Opinion ID: 1179917
Heading Depth: 3
Heading Rank: 2

Heading: Salt River Project

Text: In the case before us, the court of appeals declined to follow Arizona Tax Research, believing that it had failed to fully consider a number of settled principles of constitutional and statutory interpretation in its analysis of art. 9, § 19 and A.R.S. § 42-301. Salt River Project, 171 Ariz. at 482-483, 831 P.2d at 858-859. The court determined that both the plain language and the underlying policy of art. 9, § 19 and A.R.S. § 42-301 required a decision in favor of SRP. Id. at 484, 831 P.2d at 860. In reaching this conclusion, the court's majority stated that the dispositive question is whether, in adopting article IX, section 19, the people of Arizona intended to permit property taxes to rise regardless of the levy limitation when statutory valuations of property increased due to changes in use or usefulness from one year to the next [rather than through addition of new property to the tax roll]. In our opinion, they clearly did not. Id. at 484, 831 P.2d at 860. In the view of Salt River Project 's majority, the difference in the value of the utility property from one tax year to the next was based on different statutory methods for evaluating CWIP and OPIS, and not on the addition or creation of any new taxable property; rather, [t]he only change that occurred in those years was that each utility plant was placed into service and its statutory valuation increased as a result. Id. The court therefore concluded that because the utility property in question was put on the tax rolls (albeit at 50% of its cost) in 1985, and was not added in 1986, the County incorrectly failed to use the plant's OPIS value as the current value of all property subject to taxation in the 1985 tax year in the denominator when calculating its 1986 maximum tax levy. The dissenting opinion reasoned that the court should have followed Arizona Tax Research under the principle of stare decisis. Id. at 484, 831 P.2d at 864 (Fidel, J. dissenting). Further, on the merits, the dissent disputed the majority's assertion that the plain language ... of the Arizona Constitution compelled its result, and argued that the language of art. 9, § 19 was not so plain in application to the question of this case. Id. at 488, 831 P.2d at 864. The dissent explained that [t]he Constitution speaks of property subject to taxation from one year to the next, but does not specify what occurs when property, between tax years, undergoes the kind of qualitative transformation that Arizona Tax Research describes. We should not pretend that those who voted article IX, section 19, into the Constitution intended a precise answer to that question. In this, like many questions of constitutional or statutory interpretation, the answer cannot be deduced; it must be chosen by practical application of a phrase to an uncontemplated event.... The court in Arizona Tax Research approached the issue in this spirit, and I find its resolution practical, sensible, and sound. Id. at 488, 831 P.2d at 864. We agree with the dissent, but we believe the arguments advanced by the majority require us to explain further why we agree with the analysis of Arizona Tax Research and reject that advanced in Salt River Project.