Opinion ID: 1818144
Heading Depth: 2
Heading Rank: 1

Heading: Statutory and Administrative Background

Text: ¶ 2. We begin by examining the relevant statutes, administrative rules, and the history of the valuation of agricultural land. [2] In 1974, the Wisconsin Constitution, Article VIII, Section 1, [3] was amended to provide an exception from the uniform rule of taxation for agricultural land. See 1971 J. Res. 39, 1973 J. Res. 29, (vote April 2, 1974). The amendment added the following language: Taxation of agricultural land and undeveloped land, both as defined by law, need not be uniform with the taxation of each other nor with the taxation of other real property. Wis. Const., art. VIII, § 1. The subsequent legislation and administrative rules putting this constitutional amendment into effect present the central issue before us today. ¶ 3. Prior to January 1, 1996, agricultural land was assessed the same as all real property, at its fair market value based on its highest and best use. Wis. Stat. § 70.32 (1993-1994) [4] . In 1995, the legislature enacted Wis. Stat. § 70.32(2r) [5] , to change the manner of value assessment of agricultural land for taxation purposes from market-value assessment to use-value assessment. 1995 Wis. Act 27 § 3362h. Under marketvalue assessment, land is valued at the full value which could ordinarily be obtained therefor at private sale. Wis. Stat. § 70.32(1) (1993-1994). Under use-value assessment, agricultural land is valued according to the income that could be generated from its rental for agricultural use. Wis. Stat. § 70.32(2r)(c). ¶ 4. Section 70.32(2r) provides for the transition to use-value assessment to occur in three stages, as indicated in Wis. Stat. § 70.32(2r)(a), (b), and (c). During the first stage, otherwise known as the freeze, 1996 and 1997 assessments were frozen at the 1995 assessed value. See § 70.32(2r)(a). The second stage, otherwise referred to as the phase-in or mixed-use assessment, was legislated to begin in 1998 or upon completion of the farmland advisory council's recommendation and promulgation of rules and ending no later than December 31, 2008. § 70.32(2r)(b). The specific method of calculating assessments during the phase-in or mixed-use assessment is stated in § 70.32(2r)(b)1. through 4. The final stage, as provided in § 70.32(2r)(c), began as of the January 1 after the valuation method under par. (b) no longer applies and for each assessment thereafter. During the final stage, and for all assessments thereafter, agricultural land is wholly assessed based on its use-value. ¶ 5. At the same time the legislature enacted Wis. Stat. § 70.32(2r), the legislature created the Farmland Advisory Council (hereinafter the Council) under Wis. Stat. § 73.03(49). [6] 1995 Wis. Act 27 § 3439m. The legislature charged the Council with the responsibility of informing and advising the DOR regarding the implementation of use-value assessment. Specifically, § 73.03(49)(a) provided that the purpose of the Council was to advise the DOR on rules to implement use-value assessment of agricultural land and to reduce expansion of urban sprawl. ¶ 6. On October 1, 1997, pursuant to its authority to promulgate rules, the DOR adopted Wis. Admin. Code § Tax 18.04 through 18.08 (1997), [7] to implement the use-value assessment system. Following the statutory scheme in Wis. Stat. § 70.32(2r), 1996 and 1997 assessments were frozen pursuant to § 70.32(2r)(a) and Wis. Admin. Code § Tax 18.08. Then, based on Wis. Admin. Code §§ Tax 18.07 and Tax 18.08, the phase-in, or mixed-use assessment, began and assessments of agricultural land in 1998 and 1999 reflected a ten and twenty percent shift, respectively, toward use-value assessments. ¶ 7. On October 18, 1999, the Council, in its role as advisor to the DOR regarding the implementation of use-value assessments, recommended that the DOR implement rules to assess agricultural land at full use-value as of January 1, 2000. [8] Based on the Council's recommendation, the DOR used its authority under Wis. Stat. § 227.24(1) [9] to promulgate an emergency rule to implement the Council's recommendation. The emergency rule amended Wis. Admin. Code § Tax 18.08 by creating § Tax 18.08(4), providing for the immediate implementation of use-value assessments, as of January 2000. Subsection (4) states in full: Notwithstanding subs. (1), (2) and (3), in 2000 and thereafter, the assessment of each parcel of agricultural land shall be its use value, as determined under s. TAX 18.07(3)(b). The emergency rule was published in the Wisconsin Administrative Register on December 14, 1999, [10] and took effect on the same date. The emergency rule expired 150 days after its effective date. ¶ 8. In the meantime, the DOR began the process of promulgating a permanent rule that would replace the emergency rule upon its expiration. The proposed permanent rule repeals all of Wis. Admin. Code § Tax 18.08 and replaces it with a new § Tax 18.08. The new rule states: Beginning with the assessments as of January 1, 2000, the assessment of each parcel of agricultural land shall be its use-value, as determined under s. Tax 18.07(3)(b). Pursuant to Wis. Stat. § 227.19(2) [11] , which provides for legislative review of proposed rules, the rule was sent to the presiding officers of the legislature on May 8, 2000. The rule was then referred to the Senate Committee on Economic Development, Housing and Government Operations on May 17, 2000, and to the Assembly Ways and Means Committee on May 22, 2000. Neither committee objected to the proposed rule. Wisconsin Admin. Code § Tax 18.08, was published in the Wisconsin Administrative Register on July 31, 2000, and it took effect on August 1, 2000.