REVIEW of a decision of the Court of Appeals. Reversed.
¶1 MICHAEL J. GABLEMAN, J.
This is a review of a published decision of the court of appeals
reversing the circuit court order granting summary judgment to Metropolitan
Associates. Metropolitan Associates challenges the
procedure taxpayers must follow in order to dispute municipal property tax
assessments. After a taxpayer receives
his or her annual property tax assessment, the taxpayer may challenge that
assessment before the Board of Review for the municipality where the taxed
property is located. If the taxpayer remains unsatisfied after the
Board of Review makes its determination, the taxpayer may seek review of that
decision in the circuit court.
¶2 Prior to 2008, a taxpayer could choose between two types of review
in the circuit court: common law certiorari review or statutory de novo review
pursuant to Wis. Stat. § 74.37. Common law certiorari review is a limited
review of the record made before the Board of Review, while de novo review is
an entirely independent circuit court action in which the circuit court creates
its own record and gives no deference to the Board of Review's determination.
¶3 In 2008, the legislature passed 2007 Wis. Act 86 ("Act 86") which
allows municipalities to pass an ordinance opting out of de novo review. Taxpayers in these "opt out"
municipalities are restricted to a new form of circuit court review referred to
as "enhanced certiorari review."
This enhanced certiorari review is broader in scope than traditional
certiorari review but narrower in scope than de novo review. Act 86 also requires opt out municipalities
to grant their taxpayers additional rights during their initial Board of Review
hearing.
¶4 In
2009, the circuit court for Milwaukee
County, the Honorable
Jean DiMotto presiding, found that Act 86 unconstitutionally denied taxpayers
residing in opt out municipalities equal protection of the laws by depriving
those taxpayers of access to de novo review without a rational basis for doing
so. The court of appeals reversed. It held that the treatment taxpayers received
in opt out municipalities under Act 86 was not significantly different than the
treatment taxpayers received in all other municipalities.
¶5 We conclude that the treatment taxpayers in opt out municipalities
receive under Act 86 is significantly different than the treatment all other
taxpayers receive, and we conclude that this difference in treatment lacks a
rational basis. Accordingly, we reverse
the court of appeals and hold that all of Act 86’s modifications to Wis. Stat.
§§ 70.47, 73.03,
and 74.37 are unconstitutional.
I.
BACKGROUND
¶6 Property in Wisconsin
is taxed by a method of assessment set forth in Wis. Stat. ch. 70. Assessors, who are either elected or appointed, must value all taxable real and
personal property within their taxation district on an annual basis. Wis.
Stat. §§ 70.05, 70.10, 70.29, 70.32(1)-(2). Property owners who disagree with an assessment
may file an objection before the local Board of Review. Wis.
Stat. §§ 70.07, 70.075, 70.47.
¶7 A
Board of Review is a quasi-judicial body that hears evidence to adduce whether
an assessor’s valuation is correct. Nankin
v. Vill. Of Shorewood, 2001 WI 92, ¶18, 245 Wis. 2d 86, 630
N.W.2d 141. Its membership
typically consists of lay citizens without legal or technical backgrounds. Wis. Stat. §§ 70.46(1), 70.99(10)(a); Nankin,
245 Wis. 2d 86,
¶31; Rite-Hite Corp. v. Bd. of Review of Vill. of Brown Deer, 216 Wis. 2d 189,
575 N.W.2d 721 (Ct. App. 1997).
After conducting a hearing, the Board of Review may adjust an assessment
if it determines that the assessment is too high or too low. § 70.47(6), (9)(a).
¶8 We
begin with an overview of the two traditional methods of obtaining judicial
review of a Board of Review’s decision available prior to the enactment of Act
86: certiorari review and de novo review.
We then discuss how Wisconsin’s process for challenging assessment
decisions changed significantly in both 2001 and 2008——in 2001 it changed
because of our Nankin decision, and in 2008 it changed because of Act
86.
A.
Certiorari Review and De Novo Review
¶9 Certiorari review existed prior to the enactment of Act 86
as a limited review in which the circuit court examined only the record made
before the Board of Review. Nankin,
245 Wis. 2d 86, ¶20. In certiorari review, a circuit court may not
take its own evidence nor conduct its own factual inquiry. Id. The circuit court applying certiorari review
must uphold the Board of Review's decision unless: (1) the Board acted outside
its jurisdiction, (2) the Board acted in violation of the law, (3) the Board's
action was arbitrary, oppressive or unreasonable, representing its will rather
than its judgment, or (4) the evidence was such that the Board could not
reasonably make the determination in question.
Id.
If the circuit court determines that the Board of Review's assessment is
so deficient that it meets one of these four tests, the court must remand the
matter to the Board of Review for a reassessment. Id. The taxpayer seeking certiorari review
receives scheduling preference in the circuit court and does not have to pay
the tax before filing. Wis. Stat. § 70.47(13).
¶10 De novo review, as it existed prior to the enactment of Act 86,
is a more substantial form of review than certiorari review. The circuit court applying de novo review may
receive evidence regardless of the record made before the Board of Review. Nankin, 245 Wis. 2d 86, ¶25. While the circuit court conducting a de novo
review gives no deference to the Board of Review's decision, the underlying
assessment still carries a presumption of correctness. Id.; Wis. Stat. § 70.49(2). If a circuit court conducting de novo review
determines that the Board of Review's assessment is incorrect, the circuit
court may calculate the proper assessment without remanding it to the Board of
Review for that purpose. Nankin, 245 Wis. 2d 86, ¶25. In contrast to certiorari review, the
de novo action is not given scheduling preference in the circuit court and the
taxpayer must pay the tax before filing.
Wis.
Stat. § 74.37(2).
B. 2001: Nankin Invalidates
Population-Based Thresholds on De Novo Actions
¶11 Prior
to 2001, most property owners could obtain judicial review of a Board of
Review's decision by filing an action in the circuit court seeking either
certiorari review under Wis. Stat. § 70.47(13)
or de novo review under Wis. Stat. § 74.37. Prior
to 2001, however, property owners in counties with populations of 500,000 or
more could file for only certiorari review and did not have access to de novo
review. Wis.
Stat. § 74.37(6).
¶12 In 2001, we considered in Nankin v. Village of Shorewood
whether preventing taxpayers' access to de novo review solely based on the
population of the county in which the property was located unconstitutionally
denied those taxpayers equal protection of the laws. Nankin, 245 Wis. 2d 86, ¶11. We applied a three-step analysis to guide our
holding. First, we determined that the population-based threshold
created a "distinct classification of citizens"——those owning property in Milwaukee County. Id.,
¶13. Second, we determined that this population-based threshold
caused taxpayers in Milwaukee County to be treated in a "significantly
different" manner from all other taxpayers because the de novo review
available in all other counties provided greater protections than the
certiorari review available in Milwaukee
County. Id.,
¶14. Third, we determined that no rational basis
existed for limiting access to de novo review solely because of the population
of the county where the taxed property was located. Id.,
¶15. As a result, we held that the
population-based threshold violated the rights provided to taxpayers under the
equal protection clause. Id., ¶46. The immediate effect of this holding was that
both de novo and certiorari review became available to all property owners in Wisconsin regardless of
the population of the county in which their property was located.
C.
2008 to Present: Legislature Allows Municipalities to Opt Out of De Novo Review
¶13 On March 13, 2008, seven years after our holding in Nankin,
the Wisconsin Legislature passed Act 86. 2007 Wis.
Act. 86. Act 86 allows municipalities to
adopt an ordinance opting out of § 74.37 de novo review of Board of Review
assessment decisions.
¶14 A
municipality that passes an ordinance pursuant to Act 86 “opting out” of de
novo review must give their taxpayers greater rights in their Board of Review
proceedings than those taxpayers would receive if they lived in all other
municipalities. 2007 Wis. Act. 86 §§ 1-3, 6-7. Further, taxpayers in the opt out
municipality lose access to de novo review and must instead follow
§ 70.47(13) which provides for a new process we will refer to as
"enhanced certiorari review."
¶15 These
differences are further described in Part III of this opinion.
D.
Metropolitan Associates Challenges Act 86's De Novo Review Limits
¶16 The City of Milwaukee
opted out of de novo review when its Common Council unanimously adopted an
ordinance conforming with § 70.47(16)(c),
which became law on April 30, 2008. On
July 15, 2008, Metropolitan Associates filed a class action lawsuit against Milwaukee seeking declaratory relief and a ruling that Act
86's opt out provision violated the equal protection provisions of the Wisconsin and the United
States Constitutions. Wis. Const. art. I, § 1; U.S. Const. amend. XIV.
¶17 The circuit court orally granted summary judgment to Metropolitan
Associates on January 20, 2009, memorialized in its written order dated
February 9, 2009. It followed the same
three-step analysis of Metropolitan Associates' equal protection claim as we
did in Nankin. First, the circuit
court found that Act 86 created a distinct classification of citizens——taxpayers residing in opt
out municipalities. Second, it found
that Act 86 treated this class significantly different than taxpayers in all other municipalities. Third, the circuit court found that no
rational basis existed for the different treatment of taxpayers who own
property in opt out municipalities. It
concluded that Wis. Stat. § 74.37(4)(c)
as amended by Act 86 and § 74.37(4)(d)
as created by Act 86
violated equal protection, and enjoined their enforcement.
¶18 The court of appeals, also following the Nankin three-step
analysis, reversed the circuit court.
The court of appeals agreed with the circuit court that taxpayers in opt
out municipalities constituted a distinct classification of citizens. However, in contrast to the circuit court,
the court of appeals determined that Act 86's enhanced certiorari review
supplied taxpayers in opt out municipalities with "the functional
equivalent of a court trial." Metro.
Assocs. v. Milwaukee, 2009 WI App 157, ¶11, 321 Wis. 2d 632, 774 N.W.2d 821. The court of appeals therefore held that
there was no significantly different treatment of taxpayers between de novo
review and enhanced certiorari review. Id., ¶9. Because of this holding, the court of appeals
did not need to reach the third step of the analysis and, therefore, did not
consider whether the legislature had a rational basis for distinguishing
between taxpayers in opt out municipalities and taxpayers in all other
municipalities. Id., ¶10.
¶19 Metropolitan Associates then petitioned this court for review,
which we granted. We heard oral
arguments in this case on April 12, 2010.
The oral argument concerned Metropolitan Associates' equal protection
challenge under our three-step analysis.
Following this oral argument, we ordered the parties to file
supplemental briefs on four distinct issues:
1.
Does either of the two procedures——de novo actions under Wis. Stat. § 74.37
and enhanced certiorari actions under Wis. Stat. § 70.47(13)——carry with
it a right to a jury trial under Article I, Section V of the Wisconsin
Constitution and Village Food & Liquor Mart v. H & S Petroleum, Inc.,
2002 WI 92, 254 Wis. 2d 478, 647 N.W.2d 177?
2. If
the right to a jury trial exists under one set of procedures but not the other
set of procedures, how does this affect the question of whether the procedures
are significantly different?
3.
What is the level of scrutiny applied to determine the constitutionality of the
statute if there is a constitutional right to a jury trial?
4. Do
the challenged portions of Act 86 survive that level of scrutiny?
¶20 The
parties presented oral argument in regard to these four issues on October 7,
2010.
II.
STANDARD OF REVIEW
¶21 A challenge to the constitutionality of a statute presents a
question of law that we review de novo. Nankin,
245 Wis. 2d 86, ¶10. A statute is presumed constitutional and
this court must indulge in every presumption to sustain the law if at all
possible. Id.
The party challenging the statute must prove that the statute is
unconstitutional beyond a reasonable doubt and any doubt must be resolved in
favor of the statute's constitutionality.
Id.
III.
DISCUSSION
¶22 The equal protection clause of the Wisconsin Constitution provides
that "[a]ll people are born equally free and independent, and have certain
inherent rights; among these are life, liberty and the pursuit of happiness . .
. ." Wis. Const. art. I, § 1. We apply
the same interpretation to the equal protection provisions of the Wisconsin and the United
States Constitutions. Nankin, 245
Wis. 2d 86, ¶11; Tomczak v. Bailey,
218 Wis. 2d 245, 261, 578 N.W.2d 166 (1998).
¶23 Nankin sets forth the three-step analysis we apply in
determining whether Act 86 violates the equal protection provisions of the Wisconsin and United
States Constitutions. Nankin, 245
Wis. 2d 86, ¶¶11-15. First, we must determine whether the
legislature created a distinct classification of citizens when it passed Act
86. Id., ¶13. Second, if it
did, we must determine whether Act 86 treats this class significantly different
from all others similarly situated. Id., ¶14. If this question is also answered in the
affirmative, we must reach the third determination: whether a rational basis
exists for the significantly different treatment. Id.,
¶15.
A. Act 86 Creates a Distinct Class of Citizens
¶24 The parties agree that Act 86 created a distinct class of
citizens. We are not bound by this
agreement. However, we have conducted
our own review, and after doing so, hold that Act 86 did create a distinct
class of citizens: taxpayers living in opt out municipalities. Therefore, we turn our attention next to the
second step in the Nankin analysis——whether Act 86 treats taxpayers in opt out
municipalities significantly different than all other taxpayers.
B.
Act 86 Treats Taxpayers Living in Opt Out Municipalities Significantly
Different Than All Other Taxpayers
¶25 Act 86 requires taxpayers in
opt out municipalities to follow a different procedure in order to challenge
their property tax assessments than the procedure taxpayers in all other
municipalities must follow. In this
section, we first discuss Act 86's different treatment at the Board of Review
stage. Second, we discuss Act 86's
different treatment at the circuit court review stage. Third, we explain why these differences cause
taxpayers in opt out municipalities to follow a significantly different process
to challenge their assessments than taxpayers in all other municipalities. Fourth, we discuss whether a jury trial right
exists in de novo review actions.
1.
Assessment Challenges at the Board of Review Stage
¶26 Act 86 grants taxpayers
living in opt out municipalities three rights at the Board of Review stage that
taxpayers in all other municipalities do not have: a more detailed notice of a
changed assessment, the right to additional time to prepare for their Board of
Review hearing date, and comparatively broader discovery rights. See Wis. Stat. § 70.47(7)(c), (8)(d),
(8)(j).
¶27 The
first of these rights relates to the notice of a changed assessment that must
be sent to an affected taxpayer.
Assessors in all municipalities must send notices of changed assessments
to each taxpayer at least fifteen days before the Board of Review's annual
meeting. Wis.
Stat. § 70.365. In opt out
municipalities, this notice must inform the taxpayer of the last day on which
he or she may file an objection. Wis. Stat.
§ 70.47(7)(c), (16)(c). Opt
out municipalities must also post on their websites the last day objections to
assessments may be made. Id.
¶28 The
second of these rights is the right of taxpayers in opt out municipalities to a
sixty-day extension of their Board of Review hearing date. If a taxpayer in any municipality objects to
their assessment, the taxpayer must give written or oral notice of an intent to
file an objection to the board's clerk at least forty-eight hours before the
board's first scheduled meeting of the year. Wis.
Stat. § 70.47(7)(a). The taxpayer
must then file a written objection within the first two hours of the Board of
Review's first scheduled meeting of the year, unless extraordinary
circumstances are shown. Id. During its first meeting, the Board of Review
schedules hearings for each written objection it has received. Wis.
Stat. § 70.47(3)(a). The Board of
Review must then notify each objecting taxpayer of the time of their hearing at
least forty-eight hours in advance of that meeting. § 70.47(3)(ah). In contrast, in opt out municipalities, the
Board of Review must grant a sixty-day extension of the hearing date once a
taxpayer requests the extension and pays a $100 fee. § 70.47(7)(c). This extension, available to only taxpayers
in opt out municipalities, may be lengthened by the Board of Review if the
taxpayer shows good cause. Id.
¶29 The
third of these rights relates to broader discovery rights available to
taxpayers in opt out municipalities during Board of Review proceedings. If the objecting taxpayer in an opt out
municipality receives a sixty-day extension, the assessor and the taxpayer must
exchange all reports, documents, and exhibits they will present at the Board of
Review hearing no less than ten days before the hearing. Wis.
Stat. § 70.47(7)(c), 16(c). Both
the assessor and the objecting taxpayer in an opt out municipality can compel
the attendance of witnesses at the Board of Review hearing. § 70.47(8)(d). In addition, taxpayers in opt out
municipalities may compel the attendance of witnesses for depositions after
showing good cause to the Board of Review.
Id.
2. Assessment Challenges at the
Circuit Court Stage
¶30 While
Act 86 requires opt out municipalities to grant their taxpayers additional
rights during Board of Review proceedings, Act 86 limits both the type and
scope of circuit court review these taxpayers may seek. Act 86 limits taxpayers in opt out municipalities
to circuit court review through the “enhanced certiorari procedure” set forth
in Wis. Stat. § 70.47(13). In
contrast, taxpayers in all other municipalities have a right to select from
either traditional certiorari review or de novo review. See Wis. Stat. §§ 70.47(13), 74.37.
¶31 The
enhanced certiorari review available to taxpayers in opt out municipalities is
narrower in scope than the de novo review available to all other
taxpayers. Under enhanced certiorari
review, the circuit court must presume that the Board of Review's assessment is
correct absent a "sufficient showing" that the assessment is
incorrect. Wis. Stat. § 70.47(13). In opt out municipalities, it is the
taxpayer's burden to rebut this presumption.
If, in the course of an enhanced certiorari hearing, the taxpayer in an
opt out municipality successfully rebuts the presumption that the Board of
Review’s assessment is correct, the court may consider (1) evidence that was
not available at the time of the hearing before the Board, (2) evidence that
the Board refused to consider, and (3) evidence that the court otherwise
determines should be considered in order to correctly assess the property. Id. A taxpayer in an opt out municipality who
seeks enhanced certiorari review is not required to pay the challenged tax
prior to seeking such review, and the enhanced certiorari proceeding is given
scheduling preference in the circuit court over other proceedings. Id. In addition, both Metropolitan Associates and
Milwaukee agree
that enhanced certiorari review does not carry with it a right to a jury trial.
¶32 In
contrast, the de novo review available in all other municipalities requires
that a circuit court make its determination without regard to the Board of
Review's record or decision. Nankin,
245 Wis. 2d 86, ¶25.
In de novo review, the circuit court must hear new evidence and, while
the court must presume that the assessor's valuation is correct, the court does
not presume that the decision of the Board of Review is correct. Id. Taxpayers who request de novo review have
access to traditional civil discovery tools, but they must pay the challenged
tax prior to filing their action.
Further, in contrast to enhanced certiorari proceedings, their action is
not given scheduling preference over other circuit court proceedings. Id.,
¶29; Wis. Stat. §§ 74.37(4)(b), 70.47(13).
In addition, the parties dispute whether de novo review includes a right
to a jury trial.
3. Enhanced Certiorari and Enhanced
Board of Review Procedures Available in Opt Out Municipalities Are
Significantly Different From the De Novo Procedure Available in All Other
Municipalities
¶33 Having
surveyed the differences between the assessment challenge procedure available
to taxpayers in opt out municipalities and the assessment challenge procedure
available to taxpayers in all other municipalities, we next consider whether
these differences are significant in light of this court’s decision in Nankin. The court of appeals held that Act 86
successfully addressed Nankin's equal protection concerns and,
therefore, no significantly different treatment existed between taxpayers in
opt out municipalities and taxpayers in all other municipalities. We disagree.
¶34 We first discuss
the reasoning that led the Nankin court to hold that Milwaukee taxpayers experienced significantly
different treatment. We then apply the
reasoning from Nankin to the facts of the present case.
a.
Nankin Concludes that Significantly Different Treatment Exists
When Some Citizens May "Fully Contest Their Case in a Court Trial"
and Others May Not
¶35 In
2001, all taxpayers could first seek review of an assessment at their local
Board of Review. In 2001, however, Milwaukee taxpayers could
only challenge the Board of Review's decision through traditional certiorari
review. Wis. Stat. § 70.47(13) (2000-01). In contrast, all other Wisconsin
taxpayers could challenge a Board of Review's decision through either
traditional certiorari review or § 74.37 de novo review. See Nankin, 245 Wis. 2d 86, ¶6. We held in Nankin that all taxpayers
outside of Milwaukee
could "fully contest their case in a court trial" through the de novo review
process. Id., ¶24. We then
compared the assessment review procedure available to Milwaukee
taxpayers with de novo review available to all other taxpayers to determine
whether Milwaukee
taxpayers had access to a process which allowed them to "fully contest
their case in a court trial."
¶36 The Nankin court pointed to four differences between de novo
review and the Board of Review procedures provided to Milwaukee taxpayers to conclude that the two
procedures were significantly different.
First, de novo review allows taxpayers to present their case
in a forum
that is conducted according to the rules of evidence and discovery. Id.,
¶29. Board of Review hearings, by contrast, follow
more informal rules that "may lead to an incomplete or inadequate record." Id. Second, de novo review permits property
owners to subpoena witnesses to testify at trial, while the Board of Review
procedures in place prior to 2001 did not.
Third, de novo review is conducted by a judge, while Board of Review proceedings
are conducted by citizens who may not be "versed in the rules of
evidence." Id., ¶31. Fourth, de
novo review "typically afforded a greater amount of time to prepare [a]
case at the circuit court level," while Board of Review hearings afford
less time to prepare a case. Id., ¶32.
¶37 Next,
Nankin focused on three differences between de novo review and
traditional certiorari review when it held that the traditional certiorari
process was significantly different than a de novo procedure which allowed
taxpayers to "fully contest their
case in a court trial." First, de novo review requires the circuit court
to make its own independent determinations, while traditional certiorari review
is limited to a review of the record as it was compiled at the Board of Review
stage. Second, de novo review requires giving presumptive weight only to the
assessor's determination, while traditional certiorari review requires circuit
court deference to the Board of Review's decision. And third, de novo review
requires the circuit court to make its own assessment determination, while
traditional certiorari review generally requires the circuit court to remand to
the board if a reassessment is necessary.
Nankin, 245 Wis. 2d 86, ¶25.
¶38 Since Milwaukee
taxpayers could not "fully contest their case in a court trial" while
all other taxpayers could do so through the de novo procedure, we held that the
classes received significantly different treatment. Nankin, 245 Wis. 2d 86, ¶¶24, 27.
b.
Taxpayers in Opt Out Municipalities May Not “Fully Contest Their Case in
a Court Trial” While All Other Taxpayers May Do So
¶39 Applying this court’s reasoning in Nankin to the present
case, we must examine the differences between Act 86's enhanced certiorari and
Board of Review procedures, and contrast them with the de novo procedure
available to all other taxpayers——a
process which allows taxpayers to "fully contest their case in a court
trial." Nankin, 245 Wis. 2d 86, ¶24. First, we review the enhanced Board of Review
rights provided to taxpayers under Act 86, and conclude they do not provide
taxpayers with the protections of a court trial. Second, we review the enhanced certiorari
procedure under Act 86, and again conclude they fail to provide taxpayers with
the protections of a court trial.
i.
Enhanced Board of Review Rights
¶40 The
enhanced Board of Review hearing rights available under Act 86 to taxpayers in
opt out municipalities do not allow taxpayers in Board of Review proceedings to
"fully contest their case in a court trial." Id. Even with the additional rights granted under
Act 86, the Board of Review proceedings continue to favor municipalities over
taxpayers, just as they
did in Nankin.
¶41 For one, the sixty-day hearing date extension under Act 86 runs the
risk of forcing complex property disputes into being heard much more quickly
than such disputes would typically be heard in a de novo action. Further, additional extensions following the
initial sixty-day extension would require a finding of "good cause"
by a Board of Review composed not of legal experts, but instead composed of lay citizens. Wis.
Stat. § 70.47(7)(c),
(16)(c). This truncated discovery period
heightens the risk we feared in Nankin of an "incomplete or
inadequate record." Nankin,
245 Wis. 2d 86, ¶29.
¶42 Even setting aside these defects, the Board of Review process suffers other shortcomings
when compared to a de novo action. For
one, the Board of Review procedure under Act 86 allows the taxpayer access to
the assessor's trial exhibits a mere ten days prior to their hearing. Wis.
Stat. § 70.47(13). The appropriate time for the taxpayer to
depose the assessor would be in this ten-day period after the taxpayer has
received the assessor's report that will be introduced during the Board of
Review hearing. Additionally, Act 86
requires that taxpayers in opt out municipalities show “good cause” in order to
depose the assessor. § 70.47(8)(d). Therefore, in this ten-day pre-hearing
period, the taxpayer would need to obtain a finding of "good cause"
from a Board of Review composed of individuals untrained in the law, depose the
assessor, review and analyze all of the assessor's trial exhibits, and prepare
to argue their case. Further, during
this ten-day pre-hearing period, the taxpayer would be attempting to discover
other evidence that may refute the assessor’s valuation. De novo trials, on the other hand, do not
operate under such restrictive timelines and the discovery process is governed
by a judge, not a lay citizen. Nankin,
245 Wis. 2d 86, ¶31. Nankin's concern that the Board of
Review would develop an "incomplete or inadequate record" remains
unanswered. Id., ¶29.
¶43 The
enhanced Board of Review rights created by Act 86 fail to provide taxpayers the
ability to "fully contest their case in a court trial." Accordingly,
we hold that the enhanced Board of Review rights cause taxpayers in opt out
municipalities to be treated significantly different than all other taxpayers.
ii.
Enhanced Certiorari Procedure
¶44 The enhanced certiorari procedure created by Act 86 also fails to
offer the protections of a court trial.
Specifically, the enhanced certiorari procedure significantly restricts
the taxpayer's ability to bring additional evidence before the circuit court
when compared to de novo review. In de
novo review, the challenging taxpayer can seek the introduction of any
admissible evidence in the circuit court.
Wis.
Stat. § 904.02. Under the enhanced certiorari procedure
created by Act 86, however, the circuit court may allow the taxpayer to
introduce additional evidence only if the taxpayer first rebuts the
presumption that the board's valuation is correct. See Wis. Stat. § 70.47(7)(c), (16)(a). If the taxpayer successfully rebuts the
presumption that the Board's valuation is correct, then, and only then, may the
circuit court consider (1) evidence that was not available at the time of the
Board of Review hearing, (2) evidence that the Board of Review refused to
consider, or (3) evidence that the court otherwise determines should be
considered in order to determine the correct assessment. Wis.
Stat. § 70.47(13).
¶45 This court observed in Nankin that the de novo action “is not
simply another means of judicial review."
Nankin, 245 Wis. 2d 86, ¶24. Instead, the de novo action is a completely
independent cause of action in which the Board of Review's factual and legal
determinations may be entirely disregarded by the circuit court. Id.,
¶¶24-25.
¶46 Unlike de novo actions, the circuit court on enhanced certiorari
review must first review the Board of Review's factual and legal findings. Only then does it decide whether the
decision's presumption of correctness is rebutted——a prerequisite to the taxpayer introducing any
independent evidence. Wis.
Stat. § 70.47(13). This enhanced certiorari procedure merely
entails a “court’s review of a lower court’s or an administrative body’s
factual or legal findings.” Nankin, 245 Wis. 2d 86, ¶24. This is not comparable to a de novo action where
taxpayers have access to a new "action according to state civil practice
and procedure, including the right to a trial." Id. The taxpayer on de novo review need not first
overcome any presumptions to introduce evidence. Rather, "[a]ll relevant evidence is
admissible" in de novo actions. Wis. Stat. § 904.02.
¶47 The enhanced certiorari procedure created by Act 86 fails to
provide taxpayers the ability to "fully contest their case in a court
trial." Accordingly, we hold that the enhanced certiorari procedure
created by Act 86 causes taxpayers in opt out municipalities to be treated
significantly different than all other taxpayers.
4.
Section 74.37 De Novo Review Does Not Contain a Jury Trial Right
¶48 Both
parties concede that if a § 74.37 de novo action contains a jury trial
right and a § 70.47(13) enhanced certiorari proceeding does not contain
such a right, this would per se qualify as significantly different treatment.
We agree that such a distinction between
the assessment review processes would qualify as a significant difference. Therefore, whether the § 74.37 de novo
action contains a jury trial right is relevant in determining whether the de
novo action and enhanced certiorari proceeding are significantly different.
¶49 The
parties disagree as to whether de novo actions brought pursuant to Wis. Stat.
§ 74.37 contain a jury trial right.
We hold they do not. In Village
Food & Liquor Mart, 216 Wis. 2d 189,
¶11, we held that:
[A] party has a constitutional right to have a
statutory claim tried to a jury when: (1) the cause of action created by the
statute existed, was known, or was recognized at common law at the time of the
adoption of the Wisconsin Constitution in 1848 and (2) the action was regarded
at law in 1848.
Id.
Metropolitan Associates argues that the modern § 74.37 de novo excessive assessment claim is a
counterpart to the common law claim for "money had and received"
which existed in 1848. Milwaukee
argues that the claim for money had and received included only illegal
assessment claims and not excessive assessment claims.
¶50 We
conclude that an action for money had and received in an excessive valuation
case was not recognized at common law in 1848 and therefore only reach the
first step in the Village Food analysis.
In applying the first step of the Village Food test, we look to
whether a § 74.37
de novo action "is essentially the counterpart of a cause of action
existing in 1848 [and whether] the two causes of action . . . share a similar
purpose." Harvot v. Solo Cup Co.,
2009 WI 85, ¶72, 320 Wis. 2d 1, 768 N.W.2d 176.
¶51 First, we discuss whether Matheson v. Town of Mazomanie, 20 Wis. 201
(*191)(1865), or A.H. Strange Co. v. City of Merrill, 134 Wis. 514, 115
N.W.2d 115 (1908), points to a common law counterpart to the § 74.37 de novo
excessive assessment action. Second, we
discuss whether the assessment challenge process which existed in pre-statehood
Wisconsin
contained a jury trial right. Third, we
discuss whether the assessment challenge process which existed immediately
after statehood contained a jury trial right.
a. No Common Law Action Existed in 1848 for
Excessive Assessment Claims
¶52 Metropolitan Associates cites no case showing that actions for an
excessive assessment existed in our pre-1848 common law. Metropolitan Associates erroneously relies on
Matheson v. Town of Mazomanie, 20 Wis. 201 (*191)(1865) to
support its argument that the common law action for money had and received
included excessive assessment claims. In
that case, the taxpayer (“Matheson”) self-reported and verified by oath the
value of his personal property to be $1,000.
Id.
at 201 (*191). The assessor then added
$5,000 to the value of Matheson's nonenumerated articles of personal property,
for a total assessed value of $6,000. Id. We held that after Matheson had verified the
value of his nonenumerated property by oath, neither the assessor, town clerk,
or board of supervisors had the statutory power to increase the valuation.
Accordingly, we concluded that the $5,000 addition was "unlawful
and void" against Matheson. Id. at 204
(*194).
¶53 Matheson
is not an excessive assessment case. The
"unlawful and void" language from Matheson shows that the
assessor did not merely overvalue property which the assessor had the lawful
power to tax. This "unlawful and
void" language instead reveals that the assessor did not have the power to
assess the nonenumerated articles against Matheson. A clear counterpart to the common law Matheson
claim would be a modern Wis. Stat. § 74.35 action to recover an
"unlawful tax" and not a Wis. Stat. § 74.37 excessive assessment
action. Modern excessive assessment
cases under § 74.37 do not concern the power of the assessor to assess a
certain property (i.e. the "lawfulness" of the tax). Rather, modern excessive assessment cases
concern the proper application of assessment principles to property which can
lawfully be subject to tax.
¶54 Metropolitan
Associates further relies on our holding in A.H. Strange Co. v. City of
Merrill, 134 Wis. 514, 518, 115 N.W. 115 (1908), that:
Independently of the statute, if one pays a tax
involuntarily, . . . he may sue to recover back the
tax. It will be observed that an action
based on involuntary payment of an illegal tax was held to be maintainable in
this state before the passage of the law of 1870 . . . .
Metropolitan Associates argues that since property taxes are
involuntarily paid, they fall under the common law action described in A.H.
Strange. Metropolitan Associates,
however, ignores the language in A.H. Strange which expressly limits the
common law action described therein to one involving an "illegal
tax." Id.
Again, this implicates a § 74.35 unlawful tax claim and not the
§ 74.37 excessive assessment claim.
Accordingly, case law evidences no common law action existing in 1848
for an excessive assessment claim.
b.
The Procedure for Challenging Assessments Which Existed in Wisconsin Before 1848
Did Not Contain a Jury Trial Right
¶55 The
statutory processes for assessment challenges which existed in the decade prior
to statehood show that in this period, excessive assessment cases were not
tried to juries. The 1839 Statutes of the Territory of Wisconsin
required that:
[S]hould any person feel aggrieved by the value which
may be affixed upon his land by the assessor, or by the value at which the
appraisers estimated his town lot, he may produce evidence before the board of
commissioners, and if they think the value too high or too low, they shall
order the clerk to alter it accordingly.
Wis. Terr. Stat. p. 45 § 5 (1839). As this statute illustrates, prior to
statehood, county commissioners served as the precursor to the modern Board of
Review. This review conducted by county
commissioners was not a jury trial but rather is more comparable to an
administrative hearing before a public agency.
¶56 The
1839 statutes also provided a mechanism for review of the county board of
commissioners' decision in the district court:
From all the decisions of the several boards of
commissioner[s] there shall be allowed an appeal to the district court, by any
person or persons aggrieved, and the person or persons appealing shall take the
same within thirty days after such decision, by giving bond with security, to
the acceptance of the clerk of said board, conditioned for the faithful
prosecution of such appeal, and the payment of costs, if the same shall be
adjudged by the said court to be paid by such appellant; and the clerk shall record
such appeal, with the cases pending in the district court, within twenty days
after the taking of such appeal.
Wis. Terr. Stat. p. 106 § 18 (1839). The fact that such an appeal would be heard
by a judge and not a jury provides support for our conclusion that the
procedure for prosecuting an excessive assessment has never included the right
to a jury trial. Wis. Terr. Stat. p. 196 § 6 (1839).
c.
The Procedure for Challenging Assessments Which Existed
Immediately After Statehood Did Not Contain a Jury Trial Right
¶57 During
the decade after statehood, from 1848 until 1858, Wisconsin allowed property owners to make an
affidavit as to the value of their property.
Wis.
Stat. tit. 5, ch. 15, § 26 (1849).
The assessor was required to accept the value determined by the
taxpayer's affidavit. Id.
Because of this affidavit process, taxpayers had no reason to challenge
assessments——the taxpayers themselves valued the property. Simply put, there was no need for juries in
such matters, which is likely why none were provided for by statute.
¶58 Because
taxpayers had no right to try excessive assessment claims to juries either
immediately before or after statehood, it would be incompatible with both
Wisconsin's history and the Village Food test to hold that the modern
§ 74.37 de novo excessive assessment claim contained a jury trial right.
¶59 Although we find that neither an enhanced certiorari proceeding nor
a de novo action contains a jury trial right, we nonetheless hold that Act 86
treats taxpayers in opt out municipalities significantly different from all
other taxpayers. We must therefore,
unlike the court of appeals, reach the third step of Metropolitan Associates'
equal protection challenge——whether
there is a rational basis for this significantly different treatment. Nankin, 245 Wis. 2d 86, ¶15.
C. No Rational Basis Exists for the
Significantly Different Treatment of Taxpayers in Opt Out Municipalities
¶60 Having
concluded that Act 86 treats taxpayers in opt out municipalities significantly
different from all other taxpayers, we next consider whether this significantly
different treatment has a rational basis.
¶61 A statute violates equal protection only when "the legislature
has made an irrational or arbitrary classification, one that has no reasonable
purpose or relationship to the facts or a proper state policy." Milwaukee
Brewers v. Wisconsin Dep't of Health & Soc. Servs., 130 Wis. 2d 79, 99, 387 N.W.2d 254 (1986). Any doubts must be resolved in favor of the
reasonableness of the classification. State
v. Hezzie R., 219 Wis. 2d 848, 894, 580 N.W.2d 660 (1990).
¶62 "'The fact [that] a statutory classification results in some
inequity . . . does not provide sufficient grounds for invalidating a
legislative enactment.'" Id. at 893-94.
(quoting State v. McManus, 152 Wis. 2d 113, 131, 447 N.W.2d 654 (1989)). Indeed, "'[e]qual protection does not
deny a state the power to treat persons within its jurisdiction differently . . . .'" Id.
at 893. However, "[t]he basic test
is not whether some inequality results from the classification but whether
there exists a rational basis to justify the inequality of the
classification." Milwaukee
Brewers, 130 Wis. 2d at 99. In determining whether a rational basis
exists, we look first to determine whether the legislature articulated a
rationale for its determination. Id. at
99-101. If we cannot identify any such
articulated rationale, it is the court’s obligation to construct one. Id.
at 101.
¶63 The
classification created by Act 86 is based on whether or not a municipality has
enacted an ordinance opting out of de novo review. After reviewing Act 86's legislative history,
we note that the legislature did not articulate any rationale for creating this
distinct class of opt out taxpayers.
Therefore, we are obligated to construct a rationale if at all possible. Nankin, 245 Wis. 2d 86, ¶37.
¶64 Under our case law, a statute must meet five criteria in order to
have a rational basis:
(1) All
classification[s] must be based upon substantial distinctions which make one
class really different from another;
(2) The
classification adopted must be germane to the purpose of the law;
(3) The
classification must not be based upon existing circumstances only. [It must not be so constituted as to preclude
addition to the numbers included within the class];
(4) To whatever
class a law may apply, it must apply equally to each member thereof;
(5) The
characteristics of each class should be so far different from those of other
classes as to reasonably suggest at least the propriety, having regard to the
public good, of substantially different legislation.
Nankin, 245 Wis. 2d 86, ¶39 (citing Aicher,
2000 WI 98, ¶ 58, 237 Wis. 2d 99, 613 N.W.2d 849)(alterations in
original). Under this test, Act 86 fails
to satisfy the first, second, and fifth criteria.
¶65 To overcome the first prong of the rational basis test, Milwaukee must show that
"substantial distinctions" exist between taxpayers living in opt out
municipalities and taxpayers living in all other municipalities.
¶66 Milwaukee
argues that the enhanced Board of Review rights and enhanced certiorari
procedure given to taxpayers in opt out municipalities create substantial
distinctions between the classes sufficient to make taxpayers in opt out
municipalities "really different" from taxpayers in all other
municipalities. Nankin, 245 Wis. 2d 86, ¶39. Metropolitan Associates argues that Milwaukee only cites
distinctions in the treatment of the taxpayers and does not cite to any
distinctions between the characteristics of the taxpayers in the two
classes.
¶67 In Nankin we held that "[t]here is nothing inherent
about populous counties to justify the classification in the statute that
restricts the manner in which owners of property located in such counties may
challenge their assessments." Nankin,
245 Wis. 2d 86, ¶41. We also held that:
There is no reason why an owner of property located in
the Village of Shorewood
in Milwaukee County
should be treated differently than an owner of property in the Village of Amherst
in Portage County with respect to challenging
their property assessments.
Id.
¶68 In this case——to echo Nankin's
holding——we see nothing inherently different about taxpayers in opt out
municipalities that would justify restricting the manner in which taxpayers
located in those municipalities may challenge their assessments. See Id., ¶41.
Taxpayers in opt out municipalities are no different from taxpayers in
all other municipalities, except for the different rights available to
taxpayers in opt out municipalities at the Board of Review and circuit court
review stages. We see no reason
why Act 86 allows opt out
municipalities to deny their taxpayers the ability to "fully contest their
case in a court trial," while taxpayers in all other municipalities may
still fully contest their case in a de novo proceeding. Id.,
¶24.
¶69 Milwaukee advances no
characteristic of taxpayers in opt out counties that makes such taxpayers
really different from all other taxpayers.
Thus, it fails to establish the first prong of the rational basis test.
¶70 Under the second
prong of the rational basis test, we examine whether the classification adopted
is germane to the purpose of the law. Milwaukee
argues——similarly to the arguments we found unpersuasive in Nankin——that
the purpose of Act 86’s opt out review is to promote early settlement, provide
taxpayers access to a faster review, and provide taxpayers a cheaper
review. See Nankin, 245 Wis. 2d 86,
¶37. Milwaukee argues that creating the class of
opt out taxpayers is germane to these purposes.
We are not persuaded.
¶71 Judicial
efficiency is a concern that all courts share, irrespective of municipal
location. See id., ¶¶38,
43-44. It is irrational for the
legislature to allow opt out municipalities to arbitrarily deprive their
citizens of de novo review based on whatever criteria the municipality chooses
to consider. Act 86 does not bind a
municipality to first consider whether opting out of de novo review would be a
more efficient process for that municipality and its taxpayers. A municipality following Act 86 may, for
whatever reason it chooses——whether aligned with the legislature’s stated
objectives or not——opt out of de novo review.
¶72 Milwaukee argues that the
assessment review under Act 86 is a "faster, more efficient, more
cost-effective" procedure than the traditional Board of Review and circuit
court review procedure. If this is true,
there appears to be no reason why the legislature would not simply repeal the
§ 74.37 de novo review statute and instead require the Act 86 review
procedure be followed in all municipalities.
However, the legislature did not do this. Instead, the classification created by the
legislature under Act 86 delegates the decision of whether to pass an ordinance
adopting the assessment review procedure under Act 86 to each individual
municipality in Wisconsin. The
objectives of Act 86 argued by Milwaukee in the present case, which are essentially
to create a more efficient assessment review procedure for municipalities, have
no relation to the classification created by Act 86, which simply
delegates the choice of whether to implement Act 86’s streamlined assessment
review procedure to each individual municipality. To be germane to the purposes of Act 86, the
classification created by Act 86 would need to, in some way, align to the
legislature’s objectives in enacting Act 86.
Milwaukee
fails to explain, and we are unable to discern, how the classification of opt
out taxpayers is germane to the purposes of Act 86. Therefore, we conclude that Milwaukee fails to satisfy the second prong
of the rational basis test.
¶73 Finally,
under the fifth prong of the rational basis test, we "examine whether the
characteristics of each class are so far different as to reasonably suggest the
propriety, as to the public good, of substantially different legislation." Nankin, 245 Wis. 2d 86, ¶43. Here, as noted above, Milwaukee presents no characteristic
of taxpayers residing in opt out municipalities——and we are unable to discern
one——that is different than the characteristics of all other taxpayers. Since the characteristics of these taxpayers
are identical, they cannot "reasonably suggest the
propriety . . . of substantially different
legislation." Thus, Milwaukee also fails to
satisfy the fifth criteria of the rational basis test.
¶74 In
sum, Act 86 fails to satisfy the first, second, and fifth criteria of the
rational basis test. We therefore hold
that Act 86's irrational denial of de novo review to a distinct class of
citizens violates the equal protection provisions of the Wisconsin and the United States
Constitutions.
D.
Act 86's Severability
¶75 Because we have concluded that the provisions of Act 86 which allow
municipalities to deny their citizens access to § 74.37 de novo review violate equal protection, we
must now determine whether the unconstitutional provisions may be severed from
Act 86's remaining provisions.
¶76 Wisconsin Stat. § 990.001(11)
provides that "[i]f any provision of the statutes or of a session law is
invalid . . . such invalidity shall
not affect other provisions or applications which can be given effect without
the invalid provision or application."
We have long held that "the presumption is in favor of severability." Nankin, ¶49 (quoting State v. Janssen, 219 Wis. 2d 362, ¶37, 580 N.W.2d 260 (1998)). "Unless it is evident that the
legislature would not have enacted those provisions which are within its power,
independently of that which is not, the invalid part may be dropped if what is
left is fully operative as a law." Id.
¶77 The legislature has expressed no intent in Act 86 that is contrary
to the general presumption of severability.
Further, the remaining sections of Wis. Stat. §§ 70.47, 73.03, and 74.37 remain fully operative as a law
when the modifications from Act 86 which create the enhanced Board of Review
procedure and the enhanced certiorari procedure are severed. As a result, we hold that the provisions of
Act 86 which create the enhanced Board of Review procedure and the enhanced
certiorari procedure are severable.
¶78 The circuit court severed only the specific subsections of § 74.37
that restrict taxpayers in opt out municipalities from seeking de novo review. The statutes creating the enhanced Board of
Review and enhanced certiorari procedures were not affected by the circuit
court order.
¶79 As a result, under the circuit court's order, taxpayers in opt out
municipalities would have access to three separate assessment review
procedures: the enhanced Board of Review procedure, enhanced certiorari
procedure, and de novo review. By
contrast, under the circuit court's order, taxpayers in all other
municipalities would have access to traditional certiorari review and de novo
review. In enacting Act 86, the
legislature clearly did not intend to create a situation where enhanced board
of review and enhanced certiorari procedures would be available in a
municipality where de novo review was also available. Therefore, we conclude that all of Act 86’s
modifications to Wis. Stat. §§ 70.47,
73.03, and 74.37 are unconstitutional.
¶80 It is important to note that our holding today simply returns the
Board of Review procedures in all counties to the procedures which existed
before Act 86 was approved. It also
returns the procedure for challenging Board of Review assessment determinations
to the procedure which existed before Act 86 was approved——allowing all taxpayers the choice
between traditional certiorari review and de novo review.
IV.
CONCLUSION
¶81 We conclude that the treatment taxpayers in opt out municipalities
receive under Act 86 it significantly different than the treatment all other
taxpayers receive, and we conclude that this difference in treatment lacks a
rational basis. Accordingly, we reverse
the court of appeals and hold that all of Act 86’s modifications to Wis. Stat.
§§ 70.47, 73.03,
and 74.37 are unconstitutional.
By the Court.—The decision of the court of
appeals is reversed.
¶82 SHIRLEY S. ABRAHAMSON, C.J. (dissenting). I agree with the unanimous decision of the
court of appeals reversing the order of the circuit court and holding that 2007
Wis. Act 86 is constitutional. I agree
with the court of appeals that in enacting 2007 Wis. Act 86 the legislature
sought to, and effectively did, address the equal protection deficiencies
identified in Nankin v. Village of Shorewood, 2001 WI 92, 245 Wis. 2d 86, 630 N.W.2d 141.
¶83 As a result of 2007 Wis.
Act 86, a taxation district may determine the procedure a taxpayer may use to
challenge an assessment. The taxation
district may adhere to Wis. Stat. § 74.37(3)(d),
allowing a taxpayer to pay the assessment and commence an action in circuit
court to recover the amount of a claim not allowed. Or a taxation district may "opt in"
to Wis. Stat. § 74.37(4)(c),
(4)(d), allowing a taxpayer to get additional rights before the Board of
Review and a broad right to be heard in court following an adverse decision by
a Board of Review.
¶84 First, like the court of appeals, I conclude that the treatment of taxpayers in "opt-in"
taxation districts under 2007 Wis. Act 86 is not significantly different from
the treatment of taxpayers in taxation districts operating under Wis. Stat. § 74.37(3)(d). Second, I conclude that even if the treatment
of taxpayers in the two different classes of municipalities is significantly
different, a rational basis exists for enabling taxing districts to determine whether
to enact an ordinance to "opt in" under 2007 Wis. Act 86. Third, I conclude that the majority errs in
its severability analysis. If sections 8
and 9 of 2007 Wis. Act 86 are
unconstitutional, they may be severed from the remainder of 2007 Wis. Act 86.
I
¶85 Like the court of appeals, I conclude that the treatment of
taxpayers in opt-in taxation districts under 2007 Wis. Act 86 is not
significantly different from the treatment of taxpayers in taxation districts
operating under Wis. Stat. § 74.37(3)(d). Accordingly, 2007 Wis. Act 86 is not
unconstitutional.
¶86 2007 Wis. Act 86 addressed the concerns this court elucidated in Nankin.
¶87 2007 Wis. Act 86 gives increased rights to the taxpayer before the
Board of Review:
• Property owners can request a 60-day period to
prepare for a hearing before the Board and may request additional extensions for
good cause.
• The parties are required to simultaneously
exchange all reports, documents, and exhibits that will be presented at the
hearing at least 10 days prior to the Board hearing.
• The Board may, and upon request of the assessor
or the taxpayer shall, compel the attendance of witnesses for the hearing. Further, the Board upon good cause may compel
the attendance of witnesses for depositions.
¶88 Moreover, 2007 Wis. Act 86 gives increased rights to the taxpayer
in judicial review of the Board of Review's assessment. The decision of the Board of Review is
granted a presumption of correctness, but "that presumption goes away if
'rebutted by a sufficient showing by the [taxpayer] that the valuation is
incorrect. If the presumption is
rebutted, the court shall determine the assessment without deference to the
board of review and based on the record before the board of review, except that
the court may consider evidence that was not available at the time of the
hearing before the board[,] [or] that the board refused to consider, or that
the court otherwise determines should be considered in order to determine the
correct assessment.'"
¶89 As the court of appeals explains, the circuit court is given
extensive leeway in judicial review under 2007 Wis. Act 86, consistent with a
circuit court's powers to conduct trials.
¶90 A presumption plays a role in judicial review under 2007 Wis. Act
86 and also plays a role in
judicial review under Wis. Stat. § 74.37(3)(d). The circuit court in a § 74.37(3)(d) action
gives presumptive weight to the assessor's assessment. Therefore, under 2007 Wis. Act 86 or under § 74.37(3)(d), a taxpayer before the circuit court
must overcome a presumption, either that the board's decision is presumptively
correct, or that the assessor's assessment is presumptively correct. In situations when the board accepts the
assessor's assessment as its determination of the assessment value, the two
presumptions are indistinguishable.
¶91 Even if the difference in the operation of these two presumptions
under the two systems amounts to "some inequity," which I do not
think it does, a "statutory classification [that] results in some inequity . . . does not provide
sufficient grounds for invalidating a legislative enactment."
¶92 I conclude that a taxpayer in an "opt in" taxation
district is not treated significantly differently from a taxpayer who pays the
tax and seeks relief from an excessive assessment under Wis. Stat. § 74.37(3)(d). Accordingly, I conclude there is no equal
protection violation.
II
¶93 In Nankin,
this court was faced with a classification based on county population. In the instant case, we are faced with a
classification based on an option given to taxation districts.
¶94 The challenged
legislation in the
present case, unlike the statute the court declared unconstitutional in Nankin,
is uniformly applicable to all taxation districts. The classifications developed in the present
statutory system are based on an option granted to all taxation districts to
determine a comprehensive tax assessment challenge system applicable to the
taxpayers in that district.
¶95 This
distinction leads me to the conclusion that even if I were to agree with
the majority that taxpayers are treated substantially differently, the
legislation granting a taxation district the option to establish this
alternative procedure for tax assessment challenges is constitutional.
¶96 A statute is
presumed constitutional. In the present case it is undisputed
that rational basis is the appropriate level of scrutiny for the equal
protection challenge. The
challenger has the burden of demonstrating that the classification is arbitrary
and irrational beyond a reasonable doubt.
¶97 The statute
challenged in the instant case will be upheld against an equal protection
challenge if a plausible policy reason exists for the classification and the
classification is not arbitrary in relation to that reason. It will be held unconstitutional if it is
shown to be "patently arbitrary" with "no rational relationship
to a legitimate government interest."
¶98 The legislature
did not explicitly set out its purpose in enacting 2007 Wis. Act 86. I will therefore search for a purpose that
will uphold the statute's constitutionality.
¶99 A
legitimate purpose of this law is to increase the efficiency of the tax
assessment challenge process for taxpayers and taxation districts. An additional purpose, as indicated by the
legislative history, is to provide a system that will reduce the number of
actions brought under § 74.37.
¶100 In
Nankin, we determined that a classification based strictly on county
population was not germane to the purpose of judicial efficiency, or faster and
cheaper resolution of assessment challenges for taxpayers (and taxation
districts). In large part this
conclusion was based on the fact that those same purposes are similarly
applicable to all taxpayers regardless of the population of the county in which
the property is located.
¶101 Here,
the analysis is necessarily different.
The classification is not based strictly on a county population
number. Rather, the classification is
based on the choice of a taxation district.
¶102 Put
simply, there is a legitimate government interest in efficiently handling tax
assessment challenges. Giving
municipalities a choice between two comprehensive procedures advances this
purpose, because it allows each taxation district to determine which procedure
is more efficient under its unique circumstances. As pointed out by the circuit court, one
unique factor is the number and percentage of commercial and residential
properties located in the taxation district.
Apparently, more challenges can be expected regarding commercial
properties.
¶103 While
the purpose of 2007 Wis. Act 86 is not expressly stated, efficiency in
resolving tax assessment challenges is seemingly the driving force (both for
the taxation district and the taxpayer) in creating this new optional
system. Providing municipalities with
the option to determine which of two procedures will most efficiently resolve
tax assessment challenges based on various local factors (like the number of
residential and commercial properties) bears a rational relationship to the
government interest in creating an efficient system before the Board of Review
and the courts for tax assessment challenges.
¶104 The
majority opinion rebukes Milwaukee's argument that the procedures under 2007
Wis. Act 86 are "faster, more efficient, [and] more cost-effective"
by suggesting that if that were the case the legislature could simply repeal
§ 74.37(3) and universally apply the procedure created by 2007 Wis. Act
86. Majority op., ¶72.
¶105 The
legislature most certainly has the power to do so. However, although the procedure created in
2007 Wis. Act 86 may be faster, more efficient, and more cost-effective for Milwaukee, other taxation districts such as Green Bay, Richland
Center, or the Village of Shorewood may come to a
different conclusion based on the nature of the property and tax assessment
challenges. Therefore, the legislature
made a policy choice to provide taxation districts with an option of two
alternative procedures as opposed to mandating one or the other procedure for
all taxation districts.
¶106 Contrary
to the majority's conclusions, I cannot conclude that the legislation is
"arbitrary," because it leaves for the taxation district the choice
of how a taxpayer should proceed to challenge an assessment. The state legislature provides options to
local government in a number of areas. And
as with all policy decisions vested in the representative branches of
government, the recourse for taxpayers unhappy with the policy decisions of
their representatives rests in the ballot box.
¶107 I
conclude that the legislature could rationally conclude that the uniqueness and
variety of the taxation districts in Wisconsin
provide ample distinguishing characteristics that support providing this option
to advance the purpose of establishing a more efficient system for tax
assessment challenges.
III
¶108 The
circuit court declared unconstitutional only Wis. Stat. § 74.37(4)(c) and
(4)(d) as amended and created by 2007 Wis. Act §§ 8 and 9. In contrast, the majority opinion invalidates
the entire 2007 Wis. Act 86 by stating: "[T]he legislature clearly did not
intend to create a situation where enhanced board of review and enhanced
certiorari procedures would be available in a municipality where de novo review
was also available." Majority op.,
¶79. I disagree with the majority opinion.
¶109 Severability
is favored. Wis. Stat. § 990.001(11). The presumption is in favor of severability.
¶110 There
seems to be no dispute in the present case that if the invalid part of 2007
Wis. Act 86 falls away, the remainder can be fully operative.
¶111 The
question then becomes whether it is "evident that the Legislature would
not have enacted those provisions which are within its power, independently of
that which is not . . . ."
¶112 Nothing
in the text of 2007 Wis. Act 86 or the legislative history of the Act makes it
"evident" that the legislature intended that the Act not be
severable.
¶113 For
the reasons set forth, I cannot join the majority's declaration that
2007 Wis. Act 86 violates the Wisconsin
Constitution. Further, I disagree with
the majority's declaration that the provisions of 2007 Wis. Act 86 are not
severable. Accordingly, I dissent.
¶114 I am authorized to state that Justice ANN WALSH BRADLEY and Justice
N. PATRICK CROOKS join this dissent.