Court Opinion

ID: 9570365
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:22:40.567302+00
Date Added: 2024-06-11T12:07:10.343024
License: Public Domain

FELDMAN, Justice,
concurring.
I concur in the result reached, but only because that result is mandated by our decision in Apache County v. Atchison, Topeka & Santa Fe Railway Co., 106 Ariz. 356, 476 P.2d 657 (1970). I believe the principles announced in Apache County *551are incorrect. If we were writing on a clean slate, I would hold the statutes presently before us unconstitutional.
The legislature has classified investor-owned urban utilities and cooperative rural utilities, together with telephone and telegraph companies, water utilities, and pipeline companies, as “Class two” properties for “taxation.” A.R.S. § 42-136(A)(2)(b) (now § 42-162). The same statute (A.R.S. § 42-136(A)(2)(b)) then provides that property of gas, water, electric, and pipeline companies shall be valued either under A.R.S. § 42-124.01 or § 42-201. The result is that all these utilities are to be assessed at “full cash value.” A.R.S. § 42-124.01. In the case of water utilities and pipeline companies, full cash value means “that estimate of value that is derived annually by the use of standard appraisal methods and techniques or as provided by law.” A.R.S. § 42-201(4). In contrast, A.R.S. § 42-124.01(D) provides that electric and gas companies shall be valued by a process that is, in essence, a determination of book value. (Original plant in service cost, less depreciation.) Consequently, in valuing one type of utility property, the Department of Revenue applies whatever standard appraisal technique will be most likely to establish market value, while gas and electric utility companies are valued under a book value formula. The summary judgment record establishes that in the case of urban utilities this produces an assessed value much less than market value, and in the case of cooperatives may produce an assessed value much higher than market value.
The principle of uniformity required by art. 9, § 1 of our Constitution requires that the legislature determine the value of all properties of the same class — those with similar attributes — by a consistent, uniform method. In my view, the use of what is essentially a book value formula for valuation of electric utilities, when all other utilities must be valued under A.R.S. §§ 42-124.01(A) and 42-201(4) by applying whatever standard appraisal technique will be most likely to establish market value, violates the uniformity requirement of Ariz. Const, art. 9, § 1.
Apache County, supra, holds, however, that the constitutional requirement of uniformity only prevents the legislature from establishing a different tax rate for identical types of property, but does not prevent the legislature from establishing different valuations by placing property with similar attributes in different classes. 106 Ariz. at 359, 476 P.2d at 660. This, the majority holds, is all that has been done here. 151 Ariz. at 548-549, 729 P.2d at 902-903. Thus, under Apache County, the legislature can fulfill the constitutional requirement of uniformity not only by taxing horses at one rate and camels at another, but by enacting a statute providing that some horses shall be called camels and taxed as such. We give too much deference to legislative prerogative when we allow the legislature to destroy constitutional protection.
It is, however, late in the game to overrule the precedents on which our tax schemes have been based for the last twenty years. I therefore concur in the result.