Baker v. Matheson

Decision Date28 December 1979
Docket NumberNo. 16703,16703
Citation607 P.2d 233
PartiesLinn C. BAKER, Treasurer of the State of Utah, Plaintiff and Respondent, v. Scott M. MATHESON, Governor of the State of Utah; Dale D. Williams, Director of the Department of Finance of the State of Utah; Richard G. Jensen, Auditor of the State of Utah; Robert B. Hansen, Attorney General of the State of Utah; State Tax Commission of the State of Utah, Defendants and Appellants, and Miles "Cap" Ferry, President of the Utah State Senate and Chairman of the Legislative Management Committee, and James V. Hansen, Speaker of the House of Representatives and Vice Chairman of the Legislative Management Committee, Defendants in Intervention.
CourtUtah Supreme Court

Michael L. Deamer, Deputy Atty. Gen., H. Wright Volker, Asst. Atty. Gen., for defendants and appellants.

George M. Mecham, Salt Lake City, Asst. Legislative Counsel, for defendants in intervention.

James L. Barker, Jr., Craig L. Barlow, Asst. Attys. Gen., Salt Lake City, for plaintiff and respondent.

STEWART, Justice:

The issue raised on this appeal is the constitutionality of § 59-26-1 (the "Act") 1 which provides for a refund to certain renters and homeowners residing in the State of Utah of funds from the State's general fund. The State Treasurer, Linn C. Baker ("plaintiff"), brought the action to test the constitutionality of the Act. The named defendants are the Governor of the State of Utah, Scott M. Matheson, and the Commissioners of the State Tax Commission ("defendants"). Miles "Cap" Ferry, President of the Utah State Senate, and James V. Hansen, Speaker of the Utah State House of Representatives, intervened on the side of the defendants.

Plaintiff filed a petition for declaratory and injunctive relief in the district court alleging sixteen constitutional infirmities in the Act. The parties stipulated that there were sufficient funds in the State's general fund from which the necessary payments could be made. Cross-motions for summary judgment were filed on the ground that the constitutionality of the Act could be decided solely as a matter of law. The district court, without an opinion or other explanation, granted plaintiff's motion and permanently enjoined the State, through its appropriate officials, from dispensing any monies pursuant to the Act. Since the plaintiff offered no evidence by affidavit or otherwise of its claims of unconstitutionality, the trial court ruled that the statute is unconstitutional on its face.

Plaintiff's numerous contentions rest on various state and federal constitutional provisions. Specifically, it is contended that the Act violates: (1) Article XIII, §§ 2 and 3 of the Utah Constitution which require uniform assessment and taxation by the State of all tangible property in the State; (2) Article III, Second, of the Utah Constitution which prohibits the State from taxing lands belonging to citizens of the United States residing outside the State at a higher rate than lands belonging to residents of the State; (3) Article XIII, § 5 which prohibits the Legislature from imposing taxes "for the purpose of any county, city, town or other municipal corporation"; (4) the due process clauses of Article I, § 7 of the Utah Constitution and the Fourteenth Amendment of the United States Constitution because a state may not, under those provisions, appropriate funds for private purposes; (5) the privileges and immunities clause of Article IV, § 2 of the United States Constitution because it discriminates against nonresidents of the State; (6) Article XIII, § 9 and Article XIV, §§ 1 and 3 of the Utah Constitution which prohibit the creation of certain State indebtedness and one legislature from binding future legislatures; and (7) the equal protection provisions of Article I, § 24 of the Utah Constitution and the Fourteenth Amendment of the United States Constitution because the statute lacks a legitimate governmental interest, is not rationally related to its objective, and rests upon capricious classifications. For the reasons stated below, we hold that plaintiff's contentions cannot be sustained.

Subsection 3, Paragraphs (a) and (b) of the Act in question are the operative provisions of the Act. They permit the "owner of a dwelling" and the "renter of a dwelling comprising a household" to file claims for refunds "of state general fund free revenue." The owner of a dwelling is entitled to a payment "equal to 27% of the property taxes levied on the dwelling commencing with the calendar year 1979 and each calendar year thereafter." The payments are subject to a $400 maximum and a $100 minimum. The renter of a dwelling is entitled to a refund of general fund revenue "equal to 2.7% of the rent paid on the household during the one year period prior to the month in which the renter files a claim . . . and each one year period thereafter, or $100, whichever is greater." No maximum is specified. However, no refund may be granted "in respect to households residing for more than three months of the calendar year in tax-exempt housing."

Subsection 5 of the Act provides that no renter or homeowner who is claimed "as a personal exemption on another individual's income tax return" or has received more than 50% of his support from a household claiming a refund is entitled to a benefit under the Act. Subsection 6 prohibits a refund to any person who receives public funds in the form of a rent subsidy or a specific allocation of public funds for the payment of taxes or rents for the one-year period for which the refund is made. Subsection 7 provides that the payments contemplated shall be calculated "after allowing for the amount of any relief to which (a) claimant is entitled under chapter 25 of title 59" (the so-called "circuit breaker" provision).

The 1979 Legislature contemplated a surplus in the State's general fund which it determined could be used to offset the pervasive effects of inflation and the increased cost of living, and in particular the costs of housing which have resulted in economic hardship to many households. We judicially notice the fact that housing costs have also been magnified by the recent State program of reevaluating real property in various counties. Because of general inflation, the high rate of population growth, and the reevaluation program, the rise in property taxes has been especially rapid.

Section 59-26-1(1)(a) of the Act states:

. . . the financial condition with respect to the Utah state government is such that the revenues being received by it into the general fund are greater than the expenditures contemplated being made from the general fund, the result being that there is an excess of free funds within the general fund.

The Legislature further found that "recent increases in the cost of living in the state has (sic) had its (sic) primary impact upon the individual households, subjecting many of them to extreme economic hardship," § 59-26-1. Based on these findings, the Legislature stated its purpose in enacting § 59-26-1:

(1)(b) The purpose of this act is to provide for a refund of the excess of the free revenues in the state general fund on an equitable basis to those described in subsection (1)(a) who have experienced the primary impact of the increases in the property taxes, and increased living costs, this refund to be effectuated through payments from these free revenues and computed on the basis provided for in this section. (Emphasis added.)

It is conceded by all parties that the funds in the State's general fund which are to be refunded are not derived from property taxes. These monies are derived from inheritance taxes, license taxes, occupation taxes, various classes of sales taxes, use taxes, various fees, and interest on the investment of these funds, but they are not derived in any respect from property taxes. The amount of money to be disbursed is approximately $56 million.


In determining whether § 59-26-1 transgresses constitutional limitations, our scope of review is narrow. The wisdom of the legislative enactment is not a legitimate concern of this Court; our only concern is whether any applicable constitutional provision has been infringed. In determining the constitutionality of an enactment that is primarily economic in nature, a presumption of constitutionality is extended to that enactment; and we will not strike it down unless the party attacking it clearly establishes that a constitutional provision has been violated. See, generally, Stone v. Department of Registration, Utah, 567 P.2d 1115 (1977); Thomas v. Daughters of Utah Pioneers, 114 Utah 108, 197 P.2d 477 (1948), appeal dismissed, 336 U.S. 930, 69 S.Ct. 739, 93 L.Ed. 1090; State v. Packer Corporation, 77 Utah 500, 297 P. 1013 (1931), affirmed, 285 U.S. 105, 52 S.Ct. 273, 76 L.Ed. 643. 2

These general principles, although applied with varying degrees of stringency depending upon the nature of the statutory provision to be construed, establish general guidelines for the functioning of a system of government based upon a separation of powers in which the popular will is effectuated by the legislative branch and the power of constitutional review of legislative enactments is vested in the judiciary. Due respect for the legislative prerogative in lawmaking requires that the judiciary not interfere with enactments of the Legislature where disagreement is founded only on policy considerations and the legislative scheme employs reasonable means to effectuate a legitimate objective. In matters not affecting fundamental rights, the prerogative of the legislative branch is broad and must by necessity be so if government is to be by the people through their elected representatives and not by judges.


Plaintiff contends that § 59-26-1 is unconstitutional because the payments authorized amount to a refund or rebate of property taxes and violate the uniformity requirements of Article XIII of the Utah Constitution. That Article requires uniformity of property...

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