Court Opinion

ID: 9766046
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:30:27.900443+00
Date Added: 2024-06-11T07:30:18.659916
License: Public Domain

Johnson, J.,
¶ 41. concurring. There is wisdom in the rule that a court should be “quite certain of its ground before making a categorical finding that there is no permissible objective served by a state statute or that there is utterly no sensible or discernible relation between the legislature’s classification and a legitimate end.” In re Paris Air Crash, 622 F.2d 1315, 1319 (9th Cir. 1980). The difficulty here, in my view, is that while the hydroelectric “freeze” legislation in question may serve a permissible' governmental purpose, it is not the one stated by the Legislature. The relation between the law and the express legislative purpose is weak, at best, and the disconnect between ends and means would thus normally provide a basis to invalidate the legislation as arbitrary and capricious. Nevertheless, because the statute appears to serve a reasonable and legitimate, if unstated, governmental goal, I concur in the judgment.
¶ 42. This and other courts have consistently upheld the power of the state to divide different kinds of property into classes and assign them different tax burdens so long as the divisions and classifications are neither arbitrary nor capricious. See, e.g., Nordlinger v. Hahn, 505 U.S. 1, 11 (1992) (“[I]n structuring internal taxation schemes the States have large leeway in making classifications and drawing lines which in their judgmént produce reasonable systems of taxation.”) (internal quotations omitted); In re Property of One Church St., 152 Vt. 260, 262, 565 A.2d 1349, 1350 (1989) (Vermont Constitution “does not prohibit taxes that distinguish among classes of taxpayers,” thus upholding nonresidential property tax at 120% of fair market value). To withstand constitutional review under our Proportional Contribution Clause, Vt. Const., Ch. I, Art. 9, we have established only two basic requirements: “first, that any legislative classification of taxpayers bear a reasonable relation to the *123purpose for which it is established; and second, that the classification scheme be fairly and equitably applied among like classes of taxpayers.” One Church St., 152 Vt. at 266, 565 A.2d at 1352.
¶ 43. The first task, therefore, is to discern the purpose of the legislation. In making this determination, we are naturally inclined to credit the Legislature’s own declaration of intent, if one is available. See, e.g., Anderson v. State, 168 Vt. 641, 642, 723 A.2d 1147, 1148 (1998) (mem.) (referring to statement of legislative purpose underlying Act 60); Estate of Frant v. Haystack Group, Inc., 162 Vt. 11, 14, 641 A.2d 765, 767 (1994) (relying on Legislature’s “avowed purpose for the statute” in construing intent underlying acceptance-of-risk statute, 12V.S.A. § 1037). A legislative declaration of purpose does not, however, command automatic acceptance. See Jarvis v. Cory, 620 P.2d 598, 602 (Cal. 1980) (“where a declaration is in irremediable conflict with a statute’s substantive provisions, courts will not blindly bow to the Legislature’s stated interpretation”). Indeed, that is the case here; all deference to the Legislature notwithstanding, it is difficult to reconcile the freeze statute’s substantive provisions with its stated goals.
¶ 44. As the Court notes, the 1999 act that extended the freeze on grand list values of hydroelectric generating facilities stated that its goals were to provide additional time for towns to accurately determine fair market value in the recently deregulated market; to allow for greater assistance from the Department of Taxes; to permit expert independent appraisals; and to facilitate negotiations regarding the determination of fair market value. 1999, No. 49, § 23(a), eff. June 2,1999. In apparent reliance on this statement of purpose, the trial court here found that the primary purpose of the act was to provide a measure of budgetary predictability in a potentially volatile deregulated market, to allow towns to engage in budgetary planning without having to wait for completion of the difficult utility-reappraisal process. Tellingly, however, the act also exempted hydroelectric facilities in situations where a tax stabilization agreement predated the legislation; the facility entered into an agreement with the municipality not to reduce the grand list value; or the municipality completed a reappraisal of all taxable real estate after April 1,1997.
¶ 45. Although the goal expressed by the Legislature is to ensure budgetary predictability in an uncertain utility market, the act’s exemptions suggest that its purpose is actually to prevent any reductions in the assessed value of hydroelectric facilities for the period of the freeze, to allow market values to catch-up with grand list values in the event of any short-term market depression. Surely if the primary goal was budgetary *124predictability the act would have exempted any stipulated hydroelectric grand list value instead of only those agreements not to reduce value. Similarly, the challenge of appraising a hydroelectric facility that sells below grand-list value during the freeze period would not seem any greater than appraising a hydroelectric facility as part of an overall townwide reassessment, yet only the latter is exempted from the freeze, again suggesting an underlying intent to prevent any reduction in grand list value.
¶ 46. While the law on its face thus exhibits a rather tenuous connection with its stated objective, a reviewing court’s inquiry is necessarily directed “toward the nexus between a classification and such purposes as it may serve____Thus, if any reasonable policy or purpose for the legislative classification may be conceived of, the enactment will be upheld.” Andrews v. Lathrop, 132 Vt. 256, 259, 315 A.2d 860, 862 (1974) (quoted with approval in One Church St., 152 Vt. at 266, 565 A.2d at 1352). A legislative effort to temporarily peg hydroelectric grand list values at previously assessed levels to avoid short-term reductions is little different, in effect, from assigning a hydroelectric facility a higher tax rate or, as in One Church Street, an artificially inflated fair market value to raise municipal revenue and benefit the municipal inhabitants as a whole. One Church St., 152 Vt. at 264, 565 A.2d at 1351. As noted, courts have long upheld the validity of laws singling out certain industries for differential tax treatment so long as the classifications have a reasonable basis. See, e.g., Fitzgerald v. Racing Ass’n of Central Iowa, 539 U.S. 103, 109, 123 S. Ct. 2156, 2160 (2003) (upholding Iowa law that imposed maximum tax rate of 36% on racetrack slot machines but only 20% on riverboat slot machines as rationally related to legitimate purpose of “aiding the financial position of the riverboats”); Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 526-27 (1959) (“The State may impose different specific taxes upon different trades and professions and may vary the rate of excise upon various products.”); Blue Cross & Blue Shield v. State, 779 P.2d 634, 642-43 (Utah 1989) (upholding against equal protection challenge state law that exempted insurance companies organized as mutual benefit corporations from taxes on subscription and premium income imposed on all other insurance companies).
¶ 47. My point is that when the Legislature makes such a policy choice, it has the responsibility to confront that choice directly rather than mask it in reasons that do not withstand scrutiny. As the goal of maintaining municipal tax revenue by freezing the grand list values of hydroelectric generating facilities is consistent with the Legislature’s taxing authority, and the classification appears to be reasonable and uniformly applied, I
*125discern no constitutional infirmity in the law. Therefore, I concur in the judgment, but I do so on the real legislative policies underlying the statute.