Opinion ID: 1309027
Heading Depth: 1
Heading Rank: 9

Heading: power of the state board to set the assessment ratio

Text: Although our decision on the first issue is to hold the rule promulgated as an assessment ratio to be unconstitutional, the basic inquiry remains for further consideration as to whether under present constitutional provisions the board of equalization, with or without authorizing statutes, can be legislatively delegated taxation authority to set ratios after the first-requirement full-value assessment is completed. Again, our determination is in the negative. In considering this concern, it is necessary to define the functions performed in the taxation process. Clearly, by assessment statute and Constitution the county assessor in part and the state board, with ultimate equalization responsibility vested in the state board, are both chargeable from Art. 15, § 11 to provide a uniform assessment to secure a just valuation. Starting with this basis and that responsibility, the analysis follows whether the administrative board or the legislature should exercise any justified function of factoring the assessment by any ratio percentage in order to determine or establish the taxable assessment/debasement factor (if a factoring computation is to be used at all). Recognition of the processes even without further extensive discussion of the separation-of-powers constitutional limitation defines our conclusion. If it is asserted that the state board, having fairly obtained a full-value assessment of 100%, has the general power to set the ratio, then in that capacity assessed valuation at any figure creates a total tax amount determination capability. The administrative agency capacity, as then including establishing the amount of valuation at any amount and determining bonded indebtedness limitations for local units of government. For a specific example, if instead of the 8% and 11.5% ratios as provided by the contested administrative rule, the state board would eliminate any percentage and use 100%, the bonding capacity of local governments would commensurately be increased by a near ten-fold. Nor can we overlook a further matter in demonstrating the impropriety of pursuing the rule of fractional valuation. When assessors adopt such a rule, they indirectly assume a role which rightfully is not theirs to play. For, if such a rule is applied, the grand list will obviously be smaller in amount than it would be if the mandate of the statute were carried out. Under such circumstances, the borrowing power of the municipality is affected, since its indebtedness may not exceed specified percentages of the grand list.    Assessors who use fractional valuation to determine their assessments therefore interfere, perhaps unwittingly but nonetheless effectively, with a power which legally belongs to others. E. Ingraham Company v. Town and City of Bristol, supra, 132 A.2d at 566. Likewise, by virtue of the constitutional limitation on mill levies provided for individual units of government, taxation capability would be commensurately increased in the same multiple. What may be raised could also be lowered, and the factor could be reduced to 5%, which would eliminate half the taxation capacity of cities, counties, etc., by application of the constitutional limit for mill levies, as well as half otherwise existent bonding capacity. [22] It is our conclusion that Art. 2, Distribution of Powers; Art. 15, § 13, No tax shall be levied, except in pursuance of law, and every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied; Art. 15, § 14, The power of taxation shall never be surrendered or suspended by any grant or contract to which the state or any county or other municipal corporation shall be a party; Art. 1, § 28, No tax shall be imposed without the consent of the people or their authorized representatives. All taxation shall be equal and uniform; and Art. 3, § 33, All bills for raising revenue shall originate in the house of representatives, but the senate may propose amendments, as in case of other bills, each and severally deny constitutional or implied legislatively delegable authority to the state board of equalization to set any assessment ratios which would effectively determine the actual tax except to use full value. The legislature may not delegate its power to make laws or determine what proportion of a tax will be raised from different groups. Lake Havasu City v. Mohave County, 138 Ariz. 552, 675 P.2d 1371 (1983); Rego Properties Corp. v. Finance Administrator, N.Y., 102 Misc.2d 641, 424 N.Y.S.2d 621 (1980). Establishing assessment ratios to be applied to the constitutionally required full-value assessment constitutes the power of taxation which has not been and cannot be delegated to the state administrative agency. Sutherland, Statutory Construction § 68. The power to tax is a legislative power. The power to tax includes the power to say what shall be taxed, who shall pay it and what the tax shall be. See In re Opinion of the Justices, 242 Ala. 57, 4 So.2d 654 (1941); Duhame v. State Tax Commission, 65 Ariz. 268, 179 P.2d 252 (1947). See for comparison the equalization order issued by the Kansas board in State ex rel. Miller v. Dwyer, 208 Kan. 437, 493 P.2d 1095 (1972), as effectuating the fair-market-value process, where to be compared in this case at present there is no specific delegable statute. See Dulton Realty, Inc. v. State, 270 Minn. 1, 132 N.W.2d 394 (1964).    [T]his court is unequivocally committed to the doctrine that the Legislature of this state, in which the governmental power of taxation resides, does not possess the power to delegate to another body, having no governmental functions, the authority to determine, in its judgment or discretion, the amount to be raised by taxation, to which obviously must be added that such authority is in effect so delegated if such body may be empowered to levy taxes to the amount of an indebtedness to be incurred by it in its judgment or discretion. Van Cleve v. Passaic Valley Sewerage Commissioners, 71 N.J.L. 574, 60 A. 214, 217 (1905). A premier and well-traveled case, Weissinger v. Boswell, supra, 330 F. Supp. 615, a 28 U.S.C.A. § 2284, three-judge panel case, invalidated the Jefferson County, Alabama property tax. The critical question addressed was due-process and equal-protection application of the Fourteenth Amendment to aspects of the assessment of property, as considering variable rates sequentially applied to the initial assessment tax determination. Division by the state of property into classes was not in question. However, Alabama provided no constitutional provision permitting or justifying a tier or class of property: Even if the State of Alabama were permitted by its own Constitution and laws to classify property for tax purposes, it is clear that its present ad valorem tax program still would not comport with the stringent requirements of the Federal Constitution. Id. at 623. In addition to finding an arbitrary classification with vast disparity, the court addressed delegation: Even if we were to disregard the `plain meaning' of the statute and instead were to construe Section 17(1) in pari materia with Sections 131 and 133 of the Code of Alabama, so that the Department of Revenue would have the duty to fix and equalize the ratio of assessment throughout the state at between 0 and 30 percent of fair market value, Section 17(1) still would not pass constitutional muster. The power of taxation is a peculiarly legislative function. Delegating to an administrative agency the power to fix the ratio of assessment, without formulating a definite and intelligible standard to guide the agency in making its determination, constitutes an unconstitutional delegation of legislative power. Id. at 625. Cited as authority was another much-quoted case, Larabee Flour Mills Co. v. Nee, 12 F. Supp. 395 (W.D.Mo. 1935), which provided a well-reasoned discussion about the delegation of legislative powers: One of the great principles of the Constitution is this: That the powers of government should be divided among three branches and that none of the three should usurp the authority of the others nor surrender its authority to them. The philosopher who first formulated this principle demonstrated that only through observance of it can tyranny be avoided and the liberty of the individual preserved. Id. at 402. In reference to taxation, the judge further said:    The power to tax is a legislative power. The power to tax includes the power to say what shall be taxed, who shall pay it, what the tax shall be. Id. at 402. We would find these principles to apply similarly to state taxation. In re Opinion of the Justices, supra; James v. United States Fidelity & Guarantee Co., 133 Ky. 299, 117 S.W. 406 (1909). Weissinger v. Boswell, supra, was followed by a number of cases, including District of Columbia v. Green, supra, 310 A.2d 848, which created the new term for the assessment ratio of debasement factor; and Rego Properties Corp. v. Finance Administrator, supra 424 N.Y.S.2d at 623, which addressed the delegation issue thusly: The constitutionality    must first be tested against the principle that the power to tax is a legislative power which cannot be delegated to an administrative agency   . In the early Tennessee case of Marr v. Enloe, 9 Tenn. 452, 453-454 (1830), that court recognized that legislative power was vested in the Tennessee legislature as two houses `both dependent on the people' with taxing power belonging exclusively to it. In asking the question, Can this constitutional right, by an act of Assembly, be vested in a few individuals in each county   ? the court answered, Representation and taxation are, of necessity, in our government inseparable, as they must be in every free country. In high rhetoric, the court added: In truth, the preservation of this principle [that taxation without representation was tyranny] is the chief corner-stone on which our political fabric rests; take it away, and our government is not worth preserving. 9 Tenn. at 454-455. In more recent time, the same court in Gibson County Special School District v. Palmer, Tenn., 691 S.W.2d 544, 549 (1985), voided a taxing authority delegation to electoral referendum as    an improper delegation of the legislature's taxing power. `No principle of organic law is more firmly imbedded in the jurisprudence of Tennessee . .. than the principle that the legislature cannot delegate the taxing power beyond the extent expressly designated by this constitution.' Citing Keesee v. Civil District Board of Education, 46 Tenn. 127, 128 (1868). From a later case, the Tennessee court also quoted: The power of taxation is one that belongs to the State in its sovereign capacity. The exercise of power is legislative. The Legislature has no authority to delegate this power of taxation, except in such cases as the constitution authorizes. Waterhouse v. Board of President and Directors of the Cleveland Public Schools, 68 Tenn. 398, 400 (1876). See also Comment, Legislation  The Unconstitutional Delegation of Legislative Authority, 17 Mem.St.U.L.Rev. 143 (1986). [23] In 3 Cooley, The Law of Taxation, Ch. 16, § 1003 at 2020, it was stated: So a legislative function cannot be delegated. Thus the legislative function of levying taxes cannot be delegated to administrative officers. See also, Cooper, State Administrative Law, Ch. 3 at 31 (1965), General Discussion, Delegations of Powers: The Necessity of Controlling Administrative Discretion. The principles of separation of powers explicit in the United States Constitution and also in the Wyoming Constitution by Art. 2, were defined in two opinions by Justice Southerland, Springer v. Government of the Philippine Islands, 277 U.S. 189, 48 S.Ct. 480, 72 L.Ed. 845 (1928), and O'Donoghue v. United States, 289 U.S. 516, 53 S.Ct. 740, 77 L.Ed. 1356 (1933), as a statement of well-reasoned legal philosophy which is usable for logical persuasion in our Wyoming Constitutional conclusions. Appeal of News Publishing Co. Inc., 12 Kan. App.2d 328, 743 P.2d 559 (1987); Van Cleve v. Passaic Valley Sewerage Commissioners, supra; Killen v. Logan County Commissioners, supra. As was defined in Lake Havasu City v. Mohave County, supra, 675 P.2d at 1378: `One of the settled maxims in constitutional law is that the power conferred upon the Legislature to make laws cannot be delegated by that department to any other body or authority. Where the sovereign power of the state has located the authority, there it must remain; and by the constitutional agency alone the laws must be made until the Constitution itself is changed. The power to whose judgment, wisdom, and patriotism this high prerogative has been entrusted cannot relieve itself of the responsibility by choosing other agencies upon which the power shall be devolved, nor can it substitute the judgment, wisdom, and patriotism of any other body for those to which alone the people have seen fit to confide this sovereign trust.' Quoting from Tillotson v. Frohmiller, supra [34 Ariz. 394] 271 P. [867] at 871 [(1928)]. We determine that the legislature cannot and actually did not delegate its power of taxation to the State Board of Equalization as a discretionary grant to set assessment ratios which would be of the essence of legislative taxation power. Article 2, Wyoming Constitution. Cf. Witzenburger v. State ex rel. Wyoming Community Development Authority, Wyo., 575 P.2d 1100, reh. denied 577 P.2d 1386 (1978); Eastwood v. Wyoming Highway Department, 76 Wyo. 247, 301 P.2d 818 (1956); Kelsey v. Taft, supra, 263 P.2d 135. See also Gould v. Gould, 245 U.S. 151, 38 S.Ct. 53, 62 L.Ed. 211 (1917).