dissenting. Amendment 59 is the “Godzilla” of constitutional amendments. Nobody knows what it means. It was the child of fear and greed, spawned after our decision in 1979 which held that the Arkansas Constitution required that all property be assessed at market value. Arkansas Public Service Comm. v. Pulaski County Board of Equalization, 266 Ark. 64, 582 S.W.2d 942 (1979). Since it was a widespread practice that property, especially real property, had not been assessed at market value, our decision meant that the taxes of many property owners would double, triple, or more. This was the fear, especially of residential property owners, that spawned the amendment. So Amendment 59 to the constitution was proposed in the legislature. Marvin Russell, the director of the Assessment Coordinating Division of the Public Service Commission, explained what happened in the legislature:
Mr. Russell: Judge, when we drafted Amendment 59, the purpose was to prevent high taxation to everybody, homeowners and everybody else. It established a roll back. Now, in that same amendment, to get support of Farm Bureau and AFA, they slipped in their section for preferential treatment —
The Court: (Interposing) 14.
Mr. Russell: (Continuing) — for preferential treatment, and then everybody got in. They raised this Million Dollars, and they passed it, you know. Everybody voted for it. They got preferential treatment on assessment, but the rates are applied equally to their assessment or to your house assessment or to your personal automobile assessment.
The Court: I can understand. The rates should be applied equally, but the assessment is not equal. Is that correct?
Mr. Russell: No, sir, the assessments — they have preferential treatment in that they have use value based on productivity of the soils for those type lands, and the rate is in the roll back. When we rolled back the rate, what we would have done is reduced everybody’s personal property by two-thirds. We would have retained about a third of it, it would have cost the schools a bundle of money. And, this became a political problem in the Legislature, and it was kicked around there until the final day for getting the Amendment on the ballot for it to be legal for that year. And, Governor Clinton came down with this idea of freezing personal property, and we told him then that it would be troublesome, that it would be a mad house to handle. He said, ‘can you do it?’ and we said, ‘we probably can do it, but it’s not a good idea.’ He said, ‘we’ve got to get it out.’ So, they adopted that freeze on personal property at that point in time, and that was done without any impact study or any research, and that was the real flaw with Amendment 59. We are having to live with that thing, and the procedure was spelled out that you would adjust personal property — now, these people won’t pay any more tax right now. They’ve been paying high. So, they’ll just continue to pay high, and they’ll be reduced each year. You’ll pay less each year as the rate drops.
This was the greed that surfaced and resulted in powerful special interests being granted preferential treatment. They were the utility companies, the regulated carriers, the large landowners, especially the farmers, and the commercial and timber interests. The appellee railroad company is one of those interests, a regulated carrier.
Ironically, in the forefront promoting Amendment 59 were the local school officials; the schools were the first to suffer from Amendment 59.
A special study commission of the legislature was created in 1985 to study the impact of Amendment 59. Its report was filed in September of 1986. “Special Study Commission on Amendment 59,” Final Report, September 1986. Most of the evidence heard by the commission consisted of testimony by school officials regarding how much money Amendment 59 has and will cost Arkansas’ primary and secondary public schools. For example, Dr. Ed Kelly, at one time superintendent of the Little Rock public schools, said the amendment would cost the Little Rock schools 14 million dollars over the next ten years. The superintendent of the Fayetteville public schools said it would cost Fayetteville schools over 26 million dollars; Greenland school district, a half million dollars, and so on.
So much for the background of Amendment 59. This is the first case regarding the interpretation of Amendment 59.
Actually, not a handful of people in Arkansas pretend to understand Amendment 59, and even those who do disagree on what it means. An extended discussion occurred as to how new millage voted would be applied. Mr. Russell said new millage should be applied to personal property. He explained what had occurred in this case:
The Court: Now, where are we in Cross County then? What are they complaining about?
Mr. Russell: They have passed — they have built a new school building over there. They wanted three mills. They voted three mills.
The Court: The people did.
Mr. Russell: Yes.
The Court: To build a new school.
Mr. Russell: To build a new school building. And, we believe that it should be charged against personal and real estate because in the freeze on personal property, we’d have to separate it — we do this every year. We have to audit, and you have to separate each levy within the total. Say you had thirty mills of personal property, ten mills of that is charged for a debt service, a particular issue.
The Court: Bonds or whatever.
Mr. Russell: Right. A particular issue. Then say ten mills of it may be for maintenance and operation, paying teachers’ salaries. And, another ten mills may be for another particular debt service, another particular issue, and each of those are obligated to that issue at the revenue level that we’re frozen at in the base year.
The Court: All right.
Mr. Russell: Say it was Ten Thousand, Ten Thousand, and Ten Thousand. Well, we can’t give them less than that.
The Court: It’s already obligated.
Mr. Russell: It’s obligated. Now, if we start — if we add three mills, there’s nothing to cover it over here. When you finish out your equalization, the obligation is tied to those millage levies that are in place in the base year. So, any new levy for a new purpose would never be serviced. When you get down to your official rate, there’s no place for those three mills to add on. You can’t take away from those that are obligated. So, it’s infinitely — or into infinity, it is never paid on that levy unless you charge it as a new levy for a new purpose. Another example that you would be aware of is — say, there is three allowed levies for school millage. There’s maintenance and operation; there’s capital outlay; and, then there’s debt service. Each of those are three separate entities. All right, suppose they only had maintenance and operation, and their fifty mills was all for M and O, going for school teachers’ salaries, and their building burned, and they have to vote a new millage for a new building. This fifty mills and the Thirty Thousand Dollars or whatever is committed to maintenance and operation and frozen at that. All right, we’ve got to build a new building. Where are you going to fund the personal property from? You’ve got to allow it to be charged against the personal property; otherwise, it will never fund its portion of that debt service. It can never have a place to enter into — you’d never have debt service millage against personal property or capital outlay. Or if you want to go to cities and counties, the same precedent would apply there if you do away with the road tax. If they don’t have a road tax, for example, and the Quorum Court comes along two years later and says, ‘Okay, we’ve decided we want a road tax,’ and they appropriate three mills. It’d have to go against personal and real; otherwise, it would never fund. The people paying personal property tax would never pay their share of the tax burden. The balance of the millages are obligated—
The Court: (Interposing) Already obligated.
Mr. Russell: Already obligated, yes, sir. The funds there, the revenues created are obligated one hundred percent, and there’s no way we can borrow from them or intermingle them in any form. But, they will equalize in time.
At one point the trial judge observed:
Well, could you both be correct, and the people who drafted this thing didn’t know what the hell they were doing, or didn’t think down the road of what would happen?
It is clear that in some counties the tax rates may never equalize, which would then mean taxes on personal property would never increase.
Amendment 59 does not say that new millage voted cannot be applied to personal property, and I would not interpret it that way. Union Pacific Railroad Company, one of the appellees, received preferred treatment in Amendment 59 and now seeks to avoid paying personal property taxes to fund this three mill increase. Union Pacific reminds us they are in the same category as owners of pickup trucks in Cross County. I wouldn’t want to overlook that consideration. I doubt that the pickup truck owner in Cross County would mind the dollar or so he would pay to the local school district if the Union Pacific Railroad Company would pay the hundreds or perhaps thousands it owes.
I would reverse the judgment.