Opinion ID: 1120932
Heading Depth: 1
Heading Rank: 3

Heading: STATE v. LOCAL PURPOSE

Text: We have long recognized that the purpose of the first sentence of article XIII, section 5 was to ensure the right of the people of Utah to local self-government. It was to preserve local self-government free from needless legislative interference that the power to levy taxes for local purposes was by the state constitution vested exclusively in the proper authority of counties, cities, towns, and other municipal corporations. Best Foods, 285 P. at 1003. Section 5 has been said to complement other sections of our constitution which provide for the establishment of a system of uniform county governments, article XI, section 4; which recognize the existence of the several counties as legal subdivisions of the state, article XI, section 1; which prohibit the legislature from changing county lines without a vote of the electors of the counties involved, article XI, section 3; and which prohibit the state from assuming the debt of any county, article XIV, section 6. State ex rel. Wright v. Standford, 24 Utah 148, 66 P. 1061 (1901). We observed in Wright: An examination into its early history will show the existence of a system of territorial subdivisions of the state into counties when the present constitution was adopted. At this early date the system of local self-government existed under the general laws of the territory, and there is no provision in the constitution which can be construed as impairing that right... . The constitution was doubtless framed and adopted with the purpose to protect the local self-governments which had existed of a practically uniform character from the early settlement of the country, since which they have remained undisturbed, the continued existence of which is therein assumed, and from which the liberty of the people spring and depend. 66 P. at 1062. On another occasion, this court remarked that section 5 indicates an intention to have local business transacted and local affairs managed and controlled by local authorities. State ex rel. Salt Lake City v. Eldredge, 27 Utah 477, 76 P. 337, 340 (1904). In the first decade of our statehood, this court on two occasions found that acts of the legislature contravened section 5. In State ex rel. Wright v. Standford , we struck down a statute which required the boards of county commissioners of certain counties to appoint a county fruit tree inspector from a list of three names furnished by a member of the Utah State Board of Horticulture. 24 Utah 148, 66 P. 1061. The inspector performed his services under the direction of a member of the state board and had the right to appoint deputy inspectors under certain circumstances as they were needed. The inspector and his deputies were employed for such time as the board directed. The legislature fixed their compensation and directed that it be paid monthly out of county funds. We viewed the statute as placing in the inspector and the board the administration of the affairs of the county, with power to create a debt for the county to pay and, indirectly, the power to tax the county for the payment of that debt. This took away from such county the right to choose or appoint its own officers and compelled it to levy and collect taxes with which to pay such officers their salaries as fixed by the act. We found the act offensive in that the county commissioners had no supervisory control over the inspectors or the deputies and were not even able to determine the time or character of their employment; they were in no sense county officers. In the second case, State ex rel. Salt Lake City v. Eldredge , we found that section 5 would be contravened if a statute could be construed to allow the state board of equalization to adjust and equalize the valuation of property for the purposes of taxation within a county. 27 Utah 477, 76 P. 337. We held that the language of section 5 vesting in local authorities the power to assess and collect taxes for all purposes of such corporation included the valuation of property as well as the levying of the rate of taxation. [3] Later, in Smith v. Carbon County, 90 Utah 560, 63 P.2d 259 (1936), we held that a fee charged by county court clerks for filing the inventory and appraisement in probate proceedings was in reality a tax since it was based on the appraised value of the estate. As such, it offended section 5 in that it constituted a tax imposed by the legislature for the purpose of a county. In all other cases coming before this court where article XIII, section 5 challenges were made to legislation, we have found no violation. In Salt Lake County v. Salt Lake City, 42 Utah 548, 134 P. 560 (1913), we examined a statute that required the county commission in all counties containing cities of the first and second class to establish a detention home for delinquent children. The county was authorized to recover from the cities a reasonable sum for the support and maintenance of the delinquent children from such cities. This court held that the statute did not violate section 5 because there was no interference with municipal self-government. We viewed the statute as imposing upon cities as arms of the state some of the state's governmental functions. We wrote: The state, as we have already pointed out, in enacting the law in question, simply calls upon its agencies, the counties, and the cities to assist in discharging a public duty which in no way affects local self-government. Id., 134 P. at 564. Again, in Bailey v. Van Dyke, 66 Utah 184, 240 P. 454 (1925), we found no violation of section 5 by a statute which authorized county commissioners to enter into contracts for agricultural extension work and to provide funds therefor. We observed, There is no imposition of taxes, direct or indirect, by legislative authority upon the county, and no interference with local self-government by the county. Id., 240 P. at 457. No contravention of section 5 was found in Best Foods v. Christensen, 75 Utah 392, 285 P. 1001 (1930), where this court considered a constitutional challenge to a statute which imposed a stamp tax on oleomargarine. The statute placed the duty upon counties, cities, and towns to ascertain if an applicant for a permit to sell oleomargarine was eligible to purchase such a permit. Once the applicant was found eligible, the permittee was entitled to purchase stamps from the state treasurer to be placed on the oleomargarine, which the permittee would sell. If the permit was issued, the municipality or county issuing the same was required to keep advised at all times as to whether the permittee was complying with the act. If a violation was found, the county or municipality had authority to revoke the permit. An annual license fee of $5 made payable to a county, city, or town for a permit was attacked as a violation of section 5 in that the legislature had imposed a tax to raise revenue for counties, cities, and towns. In finding no violation, this court stated: The primary, if not the sole, purpose of issuing the permit and of certifying the revocation of a permit to the state treasurer, is to keep the state treasurer advised as to the persons to whom he may sell stamps. In performing the duties cast upon counties, cities, and towns under the act, they are acting as agencies of the state, and not in the capacity of carrying on local self-government... . We are thus of the opinion that the provision of chapter 91, Laws Utah 1929, whereby an annual fee of $5 shall be paid into the general fund of a county, city, or town for a permit to sell oleomargarine, may well be regarded as compensation for services rendered to the state by the municipality issuing the permit and assisting the state in the enforcement of the act. Under such view, the provision attacked by the respondents is not unconstitutional. Id., 285 P. at 1004-05. Finally, in two cases involving the Utah Neighborhood Development Act, again no section 5 violations were found. In Tribe v. Salt Lake City, 540 P.2d 499 (Utah 1975), this court declared the problem of urban blight to be one of statewide concern and not merely a local or municipal function. Therefore, under our decision in Salt Lake County v. Salt Lake City , we held that the legislature could require the revenue of a municipality to be applied to eradicate urban blight. Four years later, in Salt Lake County v. Murray City Redevelopment, 598 P.2d 1339 (Utah 1979), Salt Lake County contended that it would be forced to increase its mill levy to compensate for tax revenues which were diverted to pay redevelopment bonds issued by Murray City Redevelopment and that this constituted a legislative imposition of taxes on Salt Lake County for the purposes of Murray City, contrary to the intent and language of section 5. We held that because improvements benefit the general population of the state, those improvements should be paid for through taxation of the general population and not solely by Murray City. See also Denver & R.G.R.R. v. Grand County, 51 Utah 294, 170 P. 74 (1917), and Baker v. Matheson, 607 P.2d 233 (Utah 1979), where challenges to legislation based on section 5 were unsuccessful. Turning now to the instant case, plaintiff contends that the assessment and collection of property taxes is a local burden and the essence of local self-government. It points to the fact that in each county there is an elected assessor, auditor, and treasurer who are responsible to the citizens of the county to perform the assessment and collection. Plaintiff particularly decries the transfer of excess revenue raised in certain counties to other counties with a budget shortfall where the revenues may be used to pay the salaries and expenses of taxing officials and their staffs. Defendants respond that section 17-19-15 promotes accurate, equal, and uniform property tax assessment, collection, and distribution, which it asserts to be a state purpose. It would be an oversimplification and wholly inaccurate to adopt the view that because elected county assessors, auditors, treasurers, and their staffs actually perform most of the tasks of assessing, collecting, and distributing ad valorem taxes in this state, their function is solely a county function which article XIII, section 5 protects. To so hold would ignore other sections of article XIII dealing with revenue and taxation which give the state a vital role and interest in those functions. Article XIII, section 2(1) provides: All tangible property in the state, not exempt under the laws of the United States, or under this Constitution, shall be taxed at a uniform and equal rate in proportion to its value, to be ascertained as provided by law. (Emphasis added.) Article XIII, section 3(1) provides: The Legislature shall provide by law a uniform and equal rate of assessment on all tangible property in this state, according to its value in money, except as otherwise provided in Section 2 of this Article. The Legislature shall prescribe by law such provisions as shall secure a just valuation for taxation of such property, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its tangible property... . (Emphasis added.) To ensure equalization of taxation as mandated by sections 2 and 3 aforesaid, article XIII, section 11 created a state tax commission whose duty it is to administer and supervise the tax laws of the state: It shall ... equalize the valuation and assessment of property among the several counties. ... Under such regulations in such cases and within such limitations as the Legislature may prescribe, it shall review proposed bond issues, revise the tax levies of local governmental units, and equalize the assessment and valuation of property within the counties. ... In each county of this State, there shall be a County Board of Equalization consisting of the Board of County Commissioners of said county. The County Boards of Equalization shall adjust and equalize the valuation and assessment of the real and personal property within their respective counties, subject to such regulation and control by the State Tax Commission as may be prescribed by law. (Emphasis added.) In implementing these constitutional provisions, the legislature in Utah Code Ann. § 59-1-210 has given the tax commission broad power over county taxing authorities, their methods, and their procedures. Briefly, some of those powers are to adopt rules and policies to govern county boards and officers in the performance of any duty relating to assessment, equalization, and collection of taxes. § 59-1-210(3). The commission may prescribe the use of forms relating to the assessment of property and equalization of those assessments, § 59-1-210(4). It may exercise general supervision over assessors and county boards of equalization, and over other county officers in the performance of their duties relating to the assessment of property and the collection of taxes... . § 59-1-210(7). The tax commission is charged with visiting each county periodically to investigate and direct the work and methods of local assessors and other officials in the assessment, equalization, and taxation of property, and to ascertain whether the law requiring the assessment of all property not exempt from taxation, and the collection of taxes, have been properly administered and enforced. § 59-1-210(19). Finally, the commission may enforce its supervisory control over the local property tax process by seeking the removal from office of assessors, auditors, members of county boards, and other assessing, taxing, or disbursing authorities who are guilty of official misconduct or neglect of duty. § 59-1-210(12). These statutory provisions are by no means exhaustive. They do illustrate, however, that the tax commission, under article XIII, has to a large degree assumed control of the local administration of the property tax system. That being so, the legislature by enacting section 17-19-15 has not imposed a tax for the purpose of any county. Rather, a state purpose is served because the tax finances the assessment, collection, and distribution of ad valorem property taxes in each county, ensuring that local county taxing authorities have sufficient funds to adequately perform their duties, thereby minimizing disparities in the valuation and assessment of properties in violation of article XIII. Our decision in Salt Lake County v. Salt Lake City , discussed previously, gives support to the constitutionality of the statute before us in the instant case. 42 Utah 548, 134 P. 560. In that case, a statute required Salt Lake County to establish a detention home for delinquent children and required Salt Lake City to reimburse the county for the reasonable expense in caring for delinquent children who were residents of the city. We found no violation of article XIII, section 5 since the legislature in enacting the statute had imposed upon the city as an arm of the state some of the state's governmental functions. We pointed out that such purpose is not one which pertains to the corporate powers or interests of Salt Lake City. This being so, no corporate rights of the city as such are either invaded or disregarded. Id., 134 P. at 564. Similarly, in the instant case, the legislature has required each county to impose a tax which in some instances will produce revenue in excess of that required by that county. The excess revenue is transmitted to the state to be distributed to those counties where the levy does not produce sufficient revenue to finance an adequate assessment program. In so doing, the legislature has not interfered with the right of the county under local self-government to assess and levy taxes for its own purposes. The excess revenue is for the benefit of the state equalization program. To assist the tax commission in carrying out its constitutional duties of equalization, the legislature has chosen to give outside financial support to the taxing authorities in those counties where adequate revenue cannot be produced. That the legislature and the tax commission have chosen to work through county taxing officials to carry out the constitutional mandate of equality and equalization does not detract from the fact that a state purpose is being served thereby. This procedure utilizes the officers of local county government and their staffs to effect statewide equalization rather than replacing them with a cadre of state employees to ensure that result. Cases from other states having constitutional provisions similar or identical to article XIII, section 5 hold that sometimes taxation statutes serve both a local and a state purpose. In 1935, the Colorado Supreme Court decided In re Hunter's Estate, 97 Colo. 279, 49 P.2d 1009 (1935). There, the executors of an estate challenged a statute which imposed an additional 10 percent inheritance tax to be used for the payment of old age pensions and the assistance of aged, indigent persons. The court concluded that the challenged statute carried out a state purpose in that a statewide tax was levied for the benefit of state citizens wherever located, according to proportionate needs. The court suggested a test to be used for determining whether a purpose is state or local: Is it for strictly county uses, for which the county or its inhabitants alone would benefit, or is it for a purpose in which the entire state is concerned or will benefit? Id., 49 P.2d at 1011. Fifty years later, in Colorado Department of Social Services v. Board of County Commissioners, 697 P.2d 1 (Colo. 1985), the court was confronted with a legislative act requiring both the state and the counties to contribute revenues to finance public assistance. After observing the shift in the administration and financing of public assistance from the counties to the state during and following the Great Depression of the 1930s, prompted partly by federal programs such as the Social Security Act of 1935, the court stated that currently there was a strong legislative policy of state control over most aspects of the delivery of public assistance programs in that state. It concluded that the legislation before it served both state and local purposes. Said the court: When, as here, the effects of state-wide programs directly benefit residents of special localities, we must conclude that such programs serve the purposes of the local governmental units which receive those services as well as cognizable interests of the state. Id. at 13 (emphasis added). It has also been recognized in three Oklahoma cases that taxes imposed by a statute served both a state and a local purpose. In Thurston, County Treasurer v. Caldwell, 40 Okl. 206, 137 P. 683 (1913) the court observed that the state could nevertheless have a sovereign interest in many matters of chiefly local interest. This observation was repeated approvingly in General Motors Acceptance Corp. v. Hulbert, 190 Okl. 568, 125 P.2d 975 (1942), and in Board of Commissioners of Marshall County v. Shaw, 199 Okl. 66, 182 P.2d 507 (1947).