November 29, 1994

Mr. Alvin Pahlke
Tripp County State's Attorney
P.O. Box 432
Winner, S.D. 57580-0432

OFFICIAL OPINION NO. 94-13

SDCL 10-6-33.10

Dear Mr. Pahlke:

You have requested my opinion concerning the following factual situation:

FACTS:

Certain taxpayers in Tripp County, under the advice of a Winner attorney, have proposed that the Tripp County Commissioner adopt a resolution reducing the taxable value of all agricultural land to its 1993 assessed valuation. They want the assessed value of agricultural real property, but not nonagricultural real property, rolled back to 1993 levels.

The taxpayers' request is based on House Bill 1255, which passed in 1994 and amended SDCL 10-6-33.10. HB 1255 pushed back the date that personal property replacement funds could be withheld by the Secretary of Revenue for violations of statutes governing the assessment of nonagricultural property. The old date for withholding such funds was January 1, 1993. Effective July 1, there will be no withholding of personal property tax replacement dollars until after January 1, 1995 for nonagricultural property assessment violations and after January 1, 1996 for agricultural property assessment violations.

The taxpayers who presented the resolution argue that the purpose of HB 1255's extension of time was to allow a rollback of agricultural land values to 1993 levels, as proposed by the resolution. The County's position is that it would be a violation of the law to pass the resolution. In 1993, the County would not have been in compliance as required by SDCL 10-6-33.10.

Based upon these facts, you have asked the following question.

QUESTION:

May the Tripp County Commission pass the proposed resolution without being in violation of SDCL 10-6-33.10 (as amended by HB 1255) and other laws?

IN RE QUESTION:

SDCL 10-6-33 requires that "[a]ll property shall be assessed at it true and full value in money." Statewide, county compliance with that legislative mandate has in the past proven spotty. See, e.g., Rapid City Area School District No. 51-4 v. Pennington County Auditor, 284 N.W.2d 308, 311 (S.D. 1979). Consequently, in 1989 the Legislature enacted SDCL 10-6-33.10 to encourage compliance. The statute provided that fifty percent of the personal property tax replacement monies a county receives pursuant to SDCL 10-13A-3.1 would be withheld if the county did not value real property in compliance with SDCL Chapter 10-6. The authority for the Secretary of Revenue to withhold the funds was to commence January 1, 1993. (Notably, a 1990 amendment to SDCL 10-6-33.10 (SL 1990, ch. 71, 5) extended the withholding date from January 1, 1993 to January 1, 1994.)

After a determination by the Secretary in 1993 to implement the withholding of property tax replacement funds for several counties, the 1994 Legislature postponed the Secretary's power to so withhold those funds. As of July 1, 1994, SDCL 10-6-33.10 provides in relevant part:

After January 1, 1995, the secretary of revenue shall withhold fifty percent of the money distributed to a county pursuant to 10-13A-3.1 if a county fails to value all nonagricultural real property pursuant to this chapter or violates 10-6-33.8 or 10-6-33.9 in the two preceding years. After January 1, 1996, the secretary of revenue shall withhold fifty percent of the money distributed to a county pursuant to 10-13A-3.1 if a county fails to value all real property pursuant to this chapter or violates 10-6-33.8 or 10-6-33.9 in the two preceding years.

This statute allows personal property replacement funds to be withheld for several reasons. SDCL 10-6-33.8 provides that the median sales to assessment ratio for real property in the county may not be less than eighty-five percent, nor more than one hundred percent. SDCL 10-6-33.9 provides that the "coefficient ratio of dispersion for real property in a county, as calculated pursuant to 10-6-59, may not be more than twenty-five percent." Violation of either of those statutes in the two years preceding a compliance determination by the Secretary is grounds for withholding personal property tax replacement funds. Failure to assess property at its true and full value also is grounds for withholding such funds.

The taxpayers who proposed the resolution claim that the postponement of the Secretary's power to withhold funds evinces a legislative intent to roll back assessments for agricultural real property to 1993 assessment levels. The County, however, contends that adoption of the resolution would place Tripp County in violation of SDCL 10-6-33.10.

The answer to the question is a matter of statutory construction; the goal is to determine the intent of the Legislature. It is appropriate to look not only to the words used in the statute at issue, but also to examine other statutes on the subject as well. Appeal of AT&T Information Systems, 405 N.W.2d 24, 27 (S.D. 1987). Words used in the statute are to be given their plain, ordinary and popular meaning, unless the context clearly requires otherwise. SDCL 2-14-1; American Rim and Brake Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986); Border States Paving v. Department of Revenue, 437 N.W.2d 872, 874 (S.D. 1989); Whalen v. Whalen, 490 N.W.2d 276 (S.D. 1992).

My examination of the relevant statutes convinces me that the Legislature did not intend to roll back assessments for agricultural property to 1993 levels. First, I note that the only date for withholding funds extended by HB 1255 was the date dealing with nonagricultural property. House Bill 1255 delayed the start date for the Secretary to begin withholding funds for nonagricultural property to January 1, 1995. No change was made in the start date with respect to agricultural real property. The pertinent withholding date for agricultural property is January 1, 1996. That date was set during the 1993 Legislative Session, and was not changed in 1994. S.L. 1993, ch. 81,  10.

Further, adoption of the position urged by the resolution would be contrary to the mechanism set forth in the statute for determining compliance with valuation requirements. A determination whether a county complies with SDCL 10-6-33.8 and SDCL 10-6-33.9 so as to avoid the withholding of funds requires the Secretary to examine the two years preceding the compliance determination. Thus, for nonagricultural property, the Secretary will have to determine in 1994 whether the County is in compliance. The two pertinent years to be examined are 1992 and 1993. If there is noncompliance, the Secretary may withhold funds in 1995.

For agricultural property, however, the determination of compliance will be made in 1995, and the two years examined for purposes of the determination will be 1993 and 1994. If there is noncompliance, funds will be withheld in 1996. Thus, action that a county takes in 1994 with reference to its assessed valuation of agricultural lands will directly impact whether the Secretary may withhold personal property tax replacement funds from that county in 1996. It is difficult for me to believe that having established this system, the Legislature then intended to allow a rollback of agricultural land valuations to 1993 assessment levels without any regard to 1994 true and full values. This is especially true when the likely result of such action would be a determination by the Secretary in 1995 that there is noncompliance under SDCL 10-6-33.10.

I am assuming from the facts you provided that 1993 assessed values do not reflect the current true and full value of the property. Using figures that do not reflect the true and full value of the property in 1994 would not only violate SDCL 10-6-33 and SDCL 10-6-33.1, but undoubtedly will skewer the results of the calculations under SDCL 10-6-33.8 and SDCL 10-6-33.9. In my opinion, the Legislature adopted HB 1255 simply to delay the effective date of implementing the withholding provisions for nonagricultural property; it did not intend a rollback to 1993 assessment levels for agricultural real property.

Finally, there may well be circumstances where a local board of equalization or a county board of equalization has the authority to roll back real property values. See, e.g., SDCL 10-11-26; Hot Springs Independent School District No. 10 v. Fall River Landowners Association , 262 N.W.2d 33, 40 (S.D. 1978). That, however, need not be determined here because, based on the facts you provided, this is not one of those circumstances. A county board of equalization is a creature of statute and can exercise only those powers expressly granted by statute, which statutes are to be strictly construed. Rapid City Area School District No. 51-4 v. Pennington County Auditor, 284 N.W.2d 308, 311 (S.D. 1979). The 1994 amendment to SDCL 10-6-33.10 enacted through HB 1255 neither grants the county board of equalization authority to roll back agricultural real property values to 1993 assessment levels, nor reflects a legislative intent that such a rollback be undertaken. My answer to your question is "No."

Having answered your question based on the law as it currently exists, I will also remind you that property taxes will be the leading topic of the next legislative session, and therefore my answer is subject to legislative changes in direction.

MB:HHD:clr