Opinion ID: 1770470
Heading Depth: 1
Heading Rank: 3

Heading: Cross-AppealConstitutionality of Act 380 of 1991

Text: The sole issue on cross-appeal is the meaning of Act 380 of 1991. Issues of statutory interpretation are reviewed de novo, as it is for this court to decide what a statute means. Mississippi River Transmission Corp. v. Weiss, 347 Ark. 543, 65 S.W.3d 867 (2002). The appellee taxpayers alleged that Act 380 of 1991 is an unconstitutional violation of the intergovernmental tax-immunity doctrine. Act 380 provided for a one-time four percent increase in retirement benefits to some members of the Arkansas Public Employees Retirement System (APERS), the Arkansas State Police Retirement System, and the Arkansas State Highway Employees Retirement System, and their beneficiaries. The appellees assert that Act 380 was not actually an increase in retirement benefits but was, instead, a disguised tax rebate for state retirees. Since Act 380 does not provide for any such increase in benefits for federal retirees, the appellees argue that Act 380 violates the intergovernmental tax-immunity doctrine, which prohibits states from taxing income earned by federal employees differently than income earned by state employees. 4 U.S.C. § 111(a). The cross-appellee, Arkansas Attorney General, intervened to defend Act 380. The Attorney General filed a motion for summary judgment, arguing that Act 380 is clear and unambiguous, and it is a benefit increase that does not violate the intergovernmental tax-immunity doctrine. The cross-appellant taxpayers also filed a motion for summary judgment, claiming that the language of Act 380 was ambiguous and the trial court should go behind the plain language of the statute to find the design and intent of the legislature was to provide for a tax rebate for state government retirees. The trial court found that Act 380 is clear and unambiguous and granted the Attorney General's motion for summary judgment, and the trial court did not address the cross-appellants' motion for summary judgment or the merits of their claim. The cross-appellants appeal that ruling, contending that even if the language of Act 380 is clear and unambiguous, the trial court should have looked beyond the plain meaning of the act to determine its design and effect. We disagree. It is well established that the first rule in considering the meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary and usually-accepted meaning in the common language. Cave City Nursing Home, Inc. v. Arkansas Dept. of Human Serv., 351 Ark. 13, 89 S.W.3d 884 (2002). When a statute is clear, we will not search for legislative intent; rather, that intent must be gathered from the plain meaning of the language used. Id. The cross-appellants rely heavily upon Vogl v. Dept. of Revenue, 327 Or. 193, 960 P.2d 373 (1998), which was decided in the wake of state legislative action that followed the United States Supreme Court's decision in Davis v. Michigan, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). In Davis v. Michigan, supra , the U.S. Supreme Court held a Michigan statute unconstitutional because it exempted the benefits of state retirees from taxation, but did not exempt the retirement benefits of federal retirees. In response to Davis , Oregon passed a statute which increased by up to four percent the Oregon Public Employees Retirement System benefits, and repealed the full tax exemption of state government retirees' benefits. In Vogl v. Dept. of Revenue, supra , the Oregon Supreme Court held the Oregon statute was an unconstitutional violation of the intergovernmental tax-immunity doctrine because it was merely a tax rebate designed to offset the effects of the Davis decision. The Oregon statute differed from Act 380 in that it expressly stated that the four percent increase in retirement benefits was in response to the Davis decision subjecting Oregon retirees' benefits to income taxation. See Vogl v. Dept. of Revenue, supra . The plain and unambiguous language of the Oregon statute provided tax relief to state retirees that was not available to federal retirees. Moreover, the Oregon statute was part of that state's tax system. Act 380, on the other hand, contains no such language: SECTION 1. (a) On July 1, 1991, the monthly retirement benefit payable to retirants and beneficiaries of the Arkansas Public Employees Retirement System, who retired June 1, 1991, or before, shall be increased by four percent (4%) of the benefit payable on June 1, 1991. (b) The increase in benefits provided above shall be added to the monthly benefit after the annual post-retirement increase based on the consumer price index has been applied, and the increase in subsection (a) of this section shall be added to the base annuity of the retirant or beneficiary. 1991 Ark. Acts 380. Sections 2 and 3 of Act 380 read identical to Section 1, except that Section 2 applies to State Police retirees and Section 3 applies to State Highway retirees. Unlike the Oregon statute, Act 380 was never part of the Arkansas tax code. Furthermore, the Emergency Clause of Act 380 stated that state retiree benefits were inadequate and the increase was to overcome undue hardship to retirees and their beneficiaries. There is no mention in Act 380 of an attempt to offset the repeal of a tax exemption. In fact, while the Arkansas tax code is codified at Title 26 of the Arkansas Code, Act 380 of 1991 is codified at Title 24, in Ark.Code Ann. § 24-4-612 (APERS retirees), § 24-5-126 (State Highway retirees), and § 24-6-224 (State Police retirees). Thus, these increases were not part of the tax code. Furthermore, a cursory glance at Sections 4, 5, and 6 of Title 24 shows that Act 380 of 1991 was only one of several benefit increases that have taken place over the years. In asking us to look to the substance of the benefit even if the language of Act 380 is plain and unambiguous, the cross-appellants invite us to look into the motives of the drafters of the Act. This we will not do. When a statute is not ambiguous, we will not interpret it to mean anything other than what it says. Cave City Nursing Home, Inc. v. Ark. Dept. of Human Serv., supra . We decline the cross-appellants' invitation to look beyond the plain language of Act 380 and affirm the trial court's ruling that Act 380 of 1991 is plain and unambiguous and does not violate the intergovernmental tax-immunity doctrine. In sum, we affirm the trial court's ruling that Act 380 of 1991 does not violate the intergovernmental tax-immunity doctrine; we affirm the trial court's refusal to apply 26 U.S.C. § 72 to after-tax contributions in employment-related retirement plans; and we reverse the trial court's ruling that the voluntary-payment rule did not apply to taxes paid on after-tax contributions and remand with instructions to fashion a remedy consistent with this opinion. Affirmed in part, reversed and remanded in part.