The Alaska Supreme Court issued a unanimous decision on April 25, holding that same-sex couples living in Alaska are entitled to the same real estate tax break under state law that is given to married couples, and that nothing in Alaska’s marriage amendment, which provides that same-sex marriages are neither legal nor recognized in Alaska, would prevent that result. State of Alaska v. Schmidt, 2014 Alaska LEXIS 76, Opinion No. 6898 (April 25, 2014). Ironically, a concurring justice observed that the court could have ruled for the plaintiff couples using statutory interpretation and not reaching the constitutional equal protection issue, which would have rendered the court’s constitutional ruling unnecessary.
The court saw the case as a straightforward application of its earlier decision, Alaska Civil Liberties Union v. State, 122 P.3d 781 (Alaska 2005), which held that committed same-sex couples were entitled to the same state and local government employee benefits as married employees.
The key to both decisions, articulated for the court in this case by Senior Justice Robert Ladd Eastaugh, was in how one frames the equal protection question, since an equal protection analysis asks first whether two similarly situated groups are being treated in a different way, and then whether such different treatment is justified by a legitimate state interest.
When LGBT plaintiffs first started litigating equal benefits claims back in the 1970s and 1980s, court would dismiss them by saying that unmarried same-sex couples are similarly situated with unmarried different-sex couples, and since neither group was entitled to the benefits, there was no discrimination to evaluate. All unmarried employees were ineligible for benefits for their unmarried partner.
In 2005, however, the court rejected that reasoning in the ACLU decision, recognizing that the state’s ban on same-sex marriage created an inequality. Once one identified unmarried couples as the comparator, and premised a benefit on marital status, then one was discriminating against same-sex couples who were forbidden under state law to marry. An unmarried different-sex couple who sought the benefit could marry to get it. An unmarried same-sex couple who sought the benefit could not. Thus, the burden on the state was to show why the benefit in question should not be afforded equally to same-sex and different-sex couples. This did not, in the view of the court, require the plaintiffs to challenge the constitutionality of the marriage amendment, which they could not do without invoking the federal constitution. The court found that the marriage amendment had not been proposed to relieve the state of its obligation to extend equal protection of the laws to all its citizens, but only to provide that same-sex marriages would not be legal. Unlike marriage amendments in other states, the Alaska amendment do not go further to forbid the state from extending rights of benefits of marriage to same-sex couples, and thus the state constitution’s equal protection requirement still applied to such benefits.
For purposes of the equal protection requirement of the state constitution, the state would have to provide some policy justification for premising this benefit, the property tax exemption, on marital status instead of treating committed same-sex couples the same as married couples.
Justice Eastaugh straightforwardly described the dispute: “The State of Alaska and the Municipality of Anchorage exempt from municipal property taxation $150,000 of the assessed value of the residence of an owner who is a senior citizen or disabled veteran. But the full value of the exemption is potentially unavailable if a person who is not the owner’s spouse also occupies the residence. Contending that the exemption program violates their rights to equal protection and equal opportunities, three Anchorage same-sex couples in committed, long-term, intimate relationships sued the State and the Municipality. The superior court ruled for all three couples. The State and Municipality appeal.”
Using the analysis mentioned above, the court ruled in favor of two of the couples who owned their homes as tenants in common. In each case, one of the partners qualifies by virtue of age or disabled veteran status, but when they applied for the benefit they were told that as each occupied only 50% of the premises, they were entitled to exclude only the first $75,000 of assessed value because one partner was not qualified. Under this interpretation, married couples would enjoy the full benefit regardless whether one of the spouses was not individually qualified, because an implementing regulation limited the state’s reimbursement to the municipality for the lost tax revenue to the portion of the property occupied by the qualified tax-payer and his or her spouse. In his concurring opinion, Justice Daniel Winfree suggests that this is a misinterpretation of the regulation, and so long as the parties held their property as tenants in common, each had a 100% ownership interest so none of the exemption should be lost. But the court proceeded based on the facts alleged, because the couples had in fact been denied the full exemption by local tax authorities based on their interpretation of the statute and regulation.
Once having found that the policy as interpreted by local authorities and applied to the two couples was discriminatory, the court found that the governmental interests argued by the state and city were “legitimate” but that “the classification is not substantially related to those interests.” The court found that administrative cost savings “alone are not sufficient government objectives under our equal protection analysis,” as “the government can adequately protect its tax base and minimize cost without discriminating between similarly situated classes.” The state’s argument that it would consume administrative resources to determine whether same-sex couples qualified was unconvincing, since “the state allows married couples to establish eligibility for the exemption merely by making a sworn statement” and required no other proof of marital status. A similar sworn statement from a same-sex couple should thus be sufficient.
Finally, the state had argued that providing the exemption for married couples was intended to promote marriages of different-sex couples. The court could not see how denying the exemption to same-sex couples would promote such marriages. “The State has not explained how denying benefits to couples who cannot marry will promote marriage in couples who can,” wrote Eastough. “We assume, as the couples argue, that giving the full benefit only to married couples will not encourage same-sex domestic couples to leave their partnerships and enter into heterosexual relationships with an intention to marry.”
Thus, the court held that “the exemption program fails minimum scrutiny and violates these couples’ rights to equal protection.”
The third plaintiff couple, like the first two, included one partner who met the age requirement and the other who did not. The court found that the trial court erred by ruling in their favor, however because the man who qualified by age did not have an ownership interest in the property, which was solely owned by the younger partner. The exemption statute clearly makes the exemption available only to a senior or disabled veteran who owns the residential property on which they live. If these partners were married but living on property that the younger one had acquired prior to marriage and continued to own individually, they would not be entitled to the exemption, since the issue isn’t whether the qualified individual lives in the property but rather whether they have an ownership interest in it. Thus, the court saw no discrimination, once it applied its analysis to the situation of same-sex couples who jointly own their property.
The plaintiffs are represented by David Oesting and Roger Leishman of Davis Wright Tremaine LLP in Anchorage, and attorneys Thomas Stenson and Leslie Cooper appearing on behalf of the ACLU of Alaska Foundation.