Constitutionality
of the Method for Distribution of Motor Vehicle Taxes Under LB 271, as amended.
Opinion
97032
DATE:
June 2, 1997
SUBJECT:
Constitutionality of the Method for Distribution of Motor Vehicle Taxes Under
LB 271, as amended.
REQUESTED
BY: Senator Jim Jones Nebraska Legislature
WRITTEN
BY: Don Stenberg, Attorney General L.
Jay Bartel, Assistant Attorney General
You
have requested our opinion on the constitutionality of the provision in LB 271,
as recently amended by AM2313, setting out the manner in which motor vehicle
taxes imposed under the bill are to be distributed to government
subdivisions. LB 271, as amended,
would amend the manner in which motor vehicles are taxed. The tax would be calculated by
multiplying the "base tax" (based on the value of the vehicle when new) by a
fraction based on the age of the vehicle.
LB 271, as amended, ¤ 4.
Your question concerns the recent amendment to Section 3 of the bill,
which contains the manner of distribution of the tax. Prior to amendment, subsection (2) of Section 3 provided, in
pertinent part:
After
retaining one percent of the motor vehicle tax proceeds collected for costs,
the remaining motor vehicle tax proceeds shall be allocated to each taxing unit
levying taxes on taxable property in the county in which the motor vehicle has
situs in the same proportion that the levy of such taxing unit bears to the
total levy on taxable of all taxing units in which the motor vehicle has situs. (emphasis added).
This
provision was amended by AM2313 to provide:
After
retaining one percent of the motor vehicle tax proceeds collected for costs,
the remaining motor vehicle tax proceeds shall be allocated to each taxing unit
levying taxes on taxable property in the tax district in which the motor
vehicle has situs in the same proportion that the levy of such taxing unit
bears to the total levy on taxable property of all the taxing units in the tax
district in which the motor vehicle has situs. (emphasis added).
Your
question is whether the substitution of "tax district" for "county" in the
amended version of LB 271 is consistent with the language of Neb. Const. art. VIII, ¤
1(3), which, in addition to providing that "the Legislature may provide for a
different method of taxing motor vehicles. . ., states:
Provided,
that such tax proceeds from motor vehicles in each county shall be allocated to
the counties, townships, cities, villages, school districts, and other
governmental subdivisions of such county in the same proportion that the levy
of each bears to the total levy of the county on taxable property; . .
. .(emphasis added).
In
State ex rel. School Dist. of Scottsbluff v. Ellis, 168 Neb. 166, 95 N.W.2d 538 (1959) ["Ellis"],
the Nebraska Supreme Court addressed the proper construction of virtually
identical language in a prior version of art. VIII, ¤ 1 of the Constitution providing for the allocation
of motor vehicle tax proceeds. In
1952, the Nebraska Constitution was amended to allow the Legislature "to provide
for a different method of taxing motor vehicles; Provided, that such tax
proceeds from motor vehicles taxed in each county shall be allocated to the
state, counties, townships, cities, villages, and school districts of such
county in the same proportion that the levy of each bears to the total levy of
said county on personal tangible property." Id. at 168, 95 N.W.2d at 540. The Legislature, in 1953, enacted a statute (Neb. Rev. Stat. ¤
77-1240.01 (Supp. 1955)) providing
for distribution of motor vehicle taxes as follows:
The
proceeds from such motor vehicle tax in each county shall be allocated to each
taxing unit levying taxes on tangible personal property in the county in which
the motor vehicle is located in the same proportion that the levy on tangible
personal property of such taxing unit bears to the total levy on tangible
personal property of all the taxing units in which the motor vehicle is
located.
168
Neb. at 169, 95 N.W.2d at
540.
The
Scotts Bluff County Treasurer asserted that the distribution provided for under
this statute was contrary to the language in art. VIII, ¤ 1. The
Plaintiffs, political subdivisions within Scotts Bluff County, asserted the
distribution of motor vehicle taxes under the statute was consistent with the
language in art. VIII, ¤ 1, and
that the statutory distribution method had been uniformly followed in all
counties since the statute's enactment.
Id. at 169-70, 95 N.W.2d at
540.
Addressing
the construction of the distribution language contained in the amendment to
art. VIII, ¤ 1, the Court in Ellis
stated:
The
defendant's interpretation of the constitutional provision would require us to
say in effect that the levy of a motor vehicle tax was for a county-wide
purpose. The allocation of the
proceeds of the motor vehicle tax proportionately to the state, counties,
townships, cities, villages, and school districts is conclusive that a part of
the proceeds were for a county-wide purpose and a part were not. Such a construction would violate the
sound principle of taxation which prescribes that the benefits of taxation
should be directly received by those directly concerned in bearing the burdens
of taxation, so that a Legislature cannot divert taxes raised by one taxing
district to the sole use and benefit of another district.
Id. at 172, 95 N.W.2d at 542.
With
regard to whether the statutory distribution method complied with the
constitutional provision, the Court stated:
The
announced purpose of the legislation providing for the submission of the
constitutional amendment to the people was not to change existing allocations
of motor vehicle taxes but to provide a different method of taxing them. Motor vehicles had previously been
taxed as personal property the same as other tangible personal property was
taxed, the taxing units where the motor vehicle was located getting the sole
benefit of the revenue therefrom.
We interpret the words "the total levy of said county on personal
tangible personal property" contained in the constitutional provision to mean
the total levy made by the county for all political subdivisions in which a
motor vehicle has its taxable situs.
We find nothing to indicate an intention to depart from such a
distribution. . .
.The Legislature by enacting section 77-1240.01, R.S. Supp., 1955, confirmed the generally
accepted meaning of the constitutional provision and clarified its meaning by
legislative action in a manner not inconsistent with the Constitution and in
accord with the fundamental rules of taxation.
Id. at 173, 95 N.W.2d at 542 (emphasis
added).
While
art. VIII, ¤ 1, has been amended
on a number of occasions since the decision in Ellis, the language pertaining
to distribution of motor vehicle tax proceeds has remained relatively
unchanged. The current language of
the constitutional provision, quoted previously, provides for distribution of
the tax proceeds from motor vehicle taxes to political subdivisions "in the
same proportion that the levy of each bears to the total levy of the county on
taxable property;. . .
." The only difference between this portion of the provision, construed
in Ellis, and the present language is the substitution of the word "the" for
"said" before "county", and substitution of "taxable property" for "personal
tangible property."
By
virtue of the similarity between the language in art. VIII, ¤ 1, construed by the Court in Ellis, and the current
language in art. VIII, ¤ 1, we
believe the proper construction of art.
VIII, ¤ 1, continues to require proportionate distribution of motor
vehicle tax proceeds to all taxing subdivisions "in which a motor vehicle has
its taxable situs." 168 Neb. at
173, 95 N.W.2d at 542. This
interpretation is consistent with subsequent statutory provisions governing
distribution of motor vehicle taxes, and the current statute, Neb. Rev. Stat. ¤
77-1240.01(4) (1996), which provides: "The proceeds from the motor vehicle tax
shall be allocated to each taxing unit levying taxes on property in the county
in which the motor vehicle has tax situs in the same proportion that the levy
on taxable property of such taxing unit bears to the total levy on taxable
property of all the taxing units." We note that it is also our understanding
that, as was the case in Ellis, it is the practice of all counties to
distribute proceeds from the current property tax on motor vehicles to all
subdivisions taxing in the tax district where the motor vehicle has situs.
With
this background in mind, we turn to your specific question pertaining to the
use of the term "tax district" in the distribution language in LB 271. Prior to amendment, the bill required
proportionate allocation of motor vehicle tax proceeds "to each taxing unit
levying taxes on taxable property in the county in which the motor vehicle has
situs. . . ." (emphasis
added). The bill, as amended,
provides for proportionate allocation of motor vehicle tax proceeds "to each
taxing unit levying taxes on taxable property in the tax district in which the
motor vehicle has situs. . .
." (emphasis added). Your
question is whether this change in terminology is permissible, in view of the
language in art. VIII, ¤ 1,
referring to proportionate distribution of motor vehicle tax proceeds to
political subdivisions based "on the levy of each bears to the total levy of
the county on taxable property."
In our
opinion, we do not believe the change in terminology contained in LB 271, as
amended, necessarily results in an inconsistency with the distribution
requirement in art. VIII, ¤ 1. This is based on the definition of
"taxing district" in LB 270, also presently pending before the
Legislature. "Tax district" is
defined as "an area within a county in which all of the taxable property is
subject to property taxes at the same consolidated property tax rate." The levy
for property taxes for each political subdivision levying property taxes on
taxable property in the county is made annually by the county board of
equalization. Neb. Rev. Stat. ¤¤
77-1601, 77-1601.01, and 77-1601.02 (1996). The apparent intent of the use of the term "tax district" in
LB 271, as amended, is to make the language consistent with the definition of
that term in LB 270. In effect,
however, by defining the term to mean an area in a county in which all taxable
property is "subject to the same consolidated property tax rate", the change
appears merely to reflect the fact that the county, through the county board of
equalization, includes in the levy made annually levies for all political
subdivisions in the county which levy property taxes. Defining the term "tax district" in this manner, and
employing it in the distribution language in LB 271, as amended, appears to be
consistent with art. VIII, ¤ 1,
which refers to the "total levy of the county on taxable property"; the
"consolidated property tax rate" referred to in LB 270 in defining "tax
district" being the equivalent of the "total levy" language employed in the
Constitution.
In sum,
LB 271, as amended, continues to require distribution of motor vehicle tax
proceeds "to each taxing unit levying taxes on taxable property in the tax
district in which the motor vehicle has situs", and that the distribution be
"in the same proportion that the levy of such taxing unit bears to the total
levy on taxable property of all the taxing units in the tax district in which
the motor vehicle has situs." This is consistent with the Nebraska Supreme
Court's interpretation that art.
VIII, ¤ 1 requires proportionate distribution of motor vehicle tax
proceeds to all taxing subdivisions "in which a motor vehicle has its taxable
situs." Ellis, 168 Neb. at 173, 95
N.W.2d at 542. The bill, as
amended, continues the situs-based distribution articulated in Ellis. The change in terminology from "county"
to "tax district" also appears permissible, in light of the manner in which the
term "tax district" is defined in LB 270.
Very
truly yours,
DON
STENBERG Attorney General
L. Jay
Bartel Assistant Attorney General