Mr. CONLON. Right. Mr. DINGELL. But the assessment is made at the local level; is that right? Mr. CONLON. That is right. Well, there are a couple of exceptions but in general that is what happens. Part of the assessment that is logically applicable to the local government is put on the local rolls. Whatever rates that the local governments apply are applied against that value; yes sir. Mr. DINGELL. As I read this bill it would have nothing to do with the State agency which would determine the value of the property for the whole State. Am I correct on this? The language of the bill has nothing to do with the determination of the value of the whole property across the State. It simply deals with the assessment. Mr. CONLON. In general what you are saying is correct. Mr. DINGELL. I am referring to page 2 of the bill. Mr. CONLON. It is possible that in a couple of States, the valuation which is made by the State agency is the value against which the tax rate is applied on a statewide average basis. This is an exception. Mr. DINGELL. I am saying this bill in instances where the State draws the value of property across all the States, that there would be no relief from the valuation of the property by the State agency under this bill. Am I correct? Mr. CONLON. I think there are a few States where because of the Mr. DINGELL. I am just asking you a particularly pointed question, Mr. Conlon. I want you to give me a brief answer. What I am saying to you is that there would be no relief to a utility particularly a railroad that was complaining about the valuation of the property within the whole borders of State, if it was to assert a complaint against the State agency which happened to have fixed that value. Am I correct? Mr. CONLON. There are instances where it could assert that kind of complaint but very few. In general what you say is true. Mr. DINGELL. Very good. Now further, what would be a representative form of judicial and administrative review of the assessment by the community of taxes on a particular railroad's property within the confines of that community's border? Mr. CONLON. The proceeding could be in the nature of, let us say, a tax rate objection. Mr. DINGELL. How would they do that? Mr. CONLON. It seems to me what is involved in one of these proceedings is the necessity on the part of the person who complains to show, No. 1, what the full value of this railroad was and what percentage of it was put on the rolls in order to make the kind of comparison with the average ratio of other property that is needed to get the relief in the bill. Mr. DINGELL. I am not asking you about under the bill. I am asking about under existing practices. Under existing practice what would happen? You would have the assessment of the tax? Mr. CONLON. Yes. Mr. DINGELL. Would it be easily appealed to the court or would there be some intervening administratíve agency which would review that assessment? Mr. CONLON. In some States there are provisions for appeal to an administrative agency. In general, what you do when you are assessed is pay the tax under protest or you have an opportunity to protest within a certain period of time; or you might institute an action in the circuit court or district court for recovery of so much money on the ground that that much was illegally assessed against you. Mr. DINGELL. So there is judicial review within the State? Mr. CONLON. Yes. Mr. DINGELL. In that you can proceed for review through the whole structure of State judicial system right up to the supreme court of the State? Mr. CONLON. Yes, sir. Mr. DINGELL. On both questions of fairness, policy, and so forth, am I correct? Mr. CONLON. That is right. Mr. DINGELL. Then at the conclusion of this if you feel that there has been a denial of a Federal constitutional right, it then becomes the right of the litigant to assert that right and to appeal to the Federal judiciary? Mr. CONLON. Yes. Mr. DINGELL. Over a question of the denial of a Federal constitutional right. Am I correct? Mr. CONLON. Yes, sir. Mr. DINGELL. Then you have a full and a fair review within the structure of the Federal courts, am I correct? Mr. CONLON. Well, no. Mr. DINGELL. To ascertain whether there was denial of a Federal right there? Mr. CONLON. The only appeal you have from the State court decision would be to the United States Supreme Court. Mr. DINGELL. That is right, but you would have at this point an opportunity for a review Mr. CONLON. That is right. Mr. DINGELL (continuing). Of the Federal constitutional question within the Federal judiciary? Mr. CONLON. Yes. Mr. DINGELL. On the conclusion of that action it would be appropriate action by the Supreme Court to ratify the State court's action and, of course, the action of the administrative agency or remand to the State courts or State agency for action in accordance with whatever ruling the court might make. Am I correct? Mr. CONLON. That is right. Mr. DINGELL. Thank you very much. The CHAIRMAN. Mr. Harvey. Mr. HARVEY. Mr. Conlon, these remedies that Mr. Dingell has referred to have existed, I take it, almost from time immemorial, I think for a good long time. Is that not correct? Mr. CONLON. No, sir; in theory they may have but I would not put it quite the way you did because, let us say, prior to World War II, it was a fairly common thing that, if you went before a court and you had not been assessed at the statutory level, the court would not give you any relief even though you had been assessed higher than somebody else, as long as you were not assessed as high as the statu tory standard provided for assessment. But it is this which has changed. Mr. HARVEY. That has changed since when? Mr. CONLON. I think there has been great change since 1946 in this respect. Mr. HARVEY. That is 20 years ago. Mr. CONLON. Yes, sir. Mr. HARVEY. Yet you are telling us today that the discrimination does still exist? Mr. CONLON. There is discrimination in property taxes; yes. Mr. HARVEY. I served as a city councilman, mayor, and county supervisor in Michigan. I would challenge anyone who would say that discrimination did not exist because I think it does, not particularly against railroads but I think against business generally. Mr. CONLON. In some places it is against business; in some places it is in favor of business. We have jurisdictions in Illinois where business firms and commercial property are assessed at a lower rate than residential property. Mr. HARVEY. What I fail to see though is why this bill would hurt the municipalities or cities or jurisdictions which would have to appear in Federal court. Why would they be afraid of appearing in Federal court? Mr. CONLON. I don't know that they are afraid to appear in Federal court but I think the ordinary remedy for dealing with municipal and county and local affairs is in the State courts. Mr. HARVEY. You have admitted after 20 years the discrimination is still there. It seems to me it is time we ought to start looking for another remedy. Mr. CONLON. I don't agree it has failed at all. I feel there have been tremendous strides made. Michigan is one of the States where you can see a great deal of difference between 1946 and 1966. Mr. HARVEY. That is true but discrimination still exists in other States. Mr. CONLON. I am sure there is some but the area is being narrowed all the time. I don't think you are going to change this overnight by going into the Federal courts. Mr. HARVEY. I can't believe the world would come to an end. I can't believe it would be as bad as you have portrayed it. I can't believe that it would harass the taxing authorities. I think it is a question of who is going to be harassed. We are talking now not only about my State but across the country. Is it the business or railroads that will be harassed or the tax authorities that will be held accountable in other courts? It seems to me that is a decision that this committee has to make. I have a feeling there is great resentment among the taxing authorities to get into this problem at all in that they have felt, "Well, let leave things as they are; it is a hot problem." Mr. CONLON. It is an awful hot problem but so far as I know I must say that I know of no question of any feeling of resentment in this matter in any way whatsoever. Mr. HARVEY. You are getting very close to local politics. If you have ever worked on the local level, there is strong resentment no mat 60-661-66——8 ter what taxing authority you are talking about, about getting into this question of assessments and values. Mr. CONLON. There is a strong political difficulty here because if you try to do these things all in one fell swoop you may have a substantical transfer of tax burdens and this could make the life of political figures unbearable. I think this change has to be made over a period of time. I recall a State where they tried to do it overnight and the roof almost blew off the statehouse. Mr. HARVEY. I think you have made a very fine statement and I thank you for it. I have no further questions. The CHAIRMAN. Mr. Conlon, thank you very kindly. You have been very patient. We appreciate your coming here. Mr. CONLON. Thank you. The CHAIRMAN. I defer now to Mr. Younger. Mr. YOUNGER. I would like to have Mr. Ogden furnish the other side of the picture that we have asked for, the cases where you have not received relief from the State court. Mr. OGDEN. I will be most happy to, sir. (The information referred to follows:) Hon. HARLEY O. STAGGERS, GULF, MOBILE & OHIO RAILROAD CO., Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. STAGGERS: Toward the close of the committee's March 2 hearing proponents of the measure were invited to furnish information regarding unsuccessful railroad tax litigation. I am pleased to respond by forwarding herewith a partial list of pertinent cases. For the most part the decisions listed were adverse to the railroad or the ultimate result did not afford material relief or the litigation is still pending. A few cases which did not involve railroads have been included because of their immediate or potential effect on railroad assessments. The list is not offered as being all inclusive. It is mainly confined to the more recent cases. Many States are omitted either because they do not assess railroads for ad valorem taxes or due to peculiarities in their assessment procedures. This material also points up an alarming trend to legalize the discriminatory taxation of railroads. Montana, Kansas, Idaho, Kentucky, and Tennessee furnish examples of what has been done or threatened in this area. Sincerely, JAMES N. OGDEN. ALABAMA Appealed from a refusal by the State department of revenue to equalize 1964 assessments and pending in the Circuit Court of Montgomery County, Ala., are the following cases, all of which are still pending: 1. Louisville and Nashville R. Co. v. State of Alabama. 2. Illinois Central R. Co. v. State of Alabama. 3. Seaboard Air Line R. Co. v. State of Alabama. 4. Gulf, Mobile and Ohio R. Co. v. State of Alabama. 5. Atlantic Coast Line R. Co. v. State of Alabama. Appealed from a refusal by the State department of revenue to equalize 1965 assessments and pending in the Circuit Court of Montgomery County, Ala., are the following cases, all of which are still pending: 1. Louisville and Nashville R. Co. v. State of Alabama. 2. Illinois Central R. Co. v. State of Alabama. 3. Seaboard Air Line R. Co. v. State of Alabama. 4. Gulf, Mobile and Ohio R. Co. v. State of Alabama. 5. Atlantic Coast Line R. Co. v. State of Alabama. 6. Colonial Pipe Line v. State of Alabama. 7. Birmingham Southern R. Co. v. State of Alabama. 8. Federal Barge Lines v. State of Alabama. 9. Southern Ry. Co. v. State of Alabama. 10. Alabama Great Southern R. Co. v. State of Alabama. 12. Birmingham Terminal Co. v. State of Alabama. 14. Plantation Pipe Line v. State of Alabama. 15. A.T. & N. R. Co. v. State of Alabama. 16. Birmingham Belt R. v. State of Alabama. 17. St. Louis and San Francisco Ry. Co. v. State of Alabama. ARIZONA 1. Southern Pacific v. Cochise County, 92 Ariz., 395, 377 P. 2d 770 (1963). Arizona Supreme Court held that the Southern Pacific had proved discrimination in the 1959 assessment of its property by officials of Arizona, that this discrimination violated the Arizona constitution and statutes, but refused to authorize recovery of taxes illegally imposed. Rather, the court held that the railroad would be entitled to injunctive relief in the future upon proof of discriminatory assessing practices and that only after first obtaining an injunction could the railroad recover illegal taxes already paid. Following this decision the legislature in 1964 amended the Arizona Code effectively nullifying the decision. ARKANSAS 1. St. Louis-San Francisco Ry. Co. v. Ark. Public Service Commission, 304 S.W. 2d 297 (1957). Following the 1965 assessment of Frisco property in Arkansas by the public service commission of that State, the railroad appealed to the circuit court where an order was entered denying relief to the Frisco. On appeal to the supreme court it was held that the Judiciary does not sit as an assessing body and, in the absence of proof that the assessment of property for tax purposes is manifestly excessive, fraudulent or oppressive, courts will not disturb the findings of an assessing body. 2. Kansas City Ry. Co. v. Ark. Commerce Commission, 323 S.W. 2d 193 (1959). Case dealt with the proper 1957 evaluation of property of the Kansas City Southern Railway Co. No significant tax relief obtained by railroad and the court did not deal with the equalization problem. 3. Kansas City Southern Ry. Co. v. Ark. Commerce Commission, 326 S.W. 2d 805 (1959). Following the tax assessment of plaintiff railroad's property for the years 1955 and 1956 by the Tax Division of the Arkansas Public Service Commission, the railroad protested and appealed to circuit court. The orders of the public service commission were affirmed and the railroad appealed to the Supreme Court of Arkansas but its appeals were dismissed on motion by the defendant on the ground that the record of the cases below had not been filed with the clerk of the Supreme Court within 60 days after entry of order in the circuit court, even though the court below had formally extended the time for filing the record in the supreme court. CALIFORNIA 1. Forty-eight separate suits challenging the level of assessment of railroad property for the tax year 1958 were filed in 48 separate California Superior Courts by Southern Pacific Co. and its rail affiliates against 48 counties and various cites in California, pointing up the cumbersome and inadequate appeal procedure prevailing in the State. The railroad voluntarily dismissed these suits without prejudice on July 1, 1959, on an agreement by the California State Board of Equalization to equalize railroad assessments at the rate of 21⁄2 percent per year. However, the California State Board of Equalization has not equalized the railroad assessments as agreed to, according only a fraction of the relief promised. Seven years later the raliroad assessments in California remain twice as high as others. FLORIDA 1. Seaboard Air Line R. Co. v. Gay, 74 So. 2d 569 (1954) Circuit Court, Leon County, Fla. (tax year 1953 relief denied). |