Opinion ID: 1298035
Heading Depth: 1
Heading Rank: 3

Heading: initial assignments of error

Text: Having determined that L.B. 1 cannot constitutionally be applied to the 1989 tax year and that L.B. 7 is invalid as special legislation and in violation of the uniformity clause, we now address the assignments of error raised in the appellants' initial briefs.
First, there is the question concerning the Board's authority to act on the appellants' requests for equalization. The Board found that the state of Nebraska is preempted from taxing personal property of car companies and railroad companies pursuant to federal adjudication of the 4-R Act. The Board then concluded that the personal property of car companies and railroad companies is not subject to tax and, therefore, cannot be the basis for [the appellants'] claim of equalization. The Board's conclusion as to preemption is clearly erroneous. As we read Trailer Train Co. v. Leuenberger, 885 F.2d 415 (8th Cir.1988), and the 4-R Act, the State of Nebraska is prohibited by federal law from discriminatorily taxing railroad companies. In other words, federal law prohibits Nebraska from [t]he imposition of any ... tax which results in discriminatory treatment of a common carrier by railroad.... § 306(1)(d) of the 4-R Act. For that reason, in Trailer Train Co., the State of Nebraska was enjoined from collection of the discriminating tax, 885 F.2d at 418, but is not prohibited from levying a lawful tax on a common carrier by railroad. In many respects, the effect of the 4-R Act is very similar to and substantially no different from the effect to be achieved through the uniformity and proportionality clause in Neb. Const. art. VIII, § 1. Therefore, whereas the Board concluded that it could not consider the appellants' requests for equalization in view of the 4-R Act and interpretational decisions by federal courts, we conclude that § 306(1)(d) of the 4-R Act, as interpreted by the federal courts, prohibits a discriminatory tax against a railroad but does not prevent a state's nondiscriminatory taxation of a railroad. A nondiscriminatory tax is what is required by the 4-R Act, not the abolition of legitimate state taxation of railroads.
Second, the Board construed the appellants' requests as a claim for exemption from taxation. We do not deny that the actual extent of the actual taxation of the appellants' property may be greatly affected by the impact of the 4-R Act and federal court decisions such as Trailer Train Co. However, to describe the appellants' requests for equalization as requests for exemption from taxation is unrealistic and arbitrary. The fact remains that the appellants requested equalization of their property, which must be considered in the light of applicable law, state and federal, statutory, and declared by judicial interpretation of controlling statutes. The basic principles pertaining to equalization of assessments are found in Kearney Convention Center v. Board of Equal., 216 Neb. 292, 302, 344 N.W.2d 620, 625 (1984): [I]t is permissible to reasonably classify property for tax purposes and to use different methods to determine assessed values for different classifications of property. To comport with our Constitution's requirement that [t]axes shall be levied by valuation uniformly and proportionately upon all tangible property, however, the results obtained by such permissible different methods must be in some way correlated so that the results reached shall be uniform and proportionate and shall not exceed actual value. Furthermore, if the Board arbitrarily undervalues a particular class of property so as to make another class of property disproportionately higher, or achieves the same result because of legislative action, this court must correct that constitutional inequity by lowering the complaining taxpayer's valuation to such an extent so as to equalize it with other property in the state. Northern Natural Gas Co. v. State Bd. of Equal., 232 Neb. 806, 815, 443 N.W.2d 249, 256 (1989). We therefore remand these causes to the Board for further proceedings consistent with this opinion and other applicable law, which includes Northern Natural Gas Co. v. State Bd. of Equal., supra , and Trailblazer Pipeline Co. v. State Bd. of Equal., 232 Neb. 823, 442 N.W.2d 386 (1989). REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.