Case Title: Caruthers v. Myers (S54528)

Citation: 

Docket Number: S54528

State: oregon

Court: Oregon Supreme Court

Date: 2007-08-02T00:00:00Z

Document:
FILED: August 2, 2007
IN THE SUPREME COURT OF THE STATE OF OREGON
JERRY CARUTHERS &
LARRY WOLF,
v.
HARDY MYERS,
Attorney
General, 
State of Oregon,
Respondent.
(SC S54528)
En Banc
On petition to review ballot title.
Submitted on the record March 30, 2007.
Margaret S. Olney, of Smith, Diamond & Olney, Portland, filed the petition for
petitioners.
Denise G. Fjordbeck, Assistant Attorney General, Salem, filed the answering
memorandum for respondent.  With her on the memorandum were Hardy Myers, Attorney
General, and Mary H. Williams, Solicitor General.
Gregory W. Byrne, Portland, filed a brief for amicus curiae Bill Sizemore.
GILLETTE, J.
GILLETTE, J.
This ballot title review proceeding brought under ORS 250.085(2) concerns
the Attorney General's certified ballot title for a proposed initiative measure, denominated
by the Secretary of State as Initiative Petition 61 (2008).  The proposed measure is set
forth in the margin. (1)  If adopted, the measure would amend present law on ad
valorem taxation of primary residences by creating an exemption to the rules ordinarily
governing assessment of such properties.  Under the exemption, such property would be
exempt (1) from the first $100,000 of assessment if one of the owners was age 65 or older
and used the property as his or her primary residence; (2) from the first $150,000 of
assessment if one of the owners was 70 years of age or older and used the property as his
or her primary residence; (3) from the first $200,000 of assessment if one of the owners
was age 75 or older and used the property as his or her primary residence; and (4) from
the full assessment value of the property if one of the owners was 80 years of age or older
and used the property as his or her primary residence.  The proposed measure would not
apply to "any voter approved add-on taxes, such as serial levies, local option taxes, and
taxes imposed to pay for voter-approved bonded indebtedness or the interest thereon." 
The proposed measure directs the legislative assembly to adopt legislation to avoid abuses
of the ownership and residence provisions of the proposed measure. (2)
Petitioners are electors who timely submitted written comments to the
Secretary of State concerning the content of the Attorney General's draft ballot title and
who therefore are entitled to seek review of the resulting certified ballot title in this court. 
See ORS 250.085(2) (stating that requirement).  We review the Attorney General's
certified ballot title to determine whether it substantially complies with the requirements
of ORS 250.035(2)(a) to (d).  ORS 250.085(5).  For the reasons that follow, we conclude
that the ballot title challenged here fails that test.
The Attorney General certified the following ballot title for Initiative
Petition 61 (2008):
"ESTABLISHES PROPERTY TAX EXEMPTION FOR SENIOR CITIZEN'S PRIMARY RESIDENCE; INAPPLICABLE TO SPECIFIED VOTER APPROVED TAXES
(Boldface in original.)
Petitioners challenge the caption, the "yes" result statement, and the
summary in the Attorney General's certified ballot title.  All their challenges have a
common theme, however, and we therefore take this opportunity to summarize it.
Petitioners assert that the proposed measure, although it speaks of virtually
nothing but exemptions from ad valorem tax assessments for the homes of "senior
citizens," actually would have the effect of reducing local property tax revenues to a level
that would cripple local schools and governments.  That change to current law, petitioners
assert, must be identified in all three of the specified parts of the Attorney General's
certified ballot title.
We note at the outset that petitioners' underlying theory sweeps too widely. 
We do not deny that there might be circumstances in which it fairly could be said that a
proposed measure, although written in terms of subject X, really was about subject Y. 
This is not such a case, however.  The words of the proposed measure establish
inescapably that the measure is about (and, if passed, would affect) ad valorem property
taxes paid by senior citizens on their primary residences.
Petitioners rely on Kain/Waller v. Myers, 337 Or 36, 93 P3d 62 (2004).  In
that case, two proposed measures would have "capped" at a specific dollar level (3) the
amount that could be collected in ad valorem property taxes on primary dwellings and on
the parcels on which those dwellings were situated, without regard to the value of the
property, the age of the owner, or any other criterion.  Petitioners then argued, based on
data that the Attorney General did not challenge, that "[t]he limitation operates * * * as a
ceiling on the total amount of property taxes payable, not as a limitation either on the rate
of property taxation or on the growth on the assessed valuation of property."  Id. at 41. 
Faced with what was, in this court's view, not merely a far-ranging reduction in ad
valorem property tax revenues but, in fact, a change in the economic basis on which such
taxes in future would be imposed, this court concluded that the Attorney General could
not permissibly ignore that reduction in either the caption or the "yes" result statements in
the Attorney General's certified ballot titles.  Id. at 43-44.
We do not find this case to be Kain/Waller revisited, however.  Here, the
exemption applies to a certain group of property taxpayers -- far fewer than half, even by
petitioners' arguments.  In addition, it imposes no overall limit on the amount of property
taxes that can be collected from the beneficiaries of the proposed measure, let alone from
all residential property taxpayers, as did the proposed measure under consideration in
Kain/Waller.  The various property owners who otherwise would benefit from the
measure remain fully liable for a number of add-on and voter-approved taxes.  (That was
not true in Kain/Waller.)  We do not say that, as a result of the foregoing differences, the
information that petitioners wish to have appear in the Attorney General's certified ballot
title has no place in that document; we say only that the information may satisfy legal
requirements if it appears somewhere besides the caption.
The caption of the Attorney General's certified ballot title must "reasonably
identif[y]" in 15 words or less "the subject matter of the state measure."  ORS
250.035(2)(a).  Petitioners argue that the caption in the present case, like the captions in
Kain/Waller, must be modified because, petitioners assert, the proposed measure
"changes" a fundamental premise of the present ad valorem property tax system -- "that
the tax liability is based upon the value of property."
We reject that argument as proving too much.  All exemptions of any kind
to ad valorem taxation must have some impact on revenue, but we do not think -- and we
did not hold in Kain/Waller -- that an attempt to enact any exemption by means of the
initiative or referendum requires the Attorney General to mention the potential revenue
change in the caption in the initiative's ballot title.  In the present case, we acknowledge
that the issue is a reasonably close one.  Had the Attorney General chosen to include the
information for which petitioners now contend in his ballot title caption, it may even be
that such a choice would have withstood a legal challenge.  But there has to be some play
in the joints of the ballot title writing process, if this court is to maintain its status as a
law-enforcing court, rather than an editorial board.  Indeed, that flexibility inheres in the
"substantial compliance" standard that the legislature has established in evaluating
certified ballot titles pursuant to ORS 250.085(5).  We find no error in this respect.
Petitioners argue in the alternative that "[t]he other major change made by
the proposal is to give senior citizens who own property a tax break, regardless of
whether they are able to pay their taxes."  That may be a consequence of the enactment of
the measure, but we cannot say that it is in any sense the "subject matter" of the measure,
which the caption must identify.  Here, too, we find no error.  We turn to petitioners'
arguments concerning the "yes" vote result statement.
ORS 250.035(2)(b) requires that a ballot title contain a "simple and
understandable statement of not more than 25 words that describes the result if the state
measure is approved."  The purpose of this section of the ballot title is to "notify petition
signers and voters of the result or results of enactment that would have the greatest
importance to the people of Oregon."  Novick/Crew v. Myers, 337 Or 568, 574, 100 P3d
1064 (2004).  Petitioners assert that, when a proposal has a clear revenue impact, that
"result" must be included in the "yes" vote result statement.  They rely on  Novick v.
Myers, 333 Or 12, 35 P3 1017 (2001). 
We disagree.  Novick was a case in which a proposed measure would have
diverted 10 percent of income tax revenues from the General Fund to the Highway Fund,
without providing any mechanism for replacing those lost funds.  The "yes" result
statement certified by the Attorney General failed to mention that result.  This court held
that it must do so -- an outcome hardly surprising, in view of the fact that the subject
matter involved was no less than 10 percent of the general fund.  But this case is not
comparable.  There doubtless will be less ad valorem tax revenue if the measure is
adopted than if it is not.  But the amount of the reduction, conjectural in any event, cannot
under any imaginable scenario, create the total reshaping of state government finances
that would have been the inevitable outgrowth of the adoption of the proposed measure
under study in Novick.  We find no error respecting the Attorney General's certified "yes"
result statement. (4)
This brings us to respondents' attack on the Attorney General's certified
summary of the measure.  ORS 250.035(2)(d) requires that the ballot title contain a
"concise and impartial statement of not more than 125 words summarizing the state
measure and its major effects."  Petitioners assert that the Attorney General's summary
fails to meet the foregoing standard in three respects, only one of which justifies
discussion.  Petitioners assert that, even if it has no place elsewhere, a discussion of the
fiscal impact of the measure on local tax revenues belongs in the discussion as a
demonstration of the "breadth of [the proposed measure's] impact."
We agree.  Although it is impossible to state with certainty the precise
amount of local revenue that will be lost if the proposed measure is adopted, there can be
no question that there will be a noticeable loss of revenue that will have a significant
impact throughout the local government system.  That is surely an "effect" under ORS
250.035(2)(d), even if it is not the "subject matter" of the proposed measure under ORS
250.035(2)(a) or the "result" under ORS 250.035(2)(b).  See Kain/Waller, 337 Or at 40-44
(implicitly accepting proposition that a particular feature of a proposed measure may,
depending on its prominence and centrality, be either the "subject matter" or an "effect"
of that measure).  The Attorney General's failure to discuss that aspect of the measure in
the summary of his certified ballot title was error.  ORS 250.035(2)(d); ORS 250.085(5). 
The ballot title must be referred to the Attorney General for modification.
Ballot title referred to Attorney General for modification.
1. The proposed measure reads as follows:
"Section 1.  Senior citizen homestead exemption.  (a) Notwithstanding
any law, ordinance or rule in existence prior to the effective date of this
2008 Act, for tax years beginning on or after January 1, 2009, the first
$100,000 of assessed value of a parcel of real property shall be exempt from
ad valorem property taxes, if one or more of the owners of the property is
65 years of age or older and the property is his or her primary residence. 
The exemption shall be $150,000, if one or more of the owners is 70 years
of age or older and the property is his or her primary residence.  The
exemption shall be $200,000, if one or more of the owners is 75 years of
age or older and the property is his or her primary residence.  The
exemption shall be equal to 100 percent of the assessed value of the
property, if one or more of the owners of the property is 80 years old or
older and the property is his or her primary residence.
"(b) The exemption established by this section shall not apply to any voter
approved add-on taxes, such as serial levies, local option taxes, and taxes
imposed to pay for voter-approved bonded indebtedness or the interest
thereon.  Beginning with the tax year 2010 and each year thereafter, the
amount of the exemptions provided herein shall be increased annually by
three percent.
"The state legislative assembly shall adopt legislation to insure that this
section is not abused by such actions as transferring all or part of a non-qualifying person's interest in a property to a senior citizen for the purpose
of avoiding taxation, while the non-qualifying person who is not a spouse of
the senior citizen resides at the property."
2. This Initiative Petition 61 (2008) is identical to another proposed measure,
denominated by the Secretary of State as Initiative Petition 62 (2008), except that the size
of the exemptions provided in Initiative Petition 62 are smaller than those provided in
Initiative Petition 61.  The Attorney General has certified a ballot title for Initiative
Petition 62 (2008) that is similar in all material respects to the ballot title under
consideration in this case.  Petitioners in this case also have challenged the Attorney
General's certified ballot title respecting Initiative Petition 62 (2008).  Petitioners have
also challenged a third proposed initiative petition, which the Secretary of State has
denominated Initiative Petition 63 (2008).  That proposed measure is nearly identical to
Initiative Petition 62, with the addition of a section that extends the benefits contemplated
by the measure to renters and mobile home owners.  See Caruthers v. Myers, 343 Or 171,
___ P3d ___ (August 2, 2007) (dealing with objections to ballot titles for Initiative
Petitions 62 and 63 (2008)).
3. One measure would have capped the yearly ad valorem tax at $2,000; the other
would have capped the monthly ad valorem tax at $200.
4. We note again, as we did respecting the caption of the Attorney General's certified
ballot title, that the issue here is a relatively close one.  Thus, there may not have been an
error had the Attorney General chosen to include the information that petitioners desire. 
We here hold only that it was not legal error to omit the information in question from the
"yes" result statement.