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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Interior Cabaret, Hotel, Restaurant & Retailers Assoc. v. Fairbanks North Star Borough (05/12/2006) sp-6012
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| INTERIOR CABARET, HOTEL, | ) |
| RESTAURANT & RETAILERS | ) Supreme Court No. S- 11481 |
| ASSOCIATION, | ) |
| ) Superior Court No. 4FA-03-1791 CI | |
| Appellant, | ) |
| ) O P I N I O N | |
| v. | ) |
| ) No. 6012 - May 12, 2006 | |
| FAIRBANKS NORTH STAR | ) |
| BOROUGH, | ) |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Randy M. Olsen, Judge.
Appearances: Peter J. Aschenbrenner,
Aschenbrenner Law Offices, Inc., Fairbanks,
for Appellant. Joseph W. Miller, Assistant
Borough Attorney, and A. Ren‚ Broker, Borough
Attorney, Fairbanks, for Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Justices. [Fabe and Carpeneti,
Justices, not participating.]
EASTAUGH, Justice.
MATTHEWS, Justice, concurring.
I. INTRODUCTION
Interior Cabaret, Hotel, Restaurant & Retailers
Association (ICHRRA) sued the Fairbanks North Star Borough to
challenge a proposed sales tax on alcoholic beverages on theories
the tax would be illegal and the ballot question was misleading.
The borough then changed the proposed tax and the ballot question
and voters approved the proposal. ICHRRA amended its complaint
and challenged the enacted tax. Does the taxs exemption for two
cities within the borough mean that the tax is not areawide, as
AS 29.35.150 requires? Is the tax the boroughs only sales tax,
in violation of the policy embodied in AS 04.21.010(c)(2), which
is intended to prevent discriminatory taxation of alcoholic
beverage sales? And is ICHRRA the prevailing party, given the
changes the borough made before submitting the proposal to the
voters?
Despite the exemptions, we hold that the tax is
areawide. We also hold that the tax does not discriminate
against sales of alcoholic beverages, because the borough also
imposes a sales tax on hotel rooms. Finally, we hold that it was
not an abuse of discretion to find that ICHRRA was not the
prevailing party. We therefore affirm the judgment below.
II. FACTS AND PROCEEDINGS
The Fairbanks North Star Borough Assembly in July 2003
enacted Ordinance 2003-46, which proposed a referendum imposing a
sales tax on sales of alcoholic beverages. The proposed ballot
question asked: Shall the Fairbanks North Star Borough levy an
areawide 5% tax on the retail sale of alcoholic beverages with
limited exemptions for alcoholic beverage sales taxed by the City
of Fairbanks and the City of North Pole, thereby reducing the
property tax dollar for dollar? Ordinance 2003-46 contained an
implementing ordinance that would become effective if voters
approved the proposed tax.
ICHRRA filed suit on August 8 to prevent the proposed
question from being placed on the October 7 election ballot.
ICHRRA alleged that the ballot question was misleading and that
Ordinance 2003-46 proposed an invalid tax. On August 22 the
superior court denied ICHRRAs motion for a preliminary injunction
to prevent Ordinance 2003-46s question from appearing on the
ballot. The borough assembly then enacted Ordinance 2003-52,
which replaced Ordinance 2003-46. The ballot question, as stated
by Ordinance 2003-52, asked: Shall the Fairbanks North Star
Borough levy an areawide 5% tax on the retail sale of alcoholic
beverages with limited exemptions for alcoholic beverage sales to
the extent taxed by the City of Fairbanks and the City of North
Pole? Borough voters approved this proposed tax.
ICHRRA then amended its complaint, alleging that the
tax violates state law on the theories the tax is not areawide,
as AS 29.35.150 requires, and is a discriminatory sales tax on
alcoholic beverages, in violation of AS 04.21.010(c)(2). The
superior court granted summary judgment to the borough. The
court found that ICHRRA was a public interest litigant and was
therefore not liable to the borough for attorneys fees, but also
declined to award ICHRRA prevailing party attorneys fees under
the catalyst theory.
ICHRRA appeals the superior courts grant of summary
judgment in favor of the borough and its ruling that ICHRRA was
not the prevailing party.1
III. DISCUSSION
A. Standard of Review
Summary judgment is appropriate where there is no
genuine issue as to any material fact and . . . any party is
entitled to judgment as a matter of law. 2 We review grants of
summary judgment de novo.3 We draw all factual inferences in
favor of, and view the facts in the light most favorable to, the
party against whom summary judgment was granted.4 When
interpreting statutes we use a sliding-scale approach, under
which the clearer the statutory language is, the more convincing
legislative history must be to justify another interpretation.5
We give liberal construction . . . to the powers of local
government units.6
We review for abuse of discretion the superior courts
prevailing party determination when awarding attorneys fees.7
Prevailing party determinations will ordinarily be overturned
only if they are manifestly unreasonable.8
B. The Sales Tax Authorized by Ordinance 2003-52 Is
Areawide Within the Meaning of AS 29.35.150.
Alaska Statute 29.35.150 requires that borough taxing
power be exercised on an areawide basis.9 Areawide is defined by
AS 29.71.800(1) to mean throughout a borough, both inside and
outside all cities in the borough.
When this dispute arose, AS 29.45.650(a) provided that
Except as provided in AS 04.21.010(c), AS
29.45.750, and in (f), (h), (i), and (j) of
this section, a borough may levy and collect
a sales tax on sales, rents, and on services
provided in the borough. The sales tax may
apply to any or all of these sources.
Exemptions may be granted by ordinance.[10]
ICHRRA argues that [a] borough sales tax is cumulative, not
incorporating, reduced or sliding to take account of the rate of
city sales taxation, and that Ordinance 2003-52s exemption of
alcoholic beverage sales to the extent they are taxed by cities
within the borough renders the tax illegal as not areawide.
Alaska Statute 29.71.800(14) defines nonareawide to
mean: throughout the area of a borough outside all cities in the
borough. Because a borough could attempt to exercise its powers
in some, but not all, cities within the borough, the terms
areawide and nonareawide as defined by AS 29.71.800(1) and (14)
are not mutually exclusive. That is, not every exercise of
borough power that is not areawide is necessarily nonareawide.
We therefore consider whether the boroughs sales tax on alcoholic
beverages is not areawide.
ICHRRA argues that the tax is not areawide because
Ordinance 2003-52 defined the exemptions by geography. ICHRRA
similarly argues that the juxtaposition of the terms levy and
collect in various statutes11 prohibits the borough from
collecting sales taxes in some parts of the borough but not
others. These arguments are unavailing. Ordinance 2003-52 and
the implementing ordinance define exemptions in terms of any
applicable city sales taxes rather than by geography. Ordinance
2003-52s ballot question asked whether sales should be exempted
to the extent taxed by the City of Fairbanks and the City of
North Pole. The implementing ordinance likewise exempts retail
sales of alcoholic beverages to the extent that [they] are taxed
by any other municipality within the borough and exempts
wholesale sales by a bona fide alcoholic beverage distributer.12
The words of AS 29.45.650(a) indicate that boroughs
have broad power to create exemptions. The second sentence of AS
29.45.650(a) authorizes boroughs to apply a sales tax to any or
all of the sources listed in the first sentence. The second
sentence therefore allows taxes on sales, rents, and services.
The legislatures use of any or in addition to all indicates that
boroughs may be selective in determining which sources to tax.13
We interpret statutes so that no part will be inoperative or
superfluous, void, or insignificant.14 This principle suggests
that the third sentence in AS 29.45.650(a) (Exemptions may be
granted by ordinance.) is intended to authorize boroughs to grant
exemptions on some basis other than source, because the second
sentence in that subsection gives boroughs authority to tax
sources selectively, without reference to the third sentence.15
Furthermore, AS 29.45.650(a) does not purport to limit boroughs
powers to grant exemptions, and [w]e should not be quick to imply
limitations on the taxing authority of a municipality where none
are expressed.16
We also note that AS 29.45.650(c) mandates an exemption
from borough use taxes to the extent the person has paid a sales
tax on the source when the sales tax was levied in any taxing
jurisdiction whether inside or outside the state. Therefore, if
a borough levies a five percent use tax on a commodity, but a
city within the borough has already levied a five percent sales
tax on the sale of that commodity, AS 29.45.650(c) exempts the
boroughs use tax in its entirety. Yet this would not mean that
the boroughs use taxes are not areawide. Here, the taxs
exemptions operate in the manner described in AS 29.45.650(c).
We therefore conclude that the exemptions do not mean that the
tax is not areawide.
ICHRRA argues that Ordinance 2003-52 has tied the hands
of the local lawmakers, in alleged violation of our holding in
City of St. Marys v. St. Marys Native Corp.17 ICHRRA correctly
points out that the exemptions in Ordinance 2003-52 may have made
the sales tax more palatable to some voters; it argues that
because borough voters approved both the tax and the exemptions,
repeal of or reduction in the exemptions would be a new tax or an
increase in the rate of levy. ICHRRA reasons that the assembly
therefore cannot repeal the exemptions without voter approval.
This, ICHRRA argues, is a violation of the separation of powers
because it takes budget authority away from the assembly and
places it in the hands of the voters. ICHRRA also argues that
Ordinance 2003-52 violates separation of powers principles and
delegates taxing power to city governments by committ[ing] the
Assembly to honor both the City of Fairbanks[s] and the City of
North Poles power to raise taxes out of the Boroughs share.
(Emphasis in original.)
In St. Marys we concluded that when a local government
grants an exemption by ordinance and the exemption is not
subjected to a public vote, it may repeal that exemption by
ordinance without a public vote.18 The negative implication of
this statement may be that when exemptions are approved by public
vote, they may not be repealed by a mere ordinance. But the
statement from St. Marys quoted above does not suggest that
exemptions may not be approved by public vote, or that repealing
exemptions as part of the tax scheme would violate separation of
powers principles.
Moreover, AS 29.45.650(a) provides that [e]xemptions
may be granted by ordinance. (Emphasis added.) The use of the
permissive term may suggests that ordinances are not the sole
means by which exemptions may be granted.19 We therefore do not
read AS 29.45.650(a) as either precluding the adoption through
referendum of a sales tax with exemptions or mandating that
repeal of an exemption adopted in this manner would require voter
approval.20 We see no separation of powers problem with an
areawide tax that includes voter-approved exemptions that require
voter approval for repeal.
Nor do we conclude that the tax violates separation of
powers principles by delegating taxing authority to the cities.
ICHRRA correctly points out that under the current exemptions,
the boroughs portion of the tax will be decreased if cities
within the borough raise their sales taxes on alcoholic
beverages. ICHRRA therefore implies that city councils may
increase their sales taxes on alcoholic beverages to the level of
borough taxation at no political cost because the increase would
not affect the total tax paid by constituents. But boroughs have
broad power to craft exemptions,21 and whether the exemptions
should hinge on the application of city sales taxes is a policy
question for the borough. Because the legislature has not
expressly limited the boroughs taxing powers to preclude this
type of exemption,22 we decline to imply such a limit.23
As justification for the exemptions, the borough
asserts that it and the cities may not impose double taxation on
any transaction; it therefore contends that Ordinance 2003-52s
exemptions are required. Because we conclude that the tax is
areawide, we need not consider this contention. But we observe
that article X, section 1 of the Alaska Constitution merely
announces a purpose of preventing the duplication of tax-levying
jurisdictions. It is not a per se prohibition on double
taxation. Furthermore, AS 29.45.700(a) specifically contemplates
double taxation by providing that [a] city in a borough that
levies and collects areawide sales and use taxes may levy sales
and use taxes on all sources taxed by the borough in the manner
provided for boroughs. Double taxation therefore does not appear
to be expressly proscribed by either the Alaska Constitution or
sound public policy, as the borough suggests.
ICHRRA also argues in passing that the boroughs tax
regime creates an impossible administrative burden of dealing
with two tax regimes on the same transaction with two tax
collecting authorities. Fairbanks North Star Borough Ordinance
(FNSBO) 3.59.040(A)(3) requires merchants within cities to
collect a five percent sales tax on all sales of alcoholic
beverage, and remit the boroughs portion to the borough and the
citys portion, if any, to the city. This is not on its face an
impossible administrative burden, and ICHRRA has not attempted to
make the showing necessary to demonstrate burdensomeness. Nor
has it suggested to us any basis in Alaska law for invalidating a
tax because of the administrative burden the tax places on
merchants.
We therefore conclude that the sales tax on alcoholic
beverages as proposed in Ordinance 2003-52 and implemented in
FNSBO 3.59.010-.180 is areawide. We next consider whether the
sales tax on alcoholic beverages is valid under AS
04.21.010(c)(2).
C. The Sales Tax Authorized by Ordinance 2003-52 Is Not a
Discriminatory Tax on Alcoholic Beverages, in Violation
of AS 04.21.010(c)(2).
Alaska Statute 04.21.010(c)(2) prohibits municipalities
from imposing a sales tax on alcoholic beverages unless sales
taxes are imposed on other sales within the municipality. ICHRRA
argues that a tax on a single [other] commodity is insufficient
under AS 04.21.010(c)(2) to allow the borough to impose a sales
tax on alcoholic beverages. ICHRRA also argues that even if a
sales tax on a single other transaction may satisfy AS
04.21.010(c)(2), the boroughs tax on hotel room transactions is
not a qualifying tax.
1. Alaska Statute 04.21.010(c)(2) requires a sales
tax on only a single source other than alcoholic
beverages.
When interpreting statutes we use a sliding-scale
approach, under which the clearer the statutory language is, the
more convincing legislative history must be to justify another
interpretation.24 The text of AS 04.21.010(c)(2) does not clearly
indicate how many other sources must be taxed before a tax on
alcoholic beverages is permitted. The legislatures use of the
plural term sales taxes suggests a requirement that more than one
other source must be taxed before AS 04.21.010(c)(2) allows a tax
on sales of alcohol. But the legislative history indicates that
AS 04.21.010(c)(2) requires that only one other source be taxed.
We discussed this legislative history in Lagos v. City & Borough
of Sitka.25
In 1980 the legislature inadvertently deleted from the
statute then governing borough taxation powers language similar
to that now found in AS 04.21.010(c)(2).26 The legislature
realized this mistake and enacted AS 04.21.010(c)(2) in 1985.27
Senator Eliason, one of the 1985 legislations sponsors,
stated that [u]nder this language, no they cant discriminate
between alcohol or food or clothing or any other commodity thats
sold in the market. . . . [T]he intent of the legislation is to
treat them all equally.28 Senator Eliason later stated that
[t]he only limitations were placing on local
government is the fact that they cannot take
a specific sales tax on a specific industry.
What were saying is that if you want to tax
liquor and whatever else you might want to
tax, thats alright. But we want to its
keeping any specific industry going out and
point and saying, Were going to tax you and
no one else. . . . They can . . . impose a
ten percent tax on liquor and tobacco that
wouldnt be in violation of this provision. .
. . If the proposition read, Shall we have a
ten percent tax on tobacco only? they couldnt
under this provision.29
Senator Eliasons interpretation finds support in the
Senate Finance Committee testimony of Tamara Cook, the
legislative affairs committee staff member who drafted the
legislation. Cook testified that [a]s I read this language, if a
municipality, whether it be a city or a borough, in fact imposed
a sales tax on anything other than alcohol, it would be free to
then also include alcohol within its sales tax structure.30
According to the committee minutes, Senator Kerttula
shared this view:
Senator Kerttula advised of his understanding
that under the proposed provision a tax could
be imposed by a municipality if two or more
things were taxed. One commodity, however,
cannot be selected for taxation. Senator
Eliason concurred in the foregoing
understanding, noting that the amendment
attempts to avoid zeroing in on one specific
industry for a specific tax.31
Moreover, our case law supports the conclusion that a
sales tax imposed on a single other source satisfies the
requirements of AS 04.21.010(c). In Lagos we considered whether
AS 04.21.010(c) prohibited the taxation of sales of alcoholic
beverages at a higher rate than the rate for sales of other
commodities.32 We stated in dictum that the legislature intended
[AS 04.21.010(c)(2)] to prohibit the imposition of discriminatory
sales taxes . . . in the form of . . . a sales tax imposed solely
on the sale of alcoholic beverages.33 This statement, although
not controlling here, reflects an understanding that AS
04.21.010(c)(2) only requires a sales tax on a single other
source before a borough may impose a sales tax on alcoholic
beverages. We therefore conclude here that a tax on a single
other source satisfies the requirements of AS 04.21.010(c).
2. The boroughs room tax satisfies the requirement of
AS 04.21.010(c)(2).
The borough charges an eight percent sales tax on hotel
and motel room rental transactions.34 In City of Homer v. Gangl,
we held that a similar bed tax was a sales tax.35 We relied on
the inclusion of the term rents in AS 29.53.415 (the predecessor
to AS 29.45.650(a)) in concluding that the term sales tax
included a tax on commercial sleeping accommodations.36
ICHRRA argues that the boroughs room tax does not
satisfy the requirement of AS 04.21.010(c)(2) that sales taxes be
imposed on other sales within the municipality. (Emphasis
added.) ICHRRA argues that only a tax on a commodity may satisfy
this requirement. Blacks Law Dictionary defines sale as [t]he
transfer of property or title for a price.37 Alaska Statute
29.45.650(a) authorizes municipalities to levy a sales tax on
sales, rents, and on services. This can be read as seemingly
distinguishing among sales taxes on these sources. But more
broadly, it can be read as eliminating distinctions among sales,
rents, and services by explicitly characterizing a municipal tax
on rents and services as a sales tax. Arguably, AS
04.21.010(c)(2)s use of on other sales would be meaningless if
the legislature did not intend to differentiate between sales
taxes on sales, rents, and on services in defining the type of
additional sales tax required to justify a sales tax on alcohol.38
According to this reading, a sales tax on a rent or a service
could not be an enabling sales tax under AS 04.21.010(c)(2).
But we are not persuaded that the non-discrimination
principle embodied in AS 04.21.010(c)(2) requires that the other
sales tax be imposed on a transaction involving the transfer of
property or title. The distinction between transactions
involving the exchange of money for goods and transactions
involving the exchange of money for services or the occupancy or
use of property in the context of AS 29.45.650(a) is not always
clear.39 For example, the sale of an alcoholic beverage at a bar
or restaurant includes a service component when the bartender or
server prepares and serves the drink. Moreover, it seems logical
to conclude that AS 29.45.650(a)s broad characterization of sales
taxes as including taxes on both rent and services should help
guide us in determining whether a tax satisfies subsection
.010(c)(2).
Nor has ICHRRA directed us to any legislative history
that persuades us that distinctions among sales, rents, and
services should be read into AS 04.21.010(c)(2). As noted above,
Senator Eliason mentioned sales taxes on various commodities as
examples of sales taxes that would satisfy AS 04.21.010(c)(2),
but he emphasized that [t]he only limitations were placing on
local government is the fact that they cannot take a specific
sales tax on a specific industry. What were saying is that if
you want to tax liquor and whatever else you might want to tax,
thats alright.40 And Tamara Cooks Senate Finance Committee
testimony that if a municipality . . . imposed a sales tax on
anything other than alcohol, it would be free to then also
include alcohol within its sales tax structure41 supported this
interpretation. These comments reflect a legislative intent to
grant municipalities wide discretion in complying with AS
04.21.010(c)(2).
In light of this evidence of legislative intent, we
decline to import into AS 04.21.010(c) the distinction among
sales, rents, and . . . services suggested by one possible
reading of AS 29.45.650(a). Given the constitutional command to
give a liberal construction . . . to the powers of local
government units,42 we cannot say that the qualifying sales tax
under AS 04.21.010(c) must be imposed on a commodity.
ICHRRA also argues that the room tax is not an areawide
tax because it exempts [o]perators located within the city of
Fairbanks.43 ICHRRA asserts that because the room tax is invalid
as a nonareawide tax prohibited by AS 29.35.150, it cannot serve
as the enabling tax under AS 04.21.010(c)(2).
But like the sales tax on alcoholic beverages at issue
in this case, the room tax operates throughout the borough,
subject to an exemption to the extent the same transactions are
taxed by the City of Fairbanks.44 For the reasons discussed above
in Part III.B, the room tax is areawide within the meaning of AS
29.35.150. The boroughs room tax therefore satisfies the
requirement of AS 04.21.010(c)(2). Because the borough imposes a
valid sales tax on another source, its sales tax on alcoholic
beverages does not violate AS 04.21.010(c)(2).
D. The Superior Court Did Not Abuse Its Discretion by
Refusing To Find that ICHRRA Was the Prevailing Party
Under the Catalyst Theory.
DeSalvo v. Bryant held that the catalyst theory can be
an appropriate method for determining prevailing party status for
attorneys fees purposes when a lawsuit brings about relief in a
manner other than formal judgment.45 To establish prevailing
party status under the catalyst theory, a party must demonstrate
(1) that it achieved the goal of the litigation by succeeding on
any significant issue which achieves some of the benefit sought
in bringing the suit, and (2) that there is a causal connection
between the defendants action generating relief and the lawsuit.46
Once the party makes this prima facie showing, the opposing party
may demonstrate that the lawsuit lacked colorable merit or that
the defendants action was wholly gratuitous.47
ICHRRA argues that because the borough before the
election substituted Ordinance 2003-52 for Ordinance 2003-46 the
superior court abused its discretion in refusing to declare
ICHRRA the prevailing party. The superior court found that
ICHRRA had not prevailed on a significant issue.
ICHRRA initially challenged the proposed implementing
ordinance contained in Section 3 of Ordinance 2003-46. This
implementing ordinance would have become effective if borough
voters had approved the tax as proposed by Ordinance 2003-46.
Ordinance 2003-52 did not include the proposed implementing
ordinance set out in Section 3 of Ordinance 2003-46. Instead,
Ordinance 2003-52 called for the borough assembly to adopt an
implementing ordinance. We cannot say that the superior court
abused its discretion in finding that ICHRRA was not successful
in a significant issue despite the boroughs adoption of this
change.
ICHRRA also points out that Ordinance 2003-52 omits
from the ballot question the representation that the proposed
sales tax on alcoholic beverages would reduc[e] the property tax
dollar for dollar. ICHRRAs original complaint catalogues various
alleged problems with Ordinance 2003-46s ballot question, but
does not mention the quoted language. Nor does the quoted
language appear in ICHRRAs memorandum in support of its
unsuccessful motion for a preliminary injunction. ICHRRA seems
to have objected to this language for the first time in its reply
memorandum in support of its motion for a preliminary injunction.
This indicates that ICHRRA did not view the inclusion or omission
of these words as particularly important.
Moreover, although ICHRRA certainly opposed specific
language of the ballot question in Ordinance 2003-46, this issue
was peripheral to its main contention that the proposed tax
violated AS 29.35.150 and AS 04.21.010(c)(2). We therefore
cannot say that the superior court abused its discretion in
finding that ICHRRA did not prevail on a significant issue in the
litigation.48
We recently held in Halloran v. State, Division of
Elections that it is generally inappropriate to invoke the
catalyst theory when legislative action moots the lawsuit and
provides the relief sought.49 Because courts are not well-
positioned to divine post-litigation legislative motivation, the
catalyst approach should be applied only when the very clearest
expression of legislative purpose is present.50 ICHRRA notes that
chronology of events ordinarily plays an important role in
establishing causation for catalyst theory purposes.51 To
establish a causal connection between the [boroughs] action
generating relief and the lawsuit,52 ICHRRA therefore emphasizes
the enactment of Ordinance 2003-52 while ICHRRAs motion for a
preliminary injunction was pending. Because we decided Halloran
after appellate briefing was completed in this case, we assume
ICHRRA could not have anticipated a need to present more direct
evidence of legislative motivation. But the superior courts
determination that ICHRRA was not the prevailing party because it
did not succeed on a significant issue was not manifestly
unreasonable,53 so it is unnecessary to remand to allow ICHRRA to
gather and present any potential evidence of legislative
motivation.
IV. CONCLUSION
The judgment of the superior court is therefore
AFFIRMED.
MATTHEWS, Justice, concurring.
I have some difficulty with the courts interpretation
of AS 04.21.010(c)(2). In its original form the statute required
local governments to tax other sales when they taxed alcohol
sales. I would have construed this provision to mean that local
governments needed to tax the sales of a substantial number of
other commodities in order to satisfy the other sales
requirement. The evident purpose of the requirement was to
prevent excessive and discriminatory taxation of alcohol sales.
Because alcohol is often abused, causing numerous societal
problems that are costly for local governments, it is an easy and
logical target for differential taxation. The other sales
language aimed to constrain taxes on alcohol by requiring the
same tax on the sales of other commodities.1 If the tax rate
were set too high consumers of the other commodities would voice
their protests to their elected representatives. But this
constraint could only be potentially effective if the sales of a
number of commodities consumed by the voting public were taxed.2
The other sales language was deleted accidently and
five years later it was reenacted in substantially the same
terms.3 The rule of statutory interpretation that a statute, and
each part of a statute, is presumed to serve some useful purpose4
argues for interpreting the new statute as I would have
interpreted the original one. But the legislative history points
in a different direction. As the opinion of the court explains,
the staff member who drafted the new statute, and some members of
the Senate Finance Committee who reviewed it, including a co-
sponsor, expressed the view that the new statute could be
complied with by taxing just one additional commodity.
It is tempting to say that this history should not be
dispositive. Many of the criticisms leveled against reliance on
legislative history seem to apply here.5 The full Senate was not
necessarily aware of the colloquy in committee and did not
necessarily agree with the interpretation offered there. The
same is true with respect to the House of Representatives, which
concurred in the passage of the statute, and the Governor, who
decided not to veto it. Further, those who must comply with the
statute, and those seeking its enforcement, are charged only with
that notice which the text of the act gives them, not that which
can be gleaned from the legislative history.
This court, however, has given considerable weight to
legislative history. Indeed, we rejected similar arguments
against the use of legislative history in Lagos v. City & Borough
of Sitka.6 There we concluded, based on the same committee
proceedings referred to here, that AS 04.21.010(c)(2) prohibits
differential rates of sales taxes on alcohol and other
commodities.7 We have stated that when legislative history is
sufficiently clear it can alter what might otherwise appear to be
the plain meaning of the statutory language.8 Here the
interpretation suggested by the legislative history is not
inconsistent with the language of the statute. Troublingly, it
does go a long way towards nullifying the acts effectiveness in
municipalities that have not found it necessary to impose a
general sales tax.
Based on our general approach to legislative history,
the specificity of the legislative history in this case, and the
fact that the interpretation supported by the history is
consistent with the literal language of the act, I concur,
hesitantly, with todays opinion as to the meaning of AS
04.21.010(c)(2). I agree without reservation to the opinions
resolution of all other points.
_______________________________
1 The borough has filed a separate appeal from the
superior courts ruling that ICHRRA is a public interest litigant.
See Fairbanks N. Star Borough v. Interior Cabaret, Hotel, Rest. &
Retailers Assn, Supreme Court Case No. S-11612.
2 West v. Umialik Ins. Co., 8 P.3d 1135, 1137 (Alaska
2000) (quoting Alaska R. Civ. P. 56(c)).
3 Rockstad v. Erikson, 113 P.3d 1215, 1219 (Alaska 2005).
4 Id.
5 Bartley v. State, Dept of Admin., Teachers Ret. Bd.,
110 P.3d 1254, 1258 (Alaska 2005) (noting that under Alaskas
sliding-scale approach to statutory interpretation, the plainer
the language of the statute, the more convincing contrary
legislative history must be) (internal quotation marks omitted).
6 Alaska Const. art. X, 1.
7 Contl Ins. Co. v. U.S. Fid. & Guar. Co., 552 P.2d 1122,
1125 (Alaska 1976), disapproved on other grounds by Farnsworth v.
Steiner, 638 P.2d 181, 185 n.5 (Alaska 1981).
8 Jerue v. Millett, 66 P.3d 736, 740 (Alaska 2003).
9 AS 29.35.150 requires boroughs to exercise the powers
as specified and in the manner specified in AS 29.35.150
29.35.180 on an areawide basis. AS 29.35.170(a) authorizes
boroughs to assess and collect sales taxes.
10 In 2005 the legislature amended AS 29.45.650(a) to
provide that [a] borough may wholly or partially exempt a source
from a borough sales tax that is taxed by a city in that borough
under AS 29.45.700. See ch. 30, 1, SLA 2005. The statute as
amended would thus explicitly allow the tax proposed by Ordinance
2003-52 as against an areawide objection such as ICHRRA raises
here. The amendment to subsection .650(a) became effective on
August 24, 2005. Ch. 30, SLA 2005. The version of AS
29.45.650(a) quoted in the text therefore controls this case.
For ease of discussion, we will refer to the version quoted in
the text and applicable here as AS 29.45.650(a).
11 See AS 29.35.170(a); AS 29.45.650(a); AS 29.45.660(a);
AS 29.45.700(a), (b).
12 Fairbanks North Star Borough Ordinance (FNSBO)
3.59.040(A)-(B).
13 See City of Homer v. Gangl, 650 P.2d 396, 399 (Alaska
1982) (If all means the same thing as any or all, then the words
any or . . . are superfluous.) (interpreting predecessor to AS
29.45.650(a)).
14 City of St. Marys v. St. Marys Native Corp., 9 P.3d
1002, 1008 (Alaska 2000) (internal quotation marks omitted).
15 See Gangl, 650 P.2d at 399 (We have previously noted
that the term sales tax carries no such connotation of
generality, and that selective sales taxes by boroughs are not
unusual.) (citing Liberati v. Bristol Bay Borough, 584 P.2d 1115,
1123 (Alaska 1978)).
16 Liberati, 584 P.2d at 1121.
17 City of St. Marys v. St. Marys Native Corp., 9 P.3d
1002 (Alaska 2000).
18 St. Marys, 9 P.3d at 1007-08.
19 See Kiokun v. State, Dept of Pub. Safety, 74 P.3d 209,
214 (Alaska 2003) (holding that statute stating Department may
organize search party when person is lost is permissive and does
not require search). But cf. Whitson v. Municipality of
Anchorage, 608 P.2d 759, 761 (Alaska 1980), interpreting former
AS 29.53.170, which has since been repealed. See ch. 74, 88,
SLA 1985. Former AS 29.53.170(a) provided that the assemblys
power to impose a property tax shall be exercised by means of
general ordinances. (Emphasis added.) Whitson held that a
proposed amendment to the Anchorage Municipal Charter that would
have required voter approval of any new property tax or an
increase in the rate of levy contradict[ed] the command of AS
29.53.170[] that taxes shall be levied by general ordinance.
Whitson, 608 P.2d at 761.
20 Because the assembly has not attempted to repeal these
exemptions, we need not decide here whether it could do so
without voter approval.
21 See supra notes 15-17 and accompanying text.
22 Indeed, after ICHRRA filed suit, the legislature
amended AS 29.45.650(a) to allow boroughs to craft exemptions
based on the application of city taxes. See supra note 10.
23 See Liberati v. Bristol Bay Borough, 584 P.2d 1115,
1121 (Alaska 1978) (We should not be quick to imply limitations
on the taxing authority of a municipality where none are
expressed.).
24 Bartley v. State, Dept of Admin., Teachers Ret. Bd.,
110 P.3d 1254, 1258 (Alaska 2005).
25 Lagos v. City & Borough of Sitka, 823 P.2d 641 (Alaska
1991) (holding that AS 04.21.010(c) prohibits taxing sales of
alcoholic beverages at rate higher than other commodities).
26 See id. at 643 n.3 (citing Senate Finance Comm.
Proceedings, May 7, 1985 (testimony of Senator Eliason) and
Senate Finance Comm. Proceedings, May 8, 1985 (testimony of
Senator Ray)).
27 See ch. 74, 20, SLA 1985.
28 Lagos, 823 P.2d at 644 (quoting Senate Finance Comm.
Proceedings, May 8, 1985 (testimony of Senator Eliason)).
29 Id.
30 Id. at 644 n.4 (quoting Senate Finance Comm.
Proceedings, May 7, 1985 (testimony of Tamara Cook)).
31 Senate Finance Comm. Minutes, May 8, 1985.
32 Lagos, 823 P.2d at 642.
33 Id. at 645 (emphasis added).
34 FNSBO 3.58.020(A).
35 City of Homer v. Gangl, 650 P.2d 396, 398-99 (Alaska
1982).
36 Id. at 398.
37 Blacks Law Dictionary 1337 (7th ed. 1999).
38 See City of St. Marys v. St. Marys Native Corp., 9 P.3d
1002, 1008 (Alaska 2000) (noting that we interpret statutes so
that no part will be inoperative or superfluous, void or
insignificant).
39 Blacks Law Dictionary defines service as [t]he act of
doing something useful for a person or company for a fee and [a]n
intangible commodity in the form of human effort, such as labor,
skill, or advice. Blacks Law Dictionary 1372 (7th ed. 1999). It
defines rent as [c]onsideration paid, usu. periodically, for the
use or occupancy of property. Id. at 1299.
40 Lagos v. City & Borough of Sitka, 823 P.2d 641, 644
(Alaska 1991) (quoting Senate Finance Comm. Proceedings, May 8,
1985 (testimony of Senator Eliason)) (emphasis added). Senator
Eliasons comments were made approximately three years after we
decided Gangl, 650 P.2d 396 (Alaska 1982). We presume that
Senator Eliason and the other legislators were aware of our
reliance on the inclusion of the term rents when we concluded
that the citys bed tax was a sales tax within the meaning of AS
29.53.415, the predecessor to AS 29.45.650(a). See id. at 398.
We therefore interpret these statements as rejecting fine
distinctions among sales taxes on sales, rents, and services for
the purposes of AS 04.21.010(c).
41 Lagos, 823 P.2d at 644 n.4 (quoting Senate Finance
Comm. Proceedings, May 7, 1985 (testimony of Tamara Cook))
(emphasis added).
42 Alaska Const. art. X, 1.
43 FNSBO 3.58.030(B).
44 FNSBO 3.58.030(B)(3) states that operators within the
City of Fairbanks are exempt from the room tax except that
[i]f the city of Fairbanks imposes a room tax
less than the boroughs, operators in the city
of Fairbanks shall collect the borough room
tax imposed by this chapter and remit the
taxes to the borough. The borough will then
remit to the city of Fairbanks its portion of
the tax.
45 DeSalvo v. Bryant, 42 P.3d 525, 530 (Alaska 2002).
46 Id. at 530.
47 Id.
48 This conclusion renders it unnecessary to consider
whether AS 09.60.010(b), which prohibits discrimination in the
award of attorneys fees based on the factors that we have used to
determine public interest litigant status, applies to this case.
49 Halloran v. State, Div. of Elections, 115 P.3d 547, 552
(Alaska 2005).
50 Id.
51 See DeSalvo, 42 P.3d at 530.
52 Id.
53 Jerue v. Millett, 66 P.3d 736, 740 (Alaska 2003).
1 In Lagos v. City & Borough of Sitka, 823 P.2d 641, 645
(Alaska 1991), we concluded, in line with this purpose, that AS
04.21.010(c)(2) requires that the alcohol sales tax rates not
exceed the rate of taxation imposed upon . . . other commodities
sales.
2 Taxes on commodities or services mostly consumed by
nonresidents would not comport with the rationale of the statute,
because nonresidents are not directly represented on municipal
assemblies.
3 This history is detailed in Lagos, 823 P.2d at 643-44.
4 See Municipality of Anchorage v. Sisters of Providence
in Washington, Inc., 628 P.2d 22, 29 (Alaska 1981), rejected on
other grounds by Alaska Public Employees Assn v. City of
Fairbanks, 753 P.2d 725 (Alaska 1988).
5 Justice Scalia, a frequent critic, has questioned
whether legislative history accurately reflects legislative
intent. He contends that
it is a fiction of Jack-and-the-Beanstalk
proportions to assume that more than a
handful of those Senators and Members of the
House who voted for the final version of the
[legislation], and the President who signed
it, were, when they took those actions, aware
of the drafting evolution that the Court
describes; and if they were, that their
actions in voting for or signing the final
bill show that they had the same intent which
that evolution suggests was in the minds of
the drafters.
Bank One Chicago, N.A. v. Midwest Bank & Trust Co., 516 U.S. 264,
279 (1996) (Scalia, J., concurring). Justice Scalia has also
raised notice-based concerns about relying on legislative
history, remarking that
[i]t may well be true that in most cases the
proposition that the words of the United
States Code or the Statutes at Large give
adequate notice to the citizen is something
of a fiction, albeit one required in any
system of law; but necessary fiction descends
to needless farce when the public is charged
even with knowledge of Committee Reports.
United States v. R.L.C., 503 U.S. 291, 309 (1992) (Scalia, J.,
concurring) (citation omitted).
While Justice Scalia wrote alone in Bank One and was
joined only by Justices Thomas and Kennedy in his R.L.C.
concurrence, a number of commentators have noticed a marked
decline in the Supreme Courts use of legislative history since
Justice Scalia joined the court. E.g., James J. Brudney & Corey
Ditslear, The Decline and Fall of Legislative History? Patterns
of Supreme Court Reliance in the Burger and Rehnquist Eras, 89
Judicature 220, 222 (2006); Michael H. Koby, The Supreme Courts
Declining Reliance on Legislative History: The Impact of Justice
Scalias Critique, 36 Harv. J. on Legis. 369, 385-87 (1999). But
see Charles Tiefer, The Reconceptualization of Legislative
History in the Supreme Court, 2000 Wis. L. Rev. 205 (2000).
Indeed, the voting alignment in the recent City of
Rancho Palos Verdes v. Abrams case suggests that most members of
the court may be moving away from a traditional reliance on
legislative history. 125 S. Ct. 1453 (2005). Justice Scalia,
the author of the opinion of the court, looked only to the
statutes text, and its express or implicit indications, for
interpretative guidance. Id. at 1459. By contrast, Justice
Breyer, joined by Justices OConnor, Souter, and Ginsburg,
advocated examination of context, not just literal text, as a
guide to Congress intent in respect to a particular statute. Id.
at 1462. Only Justice Stevens counseled examination of all
relevant evidence, including not only text and the structure of
the statutory scheme but also legislative history, to ascertain
Congressional intent. Id. at 1463 (Stevens, J., concurring in
the judgment).
6 823 P.2d at 644-45.
7 Id. at 643-45.
8 A typical statement of our approach is found in Homer
Electric Assn v. Towsley, 841 P.2d 1042, 1043-44 (Alaska 1992):
Generally, the most reliable guide to
the meaning of a statute is the words of the
statute construed in accordance with their
common usage. Lagos v. City & Borough of
Sitka, 823 P.2d 641, 643 (Alaska 1991).
However, even where the statutory language
considered alone seems to leave room
reasonably for only one meaning, we
nonetheless may consult legislative history
and the rules of statutory construction,
realizing that sometimes language that seems
clear in the abstract takes on a different
meaning when viewed in context. North Slope
Borough v. Sohio Petroleum Corp., 585 P.2d
534, 540 (Alaska 1978); State v. Alex, 646
P.2d 203, 208 n.4 (Alaska 1982). In such
cases the legislative history and rules of
construction must present a compelling case
that the literal meaning of the language of
the statute is not what the legislature
intended. University of Alaska v. Geistauts,
666 P.2d 424, 428 n.5 (Alaska 1983) (Where a
statutes meaning appears clear and
unambiguous, . . . the party asserting a
different meaning has a correspondingly heavy
burden of demonstrating contrary legislative
intent.); State v. Alex, 646 P.2d at 208 n.4
(under Alaskas sliding-scale approach to
statutory interpretation, the more plain the
language of the statute the more convincing
the evidence of contrary legislative intent
must be).
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