County Board of Equalization v. Utah State Tax Commission

HOWE, Justice,

dissenting:

I dissent. The University of Utah is not an “educational organization” within the *185meaning of section 59-4-101(3)(b) or (e) which grants exemptions from the privilege tax. This conclusion is mandated when the exemptions are construed in pari materia with provisions of the Utah Constitution and our Revenue and Taxation Code which grant exemptions from ad valorem property taxation.

Until 1988, article XIII, section 2 of the constitution provided for the following property tax exemptions:

The property of the state, counties, cities, towns, school districts, municipal corporations and public libraries, lots with the buildings thereon used exclusively for either religious worship or charitable purposes. ...

Because it was not clear from the above exemption whether a nonprofit private or parochial school or university qualified as a “charitable purpose,” section 2 was amended by the voters at the general election in November 1982 to provide as follows:

(2) The following are property tax exemptions:
(a) The property of the state, school districts, and public libraries;
(b) The property of counties, cities, towns, special districts and all other political subdivisions of the state ...;
(c) Property owned by a nonprofit entity which is used exclusively for religious, charitable or educational purposes[.]

Since statehood, property of the University of Utah has been exempt from taxation because it was “property of the state.” This did not change with the 1982 amendment. It did not become exempt because it was property owned by a nonprofit entity which is used exclusively for educational purposes. In other words, section (2)(a) applied, not (2)(c).

This same scheme of exemptions was carried over into the Revenue and Taxation Code, section 59-2-1101, with almost this same wording. Here, again, property owned by the University of Utah is exempt as “property of the state,” not as property of a “nonprofit entity which is used exclusively for ... educational purposes.”

Section 59-4-101(3)(b) and (c), which provides for exemptions from the privilege tax, states:

(3) No tax is imposed under this chapter on the following:
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(b) the use or possession of property by a religious, educational, or charitable organization;
(e) the use or possession of property where the proceeds inure to the benefit of a religious, educational or charitable organization[.]

While the above statutory language is not identical, it is strikingly similar to the language of the constitution and the Revenue and Taxation Code which provides exemptions to property taxation.

In my opinion, we should construe the exemptions to the privilege tax in pari mate-ria with the exemptions to the property tax since they are very similarly worded and both seek to benefit the same institutions and organizations. Accordingly, I would hold that an “educational organization” is a nonprofit private or parochial school or university for the purposes of exemptions to the privilege tax. That classification does not fit the University of Utah. This conclusion seems reasonable to me since no reason has been suggested why the lands of the universities and colleges would be exempted from the privilege tax but not any other state-owned lands. Indeed, on its face, it seems incongruent that lands of the state’s universities and colleges should be exempt but not the state-owned school trust lands which support grades K through 12 of the public schools.

The foregoing conclusion is buttressed by an examination of the legislative history of the University’s Research Park. The Park was authorized by the legislature in 1969. Ch. 11, 1969 Utah Laws (1st S.S.) (later codified as Utah Code Ann. §§ 53-31-57 to - 63, now codified as Utah Code Ann. §§ 53B-17-501 to -506). In the 1969 act, authorization was given for the establishment of the Park “on the property conveyed to the University of Utah under patent from the United States of America dated October 18, 1968.” *186Although in 1969 the privilege tax, with the same exemptions as exist today, was in effect, having been enacted ten years earlier in 1959, the Research Park Act expressly provided in section 53-81-61(1):

No lands conveyed to the University of Utah by the patent, or improvements or personal property thereon, lying within the research park established under this act shall be subject to taxation under section 59-13-73 [the privilege tax].

However, every lessee in the Park was required to make an annual “contribution” to Salt Lake City “equal to and in lieu of taxes which otherwise would be imposed” as a condition to receiving municipal services which Salt Lake City was required to provide to the Park. Utah Code Ann. § 53-31-61(2). It thus appears that the legislature in 1969 did not consider the exemptions to the privilege tax broad enough to cover the Research Park and express provision was made in the Act to exempt those lands.

In 1983, the legislature enacted chapter 160, 1983 Utah Laws, which repealed section 53-31-61, “which exempted] the lands in Research Park from the privilege tax and required] that in lieu payments be made as part of the lease.” However, there was no repeal of section 53-31-62 (now 53B-17-505), which requires Salt Lake City to provide municipal services. In view of the express repeal of the exemption, I am led to conclude that the legislature did not intend that lands in the Park would nevertheless remain exempted under the provisions of the privilege tax which theretofore had not been applicable.

The majority opinion leaves all lessees in the Park, many of whom, like Evans and Sutherland, are for-profit corporations, without any liability for ad valorem or privilege taxes, or even for a “contribution” to the city or county for the municipal services they receive. I do not believe that was ever the legislature’s intent.

RUSSON, J., concurs in Justice HOWE’s dissenting opinion.