Opinion ID: 1992041
Heading Depth: 1
Heading Rank: 2

Heading: commutation of tax

Text: Swanson's first argument as to how L.B. 839 violates the Constitution of the State of Nebraska is that it is a commutation of property tax, enacted in violation of Neb. Const. art. VIII, § 4. That section provides, in relevant part: [T]he Legislature shall have no power to release or discharge any county, city, township, town, or district whatever, or the inhabitants thereof, or any corporation, 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. A commutation occurs in violation of the Nebraska Constitution when tax funds raised in one district are diverted entirely to the benefit of another district. State ex rel. School Dist. v. Ellis, 160 Neb. 400, 70 N.W.2d 320 (1955). Under the provisions of the Nebraska Constitution relating to equality in taxation, laws which impose unfair or unequal burdens of taxation upon one school district for the benefit of another qualify as commutations in violation of the Constitution. State ex rel. Groves v. School District, 101 Neb. 263, 162 N.W. 640 (1917). Swanson argues that the common levy of L.B. 839 has the practical and prohibited effect of imposing an unfair or unequal burden on him and the other property owners of school district 31 by commuting the taxes of property owners in other school districts. As authority, Swanson relies chiefly on this court's decision in Peterson v. Hancock, 155 Neb. 801, 54 N.W.2d 85 (1952). In Peterson, this court invalidated a statute imposing a blanket mill tax levy, which was imposed on all taxable property in the elementary school districts of a county in addition to the regular school levy. Id. at 804, 54 N.W.2d at 88. Only school districts enrolling five or more students were eligible to receive the revenues from that tax. Under the provision of the blanket mill tax levy, most of the revenue raised came from school districts enrolling fewer than five students; those school districts, by virtue of their minimal enrollment, received no benefits of the taxes their property owners paid. The revenues of the blanket mill tax levy were distributed to larger school districts  solely for their respective local purposes, ... thus proportionately [reducing] their regular school district levy. (Emphasis supplied.) Id. at 806, 54 N.W.2d at 89. The Peterson court struck down the blanket mill tax levy, finding that [t]he only conclusion that can logically be drawn is that districts having less than five pupils are required to pay the blanket levy on all their property into the fund for the sole benefit of districts with five or more pupils. As a result, the regular school district taxes in such districts are thereby released, discharged, or commuted at the expense of districts having less than five pupils, who are required not only to pay the blanket tax levy in full to others without any benefit to them, but also to pay all regular school taxes required to maintain the school in their own respective districts. (Emphasis supplied.) Id. at 812, 54 N.W.2d at 92. Peterson is inapposite to Swanson's argument because the property owners therein paid two separate and distinct property taxes, established under different statutes for different purposes: one regular school levy to support all school districts in the county, and one blanket mill tax levy to support only districts enrolling at least five students. Swanson attempts to analogize his case to Peterson by claiming that he is subject to two property taxesthe tax he paid prior to L.B. 839 and the estimated amount of increase he will incur under L.B. 839. This division, however, creates two taxes in only the most contrived sense. Swanson is subject to one tax, the proceeds of which support both his own district and others within the same Class VI school system, all of which feed into the Valentine High School district. As such, Swanson cannot claim that the common levy supports only a local purpose of districts other than school district 31. That notwithstanding, Swanson seeks to apply Peterson on the grounds that a Class VI school system is not a legitimate taxing district and that, as such, no public benefit exists to redeem the increase in taxes assessed against Swanson to support other Class I districts. In support of this contention, Swanson points to the structural differences between Class I school districts and Class VI school systems. Class I school districts, for example, are independent political subdivisions with a certain degree of statutory autonomy. § 79-401. Each Class I district operates under the direction of a single school board, Neb.Rev.Stat. § 79-102(1) (Reissue 1994); each district holds its own school board elections, Neb.Rev.Stat. § 79-402.09 (Reissue 1994); and each district adopts its own budget, Neb.Rev.Stat. § 13-504 (Cum.Supp.1994). The boundaries of each Class I district are distinct and separate and are drawn by the county superintendent. Neb.Rev.Stat. § 79-402 (Reissue 1994). Admittedly, a Class VI school system is distinguishable from a Class I district insofar as the latter lacks those characteristics. However, these characteristics are not dispositive of whether a taxing district exists. Although the Legislature has not statutorily defined a taxing district, by practical definition the Legislature creates a taxing district when it grants an entity the power to require the county clerk to levy a tax for the support of the district. Neither the federal nor the state Constitution requires an elected or representative board to oversee an assessment or levying process authorized by the Legislature. See Ratigan v. Davis, 175 Neb. 416, 122 N.W.2d 12 (1963). The decision of whether to create an elective body to govern a particular taxing district is vested in the discretion and competence of the Legislature. See id. That the Legislature declined to create such an elective body does not impair the constitutional legitimacy of a Class VI school system as a taxing district. Swanson also argues that he should be absolved of the burdens and benefits of schools within the Class VI school system because he has no children in school district 1. This argument is no more effective than an argument that Swanson should pay no property tax at all to support public schools if he has no school-age children. Tax laws, including L.B. 839, represent the Legislature's definition of the measure of every citizen's duty in support of the public burdens. See State ex rel. Spelts v. Rowe, 108 Neb. 232, 188 N.W. 107 (1922). Peterson v. Hancock, 155 Neb. 801, 54 N.W.2d 85 (1952), outlawed any tax levied for a purpose in which those from whom the taxes are exacted have no interest. Swanson cannot make that claim of L.B. 839. A tax levy does not equal a commutation merely because the taxing district is broadened to reflect the actual benefits to the public. So long as all taxpayers receive the benefit of the taxes they remit, the taxing district passes constitutional muster without offending the prohibition against commutation. State ex rel. City of Omaha v. Board of County Commissioners, 109 Neb. 35, 189 N.W. 639 (1922).