,Montana. Her property is in an area designated by the DOR as Area 2.1. Prior to 1990, the Barron property was appraised by the DOR at a total value of $28,019 for land and improvements. The DOR conducted a "stratified sales assessment ratio studyu in that area for taxableyear 1990. Itused a sample of 243 actual sales. It found therefrom an average sales price of $39,545 and an average appraised value of $29,310. The DOR determined that the weighed mean ratio of the figureswas 0.7412, which required an adjustment factor of plus 30% The appraised value of Patricia C. Barrontsresidence was therefore fixed at a total of $40,325. Barron appealed to the County Tax Appeal Board on these grounds:Through H.B. 703, an arbitrary 30% increasewas imposed onmy house. Suchanarbitrary increasedoes not address the mandate of Art. VIII, 5 3 of the Constitution that the State equalize the valuation of all property and is therefore unconstitutional. The appeal was denied by the County Tax Appeal Board for the

reason that I1TheBoard was informed that an error was found and that thenecessary adjustmentwould be made by the DOR ofRevenue." Patricia C. Barron appealed to STAB, again on the same grounds. STAB made findings of fact and conclusions of law on August 3, 1990, relating to the appeal. Pertinent to the findings are these: Thetestimonyindicatedthatapproximately 1,000of these sales were chosen for Cascade County and that 243 sales were analyzed and used to determine that the properties located in Area 2.1 were underappraised by 30percent.

Thepertinent conclusionof lawwith respectto this casemade by STAB is found in paragraph 1. It includes: It isthe opinion of thisBoard that thetaxpayerdid not satisfactorily challenge the DORIS constitutional authority to appraise, assess, or equalize property values. The DOR clearly has that authority and is affirmed by the Montana Supreme Court in DOR of Revenue v. Countrvside Villase, 205 Mont. 51 (1983); Hanley v. DOR of Revenue, 207 Mont. 302 (1983). However, along with that authority goes the duty, and the requirement, to equalize property values throughout an area, county to county,and statewide. It is clear to thisBoard from the evidence and testimony provided that, for Area 2.1 at least, this has not been achieved. (Emphasis in original.) STAB then went on to examine the results of the application of the 30% adjustment. Whereas before the adjustment, 40 of the 243 properties were overappraised and 203 were underappraised,after the adjustment, 102 properties were overappraised in comparison with their sales price, and 141 underappraised. STAB pointed to the Barron property, saying that even after the 30% correction was applied, the appellant's property was still appraised at only 51% of its purchase price which was $75,000. STAB then went on to analyze the results and eventually decided that Patricia C. Barronlsproperty should be assessed at $75,000. It determined that DOR had failed to perform its constitutional mandate of equalization within Area 2.1 under the implementationof H.B. 703 and further concluded thatbased on the evidence presented, "the Board believes that the District Court would very likely rule that the implementation of H.B. 703 is unconstitutional, only for the reason stated above, that equalization within a specifiedarea, hasnot been achieved." (H.B. 703 became Ch. 636,Laws of Montana (1989).) Based on the determination made by STAB in Patricia C. Barronlscase, the DOR commenced the original proceeding in this Court. DISCUSSION We have no issue of whether we should accept jurisdiction, since we have decided to treat the matter as an original proceeding for declaratory judgment. The issue for us to decide is the constitutionality of the appraisal method as applied to this case. The DOR supports the constitutionality of the amendments to 5 15-7-111,MCA,whichprovides forthe stratified salesassessmentratio study. It contends that the purposes of the amendmentswere to adjust current appraised values rather than to reappraise property; to achieve equalization between areas in the state; to change appraisal values during the 5-year cycle; and pursuant to the amendments to 

### 5 15-7-111, to adopt administrative rules establishing the areas, and the methods of achieving the ratios, subject to administrativeand judicial review. The DOR argues the taxpayer here is not in a position now to object to the adjustment to her appraisal. The DOR further contends that STABhas no power to declare an administrative rule or a statuteunconstitutional. Patricia C. Barron contends that STAB was correct in determining that the implementation of H.B. 703 was unconstitutional as applied to her property but that STAB further erred in appraising her property at $75,000, as her right to constitutional equalizationhas therebybeenviolated. She argues that equalization is not achieved by the DORIS method of revaluation in breaking the county down into neighborhoods and applying different adjustments to different neighborhoods. She contends that the method of appraisal used in the five-year cycle is the only proper one to be used and that themethod used by the DOR in fixing her 1990 appraised value does not achieve equalization. STAB has responded that it did not declare that the method used by the DOR was unconstitutional, but merely said that it believed that a district court would find the implementation oftheappraisalunconstitutional. SinceSTAB'S findings of factwere not disputedby the DOR, its findings must be considered agreed to and not subject to further argument. STAB contends that the net result to the DOR1sadjustment to Area 2.1 is that there are now more properties overappraised and fewerunderappraised thanbefore the adjustment. u his means that 100% of the 243 properties are still not appraised at market value after the application of the implementation. STAB attacks themethodology used by the DOR in reaching the ratio. Cascade County has 40,699 improvements to real property; the DOR found 1,057 acceptable sales in the County or 2.6% of the total improvements in the County. There is no indicationthat this is a representative sample relating to age, condition, size, design,construction materials, location,utilities,cityorcounty services, or other factors that determine value. STAB further contends that the appraisal values are not closer to market value

as a result of the implementationand there isno evidence that the study brings the appraised property within the range of equality 

### and market value. As an additional issue, STAB points out that the amendment to 9 15-7-102(6), MCA, now provides that a property owner may not appeal the yearly adjustments specified in 5 15-7-111,MCA, that may be made as a result of the sales assessment ratio studies. Since there is no savings clause in Ch. 636, Laws of Montana

(1989)

## ,H.B. 703, if theappeal provision isunconstitutional, STAB says that the whole of the legislation should fail.Like the policeman in the Pirates Of Penzance, taking one considerationwith another,theDORIS lot inproperty taxappraisal is not a happy one. Hampered by inadequate staff and funds, its task of individual appraisal of properties is almost impossible in any annual revision. The legislature itself is strapped in providing staffand additional funds. Yet, if our conclusionshere

are properly drawn and if we have a truly representative sample, property tax appraisals in Area 2.1 are seriously out of whack. We are working, of course,with a fore-shortened record. We have before us 243 actual sales which fall within the parameters setup by the legislature. Other sales in that area are excluded. We are not told howmany residentialproperties in total are to be found in Area 2.1. We assume, therefore, that because the legislaturerequired it 

### (5 15-7-111(5)(b)

## ,MCA)

### ,and because itwas not contested before STAB, that the 243 sales are a statistically valid sample, and that they truly represent the status of all tax appraisals in Area 2.1, before and after the application of the adjustment of 30% under the study conducted by the DOR. One of the exhibits in the record before STAB was the DOR report containing the results of all stratified sales assessment ratio studies done in Area 2.1, required to be published by the DOR under 

### 5 15-7-111(7)(b), MCA. That report includes all of the 243 sales relied on by the DOR. Shown on the report are the appraised values as of 1989, the sales price for the individual properties and the ratio, for each sale, of the sales price over the 1989 appraisedvalue. Itwas by averaging all of theappraisedvalues for the 243 parcels and averaging all of the sales prices for the sameparcels,that the DORdetermined that a 30% adjustment upward to the appraised values in Area 2.1 was necessary. Based

on this determination, every residential property in Area 2.1, including those in the 243 sales, were raised by that percentage. STAB produced for us the effect of the 30% increase on each of the 243 sales. The following are some samples taken from that exhibit:Samples of effect on residential appraised values used in Area 2.1 Analysis

1989 Sale Appraised Value Price 1990 Adjusted Ratio A~praised Value

(The first three samples were at the top of the overappraised scale; the middle three samples were appraised approximately at their salesvalue; the last three samples are at thebottom of the underappraised scale.) Itmay be demonstrated by the above samples that equalization is not achieved by the application of the 30% factor but rather that any inequality of appraisal is exacerbated by the factor. For example,the first property,which sold for $24,000in 1989but

was appraised for $46,497 is now assessed after the application of the factor, at $61,346. That same property was overappraised in relation to its salesprice at 193% before the application of the factor, but is overappraised 255% after its application. Examples of unfairness are demonstrated by those properties which were in 1989 appraised at or near their actual salesvalue. The property whose sales price was $100,000but was appraised at $101,947 was 100.9% overappraised in 1989, but will be 132% overappraised in 1990.Strangely, the underappraised properties fare better in comparison to others when the 30% factor is applied. The last property, whose salesprice was $42,600,was appraised at $21,386,

or at 50% of its value. After the application of the 30% factor, the increase in its appraised value results only in the figure of 65% of its actual sales price. We determine, therefore, from the record that themethodology prescribed by the legislatureand implementedby the DOR foryearly equalizationbetween areasunfairlydiscriminates againstproperty taxpayers in Area 2.1 whose properties in 1989 were appraised at or above theirmarket values. If, aswe are led to believe, the area study is statistically sound, the remainder of residential properties in Area 2.1 beyond the 243 parcels here studied must have the same resulting unfairness in the same proportions. Therefore, all residential properties inArea 2.1 which in 1989were assessed or appraised at

or above their true market values are unfairly discriminated againstby the application of the 30% factor to the 1989 appraised values. Discriminatory unfairness is countermanded by state constitutionaland statutoryprovisions. The state is required to appraise property for tax purposes and to equalize the valuations of all property to be taxed. (Art. VIII, 5 3). All taxable property in the state is to be assessed at 100% of its market value. Section 15-8-111(1), MCA. The DOR is required to adjust and equalize the valuations of taxable property among the severalcounties and the different classes of taxable property in any county and in the several counties between individual taxpayers. Section 15-9-101(1), MCA. Forpurposes of taxation,assessed value is the same as appraised value, and with certain exceptions, property is assessed at 100% of its market value; market value is defined as the value at which property would change hands between

a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. Sections15-8-111(1) (2)(a),and (4), MCA. The DOR and itsagentsmay not adopta lower ordifferent standard of value frommarket value inmaking official assessments or appraisals of the value of property unless within certain exceptions set forth in 5 15-8-111(3), MCA. In Patterson v. State DOR of Revenue (1976)

## , 171 Mont. 168, 557 P.2d 798, this Court held valid the statutory plan for the five-year reappraisal cycle. The decision was based on features of the plan in that all like property was to be appraised by a uniform standard according to uniform valuation procedures set forth in the same designated appraisal manual. The appraisal rotation was fixed by a uniform rule requiring the property that had gone longest since appraisal and was deemed to be the most devious from current values to be appraised first. The Patterson decision was based on a plan which allowed counties to reappraise 20% of theproperties everyyear during the five-yearcycle. That provision was eliminated by the legislature in its 1989 enactmentand the yearly changes in individual valuations are now based on studies conducted under the stratified sales assessment ratio theory. However, in Patterson, it was held that the placing of revaluations on the tax rolls annually and sequentially as the reappraisals are completed,which resulted intemporary inequities, did not offend the constitutional equal protection and uniformity requirements in the absence of intentional and systematic discrimination, constructive fraud, or arbitrary action. Patterson, In Larsonv. State and DOR of Revenue (1975), 166 Mont. 449, 534 P.2d 854, we had a case where the DOR had assumed its new responsibilities under the 1973 legislative acts for statewide appraisal, but the DOR had determined to use a county-financed appraisal (called the Laird appraisal) for 1974 Lewis and Clark County assessments. The District Court had found that the real estate appraisals under the Laird procedure were not conducted as

apart of a uniformplan forappraisalwithin the stateofMontana, and that the appraisals were not equalized with other counties in the state. The ~istrictCourt held that the use of the Laird appraisalwas unconstitutional,and the case came to this Court on appeal. In upholding the decision of the ~istrict Court that the

use of theLaird appraisalwasunconstitutional,thisCourt stated: Accepting as facts the absence of a state-wideappraisal plan and thedisproportionate appraisalmade onLewisand Clark property, we return to the legal questions presented. The district court concluded that the adoption of the Laird appraisal would require taxpayers tobear adisproportionate share ofMontana's tax burden,in violation of the equal protection requirements of the Fourteenth Amendment to the United States Constitution and Article 11,5 4, 1972 Montana Constitution. Theuse of the appraisal was also found to violate the due process requirements of the Fifth and Fourteenth Amendments to theUnited StatesConstitutionandArticle 11, Sections 17 and 29, 1972 Montana Constitution. Finally,thedistrict court found the appraisalviolated theprovisions ofTitle 84,Chapter 4,R.C.M. 1947, which requiregeneral anduniform appraisal,and assessmentand equalization of all taxable property in the state.

A "generaland uniformmethod of appraising1' necessarily requires that each appraisal or reappraisal must be a part of aplanwhich provides thatall similar properties will be valued in likemanner. Theplain meaning of the statutory language admits of no other interpretation. The absence of such a plan, as discussed earlier in this opinion, thus prevents lawful implication of the Laird appraisal. Larson, 534 P.2d at 857-58. The Larson court noted that there was an abundance of authority which finds no violation of constitutional or statutory mandates in the temporary inequalities which accompany a cyclical plan of reappraisal. Larson, 534 P.2d at 857. Italso noted that violations of statutory uniformity requirements generally result in violations of equal protection requirements. In this case,wehave noway of knowing whether the inequities in valuations in Area 2.1 are temporary or not. Presumably, the DOR will annually make ratio studies and apply factors to increase

or reduce thevaluations inArea 2.1 if the average valuations are outside the 5% parameters. It might be hoped that any valuation inequities resulting from the ratio studiesmight be rectified by thevalues found at the end of the current revaluation cycle;yet, those values under the lawmay not be placed on the tax rollsuntilone year following the completion of the revaluation cycle, 5 15- 7-111(2)

## , MCA, which, if not again extended, would occur in tax year 1994. Under therecordhere, theDOR itselfwillmake no move to rectify inequities because of its interpretation that it is bound by lawnot todo so. Section 15-7-111,MCA. The legislative provisions fortheapplicationof theratio studies includenoplan for rectifying appraisal inequitieswhichmay fallupon individual propertyholders throughapplicationof the factors derived through the ratio. We therefore determine in accord with Larson that the use of the 1990 tax values derived from the ratio studies and the application of the 30% factorto residentialproperties in Area 2.1 requirecertain taxpayers therein tobear a disproportionate share of Montana's tax burden in violation of the Equal Protection requirements of the Fourteenth Amendment of the United States Constitution,and Art. 11, § 4,1972 Montana Constitution,and the Due Processrequirements of the Fifth and Fourteenth Amendments of the United States Constitution and Art. 11, §§ 17 and 29 of the 1972 Montana Constitution. This also violates the appraisal provisions of our statutes which require general and uniform appraisal, assessment and equalization of all taxable property in this state. This is not to say that the legislature does not have the power to change appraisal values during the appraisal cycle. In Hanley v. DOR of Revenue (1983), 207 Mont. 302, 309, 673 P.2d 1257, 1260, this Court said:There canbe no doubt that thepower to equalize includes thepower to alter an appraisal cycle

# .. . We therefore hold that DOR has the authority, when acting under its power to equalize, to change the taxable value of property in this state within an appraisal cycle to comply with its constitutional mandate to tax on a uniform basis. It behooves the Court to note that the result of the DOR report relating to actual sales and appraised values in Area 2.1 should make clear to the DOR, and now to the legislature, that there is a wide disparity in appraised values of residential properties in that area when compared to actual sales values. In that situation, the indiscriminate application of an across-theboard 30% factorwould necessarily exacerbate the values of those properties which are already assessed at or near market value or in excess thereof. Such a method may achieve equalization as between areas,but not between individualproperties in the areas, where appraisal inequities already exist. Certainly the ratio study indicates that Area 2.1 should be targeted for a complete reappraisal even before the end of the valuation cycle. ~qualization between areas will automatically result when all the valuations in the individual areas are at or near market value. THE POWER OF STAB AND THE RIGHT OF APPEAL The DOR contends two issues arise in this case relating to STAB. The DOR contends that STAB has no power to ignore the administrative ruleswhich are adopted in accordancewith 5 15-7- 111, MCA, nor to declare a statute is unconstitutional. However, the record shows that STAB skirted the constitutional issue by declaring its belief that a court, if asked, would determine theassessment ratio studies and the application thereof unconstitutional. As to the administrative rules, 

### 5 15-2-301(4), MCA, provides that "the state tax appeal board must give an administrative rule full effect unless the board finds any such rule arbitrary, capricious or otherwise unlawful." STAB in its response contended that this Court should throw out the amendments adopted by the legislature in 1987 and 1989 because of theprovision in § 15-7-102(6), MCA, to the effect that "the property owner may not appeal the yearly percentage adjustments that are specified in 15-7-111, and that may be made

as a result of the sales assessment ratio study, the stratum, or area designations as specified in 15-7-111." Article VIII, 5 7, of the Montana Constitution,provides: Tax appeals. The legislature shall provide independent appeal procedures for taxpayer grievances about appraisals, assessments, equalization, and taxes. The legislature shall include areview procedureat the local government unit level. Section 15-7-111(4), MCA, provides: (4) For the taxable yearbeginning January 1, 1990,and for every taxableyear thereafter, the department shall conduct a stratified sales assessmentratio study of all residential land and improvements, agricultural 1-acre homesites and improvements, and commercial land and improvements. The sales assessment ratio based on property sales finalized and recorded by no later than November 1must be used to determine appraisals for the immediately succeeding tax year. Section 15-7-102(6), MCA, provides: (6) 

# .. . Theproperty ownermay not appeal theyearly percentage adjustmentsthat arespecified in 15-7-ill and that may be made as a result of the sales assessment ratio study, the stratum, or area designations as specified in 15-7-111.Clearly, Art. VIII, 5 7, Montana ~onstitution,guarantees the constitutional right of appeal procedures fora taxpayer concerning appraisals and assessments. It is also equally clearthat 5 15-7-111(4), MCA, required the DOR to conduct an annual stratified sales assessment ratio study beginning January 1, 1990, and for every taxable year thereafter and that the salesassessment ratio derived therefrom must be used todetermine appraisals for the immediate succeedingtax year,and 5 15-7-102(6) provides that the property owner may not appeal as a result of the sales assessment ratio study. Therefore, the provision of 5 15-7-102(6)

## , providing It[tlhe property owner may not appeal the yearly percentage adjustments that are specified in 15-7-111 and thatmay be made as a result of the salesassessmentratio study, the stratum, orarea designations as specified in 15-7-111,1t is unconstitutional as a violation of Art. VIII, 5 7, of theMontana Constitution. Notwithstanding that the non-appeal provision of 5 15-7- 102(6), MCA,may not be essential to our decision in this case,we believe it is important that the DOR and the legislature be made fully aware of the requirements of Art. VIII, 5 7,with regard to any future legislation or rule-making. THE CASE OF PATRICIA C. BARRON This whole case was brought about by the appeal of Patricia C. Barron to the County Tax Appeal Board, and then to STAB itself regarding the constitutionality of the increased adjustment to her residential property valuation for tax purposes.STAB,in determiningthat theapplicationof theratio studies toArea 2.1 was improper,did not restorePatricia C. Barron to the 1989 appraisal ofher residentialproperty. Instead, it determined that because the purchase price of thehome in which she lives was $75,000, it should be appraised at $75,000 as a reflection of its market value. InDOR of Revenuev. StateTaxAppeal Board (1980), 188Mont. 244, 249, 613 P.2d 691, 694,we quoted the United States Supreme Court saying: This Court holds that the right of the taxpayer whose property alone is taxed at 100 percent of its truevalue is to have his assessment reduced to the percentage of that value which others are taxed even though this is a departure from the requirement of statute. This conclusion is based on the principle that where it is impossible to secureboth a standard and true value, and the uniformity and equality required by law, the latter requirement is to be preferred as the just and ultimate purpose of the law. While the valuation of the Barron property at its market value is at 100% of its true value, it cannot be said that the application of that valuation reaches the uniformity and equality required by

our laws. If anything, the study of Area 2.1 reveals that there is very little equality or uniformity in the valuation of the 243 properties studied. Because PatriciaC. Barronundertook toappeal the application of the 30% adjustment toher residential property, and bore the burden of litigation to bring the DOR and this Court the problems arising out of the ratio studies, she is entitled to thebeneficial fruits of her litigation. We therefore

reversethevaluation ofher residentialproperty fixedat $75,000, and direct that the valuation of that residence for tax purposesshall be the valuation which obtained in 1989. Nothing herein prevents a proper revaluation of her residential property in accordance with statutory and constitutional principles in subsequentyears. CONCLUSION Thepower of supervisorycontrol given to this Court does not apply in this casebecause STAB isnot a court in the contemplation of Art. VII, 5 2(2) of the State Constitution. We find and determine, however, in this original proceeding proper grounds to award the following declaratory and affirmative relief: 1. The provisions of 

### 5 15-7-111, MCA, relating to stratified sales assessment ratio studies of the residential property situated in Area 2.1 (Great Falls Downtown) as conducted and appliedby theDOR are invalid because they violate state constitutional and statutory provisions which require general and uniform appraisal, assessment and equalization of all taxable property in the state; and further because the applications thereof require certain taxpayers in Area 2.1 to bear a disproportionate share of Montana's tax burden, in violation of the Equal Protection requirements of the Fourteenth Amendment to the United States Constitution and Art. 11, 

### 5 4, 1972 Montana Constitution;and because the application of the stratified salesassessment ratio study to Area 2.1 violates the Due Process requirements of the Fifth and Fourteenth Amendments of the United States Constitution and Art. 11, 17 and 29, 1972 Montana Constitution. 2. The provision of § 15-7-102(6), MCA, that states: "Theproperty ownermay not appeal theyearly percentage adjustments that are specified in 15-7-111 and that may be made as a result of the sales assessment ratio study, the stratum, or area designations as specified in 15-7- 111," is in violation of Article VIII, 

### 5 7, of the Montana Constitution. 3. The valuation for tax year 1990 of the residential property of Patricia C. Barron in Area 2.1 established by STAB should be and is hereby reversed, and STAB andall agents of the DOR shall fix the appraised value of the said residential property of Patricia C. Barron at the valuation which obtained in the tax year 1989. 4. Because of the statewide effect of this decision, because of the short period of time remaining for state and county officestoperform their duties in connection with the collection of property taxes for theyear 1990, and the extenuating exigencies which would otherwise be created by an immediate effect of this decision, we hereby delay the effective date of this decision, and make its effect prospective only to December 31, 1990, except forthose cases nowpending on appeal,orproperly appealedby theproperty owners. (This means those cases heretoforeappealed withinthetimeprovided for taxpayer appeals at the local or state level and now pending on thegroundsof unconstitutionalityfoundtoexist inthis proceeding, and includes those previously appealed on those grounds and denied at the county or state level; but,no otherappeals on thegrounds coveredherein shall be recognized.) The effect of this prospective stay is that as to all property affectedby the stratified sales assessmentratio studies,exceptthoseherein stated,the values for tax purposes for the tax year 1990 shall be those found and applied by the DOR under said studies. 5. When copies hereof are served by ordinary mail by the Clerk of this Court upon counsel of record, this opinion shallhave the effect of, and perfomthe office of, a declaratory judgment granting affirmative relief without further documents or process from this Court. It shall be effective on the date of service. We grant the stay only toprevent thedisruption of the state taxation process for the taxyear 1990 and because the legislature will meet and may address theseproblems in a sessionbeginning on the first Monday of January, 1991. prospective application of the effect of thisOpinion past the 1990 tax year as absolutely imperative shouldbe at once apparent, but some question prospective delay when the underlying act is unconstitutional. How, it is argued, can a court allow to remain legal what it has declared to be illegal? The answer lies in the choice that must be made by the Court as to whether it will allowgovernment to continue in an orderly fashion at the expense of some,or elsepermit virtual anarchy to exist. Were the illegality in this case declared to take effect immediately, it would mean that tax collections for the support of state, county, school districtandmunicipal government dependent onproperty taxeswould be thrown into immediate disfunction. There is lurking in this

case a huge legislative and executive problem, and these branches must be given a chancetodealproperlywith thatproblem. Despite theunconstitutionalityof the appraisal systemhere involved, the fashioning of a constitutional system is a proper duty of the legislative department, and not of this Court. This Court has not hesitated to delay the effect of its decision that an act isunconstitutionalwhen the immediate effect of the decisionwould disrupt government, and the legislature can be given an opportunity to rectify the unconstitutionality. Lee

v. State (1981), 195Mont. 1, 11, 1635P.2d 1282, 1287,cert.denied 456 U.S. 1006, 102 S.Ct. 2295, 73 L.Ed.2d 1300; Helena Elementary School Dist. No. 1v. State (Mont. 1990), 784 P.2d 412, 413. Other state courts have done likewise. Edgewood Independent School District v. Kerby (Tex. 1989), 777 S.W.2d 391, 399; Horton v. Meskill (Conn. 1977), 376 A.2d 359, 376; Washakie County School Dist. v. Herschler (Wyo. 1980), 606 P.2d 310, cert.denied 449U.S. 824, 101 S.Ct. 86, 66 L.Ed.2d 28 (1980); Robinson v. Cahill (N.J. 1973), 303 A.2d 273, 298, cert.denied 414U.S. 976, 94 S.Ct. 292, 38 L.Ed.2d 219.Costs of proceedings, but not attorneys fees, toPatricia C. Barron. 

# 6. Justice

We concur:

Chief Justice