State ex rel. Poulos v. State Bd. of Equalization for State of Okl., 57218

Decision Date25 May 1982
Docket NumberNo. 57218,57218
Citation1982 OK 68,646 P.2d 1269
PartiesSTATE of Oklahoma ex rel. William F. "Bill" POULOS, Petitioner, v. STATE BOARD OF EQUALIZATION FOR the STATE OF OKLAHOMA, The Honorable George Nigh, Chairman, The Honorable Spencer Bernard, Member, The Honorable Leo Winters, Member, The Honorable Jack Craig, Member; and The Oklahoma Tax Commission, Respondents.
CourtOklahoma Supreme Court

Application to Assume Original Jurisdiction to review the constitutionality of the system of ad valorem property taxation as implemented by the State Board of Equalization for the State of Oklahoma, and the Oklahoma Tax Commission, as the same affects the valuation and assessment of property taxes in all of the 77 counties in Oklahoma.

Original jurisdiction assumed. Held, there being no valid reason shown why the 12% percentage ratio by which all real property is to be taxed within the State as recommended by the Oklahoma Tax Commission should not be approved, said 12% percentage ratio, with limited permissible deviations, is determined by judicial decree to apply uniformly throughout the State for the 1982 tax year and thereafter until changed by the recommendation of the Oklahoma Tax Commission and determination by the Board of Equalization based upon good and sufficient valid, legal grounds. Further held that the three classifications of real property, i.e., residential, commercial-industrial, and agricultural, and the methodology for determining the value of real property of each class shall apply in determining tax assessments for the tax year 1982, and thereafter until such time as the same shall be changed by the recommendation of the Oklahoma Tax Commission and determination by the Board of Equalization upon good and sufficient valid, legal grounds, or until changed by Acts by the Legislature adopted pursuant to Art. 10, § 8 of the Oklahoma Constitution. Petitioner's application for allowance of attorney fees and costs of the action denied.

Buford & Percival, Manville T. Buford, John F. Percival, Oklahoma City, for petitioner.

Charles Elder, Elder, Mantooth & Haxel, Purcell, for respondent, State Bd. of Equalization.

Marjorie Patmon, Gen. Counsel, Donna E. Cox, Oklahoma City, for respondent, Oklahoma Tax Com'n.

Russell Fletcher, Oklahoma City, for intervenor, Tax Equality Committee.

Cathy Stocker, Jones & Gungoll, Enid, for amicus curiae, League of Women Voters of Oklahoma.

LAVENDER, Justice:

Original jurisdiction of this Court is sought to be invoked under authority of Art. 7, § 4 of the Oklahoma Constitution, which provides:

"The original jurisdiction of the Supreme Court shall extend to a general superintending control over all inferior courts and all Agencies, Commissions and Boards created by law."

The parties designated as Respondents are the State Board of Equalization for The State of Oklahoma (Board), its members, and The Oklahoma Tax Commission (Commission).

Petitioner brings this action in his capacity as a citizen, resident, and taxpayer. At issue is the constitutionality of the system of ad valorem property taxation as implemented by the State Board of Equalization for the State of Oklahoma, and the Oklahoma Tax Commission, as the same affects the valuation and assessment of property taxes in all of the 77 counties in Oklahoma.

Frequent reference will be made herein to State ex rel. Poulos v. State Board of Equalization, Okl., 552 P.2d 1134 (1975), State ex rel. Poulos v. State Board of Equalization, Okl., 552 P.2d 1138 (1976), to the case now pending before us, and to Cantrell v. Sanders, Okl., 610 P.2d 227 (1980). For brevity, these cases will be referred to respectively as Poulos I, Poulos II, Poulos III, and Cantrell.

In Poulos I, we held that "the matter presented is publici juris, and of immediate concern to all taxpayers." We assume original jurisdiction and proceed to consider the case on the merits.

The exhibits filed with this Court have, as reconciled, been acknowledged by the parties to be true and correct copies of what they purport to be, and are factually correct as to the studies and findings therein set forth.

In Poulos I, this Court in unequivocal language pointed out that it is the mandatory duty of the Board to adjust and equalize the valuation of real and personal property of the several counties in the State; that a system which does not equalize ad valorem assessments throughout the state is unfair and invidiously discriminatory; and that it is the manifest intention of the Oklahoma Legislature to equalize ad valorem assessments so that every parcel and item of taxable property in the state will be assessed at the same percentage of its value.

In Poulos II, this Court rejected a proposed "Plan of Compliance" because of a variance between 8% and 17.91% which permits inequality of valuation among the counties of this state. The Court directed by writ of mandamus that the Board satisfy its constitutional and statutory duty as set forth in Poulos I "by setting a definite percentile equality applicable to all counties ..." with permissible interim variations not to exceed three percentage points above or below the assessment rate, but with complete uniformity to be achieved by the Board within the three year period following the Poulos II decision.

In Cantrell, we held that it is the statutory duty of the county assessor to set an assessment percentage uniformly applicable to all real property within the county. The basis for our conclusion was all real property within the county constitutes but one "class of subjects," and the mandate of Art. 10, § 5 of the Oklahoma Constitution that taxes be "uniform upon the same class of subjects" must be followed.

Cantrell further held that Art. 10, § 8 of the Oklahoma Constitution, as it was amended in 1972, changed the method of valuing real property for tax assessment by prescribing that all property taxable ad valorem must be valued at its "fair cash value"-that is, its market value, EXCEPT:

1. No real property shall be assessed for ad valorem taxation at more than 35% of its use value, as opposed to its market value, that is, the tax value is to be determined by the value of the real property as actually used, or was previously classified for use during the calendar year next preceding the first day of January on which the assessment is made, and not in excess of 35% of said use value.

2. A transfer of property without a change in its use classification shall not require a reassessment based exclusively upon the sale value of such property.

We further said in Cantrell : "In order to value property according to its use, it is necessary to classify property according to its use. Entirely different procedures are used for the valuation of residential, commercial, industrial, and agricultural properties, and uniform standards of classification of property in order to facilitate the application of uniform procedures would be desirable."

Following the rendition of the decision in Cantrell (Rehearing Denied April 28, 1980) and up to the time of filing of Poulos III (this case), the wide diversity of assessment percentages applied by the various county assessors to real property assessments within the counties has (according to the exhibits) continued to proliferate.

Dividing the real property into three classes, residential, commercial-industrial, and agricultural, the average mean assessment ratios range from 6.40% assessment in Adair County to 13.58% in Oklahoma County. The average "mean" assessment ratio in Oklahoma County exceeds 212% of the average mean assessment in Adair County. The wide disparity in assessment ratios as applied in the various counties is illustrated by the following:

                HIGHEST AVERAGE     LOWEST AVERAGE
                MEAN ASSESSMENT     MEAN ASSESSMENT
                RATIOS BY COUNTY    RATIOS BY COUNTY
                ------------------  ------------------
                Oklahoma  13.58%    McCurtain  6.60%
                Harmon    13.08%    Adair      6.40%
                Canadian  12.92%    Choctaw    6.66%
                Greer     12.37%    Cherokee   7.14%
                

with wide variations between the extremes.

The disparity in the assessment ratios applied to property within the use classifications is even greater. For example, with reference to agricultural land, the ratio applied in McCurtain County of 2.71% as compared with Oklahoma County which is 666% greater.

On June 20, 1981, the Commission in accordance with 68 O.S. 1971, § 2462 and Enrolled Senate Concurrent Resolution No. 54 of the 37th Oklahoma Legislature (O.S.L.1980) transmitted to the Board "Techniques, Guidelines and Definitions for Determining Use Value of Real Property for Ad Valorem Tax Purposes," and "1981 Comprehensive Ratio Study Report" along with "Recommendations of the Oklahoma Tax Commission for Statewide Equalization." The Commission found and determined, based upon its studies and research, that "a single assessment ratio has not been applied to determine assessed valuation of all real property within each county and that the assessed valuations of real property are not equalized among the various counties pursuant to this Board's adopted guideline setting the definite assessment ratio at 12%."

The Commission made the following recommendations to the Board:

1. That, the State Board of Equalization act upon the submitted techniques, guidelines and definitions by approval thereof.

2. That, the State Board of Equalization increase or decrease, as the case may be, the assessment valuations of the classifications of real property within each county so that a single assessment ratio is applied to the valuation of all real property within each county to determine assessed valuation, in accordance with the Recommendations of the Oklahoma Tax Commission for Statewide Equalization.

3. That, the State Board of Equalization increase or decrease, as the case may be, the assessment valuations of real property so that the assessment ratio of each county is within the permissible three point deviation...

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    ...pursuant to the doctrine of publici juris to address ad valorem tax issues emanating from the Board. See State ex rel. Poulos v. State Bd. of Equalization, 646 P.2d 1269 (1982); State ex rel. Poulos v. State Bd. of Equalization, 552 P.2d 1134 (1975). The public importance of the issues pres......
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