Case Title: Whitsett v. Kroger

Citation: 

Docket Number: S058313

State: oregon

Court: Oregon Supreme Court

Date: 2010-04-29T00:00:00Z

Document:
FILED:  April 29, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
DOUG WHITSETT,
an individual Oregon Elector,
Petitioner,
v.
JOHN R. KROGER,
Attorney General,
State of Oregon,
Respondent.
(SC S058313)
En Banc
On
petition to review ballot title filed March 10, 2010; considered and under
advisement on March 31, 2010.
Nathan
R. Rietmann, Salem, filed the petition and reply memorandum for petitioner.
Stephanie
L. Striffler, Senior Assistant Attorney General, Salem, filed the answering
memorandum for respondent.  With her on the memorandum were John R. Kroger,
Attorney General, and Jerome Lidz, Solicitor General.
GILLETTE,
J.
The
ballot title is referred to the Attorney General for modification.
GILLETTE,
J.
This
is a proceeding to review the ballot title for Senate Joint Resolution (SJR)
48, a measure referred to the people by the Legislative Assembly.  See
Or Const, Art IV, § 1(3)(c) (authorizing such referrals).  Pursuant to ORS
250.075, the Legislative Assembly drafted its own ballot title for the referred
measure.  Such ballot titles are reviewable by this court on the petition of "[a]ny
elector dissatisfied with [the] ballot title."  ORS 250.085(1). 
Petitioner, an elector, challenges each part of the ballot title -- the
caption, the "yes" and "no" vote result statements, and the
summary.  For the reasons that follow, we conclude that some of petitioner's
challenges to each part of the ballot title are well taken.  We therefore refer
the ballot title to the Attorney General for modification.
SJR
48 is a constitutional amendment that would add a new Article, denominated
Article XI-P, to the Oregon Constitution.  The complete wording of the referred
measure is attached to this opinion as an appendix.  For the purposes of our
review, however, it is possible to abbreviate our description of SJR 48 to the
following:  Article XI, section 7, of the Oregon Constitution, prohibits the
state from pledging the full faith and credit of the state to secure
indebtedness incurred by the state in an amount in excess of $50,000.  Over the
years, the voters have amended Article XI, section 7, on 17 separate occasions
to permit the state to pledge its full faith and credit in support of bonds for
particular purposes.  Or Const, Arts XI-A through XI-O.  SJR 48 would create an
additional exception to the limit imposed by Article XI, section 7, by
permitting the Legislative Assembly to authorize the state to incur certain
kinds of indebtedness, the repayment of which would be backed by the full faith
and credit of the state.  Such indebtedness could be used to finance or
refinance the costs of "acquiring, constructing, remodeling, repairing,
equipping or furnishing real or personal property that is or will be owned or
operated" by the state.  SJR 48, §§ 1(1) and (2).  The indebtedness
incurred pursuant to SJR 48 could not exceed one percent of the real market
value "of the property in this state."  Id. § 2(1).  Any
indebtedness would have to be paid from income tax revenues; the measure
forbids repaying any obligation incurred pursuant to the measure from property
taxes.  Id. § 2(2).
The
Legislative Assembly created the following ballot title for SJR 48:
"AMENDS CONSTITUTION:
AUTHORIZES LOWEST-COST BORROWING FOR STATE'S REAL AND
PERSONAL PROPERTY PROJECTS
"RESULT OF 'YES' VOTE:  'Yes'
vote authorizes lowest-cost bonds to finance state owned or operated real and
personal property projects.  Prohibits property tax for repayment.  Limits
amount borrowed.
"RESULT OF 'NO' VOTE:  'No'
vote rejects authorization for state to issue lowest-cost general obligation
bonds for real and personal property projects owned or operated by the state.
"SUMMARY:  The measure amends
the Oregon Constitution to authorize the state to issue general obligation
bonds to finance acquisition, construction, remodeling, repair, equipping or
furnishing of state owned or operated property.  General obligation bonds are
the cheapest method of borrowing the state may use and would cost less than the
certificates of participation the state currently uses.  The bonds would save
an estimated $5 million on interest costs for each $100 million issued.  The
measure does not authorize any specific bonds, but authorizes the Legislative
Assembly to enact implementing legislation.  The measure prohibits the levy of
property taxes to repay the bonds and limits the amount of outstanding bonds to
one percent of the real market value of property in the state."(1)
We
turn to a discussion of each of petitioner's challenges to the title, beginning
with his challenges to the caption.
A
ballot title caption for a proposed constitutional amendment must begin with
the words "Amends Constitution," followed by a statement of not more
than 15 words that reasonably identifies the subject matter of the measure. 
ORS 250.035(2)(a).(2)  This court's role in reviewing
challenges to a ballot title caption is to determine whether the caption
substantially complies with the pertinent statutory requirements.  ORS
250.085(5).  To meet the applicable statutory standard, case law requires that
the caption "state or describe the proposed measure's subject matter 'accurately
and in terms that will not confuse or mislead potential petition signers and voters.'" 
Kain/Waller v. Myers, 337 Or 36, 40, 93 P3d 62 (2004), quoting Greene
v. Kulongoski, 322 Or 169, 174-75, 903 P2d 366 (1995).  By "subject
matter," we refer to the "actual major effect" of a measure or,
if the measure has more than one major effect, all such effects (to the limit
of the available words).  See, e.g., Terhune v. Myers, 342 Or 475, 480,
154 P3d 1284 (2007) (so holding).
In
this case, the referred measure's authorization of new indebtedness is a major
effect, as the caption recognizes.  However, there is another, equally
important effect that the caption does not mention.  The first substantive
sentence of the referred measure includes the qualification, "notwithstanding
the limitations contained in section 7, Article XI[,] of th[e Oregon]
Constitution."  The proposed measure would supersede that "limitation";
it therefore is pertinent to inquire what the limitation entails.
Article
XI, section 7, of the Oregon Constitution, provides, in part:
"The Legislative Assembly shall not lend
the credit of the state nor in any manner create any debt or liabilities which
shall singly or in the aggregate with previous debts or liabilities exceed the
sum of fifty thousand dollars, except in case of war or to repel invasion or
suppress insurrection or to build and maintain permanent roads; and the
Legislative Assembly shall not lend the credit of the state nor in any manner
create any debts or liabilities to build and maintain permanent roads which
shall singly or in the aggregate with previous debts or liabilities incurred
for that purpose exceed one percent of the true cash value of all the property
of the state taxed on an ad valorem basis; and every contract of indebtedness
entered into or assumed by or on behalf of the state in violation of the
provisions of this section shall be void and of no effect. * * *."
In all pertinent
respects, that provision has been a part of the Oregon Constitution since
statehood.  We have described the purpose and effect of the foregoing debt
limitation provision this way:
"The debates on the floor of the convention
left little doubt as to the purpose of the debt limitation.  The central
concern was that future generations should not be saddled with the excessive
undertakings of an imprudent legislature.  The debt limitation was therefore
adopted to protect against burdensome and excessive taxation.  It was intended
to prevent exposing the sources of public revenue to potential hazard. 
Long-term obligations create a fixed charge against future revenues and can
impair the flexibility of planning and the ability of future legislatures to
avoid a tax increase."
State ex rel Kane v. Goldschmidt,
308 Or 573, 580, 783 P2d 988 (1989) (footnote, internal quotation marks, and
citations omitted).  Petitioner argues that, correctly understood, it is "[t]he
superseding of the existing constitutional debt limitation" that is the
subject of the referred measure.  Yet, petitioner points out, that concept
appears nowhere in the present caption.  It follows, petitioner reasons, that
the caption is deficient.
It is this
court's practice to require that a ballot title caption for a measure like the
one before us inform prospective voters of the "substantive change" in
existing law that the measure will make.  See, e.g., Meyer v. Myers, 343
Or 399, 407, 171 P3d 937 (2007) (so requiring); Kain/Waller, 337 Or at 40
(subject matter of proposed measure includes scope of legal changes proposed
measure would enact).  The Attorney General acknowledges the foregoing
authorities, but argues that the practice has not been uniform.  He points to Anderson
v. Thornton, 250 Or 185, 441 P2d 240 (1968), a case involving an initiated
constitutional amendment in which this court did not require that the ballot
title caption contain a statement about the substantive change in existing law
that the proposed measure would make.  However, that case was one in which no
side argued that such a statement should appear; it therefore is not one in
which this court affirmatively concluded that no such statement was necessary. 
When the issue has been before us, we have followed the rule stated in Meyer.
This is
such a case, and petitioner's argument is well taken.  The referred measure, if
adopted, would alter state borrowing practices in a way that would impact the
ability of future legislatures to utilize tax revenues to deal with new fiscal
and policy problems.  That policy choice may or may not be an appropriate one,
but it certainly is one that must be acknowledged.  The present ballot title
does not do that.  The ballot title must be referred to the Attorney General to
remedy the omission.
Petitioner
also argues that the caption is deficient in another respect.  He asserts that
the use in the caption of the phrase "lowest-cost borrowing" is
inappropriate, because it is misleading and confusing.  That argument has
several sub-parts.
First,
petitioner argues that the use of the phrase "lowest-cost borrowing"
is misleading because (petitioner asserts) the phrase has no frame of reference
or point of comparison.  For example, he argues, the use of "lowest-cost"
to modify "borrowing" in the caption will lead a prospective voter to
conclude that the referred measure authorizes borrowing that has a lower cost
than all other forms of borrowing.  That conclusion, petitioner reasons, then
will cause a prospective voter to believe that the referred measure creates
some kind of process by which the state will "shop around or otherwise
price compare" various borrowing alternatives and select the "lowest-cost"
one when, in fact, the referred measure creates no such process.  From that,
petitioner contends that the phrase in question is misleading.
The
simplest answer to the foregoing argument is that it requires far too much
speculation on our part to be valid.  It may be that some voters will reason in
precisely the way that petitioner postulates -- a capacity to misread or
misunderstand is inherent in any human enterprise.  But we see no basis for reaching
that conclusion other than by speculating, and we shall not do that.  There
being no persuasive demonstration of a problem, we decline to direct the
Attorney General to cure it.
Petitioner
next argues that the modifier "lowest-cost" itself is misleading, "because
it gives rise to an unanswered question: for whom is the borrowing authorized
by SJR 48 at lowest-cost?"  With respect, we do not see any ambiguity --
the borrowing authorized by SJR 48 is borrowing authority granted to the
state.  It follows, we think, that the "lowest-cost" phrase refers to
the cost to the state of that borrowing.(3)
Finally,
petitioner asserts that the use of the term "borrowing" is
misleading, because the term is broader and different than the constitutional
term "debt."  As a result, petitioner reasons, potential voters will
infer "that SJR 48 authorizes an array of 'lowest-cost' financing
arrangements that do not involve the incurring of debt or indebtedness in the
constitutional sense."  We are not persuaded that a logical path leads the
way that petitioner points, but, in any event, we believe that the modified
ballot title caption that the Attorney General creates on referral of this
matter will make even clearer that the "borrowing" the caption refers
to is borrowing that will create a "debt" of the state that would run
afoul of the restriction in Article XI, section 7, without the adoption of this
referred measure.
In summary,
we find petitioner's central contention concerning the caption -- that it fails
to mention that the limitation on debt in Article XI, section 7, would not
apply to debt incurred under the proposed amendment -- to be well taken.  The
caption must be modified.  However, petitioner's other contentions about the
caption do not require modification.(4) 

We turn
next to petitioner's challenges to the "yes" and "no" vote
result statements.  For convenience, we again set out the ballot title vote
result statements:
"RESULT OF 'YES' VOTE:  'Yes'
vote authorizes lowest-cost bonds to finance state owned or operated real and
personal property projects.  Prohibits property tax for repayment.  Limits
amount borrowed.
"RESULT OF 'NO' VOTE:  'No'
vote rejects authorization for state to issue lowest-cost general obligation
bonds for real and personal property projects owned or operated by the state."
Petitioner
asserts that the "yes" result statement suffers from the same
infirmities that he identified with respect to the caption.  We agree with
petitioner that the "yes" result statement must state the impact of
the proposed measure on the operation of present law in Article XI, section 7,
of the Oregon Constitution.  The statement prepared by the Legislative Assembly
does not do that.  On referral to the Attorney General, the "yes"
result statement must be modified in that regard.
Petitioner
also repeats the other arguments that he made about the caption, but, once
again, we do not find them persuasive.  Petitioner does, however, advance one additional
argument.  He asserts that the statement "[l]imits amount borrowed"
in the "yes" result statement is misleading because the word
"limits" suggests constraints on state borrowing but, in fact, the
referred measure authorizes substantial new debt.  It is true that the referred
measure authorizes borrowing up to an amount equal to "one percent of the
real market value of the property in this state," and that such an amount
doubtless is a large one.  Nonetheless, it is a true "limit."  Under
those circumstances, we cannot say that the "yes" result statement is
insufficient in that regard.
Petitioner
attacks the "no" vote result statement on the ground that it amounts
to little more than a declaration that "no rejects yes."  That is a
fair characterization, and it is not satisfactory under the facts of this
case.  See, e.g., Nesbitt v. Myers, 335 Or 424, 432-33, 71 P3d 530
(2003) (criticizing such "no" vote result statements).  The "no"
vote result statement needs to include a description of the law that a
"no" vote would leave in place:  Article XI, section 7, of the Oregon
Constitution.  That would allow the "no" vote result statement to
perform its function in advising potential voters as to the choice they are
being asked to make.  The "no" vote result statement must be
modified.
Finally, we
turn to petitioner's arguments pertaining to the summary.  For convenience, we
once again set out the Legislative Assembly's summary:
"SUMMARY:  The measure amends
the Oregon Constitution to authorize the state to issue general obligation
bonds to finance acquisition, construction, remodeling, repair, equipping or
furnishing of state owned or operated property.  General obligation bonds are
the cheapest method of borrowing the state may use and would cost less than the
certificates of participation the state currently uses.  The bonds would save
an estimated $5 million on interest costs for each $100 million issued.  The
measure does not authorize any specific bonds, but authorizes the Legislative
Assembly to enact implementing legislation.  The measure prohibits the levy of
property taxes to repay the bonds and limits the amount of outstanding bonds to
one percent of the real market value of property in the state."
ORS
250.035(2)(d) requires that a ballot title contain a "concise and
impartial statement * * * summarizing the state measure and its major effect." 
"The function of [the] summary is to provide voters with enough
information to understand what will happen if the proposed measure is approved,
i.e., to advise voters of the 'breadth' of a measure's impact."  Caruthers
v. Kroger, 347 Or 660, 670, 227 P3d 723 (2010).
Petitioner
raises four objections to the summary.  First, he argues that, like the caption
and the "yes" and "no" vote result statements, the summary
is deficient because it fails to inform voters that SJR 48, if adopted, would exempt
the new borrowing authority from the debt limitation in Article XI, section 7,
of the Oregon Constitution.  We agree.  On referral, the summary must be
modified in that respect.
Second,
petitioner argues that the summary fails to inform voters that the debt
incurred pursuant to the referred measure is secured by the taxing authority
and the full faith and credit of the state.  We consider this argument to be a
more focused version of the one just discussed.  As such, it is well taken.  We
assume that this argument will be met by the manner in which the Attorney
General deals with petitioner's first point.
Third,
petitioner challenges the statement in the summary that "the bonds would
save an estimated $5 million on interest costs for each $100 million issued." 
This statement is misleading, petitioner argues, because the ordinary reader
would understand the savings so described to occur annually, while the actual
projected savings are over the life of the particular bonds.  The Attorney
General responds that the summary will not be misread in that way.  Both sides,
in other words, ask us to speculate about how the words in question will be
understood.  Without suggesting that we are wholly reassured by the Attorney
General's argument, we nonetheless must say that we are unpersuaded by
petitioner's contrary view.  We therefore do not refer the summary to the
Attorney General on that basis.
Finally,
petitioner challenges the statement in the summary that "[g]eneral
obligation bonds are the cheapest method of borrowing the state may use and
would cost less than the certificates of participation the state currently
uses."  He makes two arguments concerning that statement.  He argues,
initially, that "cheapest" is a "loaded" word that is "politically
charged and advocates support for the measure."  He then asserts that the
sentence also is misleading because, although the interest rate on
general obligation bonds doubtless would be lower than the interest rates on
certificates of participation, the actual "cost" to the taxpayers of
the state for using general obligation bonds probably "remains constant [compared
with the cost of using certificates of participation], as the value of the
additional risk assumed by Oregon taxpayers should be proportionate to the
value of the interest rate reduction."  The Attorney General responds to
petitioner's initial argument by asserting that "cheapest" is a fair
substitute for the phrase "lowest-cost," particularly if the word
limitation is tight.  He does not respond to the second argument.
Better
terms there may be, but we cannot say that the summary fails to comply
substantially with the requirements of ORS 250.035(2)(d) in its use of "cheapest." 
We also reject petitioner's second theory on precisely that ground -- it is a
theory.  Petitioner may or may not be correct in speculating as to the true
relative "cost" to Oregon taxpayers of general obligation bonds
compared to certificates of deposit; we have no way of knowing.  And, because
we have no way of knowing, we cannot hold that the sentence in question fails
the statutory test of substantial compliance.
Based
on the foregoing discussion, we hold that the Legislative Assembly's ballot
title for SJR 48 fails to comply substantially with the requirements of law for
such ballot titles set out in ORS 250.035(2).  Pursuant to ORS 250.085(8), the
ballot title is referred to the Attorney General for modification.
The
ballot title is referred to the Attorney General for modification.
APPENDIX
Enrolled
Senate Joint Resolution 48
Be
It Resolved by the Legislative Assembly of the State of Oregon:
PARAGRAPH 1. 
The Constitution of the State of Oregon is amended by creating a new Article to
be known as Article XI-P, such Article to read:
ARTICLE
XI-P
SECTION 1.   (1)  In the manner provided by law
and notwithstanding the limitations contained in section 7, Article XI of this
Constitution, the credit of the State of Oregon may be loaned and indebtedness
incurred to finance the costs of:
(a)  Acquiring, constructing, remodeling,
repairing, equipping or furnishing real or personal property that is or will be
owned or operated by the State of Oregon, including, without limitation,
facilities and systems;
(b)  Infrastructure related to the real or
personal property; or
(c)  Indebtedness incurred under this
subsection.
(2)  In the manner provided by law and
notwithstanding the limitations contained in section 7, Article XI of this
Constitution, the credit of the State of Oregon may be loaned and indebtedness
incurred to refinance:
(a)  Indebtedness incurred under subsection (1)
of this section.
(b)  Borrowings issued before the effective date
of this Article to finance or refinance costs described in subsection (1) of
this section.
SECTION 2.  (1)  Indebtedness may not be
incurred under section 1 of this Article if the indebtedness would cause the
total principal amount of indebtedness incurred under section 1 of this Article
and outstanding to exceed one percent of the real market value of the property
in this state.
(2)  Indebtedness incurred under section 1 of
this Article is a general obligation of the State of Oregon and must contain a
direct promise on behalf of the State of Oregon to pay the principal, premium,
if any, and interest on the obligation.  The full faith and credit and taxing
power of the State of Oregon must be pledged to payment of the indebtedness. 
However, the State of Oregon may not pledge or levy an ad valorem tax to pay
the indebtedness.
SECTION 3.  The Legislative Assembly may enact
legislation to carry out the provisions of this Article.
SECTION
4.  This Article supersedes conflicting provisions of this Constitution.
PARAGRAPH 2.  The amendment proposed by
this resolution shall be submitted to the people for their approval or
rejection at the next regular general election held throughout this state.
1. The
ballot title was prescribed by the Legislative Assembly in section 21 of
enrolled Senate Bill 998 (2010).  Or Laws 2010, ch 21, § 21.
2. Section
21(2) of enrolled Senate Bill 998 (2010) provides that "the word limits
described in ORS 250.035(2) do not apply for the purposes of judicial
review."  Or Laws 2010, ch 21, § 21(2).  The legislature nonetheless
appears to have endeavored to keep the number of words in each section of its
ballot title within the statutory limitation.  In every other respect,
moreover, the requirements of ORS 250.035(2) apply.
3. Petitioner
does not separately argue that the phrase "lowest cost" is a
politically "loaded" one that should not be included in a ballot
title.
4. Petitioner
adds a new argument concerning the caption in his reply to the state's
answering memorandum.  He asserts that use of the term "lowest-cost"
is inappropriate because it focuses on one aspect of the borrowing process --
the interest rate -- at the expense of a myriad of other considerations.  We
decline to address this argument, however, because it is new; it was not
advanced in petitioner's opening memorandum and the Attorney General has had no
opportunity to respond to it.