Attorney General Opinion; Honorable Paul Pate

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TAXATION: Repeal of Local Option Sales and Services Tax. Iowa Code § 422B.1(9) (Supp. 1995). The governing body of a city which is contiguous to other cities may repeal the local option sales and services tax in that city without concurrent action by the other cities. (Scase to Pate, Secretary of State, 10-17-96) 96-10-6

The Honorable Paul D. Pate Secretary of State Statehouse L-O-C-A-L

Dear Secretary Pate:

You have requested an opinion from this office interpreting Iowa Code sub section 422B.1(9) (Supp. 1995), which allows for the partial repeal of a local option sales and services tax. Specifically, you ask whether this subsection allows the governing body of a city which is contiguous to other cities to repeal the tax only in its own city, so that the tax would remain imposed in the other cities. If we determine that this subsection does not allow a single city repeal, you ask what action is necessary for the city to repeal the sales and services tax under 422B.1(9).

As you note in your request letter, contiguous cities are generally treated throughout section 422B.1 as one entity. This is true for imposition of the local option sales and services tax.

A local option tax shall be imposed only after an election at which a majority of those voting on the question favors imposition and shall then be imposed until repealed as provided in subsection 6, paragraph “a”.... If the tax is a local sales and services tax imposed by a county, it shall only apply to those incorporated areas and the unincorporated area of that county in which a majority of those voting in the area on the tax favors its imposition.

For purposes of the local sales and services tax, all cities contiguous to each other shall be treated as part of one incorporated area and the tax would be imposed in each of those contiguous cities only if the majority of those voting in the total area covered by the contiguous cities favors its imposition.

Iowa Code § 422B.1(3) (Supp. 1995) (emphasis added); see also Iowa Code § 422B.1(6)(a) (Supp. 1995) (reiterating provision that contiguous cities treated as one incorporated city area for purposes of imposition of local option sales and services tax); Iowa Code § 422B.8 (Supp. 1995) (contiguous cities treated as one incorporated area for purposes of collection of local option sales and services tax). Contiguous cities are also treated as a single incorporated city area for purposes of conducting an election for repeal, rate change, or change in the use of local option sales and services tax proceeds. See Iowa Code § 422B.1(6)(a) (Supp. 1995) (election at which these questions are presented is to be “called and held in the same manner and under the same conditions as ... for the election on the imposition of the local option tax”).

This office concluded in a 1991 opinion that the statutory provisions “whereby contiguous cities are combined into one incorporated area for purposes of determining voter approval and territorial application of the county local option sales and services tax [are] rationally related to a legitimate state purpose and [do] not violate the equal protection clause of the Fourteenth Amendment....” 1992 Op. Att'y Gen. 22 (# 91-4-8(1) at 5).

Prior to 1989, a city could only repeal a local option sales and services tax if a majority of the voters in an election favored repeal.

See Iowa Code ch. 422B (1989); 1986 Op. Att'y Gen. 127 (#86-11-4(L) at 2). In 1989, the legislature enacted a provision allowing the county board of supervisors and governing bodies of incorporated city areas to repeal the local sales and services tax without conducting an election. 1989 Iowa Acts, ch. 276, § 1. This provision, which now appears as subsection 9 of section 422B.1, is the subject of your inquiry. Sub section 422B.1(9) provides as follows:

In a county that has imposed a local option sales and services tax, the board of supervisors shall, notwithstanding any contrary provision of this chapter, repeal the local option sales and services tax in the unincorporated areas or in an incorporated city area in which the tax has been imposed upon receipt of a motion adopted by the governing body of that incorporated city area requesting repeal.... For purposes of this subsection, incorporated city area includes an incorporated city which is contiguous to another incorporated city.

Iowa Code § 422B.1(9) (Supp. 1995) (emphasis added).

You have asked whether subsection 9 of 422B.1 allows a city which is contiguous to other cities to adopt a motion to repeal the local sales and services tax only in its own city, thereby allowing the tax to continue in force in the other cities. We believe that it does.

Mindful of the principle that “[r]ules of statutory construction are not resorted to unless there is ambiguity present,”

State v. Gilmour, 522 N.W.2d 595, 597 (Iowa 1994), we begin by examining sub section 422B.1(9). “Ambiguity is present if reasonable minds may differ or be uncertain as to the meaning of the statute.”

Id. We conclude that at least two interpretations could be given to sub section 422B.1(9): the first requiring treatment of contiguous cities as one incorporated city area; and the second allowing contiguous cities to act independently. Because we believe that the subsection is ambiguous, we turn to familiar principles of statutory construction.

The primary goal of statutory construction is the determination of legislative intent. American Asbestos v. Eastern Iowa Community College, 463 N.W.2d 56, 58 (Iowa 1990). “We consider all portions of the statute together, without attributing undue importance to any single or isolated portion.” Id. We must also recognize that the legislature may act as its own lexicographer and that we are bound by its definitions.

See Hartman v. Clarke County Homemakers, 520 N.W.2d 323, 328 (Iowa App. 1994).

As we have noted, contiguous cities are generally treated as a single incorporated area for purposes of imposing, setting the rate of, and collecting the local sales and services tax. The language of sections 422B.1(3), 422B.1(6)(a), and 422B.8 specifically provides that “all cities contiguous to each other shall be treated as part of one incorporated area.” Sub section 422B.1(9) does not, however, adopt the definition of “incorporated area” utilized elsewhere in chapter 422B. Rather, sub section 422B.1(9) indicates that, “for purposes of this subsection, incorporated city area includes an incorporated city which is contiguous to another incorporated city.” If this definition of “incorporated city area” is inserted into the operational provision of sub section 422B.1(9), that provision reads as follows:

[T]he board of supervisors shall, notwithstanding any contrary provision of this chapter, repeal the local option sales and services tax in ... [an incorporated city which is contiguous to another incorporated city] in which the tax has been imposed upon receipt of a motion adopted by the governing body of [the incorporated city which is contiguous to another incorporated city] requesting repeal.

This reading of the statute allows the governing body of a city to act independently to repeal the local sales and services tax within its city without regard to the action of contiguous cities.

We note, however, that a city's ability to repeal a local option sales and services tax is not without limitation. A city or county is statutorily precluded from repealing or reducing the rate of the local option sales and services tax “if obligations are outstanding which are payable as provided in section 422B.12, unless funds sufficient to pay the principal, interest, and premium, if any, on the outstanding obligations at and prior to maturity have been properly set aside and pledged for that purpose.” Iowa Code § 422B.1(10) (Supp. 1995).

We recognize that our interpretation of sub section 422B.1(9) results in contiguous cities being treated differently for purposes of repealing the local option sales and services tax than they are treated throughout the remainder of chapter 422B. Nevertheless, we are not free to legislate. “To the contrary, we must search for legislative intent as expressed by what the legislature has said, not by what it should or might have said.” Hartman v. Clarke County Homemakers, 520 N.W.2d at 328.

“Where identical language is used in several places in a statute, the phrase is usually given the same meaning throughout.” Carson v. Roediger, 513 N.W.2d 713, 716 (Iowa 1994). The inverse is also true: “when the legislature uses certain language in one part of the statute and different language in another, the court assumes different meanings were intended.” 2A N. Singer, Sutherland Statutory Construction §46.06, at 67 (Supp. 1996). Because the legislature chose not to utilize its previous definition of incorporated area and adopted different terminology in sub section 422B.1(9), we must assume that the legislature intended to treat contiguous cities differently under this subsection than they are treated elsewhere within chapter 422B.

Review of 422B.1(9) in its statutory context compels our conclusion that the governing body of a city which is contiguous to other cities may repeal the local option sales and services tax in that city without concurrent action by the other cities.

Sincerely, /s/

Cheistie J. Scase Assistant Attorney General