(dissenting).
I dissent for the following reasons:
In 1974, a rehabilitation tax credit for railroad repair work done in this state was first allowed by statute. 1974 S.D.Sess. Laws 106. That law permitted a credit against the taxes assessed within any taxing district for expenditures in replacement and repair of existing trackage. The credit could be spread over a three year period in equal installments. By its terms, the statute ceased to be effective July 1, 1979.
In 1979, the statute was, in effect, reenacted by the legislature and codified as SDCL 10-28-21.1. Its provisions were substantially similar to the 1974 act although expanded in scope. In 1981, the legislature amended the statute to its present form. 1981 S.D.Sess. Laws 93 (the Act).1
During the period January 1, 1980 to December 31, 1980, Railroad engaged in the replacement and repair of existing trackage owned by it within various taxing districts in Fall River County, South Dakota, which entitled it to tax credits in the amount of $249,917.31, against taxes paid. On or about April 3, 1981, Railroad certified its expenditures in connection therewith as provided by statute and claimed a credit of one-third of the amount certified for each taxing district involved as a credit against taxes.
The total of the claimed credits for the years 1981 and 1982 of $132,188.81, and for 1983 of $117,728.50, were paid under protest pursuant to the provisions of SDCL 10-27-2. These payments were received and retained by defendant Fall River County-
Although Railroad advances reasonable arguments in support of its position that the legislature never intended the act to be interpreted retroactively, there is no real reason to address those arguments in view of the holding of the trial court and the majority.
Under the holding of the trial court, which holding is affirmed by the majority, the Act has a retroactive effect in that it denies the taxpayer credit which was earned in 1980 under 1980 law. Therefore, the Act is unconstitutional in that it is unreasonably retroactive in its application against this taxpayer. Therefore it is not necessary to determine whether the legislature intended the Act to be retroactive or not.
A retroactive law is one that attributes consequences to situations existing or transactions occurring before the law went into effect. State ex rel Strenge v. Westling, 81 S.D. 34, 130 N.W.2d 109, 111 (1964) Pabst v. Commissioner of Taxes, 136 Vt. 126, 388 A.2d 1181 (1978). The harshness and oppressiveness of a retroactive tax depends on two factors: (1) the degree to which the taxpayer is surprised by the law attributing consequences to his past conduct, Blodgett v. Holden, 275 U.S. 142, 48 S.Ct. 105, 72 L.Ed. 206 (1927), and (2) the likelihood that the taxpayer would have altered that conduct if he had foreseen the retroactive features of the challenged law. Welch v. Henry, 305 U.S. 134, 59 S.Ct. 121, 83 L.Ed. 87 (1983). See also: Milliken v. United States, 283 U.S. 15, 51 S.Ct. 324, 75 L.Ed. 809 (1931).
A retroactive application of SDCL 10-28-21.1 as applied to this taxpayer would be an unconstitutional taking of property *149without just compensation in violation of the due process clauses of the Fifth and Fourteenth Amendments to the United States Constitution and Article IV, Section 13 of the South Dakota Constitution.
Railroad’s trackline repair was completed by the time the legislation in question was introduced and passed during the 1981 session. Railroad could hardly be expected to foresee the enactment of a law removing credits before the effective date for legislation passed in the 1981 session, which was July 1, 1981. It is not the policy of this state to encourage an investor to spend its money improving South Dakota’s deteriorating trackline, then tell that investor, after the work is done and the money spent, that the tax benefit which induced the investment is no longer available.
The second consideration in determining whether a retroactive tax is unconstitutional is whether the taxpayer who suffers from the retroactive tax would have altered its conduct had it foreseen the retroactive features of the challenged law. Welch, supra. During 1980, Railroad invested hundreds of thousands of dollars in rehabilitation and repair of track in this state. It is reasonable to assume that, in the absence of the statutory credit for repair, Railroad would not have undertaken such an extensive and massive overhaul.
The application of constitutional standards impels the conclusion that the tax imposed on Railroad was unconstitutional under Blodgett, Welch and Milliken, supra. The problem in this case is simply that the prior legislature passed an unwise law which allowed far too much credit against far too little tax.
Accordingly, it is simply unfair to Railroad to eliminate the credit now for the repairs previously made in reliance on the then existing law.
I am authorized to state that FOSHEIM, Retired Justice, joins in this dissent.. The Act was titled: Railroad Tax Credit Restricted. It bears the preamble "ENTITLED, An Act to delay the railroad tax credit to one year following certification and to restrict the credit to lines carrying less than ten million net tons annually.” As its preamble states, the major changes effected by the amendments were to delay the point at which the railroad could take the credit for repair work done, and to restrict the application of the credit to companies carrying no more than ten million net ton miles per mile annually. SDCL 10-28-21.1 concludes with this language: “The provisions of this section do not affect credits certified prior to January 30, 1981.”