132 Nev., Advance Opinion 14
IN THE SUPREME COURT OF THE STATE OF NEVADA
CITY OF FERNLEY, NEVADA, A No, 66851
NEVADA MUNICIPAL CORPORATION,
Appellant,
vs.
THE STATE OF NEVADA, FILED
DEPARTMENT OF TAXATION; THE
JAN 1 4 2016
HONORABLE DAN SCHWARTZ, IN
HIS CAPACITY AS TREASURER OF
THE STATE OF NEVADA; AND THE
.t E K. LINMEMAN
r6CFMn
HIEr bEITtlXrCtERK
LEGISLATURE OF THE STATE OF
NEVADA,
Respondents.
Appeal from a district court order granting summary
judgment in a tax matter. First Judicial District Court, Carson City;
James Todd Russell, Judge.
Affirmed.
Brownstein Hyatt Farber Schreck, LLP, and Joshua J. Hicks, Las Vegas;
Brandi L. Jensen, City Attorney, Fernley; Holley, Driggs, Walch, Fine,
Wray, Puzey, Thompson and Clark V. Vellis, Reno,
for Appellant.
Adam Paul Laxalt, Attorney General, Gina C. Session, Chief Deputy
Attorney General, and Andrea Nichols, Senior Deputy Attorney General,
Reno; Brenda J. Erdoes, Legislative Counsel, Kevin C. Powers, Chief
Litigation Counsel, and J. Daniel Yu, Principal Deputy Legislative
Counsel, Carson City, for Respondents.
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BEFORE THE COURT EN BANC.
OPINION
By the Court, PICKERING, J.:
The Nevada Constitution prohibits the Legislature from
passing local or special laws "[f] or the assessment and collection of taxes
for state, county, and township purposes," Nev. Const. art. 4, § 20, and
further requires that "hi n all cases enumerated in [Section 201, and in all
other cases where a general law can be made applicable, all laws shall be
general and of uniform operation throughout the State." Nev. Const. art.
4, § 21; Clean Water Coal. v. The M Resort, LLC, 127 Nev. 301, 310, 255
P.3d 247, 253-54 (2011). Here, we are asked to decide whether the Local
Government Tax Distribution Account under NRS 360.660 is special or
local legislation in violation of Sections 20 and 21 of the Nevada
Constitution. We conclude that the district court properly found the Local
Government Tax Distribution Account to be general legislation.
Accordingly, we affirm the district court's order granting summary
judgment.
I.
A.
Some background on the C-Tax system is needed to make
sense of the legal issues presented by this appeal. In 1997, the
Legislature enacted the Local Government Tax Distribution Account,
referred to as the C-Tax. 1997 Nev. Stat., ch. 660, § 1, at 3278. The C-Tax
is designed to fund local governments and their corresponding entities by
"creat[ing] a system that would be a little bit more responsive to where
growth is occurring within each one of the counties." Hearing on S.C.R. 40
Before the Senate Comm. on Government Affairs, 69th Leg. (Nev.,
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March 31, 1997). The C-Tax replaced a series of different systems; "some
of [the previous systems] dealt with population solely, some of them dealt
with assessed valuations, some of them included counties, some of them
excluded counties, and various combinations in between." Id. Under
previous systems, new cities would emerge to take advantage of their
share in revenues without necessarily providing any benefit to the public.
The previous systems also created an atmosphere of competition instead of
cooperation. For example, before the C-Tax, "if one entity was to dissolve
and be absorbed by another, . . the allowed revenues that they had from
various taxes would otherwise go away" instead of allowing entities to
receive the revenues from assuming new responsibilities. Id.
To eliminate these inefficiencies, the Legislature
"consolidate[d] a series of six different distribution formulas into one
that . . . is also more responsive to growth. .. and in the long run, proves
to be a more simplified and effective way of distributing the six revenues."
Id. It is from this consolidation that the C-Tax derives its name: the
Consolidation Tax. The C-Tax comprises six different tax pools: liquor tax,
cigarette tax, real property transfer tax, basic city-county relief tax,
supplemental city-county relief tax, and the basic motor vehicle privilege
tax.
All of the revenue from the six different tax pools is
consolidated into the C-Tax Account, which is regulated by the
Department of Taxation. The C-Tax Account is then distributed to local
governments under a two-tier system. First, as per the statutory formula,
the State disburses revenue to Nevada's 17 counties under the Tier 1
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distribution.' Second, following a different statutory formula, the counties
disburse revenue to qualifying Tier 2 entities in their county. Only three
types of entities qualify for a Tier 2 distribution: (1) Enterprise Districts,
such as water, sewer, television, and sanitation services; (2) Local
Governments, including counties, cities, and towns; and (3) Special
Districts, such as fire departments, hospitals, and public libraries. See
NRS 360.620; NRS 360.650.
Under the Tier 2 distribution system, there are two
components: base distributions and excess distributions. NRS 360.680;
NRS 360.690. If a Tier 2 entity—such as a county, city, or town—received
taxes prior to July 1, 1998, it will continue to receive that same base
amount, which increases as per the Consumer Price Index. NRS 360.670.
After all of the base amounts are paid, if there is a surplus in the account,
it is distributed as an "excess" distribution to the Tier 2 entities (except
Enterprise Districts). NRS 360.690. The excess distributions are
calculated using a statutory formula that measures changes in population
and assessed valuation of taxable property. NRS 360.690(4)-(9).
If a Tier 2 entity—such as a city or a town—did not exist
before July 1, 1998, or did exist, but wants to increase its base amount,
there are three ways to qualify for an increased C-Tax distribution. First,
a new local government is eligible for increased C-Tax distributions if it
provides police protection and at least two of the following services: (1) fire
protection; (2) construction, maintenance, and repair of roads; or (3) parks
and recreation. NRS 360.740. Second, a new local government can
'Under the C-Tax system, Carson City is treated as a county for
purposes of Tier 1 distributions. NRS 360.610.
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assume the functions of another local government (i.e., merger of entities).
NRS 354.598747. Third, a new local government can enter into a
cooperative "interlocal" agreement with another local government (i.e.,
taking over services provided by the other local government or agreeing to
pay costs). NRS 360.730.
All three options involve the new local government providing
services by either creating or assuming the responsibilities for the
services. The Legislature feared that new entities could form and take
money away from counties without having "any of the responsibility to
share in any of the social parts of government." Hearing on S.C.R. 40
Before the Senate Comm. on Government Affairs, 69th Leg. (Nev.,
March 31, 1997). These options demonstrate that the object of the C-Tax
was to foster general-purpose governments. Hearing on S.C.R. 40 Before
the Senate Comm. on Government Affairs, 69th Leg. (Nev., April 14, 1997)
("[T]he distribution formula was a deliberate attempt to promote the
formation of general-purpose governments, as opposed to special-purpose
governments."). The Legislature found general-purpose governments
desirable because "of all the little forms of government that we
have. . . they can make a conscious decision, on an annual basis, about
service levels." Hearing on S.C.R. 40 Before the Senate Comm. on
Government Affairs, 69th Leg. (Nev., March 31, 1997).
B.
When the Legislature enacted the C-Tax system in 1997,
Fernley was an unincorporated town, thus qualifying for a Tier 2
distribution as a local government entity. To facilitate the transition
between the previous tax system and the C-Tax system, the Legislature
"would begin in the base year with the amounts of revenue that [the Tier 2
entities] otherwise would have realized under the former series of
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distribution formulas." Id. Thus, Fernley's initial year of C-Tax
distributions—base and excess—were calculated based on its status as an
unincorporated town.
In 1998, Fernley began taking the steps required by NRS
Chapter 266 to bring about its incorporation. One of the required steps
was to submit an incorporation petition, which must include the plans for
providing police protection, fire protection, road maintenance, and other
governmental services, plus a cost estimate and sources of revenue to pay
for those services. Over the next two years, Fernley corresponded with the
Department of Taxation to obtain estimates of the C-Tax distributions it
would receive if it incorporated. However, the Department of Taxation
informed Fernley on multiple occasions that it would not receive increased
C-Tax distributions if it did not provide services under NRS 360.740,
assume responsibilities of another government, or enter into an interlocal
agreement. At the time, Lyon County provided Fernley's fire protection,
police protection, and construction, maintenance, and repair of roads,
while also funding Fernley's three public parks.
In its incorporation petition, Fernley planned to provide
governmental services after it incorporated. However, this plan was
contingent upon Lyon County approving an interlocal agreement in which
Lyon County would continue providing those services while Fernley
negotiated to fund those services. The Committee on Local Government
Finance expressed concern about Fernley's plan because the plan
depended "largely on how willing and how able the city is to reach an
agreement with the County." But, the Committee went on to conclude
that "if indeed, the working with the County goes smoothly I think we
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clearly have the ability to provide the revenues needed for a city [but if]
the County says no, go take a walk, then you've got big problems."
Despite notice that its C-Tax distributions may not increase
unless it creates, assumes, or enters into an interlocal agreement to
provide services, Fernley incorporated on July 1, 2001. Fernley is the only
government entity to incorporate after the enactment of the C-Tax. After
its incorporation, Fernley neither entered into an interlocal agreement
with Lyon County, nor did Fernley create or assume public services.
Instead, Lyon County continued to provide Fernley with all of its services.
Although Fernley incorporated as a city, its C-Tax base
distribution was first created when Fernley was an unincorporated town.
Because Fernley did not create, assume, or enter into an interlocal
agreement to provide services, Fernley never became eligible to receive an
increase in its C-Tax distribution. Without the increase, Fernley's C-Tax
distribution only grew with an adjusted percentage rate to reflect the
Consumer Price Index, even though Fernley's population more •than
doubled. Specifically, Fernley's population grew from 8,000 people in 1997
to 19,000 people in 2015, which accounts for 36 percent of Lyon County's
population.
Fernley argues that it receives far less revenue than other
cities that are similar in population and assessed valuation, such as
Mesquite, Boulder City, and Elko. For example, in 2013, Fernley received
$133,050.30 in C-Tax distributions, while Mesquite, Boulder City, and
Elko received $7,336,084.71, $8,885,664.66, and $13,521,334.12,
respectively. Although Fernley maintains that the C-Tax is unfair,
Fernley recognizes that cities such as Mesquite, Boulder City, and Elko all
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provide the traditional general-purpose governmental services, while
Fernley does not.
Before bringing this litigation, in an effort to explore its ability
to obtain an increase in its C-Tax distribution, Fernley sought an advisory
opinion from the Department of Taxation. In the Department's advisory
opinion, dated December 20, 2011, it told Fernley that Fernley is not
eligible to create services under NRS 360.740—police protection and two
other services—and thereby gain an increase in C-Tax distributions. The
Department stated that the language of NRS 360.740 2 only allows a new
local government to create those services within one year of its
incorporation. 3 Because Fernley did not create police protection services
and two other services within its first year of incorporation in 2001, the
Department opined that Fernley could only reach its goal of receiving a
C-Tax distribution increase if it assumed the services of another local
2 The relevant language of the statute is as follows:
On or before December 31 of the year immediately
preceding the first fiscal year that the local
government or special district would receive
money from the Account, a governing body that
submits a request pursuant to subsection 1 must:
(a) submit the request to the Executive Director;
and (b) provide copies of the request. . . .
NRS 360.740(2) (emphasis added).
3 Althoughthe advisory opinion interpreted NRS 360.740 to only give
a one-year window in which Fernley could create services, the State has
reversed course in its answering brief on this appeal and now maintains
that the advisory opinion was incorrect and that, in fact, the one year
runs, not from the date of incorporation, but from the date the city
commits to provide services.
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government or entered into an interlocal agreement. Although Fernley
did attempt to assume services or enter into an interlocal agreement with
Lyon County, its attempts were unsuccessful. Consequently, Fernley filed
its complaint on June 6, 2012, seeking declaratory and injunctive relief for
violations of the Separation of Powers Doctrine and the prohibition on
special or local legislation under the Nevada Constitution, Article 4,
Section 20. 4 On October 6, 2014, the district court entered summary
judgment in favor of the State.
This court reviews a district court's order granting summary
judgment de novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d
1026, 1029 (2005). Summary judgment is proper if the pleadings and
evidence demonstrate that no genuine issues of material fact exist and
that the moving party is entitled to judgment as a matter of law. Id.
4 Fernley initially sought money damages of $42,670,000, but
abandoned that claim on appeal. Nevertheless, Fernley appeals the
district court's order awarding costs of $8,489.04 to the State, claiming
that it should be immune from an award of costs because its lawsuit
involved a good-faith challenge to the C-Tax. This court does not disturb
an award of costs absent an abuse of discretion, but does require that the
award be authorized by a statute, rule, or contract. McCarran Int'l
Airport v. Sisolak, 122 Nev. 645, 673, 137 P.3d 1110, 1129 (2006). NRS
18.020(3) provides that "Lciosts must be allowed of course to the prevailing
party against any adverse party against whom judgment is rendered, in
the following cases: . . . (3) In an action for the recovery of money or
damages, where the plaintiff seeks to recover more than $2,500." Also,
NRS 18.025 prohibits the district court from reducing or refusing costs
solely because the prevailing party is the State. We recognize Fernley's
challenge as brought in good faith but cannot conclude under these
statutes that the district court abused its discretion in awarding costs to
the State. We therefore decline to disturb the cost award.
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A.
The district court granted the State's motion for summary
judgment, concluding the complaint was time-barred. It did so based on
its holding that NRS 11.220—a default statute of limitations period of four
years—applies to Fernley's constitutional claims because "no other specific
statute prescribes a different limitations period for those claims."
Under the Nevada Revised Statutes, an action for relief that is
not otherwise provided for "must be commenced within 4 years after the
cause of action shall have accrued." NRS 11.220. The statute of
limitations serves to prohibit suits "after a period of time that follows the
accrual of the cause of action." FDIC v. Rhodes, 130 Nev., Adv. Op. 88,
336 P.3d 961, 965 (2014). "[S]uch limitation periods are meant to provide
a concrete time frame within which a plaintiff must file a lawsuit and
after which a defendant is afforded a level of security." Winn v. Sunrise
Hosp. & Med. Gtr., 128 Nev., Adv. Op. 23, 277 P.3d 458, 465 (2012). The
public policies embodied in statutes of limitation are important
considerations because they "stimulate activity, punish negligence, and
promote repose by giving security and stability to human affairs."
Peterson v. Bruen, 106 Nev. 271, 274, 792 P.2d 18, 19 (1990).
Although the statute of limitations may time-bar a claim, it
does not prohibit this court from reviewing the constitutionality of an
enacted statute. See Black v. Ball Janitorial Serv., Inc., 730 P.2d 510, 515
(Okla. 1986) (reaching the merits of a special legislation constitutional
challenge even after holding the statute of limitations had passed); see
also State ex rd. State Bd. of Equalization v. Bakst, 122 Nev. 1403, 1409,
148 P.3d 717, 721 (2006) ("[W]e will declare a government action invalid if
it violates the Constitution."); King v. Bd. of Regents of Univ. of Nev., 65
Nev. 533, 542, 200 P.2d 221, 225 (1948) ("It is undoubtedly the duty of
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courts to uphold statutes passed by the legislature, unless their
unconstitutionality clearly appears, in which case it is equally their duty
to declare them null." (quoting State v. Arrington, 18 Nev. 412, 4 P. 735,
737 (1884))).
The Legislature has considerable law-making authority, but it
is not unlimited. Clean Water Coal., 127 Nev. at 309, 255 P.3d at 253
(interpreting the constitutionality of legislation under Nev. Const. art. 4,
§§ 20-21); We the People Nev. ex rd. Angle v. Miller, 124 Nev. 874, 890
n.55, 192 P.3d 1166, 1177 n.55 (2008). "The Nevada Constitution is the
'supreme law of the state,' which `control[s] over any conflicting statutory
provisions." Thomas v. Nev. Yellow Cab Corp., 130 Nev., Adv. Op. 52, 327
P.3d 518, 521 (2014) (quoting Clean Water Coal., 127 Nev. at 309, 255 P.3d
at 253). "It is fundamental to our federal, constitutional system of
government that a state legislature 'has not the power to enact any law
conflicting with the federal constitution, the laws of congress, or the
constitution of its particular State." Thomas, 130 Nev., Adv. Op. 52, 327
P.3d at 520-21 (quoting State v. Rhodes, 3 Nev. 240, 250 (1867)).
While this court will try to construe statutes to be in harmony
with the constitution, if the "statute 'is irreconcilably repugnant' to a
constitutional amendment, the statute is deemed to have been impliedly
repealed by the amendment." Thomas, 130 Nev., Adv. Op. 52, 327 P.3d at
521 (quoting Mengelkamp v. List, 88 Nev. 542, 545-46, 501 P.2d 1032,
1034 (1972)). "Statutes are construed to accord with constitutions, not
vice versa." Thomas, 130 Nev., Adv. Op. 52, 327 P.3d at 521. "If the
Legislature could change the Constitution by ordinary enactment, no
longer would the Constitution be superior paramount law, unchangeable
by ordinary means. It would be on a level with ordinary legislative acts,
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and, like other acts, alterable when the legislature shall please to alter it."
Id. at 522 (internal quotations omitted). Therefore, "the principle of
constitutional supremacy prevents the Nevada Legislature from creating
exceptions to the rights and privileges protected by Nevada's
Constitution." Id.
The statute of limitations applies differently depending on the
type of relief sought. Taxpayers Allied for Constitutional Taxation v.
Wayne Cty., 537 N.W.2d 596, 599 (Mich. 1995); Kim v. Noyes, 31 N.Y.S.2d
90, 93 (App. Div. 1941) (holding that no statutory limitation applies "when
a declaratory judgment will serve a practical end in determining and
stabilizing an uncertain or disputed jural question, either as to present or
prospective obligations"). There are two types of relief: retrospective
relief, such as money damages, and prospective relief, such as injunctive
or declaratory relief Tenneco, Inc. v. Arnerisure Mitt. Ins. Co., 761 N.W.2d
846, 862-63 (Mich. Ct. App. 2008). For example, in Taxpayers Allied,
taxpayers challenged a Michigan tax statute claiming that it exceeded the
constitutional limit 537 N.W.2d at 599. The taxpayers sought a tax
refund and also declaratory relief from future application of the allegedly
unconstitutional statute. Id. However, the county sought to dismiss the
taxpayers' challenge, arguing that the one-year statute of limitations
period had expired. Id. The Michigan Supreme Court distinguished
between the taxpayers' rights to sue for a refund and their ability to sue to
prospectively vindicate constitutional rights. Id.
Taxpayers may sue for a refund within one year of
the data the tax was assessed. Even if taxpayers
cannot obtain refunds for past tax payments
exceeding the constitutional limit because they did
not dispute them within one year of the date the
taxes were assessed, the constitutional right does
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not disappear because they retain the right to
prevent future violations of their rights.
Id. The court concluded that the statutes of limitations applicable to a
refund claim did not bar their declaratory judgment claims. Id. at 601.
Consequently, the one-year statute of limitations under the Michigan
statute "does not prevent a taxpayer from seeking to enjoin a
governmental unit from imposing on him in the future taxes that violate
the [constitution]. To hold otherwise would truncate the constitutional
right." Id. at 600. 6
Here, Fernley challenges the constitutionality of the C-Tax
under Article 4, Sections 20 and 21 of the Nevada Constitution and the
separation of powers doctrine. 6 Because Fernley was aware at the time of
6Although some courts have held that the statute of limitations does
apply to declaratory relief, those issues involved a personal injury and not
a constitutional challenge to the prospective application of an asserteclly
invalid statute. See, e.g., Snyder v. Cal. Ins. Guarantee Ass'n, 177 Cal.
Rptr. 3d 853,861 (Ct. App. 2014) (seeking declaratory relief to determine
if money is owed to plaintiff); Hill v. Thompson, 297 S.W.3d 892, 898 (Ky.
Ct. App. 2009) (prisoner seeking declaratory relief that his due process
rights were violated when he did not receive awards of meritorious good
time credit).
6 Wedecline to address the merits of Fernley's separation of powers
challenge because Fernley, as a political subdivision, does not have
standing to sue under the separation of powers doctrine. See City of Reno
v. Washoe Cty., 94 Nev. 327, 331-32, 580 P.2d 460, 463 (1978) (refusing to
give standing to political subdivisions to enforce constitutional provisions
that were not created to protect political subdivisions, but allowing
standing for challenges to legislation as a local or special law); State ex rel.
List v. Douglas Cty., 90 Nev. 272, 280, 524 P.2d 1271, 1276 (1974)
overruled on other grounds by Att'y Gen. v. Gypsum Res., 129 Nev., Adv.
Op. 4. 294 P.3d 404 (2013) (holding that a political subdivision does not
have standing under the Fourteenth Amendment "in opposition to the will
of its creator"). Further, the language of the separation of powers
continued on next page...
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its incorporation in 2001 that its C-Tax base distributions would be
calculated as of that date, this court used 2001 as the beginning of its
limitations period. 7 In this case, NRS 11.220 applies to any action for
relief that was not specifically provided for. Under NRS 11.220—the
catch-all statute of limitations period of four years—Fernley had until
July 1, 2005, to file its complaint. Nevertheless, Fernley did not file its
complaint until June 6, 2012. Accordingly, the statute of limitations bars
Fernley's claim for retrospective relief.
But the statute of limitations does not bar Fernley's claims for
injunctive and declaratory relief from an allegedly unconstitutional
statute. To hold otherwise would undermine the doctrine of constitutional
supremacy. Similar to Taxpayers Allied, Fernley originally had two claims
for relief: (1) retrospective relief in the form of past money damages that
Fernley did not receive from the allegedly unconstitutional C-Tax
...continued
provision in the Constitution does not extend any protection to political
subdivisions. Nev. Const. art. 3, § 1 ("The powers of the Government of
the State of Nevada shall be divided into three separate departments . ..."
(emphasis added)).
7 In2012, on its first time before this court, the State sought writ
relief, which this court granted for the federal constitutional claims. State
Dep't of Taxation v. First Judicial Dist, Court, Docket No. 62050 (Order
Granting in Part and Denying in Part Petition for a Writ of Mandamus,
January 25, 2013). This court held that Nevada's statute of limitations for
personal injury claims time-bars Fernley's federal constitutional claims.
Id. This court acknowledged the City of Fernley's notice of its C-Tax
distributions not increasing: "Neither party disputes that, at the time of
the City's incorporation in 2001, the City was aware that absent specific
circumstances, its base consolidated-tax distributions would be set by its
previous distributions and would remain at that level." Id.
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distributions; 8 and (2) prospective relief in the form of an injunction and
declaratory judgment from future application of the allegedly
unconstitutional statute. Like Taxpayers Allied, where the statute of
limitations had already expired for the retrospective relief, 537 N.W.2d at
601, here, the four-year limitations period expired in July 2005—almost
seven years before Fernley filed its complaint. Nevertheless, similar to
the court in Taxpayers Allied, we hold that the failure to file a claim
within the statute of limitations period does not render all relief time-
barred because claimants retain the right to prevent future violations of
their constitutional rights.
B.
Fernley argues that the C-Tax violates Article 4, Sections 20
and 21 of the Nevada Constitution. The district court found that the
C-Tax is a general law—therefore rendering Article 4, Sections 20 and 21
inapplicable—because the law applies equally to all similarly situated
entities. We agree.
The Nevada Constitution prohibits the Legislature from
passing local or special laws "[for the assessment and collection of taxes
for state, county, and township purposes," Nev. Const. art. 4, § 20, and
further requires that "[fin all cases enumerated in [Section 201, and in all
other cases where a general law can be made applicable, all laws shall be
general and of uniform operation throughout the State." Nev. Const. art.
4, § 21; Clean Water Coal., 127 Nev. at 309, 255 P.3d at 253-54 This court
sAlthough Fernley dropped its claim for retrospective relief on
appeal, Fernley still prays for prospective relief.
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adheres to the following explanation on the prohibition against special or
local laws under the Nevada Constitution:
ffif a statute be either a special or local law, or
both, and comes within any one or more of the
cases enumerated in section 20, such statute is
unconstitutional; if the statute be special or local,
or both, but does not come within any of the cases
enumerated in section 20, then its
constitutionality depends upon whether a general
law can be made applicable.
Clean Water Coal., 127 Nev. at 310, 255 P.3d at 254 (quoting Conservation
Dist. v. Beemer, 56 Nev. 104, 116, 45 P.2d 779, 782 (1935)). Therefore, the
first inquiry is whether the legislation is general or whether it is special or
local. See Youngs v. Hall, 9 Nev. 212, 218 (1874).
1.
A law is general if it is "operative alike upon all persons
similarly situated," but "need not be applicable to all counties in the
state." Id. at 222. Stated more recently, "[a] law is general when it
applies equally to all persons embraced in a class founded upon some
natural, intrinsic, or constitutional distinction." Clean Water Coal., 127
Nev. at 311, 255 P.3d at 254 (quoting Colman v. Utah State Land Bd., 795
P.2d 622, 636 (Utah 1990)). The purpose underlying the general law
requirement "is that when a statute affects the entire state, it is more
likely to have been adequately considered by all members of the
Legislature, whereas a localized statute is not apt to be considered
seriously by those who are not affected by it." Id. at 311, 255 P.3d at 254.
Conversely, a law is considered local "if it operates over 'a
particular locality instead of over the whole territory of the State." Att'y
Gen. v. Gypsum Res., 129 Nev., Adv. Op. 4, 294 P.3d 404, 407 (2013)
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(quoting Damus v. Cty. of Clark, 93 Nev. 512, 516, 569 P.2d 933, 935
(1977)). Further, a law is considered "special legislation if it confers
particular privileges or imposes peculiar disabilities, or burdensome
conditions in the exercise of a common right; upon a class of persons
arbitrarily selected, from the general body of those who stand in precisely
the same relation to the subject of the law." Clean Water Coal., 127 Nev. at
311, 255 P.3d at 254 (emphasis added) (quoting Colman, 795 P.3d at 636).
In Clean Water Coalition, this court considered whether
legislation that required the Clean Water Coalition (CWC)—a political
subdivision of the State—to turn over $62 million to benefit the state
general fund was a special or local law in violation of the Nevada
Constitution. 127 Nev. at 305, 255 P.3d at 250. The Legislature enacted
the law, A.B. 6, Section 18, to confront a statewide budget crisis. Id.
However, the law only applied to the CWC. Id. While drafting the law,
"the Legislature found and declared that la] general law cannot be made
applicable to the provisions of this section because of special
circumstances." Id. at 313, 255 P.3d at 255. This court stated that, while
it accords great weight to legislative findings when interpreting a statute,
those findings are not binding. Id. Nonetheless, regarding A.B. 6, this
court found that "Mhe Legislature's express finding and declaration that
section 18 is not a general law, however, is consistent with the bill
section's text." Id. Hence, this court found that A.B. 6, Section 18 was not
a general law because it applied only to the CWC. Id. at 305, 255 P.3d at
250.
Here, the C-Tax is a general law. Although the Legislature
found that "a general law cannot be made applicable for all provisions" of
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the C-Tax, 9 this court is not bound by the legislative findings, as this court
held in Clean Water Coalition. Instead, similar to Clean Water Coalition,
this court may look at the actual text to determine if it is a general law or
special or local law. In this case, Fernley does not challenge the C-Tax
classifications at the time of its enactment when Fernley was an
unincorporated town. At the time of enactment, the C-Tax did not single
out Fernley; rather, it made constitutional distinctions to determine C-Tax
distributions based on the old tax formula, assessed property values, and
population. Fernley has not made the argument that its initial C-Tax
distribution as an unincorporated town violates any laws. Instead,
Fernley argues that the State's refusal to award more C-Tax distributions
to Fernley after its changed status as an incorporated city singles out
Fernley and only maintains the status quo of "participants in the system
at that time," and should, therefore, be held unconstitutional.
Fernley cites Clean Water Coalition for support because
Fernley is the only city to have incorporated after the enactment of the
C-Tax—making it the only entity to be burdened, like CWC. However,
Fernley's situation is distinguishable from the CWC's. Unlike CWC,
9 The beginning of the C-Tax statute states the following:
WHEREAS, The legislature finds and declares
that a general law cannot be made applicable for
all provisions of this act because of the economic
diversity of the local governments of this state, the
unusual growth patterns in certain of those local
governments and the special conditions
experienced in certain counties related to the need
to provide basic services.
S.B. 254, 69th Leg. (Nev. 1997) (emphasis added).
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where it was singled out in the legislation, here, Fernley was not singled
out, but was classified with similarly situated local governments. When
Fernley incorporated without creating or assuming services, it singled
itself out from increased C-Tax distributions.
2.
The State argues that the distribution classifications apply
uniformly to all those entities that areS similarly situated, with which the
district court agreed. Further, the State contends that under this court's
rational basis test, the Legislature had a legitimate government purpose
for enacting the C-Tax with different classifications because it wanted to
promote general-purpose governments.
Under the Nevada Constitution, Article 4, the validity of a
statute "is determined by ascertaining its effect, and not by the number of
counties coming within its scope." Reid v. Woofter, 88 Nev. 378, 380, 498
P.2d 361, 362 (1972). For example, in Reid, this court rejected the
argument that a statute violated Sections 20 and 21 because it only
applied to certain townships based on population. Id. This court
concluded that "a statute is not rendered an unconstitutional local or
special law merely because it applies to only one or a few areas due to
their population, for if there were others of the same population they too
would be included." Id. The fact that only two counties fell within the
statute did not matter because the statute's "operation and effect is so
framed as to apply in the future to all counties coming within its
designated class" rendering it neither local nor special legislation under
Sections 20 and 21. Id.
When a "classification applies prospectively to all counties
which might come within its designated class, it is neither local nor
special." Clark Cty. ex rel. Cty. Comm'rs v. City of Las Vegas ex rel. Bd. of
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City Comm'rs, 97 Nev. 260, 263, 628 P.2d 1120, 1122 (1981). The
legislative classification still "must be rationally related to the subject
matter and must not create odious or absurd distinctions" Id. at 264, 628
P.2d at 1122 (citing Anthony v. State, 94 Nev. 338, 341, 580 P.2d 939, 941
(1978)). Thus, in Clark County, this court invalidated subsequent
amendments to a tax system that specified, rather than classified,
recipients. Id. Because the tax system, as amended, specified recipients,
prospective counties had no classification into which they could fit. Id.
Therefore, this court invalidated the amendments, rendering the law as it
existed prior to the amendments as controlling. Id. at 265, 628 P.2d at
1123.
This case most closely resembles Reid, where this court
classified legislation as general even though it currently affected a small
number of counties. Similarly, here, Fernley is the only city to have
incorporated after the enactment of the C-Tax, rendering it the only one
with an outdated base distribution. Nevertheless, the way that the C-Tax
system is designed, if another town decided to incorporate today without
creating or assuming any public services, it would occupy the same
position as Fernley. Further, if Fernley created or assumed public
services, it could achieve the same classification as the other cities that
Fernley compares itself to, such as Boulder City, Mesquite, and Elko. See
NRS 360.740; NRS 354.598747; see also supra note 3 (State concedes this
option remains open to Fernley).
Unlike Clark County, where the amendments to the tax
system specified counties, rather than classified counties, 97 Nev. at 263-
64, 628 P.2d at 1122, here, the C-Tax does not specify recipients. Instead,
the C-Tax has different formulas it uses for any entity that falls within
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that classification. NRS 360.690. The classifications that the Legislature
used when enacting the C-Tax are rationally related to achieve that end,
as required by this court in Clark County, 97 Nev. at 264, 628 P.2d at
1122. The Legislature enacted the C-Tax to encourage general-purpose
governments that provide public services, such as police and fire
protection. Additionally, the Legislature wanted to avoid new local
governments that emerge to take advantage of extra tax funds without
providing any benefit to its residents.
In this case, Fernley presents the exact situation the
Legislature evidently sought to avoid: Fernley incorporated hoping to
collect more tax distributions, but it has not provided any new benefits to
its residents, beyond those it provided when it was an unincorporated
town, nor has it assumed the fiscal responsibility of Lyon County for
providing its services. If Fernley did create or assume public services
under one or more of the three different methods provided by NRS 360.600
et seq., it would achieve the legislatively set goals and receive the
increased C-Tax distributions; having not done so, its C-Tax base
distribution stands. Therefore, the C-Tax classifications are rationally
related to achieve its legitimate government interests of promoting
general-purpose governments.
The C-Tax system is a general law that applies neutrally to
local government entities and is based on classifications that are
rationally related to achieving the Legislature's legitimate government
objective of promoting general-purpose governments that have public
services, such as police and fire protection.
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We therefore affirm the district court's grant of summary
judgment.
J.
We concur:
Parraguirre
/ AA* J.
Hardesty
Douglas \
1 4L-C J.
Che
ii\AAL
Saitta
ty-vb
Gibbons
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