Eastler v. State Tax Assessor

• Decision Date: 16 October 1985
• Citation: 499 A.2d 921
• Parties: Thomas E. EASTLER, et al. v. STATE TAX ASSESSOR, et al.
• Court: Maine Supreme Court

Page 921

499 A.2d 921

Thomas E. EASTLER, et al. v. STATE TAX ASSESSOR, et al.

Supreme Judicial Court of Maine.

Argued Sept. 20, 1985.

Decided Oct. 16, 1985.

Verrill & Dana, Charles L. Cragin (orally), Paul F. Driscoll, Portland, for plaintiffs.

Crombie J.D. Garrett, Asst. Atty. Gen., (orally), Augusta, for defendants.

Before McKUSICK, C.J., and NICHOLS, VIOLETTE, WATHEN, GLASSMAN and SCOLNIK, JJ.

GLASSMAN, Justice.

The eight named plaintiffs-landowners filed suit on December 28, 1983, in the Superior Court, Kennebec County, challenging the validity of the tax imposed by the Forest Fire Suppression Act (Act), 36 M.R.S.A. §§ 2711-2714 (Supp.1984-1985). The plaintiffs alleged, inter alia, that the tax contravenes article IX, § 8 of the Maine Constitution. The Superior Court ordered certification of a class consisting of all persons or legal entities subject to the tax. On June 28, 1985, after a hearing on cross-motions for summary judgment, the Superior Court entered a judgment for the plaintiffs, finding the Act unconstitutional under article IX, § 8 because it imposed a property tax not apportioned and assessed according to the value of the land. The defendants appeal from the judgment. ¹ Because we agree with the finding of the Superior Court, we hold the Act unconstitutional and affirm the judgment.

I

For nearly eight decades the Maine Legislature has been concerned with the funding of forest fire protection services in the unorganized territories and adjacent municipalities. In 1909 the Legislature created the Maine Forestry District to provide for protection from forest fires in the unorganized territories and imposed within the District an ad valorem tax on the assessed value of real estate. P.L. 1909, ch. 193, § 2. The Maine Forestry District tax continued to be an ad valorem property tax ² until 1979 when the Legislature replaced the ad valorem tax with a flat rate of 21.3 cents per acre. P.L. 1979, ch. 646, § 1 (codified at 12 M.R.S.A. § 1601 (1981))(repealed 1983).

Continuing legislative concern with the cost of forest fire control led to the creation of the Maine Forest Fire Control Study Commission. Reporting to the Legislature in January, 1983, the Commission majority recommended that the Maine Forestry District and tax be abolished, and that in their stead the State fund one-half of the cost of forest fire control out of the general fund, while municipalities and unorganized territories would pay the other one-half through locally assessed property taxes. Maine Forest Fire Control Study Commission, Report to the 111th Legislature at 10-11, 13-14, 22-25 (Jan. 14, 1983). The Commission minority, on the other hand, proposed that owners of protected forest land pay an annual per acre tax, the rate to be determined by dividing the total forest fire control cost by the total number of protected acres. Study Commission, Report at 16-18, 26-31. The Legislative Committee on Taxation combined and modified the recommendations into L.D. 1781 (111th Legis.1983). The substantial provisions of L.D.1781 were enacted by the Legislature as P.L. 1983, ch. 556 (codified as amended at 12 M.R.S.A. §§ 8902-9205-A, 9621 (Supp.1984-1985) and 36 M.R.S.A. §§ 2711-2714 (Supp.1984-1985)).

The legislation abolished the Maine Forestry District and tax. P.L. 1983, ch. 556, §§ 4-5. The present scheme for funding the cost of forest fire suppression is as follows: Municipalities and unorganized territories are responsible for one-half of the cost up to 1/2 of 1 percent of the state valuation of the municipality or territory. The state funds (or reimburses, as the case may be) the remaining cost. 12 M.R.S.A. §§ 9204, 9205, 9205-A (Supp.1984-1985). The state funding process begins with the Governor presenting to the Legislature the total projected cost of forest fire protection minus the funding expected from the municipalities and unorganized territories or other sources. 36 M.R.S.A. § 2711(2)(A). The Legislature makes a final determination of the projected cost minus other expected funding. Id. The State Tax Assessor adds to the resulting figure the amount appropriated by the Legislature for administration of the tax and then divides the total in half. § 2711(2)(B)(Special Pamph.1984-1985). The resulting amount is then divided by the acres subject to the tax to determine the tax per acre. Id. The per acre tax is multiplied by the number of protected nonexempt acres owned by each person to determine the amount of the tax assessed against each owner. Id. In short, the statutory provisions create three sources of funding. Municipalities and unorganized territories pay an initial amount up to a limit based on a percentage of valuation. The remainder of the cost is borne one-half by the State out of the general fund and one-half by a per acre tax on protected land. At the time the legislation was proposed, the Legislative Committee on Taxation expected that each source would bear approximately 1/3 of the total cost of forest fire control. L.D.1781, Statement of Fact (111th Legis.1983).

An owner of protected land pays a per acre rate that is standard throughout the state and is not based on the value of the land. See 36 M.R.S.A. § 2711(2)(B). "Protected land" is defined as:

forest land and other undeveloped land such as blueberry barrens, swamps, bogs, undeveloped pastureland or brushland. It does not include federal, municipal or state-owned land.

36 M.R.S.A. § 2711(1)(Supp.1984-1985). Each owner of protected land is entitled to an exemption of 500 acres of land in each municipality or unorganized territory. § 2711(1-A) (Special Pamph.1984-1985). ³ Thus, the owner pays the per acre tax only on the unexempted acres of protected land within any given municipality or territory. The statute expressly characterizes the tax as an excise tax. §§ 2711(1), (2)(B); 2714(1). The tax is enforceable through a lien that attaches to the land when the tax becomes due. § 2714(2).

II

In the case at bar there is no contention that the Act involves the levying of a tax that does not serve a legitimate public purpose, ⁴ or that those enjoying a special benefit may not in appropriate circumstances be required to bear a heavier burden under an ad valorem tax. ⁵ The single issue is whether, as the plaintiffs allege, the Act violates article IX, § 8 of the Maine Constitution because it imposes a tax on ownership of property that is not apportioned according to the value of the land, or, as argued by the defendants, the tax is imposed on the commercial use of property and is, therefore, an excise tax not subject to the constitutional requirements for a valid property tax.

Article IX, § 8 provides in pertinent part:

All taxes upon real and personal estate, assessed by authority of this State, shall be apportioned and assessed equally according to the just value thereof.

This constitutional provision establishes two requirements for a valid property tax: a valuation requirement and an apportionment requirement. Under the valuation requirement the tax-levying authority must determine the market value of the property. See Shawmut Inn v. Town of Kennebunkport, 428 A.2d 384, 389 (Me.1981) (" 'Just value' is the equivalent of 'market value.' "). Under the apportionment requirement the taxing authority must then apportion the tax equally according to the market value. The purpose of the two constitutional requirements is to equalize public burdens so that a taxpayer contributes to the entire tax burden in proportion to his share of the total value of all property subject to the tax. See Opinion of the Justices, 155 Me. 30, 47, 152 A.2d 81, 89 (1959).

However, the Maine Constitution contains no limitation on the legislative imposition of taxes on business, State v. Stinson Canning Co., 161 Me. 320, 325, 211 A.2d 553, 556 (1965), if the tax is for a public purpose and is assessed uniformly upon all business of a like kind. State v. Western Union Telegraph Company, 73 Me. 518, 526-27, 531 (1882). Such a tax on business is commonly called an excise tax. See State v. Hamlin, 86 Me. 495, 503-504, 30 A. 76, 79 (1894).

The question thus becomes one of distinguishing an excise tax from a property tax. A property tax is levied on the ownership of property, Dawson v. Kentucky Distilleries & Warehouse Co., 255 U.S. 288, 294, 41 S.Ct. 272, 275, 65 L.Ed. 638, 646 (1921); Flynn v. City of San Francisco, 18 Cal.2d 210, 215, 115 P.2d 3, 6 (1941), while an excise tax may only be levied on a use of the property. ⁶ Bromley v. McCaughn, 280 U.S. 124, 136, 50 S.Ct. 46, 47, 74 L.Ed. 226, 229 (1929); Western Union, 73 Me. at 526; Weaver v. Prince George's County, 281 Md. 349, 358-59, 379 A.2d 399, 404 (1977); John Wanamaker, Philadelphia v. School District, 441 Pa. 567, 572-75, 274 A.2d 524, 526-27 (1971). ⁷

The question of distinguishing the two types of taxes becomes difficult, however, when the amount of the purported excise tax is measured by the property in the hands of the taxpayer. In Western Union, we employed a two-part test in finding that a 2- 1/2 percent tax on the value of telegraph company equipment was an excise tax. 73 Me. at 518-19. First, we looked to the method of establishing the tax rate, regarding the method as "significant," but "not conclusive." Id. at 527. We noted that under a property tax the rate is usually fixed by dividing the total sum to be raised by the total valuation of the property. This ratio becomes the tax rate. The telegraph company taxation act, however, fixed the rate by law. Id. The rate was then applied to the value of the telegraph company's equipment, but that value was simply taken as an arbitrary measure of the value of the franchise or business. Id. at 531. Second, we looked to what was being taxed, the subject matter of the taxation. The act taxed only such property "as is used in the telegraph business" and "only while it is in use for this business." Id. We concluded, therefore, that the tax was not on the property...