Opinion ID: 2755001
Heading Depth: 3
Heading Rank: 1

Heading: The Resolution Is a Tax Levy

Text: ¶20 The City argues that the Resolution does not levy a tax, but instead represents only an administrative implementation of an already existing tax. Levying a tax, the City claims, requires a tax increase. But the City’s argument is inconsistent with the actions undertaken and the statutory framework on which it relies. ¶21 First, the City’s argument is belied by the text of the Resolution itself and past City and District resolutions. The City has proffered no evidence that it levied a tax in 2001 that was to continue year after year. And the proposition put to the voters in 2001 indicates the contrary. It reads: “Shall the City Council of Draper City be authorized to annually levy and collect taxes from the owners of property located within the Traverse Ridge Special Service District . . . ?” Under this language, taxing authority was granted, but no tax was levied. And the taxing authority granted was for an annual tax levy, not a levy to continue in perpetuity.27 Moreover, the resolution proffered by the City as the initial tax levy in 2001 is virtually indistinguishable from the 2014 tax levy at issue here. The only conclusion to be drawn from the text of these documents is that the City was granted taxing power by the people in 2001 and has since then “annually lev[ied] and collect[ed] taxes” pursuant thereto. ¶22 The City also argues that the Resolution does not qualify as a tax levy because it was not required to provide notice and public hearing under Utah Code section 59-2-919(2), a process commonly known as Truth in Taxation.28 That subsection states that “[a] taxing entity may not levy a tax rate that exceeds the taxing entity’s certified tax rate unless the taxing entity meets” certain notice and hearing requirements.29 The phrase “that exceeds” is “defining, or restrictive”—it identifies those tax levies requiring 27 Indeed, the Legislature does not allow taxing entities to levy perpetual property taxes. See UTAH CODE § 59-2-912 (requiring each taxing entity “before June 22 of each year” to “adopt” and “report the [tax] rate and levy . . . to the county auditor”). 28 Truth in Taxation, UTAH STATE TAX COMMISSION—PROPERTY TAX DIVISION (last updated Jan. 8, 2013), http://propertytax.utah.gov/ property-tax-rates/truth-in-taxation/truth-in-taxation-process. 29 UTAH CODE § 59-2-919(2) (emphasis added). 8 Cite as: 2014 UT 54 Opinion of the Court notice and hearing.30 But it does not define what constitutes a tax levy. ¶23 The City’s argument also is inconsistent with an earlier section in the same part of the Utah Code stating that “the governing body of each taxing entity shall before June 22 of each year: (a) adopt a proposed tax rate, or if the tax rate is not more than the certified tax rate, a final tax rate for the taxing entity; and (b) report the rate and levy . . . to the county auditor of the county in which the taxing entity is located.”31 This provision indicates that a taxing authority levies a tax each year, regardless of whether the tax levied represents a tax increase, a tax decrease, or a tax equivalent to the tax levied the prior year.32 We therefore conclude that the Resolution does, in fact, levy a tax. B. Subjurisdictional Referenda are Constitutional ¶24 The City next argues that this tax levy is not subject to a referendum because it was enacted by the District, and not the City.33 Utah Code section 20A-7-601(3) allows residents of a subjurisdiction, such as the District, to challenge laws applicable to that subjurisdiction through a referendum. But the City argues that this provision is unconstitutional because it would limit the number of Draper City citizens who are entitled to vote on the referendum 30 See WILLIAM STRUNK JR. & E.B. WHITE, THE ELEMENTS OF STYLE 59 (4th ed. 2000). 31 UTAH CODE § 59-2-912(1). However, “[i]f the governing body of a taxing entity fails to comply . . . , the auditor of the county . . . shall . . . forward all available documentation to the [State Tax Commission,]. . . .[which] shall hold a hearing on the matter and certify an appropriate tax rate.” Id. § 59-2-912(3). 32 Other provisions support this conclusion. E.g., id. § 59-2-901 (“Before June 22 of each year the [State Tax Commission] shall determine the rate of state tax to be levied and collected upon the taxable value of all property in the state sufficient to raise the amount of revenue specified by the Legislature for general state purposes.”). 33 In the specific context of levying taxes, we note that neither the constitution nor the applicable statutes allow a special service district to levy property taxes; property taxes for the district must be levied by the county or municipality that established the district. See UTAH CONST . art. XI, § 7(1)(b); UTAH CODE § 17D-1-301(3)(c). 9 MAWHINNEY v. DRAPER CITY Opinion of the Court to those citizens residing within the District. The City also argues that this provision is inconsistent with the legislative power reserved to the voters in the Utah Constitution, which provides that “[t]he legal voters of any county, city, or town . . . may . . . require any law or ordinance passed by the law making body of the county, city, or town to be submitted to the voters thereof.”34 ¶25 We are unpersuaded by the City’s constitutional challenge. Under the constitution, “[t]he Legislative power of the State [is] vested in . . . the Legislature . . . [and in] the people.”35 While the constitution specifies that certain legislative power remains in the people, it in no way prohibits the Legislature from delegating to the people additional legislative power. The Legislature may delegate some of that power by statute to the people of a subjurisdiction if it chooses. And the Legislature has done just that. By enacting Utah Code section 20A-7-601(3), the Legislature has delegated legislative power to the residents of subjurisdictions by creating a procedure that allows subjurisdictional legislation to be referred to the voters of the subjurisdiction.36 And there is nothing about this delegation of legislative power that is inconsistent with the constitutional provision reserving legislative power to the people. C. A Vote by District Residents Does Not Disenfranchise Non-District Residents of the City ¶26 The City finally argues that non-District residents of the City will be disenfranchised if they are not allowed to vote on this referendum because it may impact the City’s finances. We disagree. Because the referendum concerns a tax levied only on the residents of the District, non-District residents will not be directly impacted by the vote. In the event that the voters in the District reject the 34 UTAH CONST . art. VI, § 1(2)(b) (emphasis added). 35 Id. art. VI, § 1(1). 36 UTAH CODE § 20A-7-601(3). A subjurisdiction is “an area comprised of all precincts and subprecincts in the jurisdiction of a county, city, or town that are subject to a subjurisdictional law.” Id. § 20A-7-601(3)(a)(i). A subjurisdictional law is a “law or local obligation law passed by a local legislative body that imposes a tax or other payment obligation on property in an area that does not include all precincts and subprecincts under the jurisdiction of the county, city, or town.” Id. § 20A-7-601(3)(a)(ii). It is undisputed that the District is a subjurisdiction and that the Resolution is a subjurisdictional law. 10 Cite as: 2014 UT 54 Opinion of the Court District’s property tax levy, the city council will then need to confront how to replace the lost revenue. Any financial impact on the City—whether through additional taxes or reallocation of resources—must first be approved by the city council, which represents all residents of the City. If voters of the City disagree with the legislative action the city council takes in response to any revenue lost as a result of this referendum, they can then seek a referendum to challenge that action.