Opinion ID: 2524427
Heading Depth: 1
Heading Rank: 2

Heading: When the Full and True Value of Property in a Municipality Exceeds the Limit Imposed by the AS 29.45.080(c) 225% Valuation Cap, the Municipality May Reduce the Value of All Taxable Property on a Pro Rata Basis.

Text: 1. Statutory construction Although AS 29.45.080(c) limits the value of property that a municipality may tax, it provides no guidance for how to reduce the total property value when that amount exceeds the value imposed by the statute's 225% cap. In arguing that the statute requires a reduction in only 43.56 property, Bullock relies essentially on a plain language analysis. Although the plain terms of the statute may make Bullock's position plausible, we have rejected the plain meaning rule in favor of a rule wherein [s]tatutory construction begins with an analysis of the language of the statute construed in light of its purpose. [14] We have explicitly rejected that formulation of the plain meaning rule which mandates that we must disregard all legislative history if the statute's wording is clear and unambiguous on its face. To do so would overly restrict our inquiry, since reference to legislative history may provide an insight which is helpful to making a judgment concerning what a statute means, and since words are necessarily inexact and ambiguity is a relative concept. [15] This court will generally construe statutes in pari materia where two statutes were enacted at the same time, or deal with the same subject matter. [16] Moreover, [i]t is an established principle of statutory construction that all sections of an act are to be construed together so that all have meaning and no section conflicts with another. [17] Because subsection .080(c) relates to, and is incorporated in, the oil and gas taxation act, AS 43.56, [18] we look to AS 43.56 for guidance in determining the method for apportioning the tax base under subsection .080(c). In particular, AS 43.56.010(c) sheds light on this issue. That provision states: If the total value of assessed property of a municipality taxing under AS 29.45.080(c) exceeds the [225% valuation cap], the department shall designate the portion of the tax base against which the local tax may be applied. (Emphasis added.) In referring to the total value of assessed property, this section does not distinguish between 43.56 property and other, locally assessed property. [T]otal value of assessed property clearly refers to the total taxable property within the municipality. The section then refers to the portion of the tax base that the municipality may tax. The tax base must include all of the taxable property within the municipality, and not merely the 43.56 property. It is not logical for 43.56 property alone to comprise the entire tax base, because the statutory scheme contemplates the taxation of local, non-43.56 property. [19] Based on this language, it is reasonable to read AS 43.56.010(c) to mean that when a municipality's total property value exceeds the 225% valuation cap, the entire tax base is subject to reduction, and not merely the 43.56 property. This construction of AS 43.56.010(c) suggests that AS 29.45.080(c)'s paired phrasesfull and true value of that portion of taxable property taxable under AS 43.56 as assessed by the Department of Revenue and the value of property otherwise taxable by the municipalityrefer to the values of the two components of the portion of the tax base (with tax base meaning total tax base) in AS 43.56.010(c). Alaska Statute 43.56.010(c) requires the Department to designate these two components as locally taxable when the total value of assessed municipal property exceeds the valuation tax cap. The first tax base component, then, referred to in the first statutory phrase of AS 29.45.080(c), is 43.56 property value; the second component, referred to in the second phrase, is locally assessed property value. And, as designated by the Department under AS 43.56.010(c), each of these tax base components will reflect the pro rata reduction necessary to achieve compliance with the 225% valuation tax cap. Bullock's proposal to reduce only the 43.56 property is inconsistent with such a reading. Although we do not believe that this is the only interpretation that the statutory language will support, at the very least the language of these two provisionsAS 29.45.080(c) and AS 43.56.010(c)creates ambiguity. And when the meaning of a statute is ambiguous or in doubt, the Department's interpretation is entitled to great weight. In this case the Department's pro-rata interpretation of these statutes has been long-standing, consistent, and widely known; thus we afford it great weight. 2. The Department has long interpreted subsection .080(c) to allow for a pro-rata reduction in oil and gas property and other locally assessed property. Since 1978 the Department of Revenue has interpreted subsection .080(c) to allow for the pro-rata reduction of both 43.56 property and locally assessed property. In determining that there is a long-standing agency interpretation of subsection .080(c), we conclude first that the Department has interpreted subsection .080(c), and second that this interpretation is long-standing. We first determine that the Department of Revenue has, in fact, interpreted subsection.080(c) to permit municipalities to reduce total property using a pro-rata method. In 1978 the Department of Revenue sent a letter to the mayor of NSB, specifically applying the pro-rata method of the 225% formula cap to NSB's factual situation. The Deputy Commissioner of the Department of Revenue, John R. Messenger, concluded the letter by stating that the Department planned to formalize this ruling in a form of a regulation in the near future. Although the Department never did codify the pro-rata interpretation as a formal regulation, it clearly ruled that it would require a pro-rata reduction. [20] Further evidence of the Department's long-standing interpretation comes from a Report to the Senate Community and Regional Affairs Committee that was submitted in January 1990 by the Senate Select Advisory Committee on Municipal Taxation of Oil and Gas Properties (the Select Committee). In that report, the Select Committee requested a regulatory change to clarify the appropriate procedure when the actual tax base of a municipality exceeds the 225% cap. The report stated that [t]he regulations should incorporate existing and past state practice and provide that the reduction of the actual tax base total shall be made through a pro-rata reduction of both oil and gas property and other property within the municipality. (Emphasis added.) The next question is whether the Department's interpretation has been long-standing. We have never specified a standard for what constitutes long-standing. But here, the Messenger letter was written twenty-three years ago, and we conclude that twenty-three years easily qualifies as long-standing. In addition, the Attorney General wrote a letter embracing the pro-rata interpretation. When an executive interprets legislation, that interpretation is entitled to be given weight by the court in construing the intent of the statute. [21] And the Attorney General's opinions, while not controlling, are entitled to some deference in matters of statutory construction. [22] In this case, Attorney General Norman C. Gorsuch sanctioned the Department's pro-rata interpretation of the 225% cap when he wrote to the mayor of NSB in 1985 that we have reviewed the [pro-rata] methodology and find that it comports with the method approved by the Department of Revenue for the North Slope Borough in 1978. As such, we find that it is a reasonable and defensible interpretation of the statute . The Gorsuch letter independently approves of the pro-rata method used by NSB and Valdez. Perhaps more importantly, however, it is more evidence that the Department has, in fact, long interpreted subsection .080(c) to permit municipalities to calculate the municipal tax base using the pro-rata method. In his argument against the Department's pro-rata interpretation, Bullock points to a 1988 letter from State Assessor Mike Worley. This letter, which Worley submitted to the director of his division in the Department of Community and Regional Affairs (DCRA), concluded that subsection .080(c) required municipalities to levy against 100% of the locally assessed value. But Worley's letter simply recommended that his concerns be pointed out to the Select Committee, which the senate had recently convened to review proper methods for municipal taxation of oil and gas properties. The Select Committee eventually recommended clarifying the law through legislation or regulations to conform with the existing pro-rata practice of NSB and Valdez. Furthermore, in a memorandum explaining his position to the commissioner of DCRA, Worley expressly recognized that the current method of taxation had been approved by the Department of Revenue since 1978, and he specifically acknowledged that the DCRA had no authority to alter the Department of Revenue's interpretation of the correct method of taxation: It is not within the statutory authority of my office to take any action with regard to decisions made by other state agencies. Moreover, we observe that in addition to being a long-standing practice of the Department, the pro-rata reduction method does not appear to conflict with the legislature's intentions. Indeed, the legislature has demonstrated continued deference to the Department's interpretation. First, in drafting the statutes themselves, the legislature gave the Department a generous amount of leeway in implementing these statutory schemes. [23] Also, in 1982 the legislature passed an amendment to the current subsection .080(c), then subsection .045(b), in an attempt to clarify the language. The proposed change provided: A municipality may levy and collect a tax on the full and true value of that portion of property taxable under this chapter and under AS 43.56 as assessed by the Department of Revenue which value, when combined with the value of property otherwise taxable by the municipality, does not exceed the product of 225 percent of the average per capita assessed full and true value of property in the state multiplied by the number of residents of the taxing municipality. [24] This amendment, although ultimately vetoed by the governor for unrelated reasons, specified that both other property and AS 43.56 property were to be apportioned. It therefore indicates that the legislature intended to defer to the Department's pro-rata interpretation. Moreover, the legislature appeared to endorse the pro-rata interpretation in its letter of intent to the current subsection .080(c): It is not the intent of the House Community and Regional Affairs Committee in adopting AS 29.53.045 as the renumbered section 29.45.080 in CSHB 72 (C & RA) to alter the substance or effect of that provision. [25] Since the effect of the 225% cap had been to permit NSB and Valdez to calculate their tax base using the pro-rata method, this letter of intent further evidences the legislature's intent to defer to the Department's application of subsection .080(c), which was to reduce both types of property proportionately pursuant to the Department's interpretation. [26] A final piece of evidence that suggests that the legislature intended to defer to the Department's interpretation is a letter written by Senator Mike Szymanski, Chairman of the Senate Community & Regional Affairs Committee. He stated that the present interpretation of [the 225% cap] is both appropriate and reasonable. In addition, the present system for taxing oil and gas properties is an integral part of the existing mechanism for municipal funding in the state. The Messenger letter, the Gorsuch letter, the Worley correspondence, and the Report to the Senate Community and Regional Affairs Committee all demonstrate that the pro-rata reduction method is a continuous and long-standing Department interpretation. In addition, the legislature has deferred to that interpretation at least since 1982, when it first formally addressed the issue. Thus, the Department has consistently interpreted subsection .080(c) since 1978, and that interpretation does not conflict with legislative intentions. We therefore conclude that the Department's pro-rata interpretation, which permits a reduction in both 43.56 property and other property, is entitled to deference. 3. The pro-rata method does not violate the requirement to assess non-oil-and-gas property at full and true value or exceed the exemptions authorized by statute. Bullock argues that the pro-rata method fails to assess non 43.56 property at full and true value as required by AS 29.45.110(a), and exceeds the exemptions authorized by AS 43.56.010(b). But as the State points out, assessments and exemptions are different matters than inclusion in the tax base. For, in apportioning the property that is included in the tax base under subsection .080(c), all property is assessed at full and true value and reduced in equal proportion. This method of calculating the municipal tax base does not under-assess or exempt any property.