Banner County v. State Bd. of Equalization and Assessment

• Decision Date: 14 August 1987
• Docket Number: No. 86-699,86-699
• Citation: 411 N.W.2d 35,226 Neb. 236
• Parties: BANNER COUNTY, Nebraska, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.
• Court: Nebraska Supreme Court

Page 35

411 N.W.2d 35

226 Neb. 236

BANNER COUNTY, Nebraska, Appellant, v. STATE BOARD OF EQUALIZATION AND ASSESSMENT, Appellee.

No. 86-699.

Supreme Court of Nebraska.

Aug. 14, 1987.

Syllabus by the Court

1. Constitutional Law: Taxation: Valuation. The Nebraska Constitution requires that taxes be levied by valuation uniformly and proportionately upon all tangible property except motor vehicles.

2. Constitutional Law: Taxation: Valuation. The 1984 amendment to Neb. Const. art. VIII, § 1, which added the language, "The Legislature may provide that agricultural land and horticultural land used solely for agricultural or horticultural purpose shall constitute a separate and distinct class of property for purposes of taxation," did not repeal the uniformity clause.

3. Constitutional Law. The Constitution, as amended, must be read as a whole.

4. Constitutional Law: Taxation. The power to tax is a sovereign power, and constitutional provisions relating to that power limit that power.

5. Constitutional Law: Legislature. The Legislature cannot circumvent an express provision of the Constitution by doing indirectly what it may not do directly.

6. Constitutional Law. In determining the meaning of a constitutional provision, we must look to the plain and clear language contained therein.

7. Constitutional Law. A constitutional amendment becomes an integral part of the instrument and must be so construed. It must be harmonized, if possible, with all other provisions, and effect must be given to every section and clause as well as the whole instrument.

8. Constitutional Law: Valuation. The effect of the 1984 amendment to Neb. Const. art. VIII, § 1, is to permit the valuation of agricultural and horticultural land by a different method. However, the result must be correlated with the value of all other land.

9. Statutes. Neb.Rev.Stat. §§ 77-1502 and 77-1504 (Reissue 1986) were not repealed by 1985 Neb.Laws, L.B. 271.

William E. Peters of Peters & Chunka, P.C., Lincoln, for appellant.

Robert M. Spire, Attorney General, and L. Jay Bartel, Lincoln, for appellee.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

PER CURIAM.

This case arises out of a controversy concerning the valuation for tax purposes of irrigated cropland in Banner County, Nebraska, for 1986. The county assessor used the 1986 Nebraska Agricultural Land Valuation Manual to establish values of all agricultural land in the county for 1986.

Banner County officials had attended public hearings before the Tax Commissioner's staff regarding the implementation of the 1986 land manual prior to its completion. At those meetings, certain officials from the county testified there appeared to be some problem with some of the calculations. The land manual calculations were ultimately completed, and the manual was used by the assessor to determine values for the 1986 tax year.

Following the receipt of notices by taxpayers in the county, a number of questions were received by the county board of equalization concerning the values placed on irrigated cropland. Hearings were held on April 21 and 28, 1986, to permit all interested persons to provide information concerning the operation of such lands. After the hearings most of the owners of irrigated lands in the county filed formal protests, and a formal hearing was set for May 19, 1986.

Based on the evidence presented at the hearing, the board made several findings.

The board first found that all interested parties had received notices of increased valuations caused by use of the land manual for the 1986 tax year. The board then stated the increase for the value of irrigated lands was substantial and that the board had investigated the increase. The board found the valuations of irrigated lands had been increased by more than 54 percent. The board stated that it had evidence the valuations of dryland in the county compared favorably to counties adjoining Banner County but that values for irrigated land were considerably lower in the adjoining counties.

The board stated there was evidence the irrigated land in the county was very sandy ground and subject to severe erosion. The board further found the assessor had historically adjusted the values of these lands to compensate for the severe erosion and inadequate water supply in the area. The board found that such adjustments by the assessor were no longer possible under the 1986 land manual. The board further found that testimony presented at the hearing confirmed the previous appraisals made by the assessor, that the lands involved were sandy, that there was severe erosion, and that the land was of lesser value than lands in Cheyenne and Kimball Counties which had received a lower value in the manual. The board stated it had viewed the lands whose valuations were being protested and land on which protests were not filed, had confirmed the testimony presented at the hearings, and concluded adjustments to the land manual valuations were required to determine the true value of the land. The board then asked the assessor to further review the information used by the department and to recalculate the values for such land.

The board stated such recalculations included the addition of information not used by the department, such as the type and condition of the land, and that the resulting values compared favorably with other counties and the information provided by the owners.

On May 29, 1986, the Banner County Board of Equalization adopted a resolution reducing the values of the subclasses of irrigated land in Banner County for the 1986 tax year from the values determined by the 1986 land manual. This adjustment was reported to the State Board of Equalization and Assessment by the State Tax Commissioner on July 10, 1986. The state board then directed the Tax Commissioner to review the action taken by Banner County, as well as by Custer County, Sherman County, and Cherry County, and to report her findings and recommendations on August 11, 1986. Notice to show cause was mailed to Banner County, and a hearing was scheduled for July 29, 1986. Banner County requested a continuance, which was granted, and the hearing was set for August 5, 1986.

At the hearing before the Tax Commissioner the county board contended it had acted properly in decreasing the values of irrigated land. The board contended the figures which the Nebraska Department of Revenue had used were flawed in two aspects: first, because the department improperly used harvested acres rather than total acres to calculate the agricultural land formula and, second, because the department improperly calculated the factor used to ascertain a 5-year average yield as established by the crop reporting service. The county also contended the values established in the 1986 land manual did not achieve equalization among the counties. Barbara Stoddard, deputy county assessor for the county, testified the recalculation of values was done in the following manner. The formula from the land manual was used to determine the "contribution of value." She then went back to the crop reporting service report and took

the acres under the crops that were sent out by the state for our use. I have recalculated those and came up with the average yield for Banner County for the last five years. The only change in that that I did make was in the sugarbeet crop, which we did use the yields for the years 1979 through 1984, [because] the 1984 report ... could not be used because there was still some question as to the price to use....

She also used the actual number of irrigated acres in Banner County as indicated on the 1985 abstract, which was 21,192 acres. She used the same percentage as the state used to determine crop mix. She then calculated the crop yield, which differed from that calculated by the state. That yield was then used in the computation as required by the formula, resulting in a different contribution to value, which lowered the value of irrigated lands from subclass 4A through subclass 2A.

Stoddard testified that she also looked at the values for dry cropland but found that very little change was necessary. Using the yield statistics from the Soil Conservation Service (SCS) reports in calculating the value of dry cropland resulted in a variance of only 1 or 2 percent from the values obtained using the manual, so the averages obtained by the land manual were used to value dry cropland.

Stoddard testified the state had used approximately 16,500 acres in the original manual calculation for the county. Stoddard testified she used the larger number because she believed it was necessary to include all irrigated acres because a crop is raised thereon every year and there is no set-aside on irrigated acres. Stoddard testified the calculations used by the state for dry cropland had accounted for most of those acres in the county and did not require adjustment.

The county assessor testified he had supervised the recalculations. He testified he had applied the land manual as published in setting the original values and sending notices for 1986. The final adjustments occurred May 29, 1986. A public notice was published following that action to inform the taxpayers, which included the minutes of the board proceedings. It was his understanding the board was acting to correct an apparent problem in the valuations of irrigated land which had been raised by the protests. He further testified that the protests involved about 75 percent or more of the irrigated land in the county, so the county board adjusted the valuations of that land and then, for the purpose of equalizing within the county, adjusted the values of land not specifically within the protests. There was also testimony that Banner County was not on the soil survey at that time but that the classifications of land within the county were reasonable. When asked under what statutory authority the board had proceeded, one...