Court Opinion

ID: 9606546
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:50:45.19136+00
Date Added: 2024-06-11T14:58:50.242594
License: Public Domain

HOWE, Associate Chief Justice
(dissenting):
I dissent. I cannot agree with the majority’s interpretation of section 11-12-3 that requires District No. 1 to turn over to West Valley City tax revenues which the District has lawfully levied and collected. That interpretation is without precedent and ignores the administrative interpretation that the Utah State Tax Commission has given the statute for over twenty-five years.
It is clear to me that the intent of section 11-12-3 is that when property is annexed to an existing taxing entity, the new entity can tax it at its rate if the notice of annexation required by section 11-12-1 has been given by December 31 of the prior year. Conversely, if notice has not been given by December 31, the property remains taxable by the former entity at its rate. The statute was drawn in recognition of the fact that (1) taxes are assessed, levied, and collected on a calendar-year basis and (2) for purposes of taxation, boundaries of taxing entities are fixed as of January 1. The majority, however, finds a void in the statute in that it does not “speak to the question of which entity is entitled to the tax revenue.” The majority then concludes that although notification was not given by December 31 and the property remains taxable by the former entity (District No. 1) at its rate, the proceeds belong to the new entity (West Valley City). I cannot agree.
It seems elementary that when the legislature authorizes an entity to impose a tax, the proceeds from taxation should belong to that entity unless the legislature has made an exception. No statutory exception has been cited by West Valley or the majority, nor have I been able to find any. Nevertheless, the majority requires the former entity (District No. 1) to disgorge the proceeds of a tax it lawfully imposed and give them to the new entity (West Valley) because the property had been annexed to West Valley before the levy date of June 22. As its sole authority for that holding, the majority relies on Huntington City v. Peterson, 30 Utah 2d 408, 518 P.2d 1246 (1974), and concludes that “the date of assessment and levy, not the statutory lien date of January 1st, is the relevant date for determining whether property is within the reach of a taxing entity’s power for the purpose of assessing, levying, and collecting taxes on the property.”
Huntington City obviously dealt with a far different question than the one before us here. There, Huntington City purchased a tract of land on April 7, 1959. Under article XIII, section 2 of the Utah Constitution, land owned by a city is exempt from taxation. The question arose whether taxes could be lawfully levied on the land since it was privately owned on January 1, 1959, when the tax lien attached. This court held that because the city had acquired the property prior to the levy of taxes made in August of 1959, the property should not have been taxed and that the city was entitled to its exemption for 1959.
Clearly, that case has no application in the instant case. We are not concerned here with a tax exemption. The property here is admittedly taxable. The only questions are, who can tax the property, and who is entitled to the tax proceeds? Huntington City sheds no light on these questions.
West Valley contended in the trial court, and now contends in this court, that it had *1006the constitutional and statutory right to tax the annexed land for 1988. Yet it made no attempt to tax it in 1988. To the contrary, the county auditor notified West Valley on or about June 1, 1988, of the total assessed valuation of property within West Valley City, pursuant to section 59-2-924, and that the value of the property here annexed on March 30 was not included in that total. Yet West Valley then did not protest or claim that it should be allowed to tax the property. It did not bring legal action then. It was content to allow District No. 1 to levy and collect the tax, and it was not until October 28, 1988 (just one month before the taxes became delinquent), that West Valley made its first formal demand on District No. 1 for the taxes about to be collected. If West Valley thought that it was entitled to tax the property, it should have brought legal action early on to prevent the District from taxing it. But it did not do so.
The majority impliedly rejects West Valley’s contention that it had the constitutional and statutory right to tax the property. Indeed, under our statutory timetable for assessing, levying, and collecting taxes, §§ 59-2-301 to -330, there was no way West' Valley could tax property in 1988 which it did not annex until March 30 of that year. Nevertheless, the majority holds that West Valley is entitled to the tax revenues because the property was in West Valley on the date the levy was made, not by West Valley, but by the District. I do not follow that reasoning, and I cannot agree with that result.
I know of no precedent whereby this court can by judicial fiat take taxes levied and collected by one taxing entity and give them to another entity. The Utah Constitution authorizes revenue sharing in article XIII, section 5, only when provided by statute. That section provides in part:
Notwithstanding anything to the contrary contained in this Constitution, political subdivisions may share their tax and other revenues with other political subdivisions as provided by statute.
(Emphasis added.)
The majority has cited no statute, and I have not been able to find one, which authorizes the sharing of tax revenue here ordered by the majority. In fact, the statutes authorizing the creation of municipal-type service districts prohibit it.
As the taxes or service charges or fees are levied and collected, they shall be placed in a special revenue fund of the county and shall be disbursed only for the rendering of the services or functions established in Section 17-34-2 within the unincorporated areas of the county.
Utah Code Ann. § 17-34-3(1) (emphasis added).
In a perfect world, each taxing entity would tax the property for that part of the year in which the property was included in the entity. Our statutory taxation framework, however, does not allow for any such division. Instead, our legislature has established a framework in which taxes are assessed, levied, and collected according to the situs of the property on January 1 of each year. This statutory scheme may create some inequities as the majority points out. However, the inequity is not solved by the majority’s decision, which leaves the former entity without any revenue to cover that part of the year in which it rendered services to the annexed area. The legislature, in section 11-12-3, has spoken on this matter and has provided that when boundary changes are made after December 31, the property shall remain taxable for that year in the former entity and shall bear the former entity’s tax rate. It was unnecessary for the legislature to affirmatively state that the taxing entity would be entitled to the revenue since tax revenues belong to the entity imposing them unless the legislature has otherwise provided. Moreover, if section 11-12-3 creates a hardship on an annexing city, the city can always delay the annexation until close to the end of the year and avoid the hardship.
The majority has failed to mention or to give any weight to the historical administrative interpretation given section 11-12-3 by the Utah State Tax Commission, which administers property tax assessment, levying, and collection in this state. Ever since *1007section 11-12-3 was enacted in 1963, the tax commission has consistently interpreted that section to allow the former entity to tax and retain the revenues collected where the boundary had been changed after December 31. As this court observed in Salt Lake City v. Salt Lake County, 568 P.2d 738, 741-42 (Utah 1977) (footnote omitted):
[I]n case of any uncertainty or ambiguity in a statute, a reasonable administrative interpretation and practice should be given some weight. And this is particularly true when such an administrative interpretation and practice has persisted for a long time without any legislative correction or change.
During the past twenty-five years, it is very likely that hundreds of boundary changes have been made in the many taxing entities in this state. Yet no one has questioned the commission’s interpretation until this case arose in 1988.
I would affirm the trial court.