Court Opinion

ID: 4716835
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:45:45.717242+00
Date Added: 2024-06-11T08:07:28.534695
License: Public Domain

Wiggins, J.
(concurring in result)
¶29 I agree with the majority that the city of Snoqualmie (City) has standing to *304pursue these claims. Majority at 295-96. I also agree that the Muckleshoot Indian Tribe’s payment in lieu of tax (PILT) is not subject to article VII of the Washington Constitution. Id. at 303. However, I do not agree that the PILT is not a tax. Rather, I would hold that, while not a property tax, the PILT is an excise tax, a determination that ultimately does not change the outcome of the majority’s opinion. Therefore, I concur in the majority’s result but decline to join in the majority’s reasoning.
¶30 I take issue with the majority’s analysis of the third Covell3 factor—“whether there is a direct relationship between the fee charged and the service received by those who pay the fee or between the fee charged and the burden produced by the fee payer.” Arborwood Idaho, LLC v. City of Kennewick, 151 Wn.2d 359, 372, 89 P.3d 217 (2004). For this factor, the majority concludes that “the PILT is paid because of the municipal services the land receives” and because the PILT is “preemptive and is intended to cover costs that are likely to arise . . . , we find that the PILT is related to the services received on the land.” Majority at 302. However, the majority fails to distinguish the PILT’s relationship to government services from the relationship that a general property tax has to government services, beyond the amount charged by the State for the PILT—the very issue presented in this case: whether the PILT is a tax subject to article VII’s uniformity requirements.
¶31 Both the PILT and the property tax compensate the government for governmental services. See, e.g., RCW 82-.29A.010(1)(a) (recognizing that certain properties “receive substantial benefits from governmental services provided by units of government” and requiring a leasehold excise tax as a result); Wash. State Dep’t of Revenue, Homeowner’s Guide to Property Tax 1 (2016) (“[The property tax] continues to be the most important revenue source for public schools, fire protection, libraries, and parks and recreation.”), *305https://dor.wa.gov/docs/pubs/prop_tax/homeown.pdf [https:// perma.cc/2Q3N-E2NU]. However, RCW 82.29A.055(2) allows a tribe to negotiate a lower amount than a general property tax or leasehold excise tax to pay for these services—the PILT. Because we require property taxes to be uniform, we cannot reason backward and say that because a different amount is being charged by the PILT, even though it is for the same services, this somehow transforms the charge into a fee and not a tax.
¶32 It is true that we do not require that “the charge be individualized as to the actual benefit received or burden imposed by the payer” to characterize the charge as a fee versus a tax. Dean v. Lehman, 143 Wn.2d 12, 28, 18 P.3d 523 (2001). However, there still must be a direct relationship between the fee charged, and the services received and the burden produced by the fee payer. Id. In the present case, even if a tribe fails to pay the PILT, the tribal property will still receive governmental services. This is likewise the case for individuals who fail to pay their property taxes; such individuals still receive the benefit of government services. Therefore, there is precisely the same relationship between the PILT and the governmental services received as there is between property taxes paid and the services those taxes go to provide.
¶33 This scenario is different from a true fee scheme. For example, in a hypothetical water district, a price is calculated, similar to the PILT, according to the estimated burden an individual may create by drawing water from the district. See, e.g., RCW 57.08.005(11). Yet, we do not label the water district charge a “fee” merely because the charge is based on a practical estimate of what burden on the district an individual may cause. Instead, we call the water district charge a fee because there is a direct relationship between the charges an individual pays and the service received from the water district: water. If an individual stops paying water district fees, the water district no longer provides the service; the district shuts off access to the *306water. In such a case, there is a direct relationship between the charge and the service provided. As a result, such a charge is appropriately characterized as a fee rather than a tax.
¶34 In the present case, there is no direct relationship between the “actual benefit received or burden imposed” for the PILT to be classified as not a tax. Since the tribal property receives governmental services regardless of the PILT, as is the case with property tax, and since the only discernable difference between the PILT and the property tax is the name and amount charged, I would classify it as a tax rather than a fee.
¶35 Furthermore, I do not find persuasive the majority’s reasoning that “the PILT is simply not a tax because of the legislature’s own language and construction of the PILT.” Majority at 302. Courts have never been persuaded on a constitutional question regarding the propriety of taxation merely by the legislature’s labeling. See, e.g., Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 564, 132 S. Ct. 2566, 183 L. Ed. 2d 450 (2012) (noting that a governmental charge’s constitutionality “was not controlled by Congress’s choice of label”); United States v. Sotelo, 436 U.S. 268, 275, 98 S. Ct. 1795, 56 L. Ed. 2d 275 (1978) (“That the funds due are referred to as a ‘penalty’ . . . does not alter their essential character as taxes.” (quoting 26 U.S.C. § 6672(a))); Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 363, 61 S. Ct. 586, 85 L. Ed. 888 (1941) (“In passing on the constitutionality of a tax law ‘we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it.’ ” (quoting Lawrence v. State Tax Comm’n, 286 U.S. 276, 280, 52 S. Ct. 556, 76 L. Ed. 1102 (1932))); Covell, 127 Wn.2d at 886 (“[T]he characterization of charges by the governmental entity imposing them is not dispositive. Rather, the characterization of the fees turns on a determination of the primary purpose of the fees as derived from the language of the authorizing and implementing legislation.”).
*307¶36 With this in mind, I would conclude the PILT is an excise tax rather than a property tax. We have established a two-pronged test for determining whether a charge is a property tax or an excise tax:
[A]n assessment is a valid excise tax if (1) the obligation to pay an excise tax is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the excise tax, and (2) the element of absolute and unavoidable demand is lacking.
Arborwood, 151 Wn.2d at 367. We stated the difference between a property tax and excise tax alternatively as follows:
If a tax is imposed on the value of the property, it may be a property tax. If levied upon the privilege of doing business, it is an excise tax. A tax for the beneficial use of property as distinguished from a tax on property itself has long been established law.
High Tide Seafoods v. State, 106 Wn.2d 695, 699-700, 725 P.2d 411 (1986) (citations omitted). In the present case, RCW 82.29A.055(l)(a) imposes a PILT when “[t]he tax exempt property is used exclusively for economic development.” The same property would not be subject to the PILT if not used for commercial purposes. As such, the PILT lacks the element of “absolute and unavoidable demand” of property taxes .Arborwood, 151 Wn.2d at 367. Consequently, the PILT is an excise rather than a property tax. Therefore, the PILT, while certainly a tax, is not subject to the uniformity requirements of article VII, section 1 of the Washington Constitution. See High Tide Seafoods, 106 Wn.2d at 700.
¶37 I concur in the majority’s result only.
Gordon McCloud, J., concurs with Wiggins, J.
Reconsideration denied March 8, 2017.

 Covell v. City of Seattle, 127 Wn.2d 874, 905 P.2d 324 (1995).