Tucson Elec. Power Co. v. Apache County, 1
| Citation | 185 Ariz. 5,912 P.2d 9 |
| Decision Date | 21 November 1995 |
| Docket Number | No. 1,CA-TX,1 |
| Parties | TUCSON ELECTRIC POWER COMPANY, an Arizona corporation, Plaintiff-Appellant, v. APACHE COUNTY, Cochise County, Coconino County, Graham County, Greenlee County, Maricopa County, Navajo County, Pima County, Pinal County, Santa Cruz County and Yavapai County, political subdivisions of the State of Arizona; the Arizona Department of Revenue, an agency of the State of Arizona; and the Treasurer of the State of Arizona, acting in his official capacity, Defendants-Appellees. ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; Salt River Project Agricultural Improvement and Power District, a political subdivision of the State of Arizona; El Paso Electric Company, a Texas corporation; the Department of Water and Power of the City of Los Angeles, a California municipal corporation; Public Service Company of New Mexico, a New Mexico corporation; Southern California Edison Company, a California corporation; Southern California Public Power Authority, a California joint powers agency; Arizona Electrical Power Cooperative, Inc., an electric generation and transmission cooperative, Plaintiffs-Appellants, v. APACHE COUNTY, Cochise County, Maricopa County, Navajo County and Pinal County, political subdivisions of the State of Arizona; the Arizona Department of Revenue, an agency of the State of Arizona; and the Treasurer of the State of Arizona, acting in his official capacity, Defendants-Appellees. 93-0015. |
| Court | Court of Appeals of Arizona |
In these consolidated actions, nine companies that own property in Arizona used for generating electricity ("the taxpayers") appeal from a judgment sustaining the constitutionality of the levy school finance imposed by Ariz.Rev.Stat.Ann. ("A.R.S.") section 15-992(B) (). The taxpayers further contest the retroactivity of both this amendment, and an amendment to A.R.S. section 42-227(A), which raised the assessment percentage for class one (mining) and class two (utility) property from 25% to 30%. 1990 Ariz.Sess.Laws, 3d Sp.Sess., ch. 3, §§ 8, 62. The separate appeal of El Paso Electric Company ("El Paso") challenges the dismissal of its refund claim for its failure, while in Chapter 11 bankruptcy, to timely pay accruing Arizona real property taxes.
The dispositive issues are these:
1. Whether A.R.S. section 15-992(B) (1990) violates the exemption, special legislation, or uniformity clauses of the Arizona Constitution, or the equal protection clauses of the United States and Arizona Constitutions;
2. Whether the tax court erred in holding that the 1990 amendments to A.R.S. sections 15-992(B) and 42-227(A)(1) and (2) applied retroactively to January 1, 1990; and
3. Whether the tax court's dismissal of El Paso's complaint during the pendency of its Chapter 11 bankruptcy proceeding violated the automatic stay provided by 11 U.S.C. § 362(a).
We have jurisdiction pursuant to A.R.S. section 12-2101(B).
Because of the complexity of the issues involved in this case and the length of the opinion, we summarize our holdings at the start. In this opinion, we hold unconstitutional, as a "special law," the 1990 amendment to A.R.S. section 15-992(B). We therefore do not address the taxpayers' additional constitutional challenges. Because the unconstitutional amendment is void, we conclude that of the predecessor statute, A.R.S. section 15-992(B) (1989), which included all assessed property in the class of taxpayers in those affected districts, is automatically revived. Although we apply our decision retroactively, we conclude that the taxpayers are entitled only to a partial refund of the taxes they paid. This partial refund is to be computed by the tax court on remand. Other classes of property need not be taxed retroactively under the 1989 statute.
Because we hold A.R.S. section 15-992(B) (1990) unconstitutional, we need not address whether the tax court properly held that the amendment applied retroactively to January 1, 1990. We find no error in the tax court's conclusion that A.R.S. section 42-227(A)(1) and (2) applied retroactively to January 1, 1990.
Finally, we hold that the tax court's dismissal of El Paso's claim for failure to pay a subsequently levied tax after it filed for Chapter 11 bankruptcy violated the automatic stay required by 11 U.S.C. § 362(a).
For a basic understanding of Arizona's existing school financing system, we turn to our supreme court's recent opinion in Roosevelt Elementary School District # 66 v. Bishop, 179 Ariz. 233, 877 P.2d 806 (1994):
The statutes create an educational funding formula. First, each district's base-level funding needs are determined by multiplying the number of students in the district by an arbitrary, state-wide dollar amount per pupil. A.R.S. § 15-943. The per-pupil amount appears to be unrelated to any minimum amount necessary for a basic education.
The formula then determines the districts' share of the base level. The required contribution by a district is derived by multiplying the district's total assessed property value by an arbitrary dollar figure that each district is to collect from property taxes. A.R.S. § 15-971(D). If a district's required contribution falls short of the predetermined base level, the state makes up the difference. Id. If the district's expected contribution exceeds the base level, the district is not entitled to any state "equalization assistance." Id.
Finally, any funding in excess of the equalized level must be raised through bonded indebtedness by the individual districts. These bonds are subject to voter approval because they must be repaid by increased property taxes. "Since bonds are outside the funding formula, a district's ability to pass bonds is based purely on property wealth and taxpayer willingness." The Joint Legislative Budget Committee's Staff, K-12 Funding Formula Examples and Descriptions 11 (1993). The amount of bonded indebtedness that a district may incur, however, is limited by its total assessed property valuation. A.R.S. § 15-1021.
Id. at 237, 877 P.2d at 810 (footnote omitted).
The "equalization assistance" to which the Roosevelt court referred is also affected by A.R.S. section 15-992. Beginning with its adoption in 1981, section 15-992 required counties to levy school district taxes annually on all property in any school district
in which additional amounts are required, which shall be at rates sufficient to provide the additional amounts. The taxes shall be added to and collected in the same manner as other county taxes on the property within the school district.
A.R.S. § 15-992, 1981 Ariz.Sess.Laws ch. 1, § 2, redesignated A.R.S. § 15-992(A) by 1989 Ariz.Sess.Laws ch. 312, § 3.
In 1989, the legislature adopted section 15-992(B), which required each county to levy an additional tax (the QTR tax) annually "on the property in each school district that is not eligible for equalization assistance as provided in section 15-971...." 1989 Ariz.Sess.Laws ch. 312, § 3. The amount of the levy was to be determined as the difference between (1) the hypothetical levy that would be produced by applying one quarter of the "qualifying tax rate" prescribed in section 15-971(B) 1 to the district's assessed valuation, augmented by voluntary contributions under A.R.S. section 48-241 et seq., 2 and (2) the "additional" school district taxes levied under former section 15-992, now section 15-992(A). A.R.S. § 15-992(B) (1989). The proceeds of the levy were to be forwarded to the state treasurer for deposit in the state general fund. A.R.S. § 15-992(C) (1989).
In 1990, the legislature narrowed the applicability of the QTR tax. The tax provided by A.R.S. section 15-992(B) (1990) no longer applied to all property in school districts ineligible for equalization assistance. 1990 Ariz.Sess.Laws, 3d Sp.Sess., ch. 3, § 4. Rather, it now applied only to property in such districts classified by A.R.S. section 42-162 as class one (mining) or class two (utility) property, and property on which voluntary contributions were collected pursuant to A.R.S. section 48-241 et seq. A.R.S. § 15-992(B)(1), (2) (1990). The amount of this modified QTR tax was to be determined by reference to a hypothetical levy calculated by applying 65% 3 of the applicable qualifying tax rate under section 15-971(B) to the values of class one and two property in the district and the value used to determine voluntary contributions from property in the district. The 1990 amendment to A.R.S. section 15-992 was expressly made retroactive to January 1, 1990. 1990 Ariz.Sess.Laws, 3d Sp.Sess., ch. 3, § 62(B).
Section 8 of the amending legislation also amended A.R.S. section 42-227(A)(1) and (2) to raise the assessed valuation for mining and utility property from 25% to 30% for tax years 1990 and following. 1990 Ariz.Sess.Laws, 3d Sp.Sess., ch. 3, § 8. This, too,...
To continue reading
Request your trial
-
Zarabia v. Bradshaw, CV-95-0517-SA
...912 P.2d 5 ... 185 Ariz. 1, 64 USLW 2595 ... Jesus Manuel ZARABIA, Nebra ... of the State of Arizona, in and for the County of Yuma, Respondent and Real Party in Interest ... ...
- Macaluso v. Industrial Com'n of Arizona