Title: CONNICK v JUDGE

State: montana

Issuer: Montana Supreme Court

Document:

No. 1-3075 LN T?IE SUPKPiMli dOUKT OF THE STATE d l MONTANA 1975 ART LONNICK, .IKT W O O D S and iHRIS GARDNER, a s t h e Board of County Commissioners of LE3JIS AND CLARK COUNTY, S t a t e of Montana, T H O U S L. JUDGE, Governor af he S t a t e of Montana, Counsel of Record: For P l a i n t i f f s : Thomas F. Dowling, GourlCy .Icrurney, Helena, Montra L i d Leif B. Erickson, Deputy County Attorney, argued, Helena, Montana Louis F o r s e l l argued, Helena, Montana %or Defendants : Hon. Robert L. Woodahl, Attorney General, Helena, Montana % t r i c k E. Melby argued, Helena, Montana Yarry L. Hjort, Helena, Montana Submitted: July s, 1975 Decided : J k r i 8 3 agpj 5iLed: LA- 3 j k,,k, PER CURIAM: This i s an o r i g i n a l proceeding wherein p l a i n t i f f county commissioners of Lewis and Clark County seek a declaratory judgment a s t o whether t h e Montana Forty-Fourth Legislative Assembly levied a property tax f o r t h e years 1975 and 1976 f o r t h e support of t h e University System. This Court permitted t h e f i l i n g of t h e complaint and ordered service on t h e Governor, S t a t e Auditor, Superintendent of Public I n s t r u c t i o n and t h e Board of Regents. The Governor f i l e d an answer. The S t a t e Auditor appeared by b r i e f . The i s s u e r a i s e d i s whether t h e Forty-Fourth Legisla- t i v e Assembly levied a property t a x f o r t h e years 1975 and 1976 t o supply the fund from which appropriations have been made. Does t h e a c t of appropriating money from a s p e c i f i c fund a c t a s a levy of a t a x t o c r e a t e t h a t fund? The Forty-Fourth Legislature i n House B i l l s No. 269 and No. 271, Laws of Montana 1975, appropriated various sums from the fund created f o r deposit of t h e monies c o l l e c t e d by t h e levy authorized under section 84-3804, R.C.M. 1947, by name and account number a s i l l u s t r a t e d by t h e following excerpt from House B i l l No. 271: "Section 11. The following moneys a r e appropriated t o the board of regents f o r t h e respective u n i v e r s i t y system u n i t s f o r t h e biennium ending June 30, 1977: For F i s c a l Year For F i s c a l Year Ending 6130176 Ending 6/30/77 'I* 9 : ;'c "UNIVERSITY OF MONTANA "* 9 : * I I From t h e earmarked revenue fund 02106 University millage ERA [earmarked revenue account] 3,041,786 3,165,627". Funds i n t h e t o t a l sum of $15,836,528 f o r f i s c a l years 1976 and 1977 w e r e appropriated from t h i s fund f o r the support, maintenance, and operation of t h e University System. The Uni- v e r s i t y millage earmarked revenue account was o r i g i n a l l y estab- l i s h e d i n 1949 a s d i r e c t e d by t h e laws which preceded section 84-3804, R.C.M. 1947. (See Chapter 217, Laws of Montana 1947, and Chapter 218, Laws of Montana 1957). It has been used ex- clusively f o r the deposit of tax receipts collected by the levy f o r the support of the University System. Those a r e the only monies ever deposited i n t h e account and t h a t i s the only account i n which those t a x receipts have ever been deposited. The Governor, a s defendant, argues t h e i n t e n t t o levy the t a x i s c l e a r l y shown by the appropriation of money from the account created by the tax, and, ergo, the tax was levied. W e do not agree. Article V I I I , Section 1, 1972 Montana Constitution, s t a t e s : "Ta.xes s h a l l be levied by general laws f o r public purposes. I I Article V I I I , Section 9, 1972 Montana Constitution s t a t e s : "Appropriations by the l e g i s l a t u r e s h a l l not exceed anticipated revenue. 1 I It i s obvious then t h a t specific levies of taxes s h a l l be made. Merely appropriating funds does not c o n s t i t u t e a levy of taxes. Otherwise, i f appropriation b i l l s were self-executing tax levies, there would be no purpose i n A r t i c l e V I I I . Section 84-3804, R.C.M. 1947, provides: "Upon the approval of the electors of t h i s s t a t e , t o be determined by t h e i r vote a t the general election t o be held i n November of 1968, the l e g i s l a t i v e assembly s h a l l levy a property t a x of not more than s i x (6) m i l l s on the taxable value of a l l r e a l and 'personal property each year f o r ten (10) years beginning with the year 1969. A l l revenue from t h i s property tax levy s h a l l be appropriated f o r the support, maintenance, and improvement of the Montana university sys tern. " (Emphasis supplied) . This section, together with the referendum approving it, authorizes the l e g i s l a t u r e t o levy a property tax. It does not c o n s t i t u t e a levy. The l e g i s l a t u r e under t h i s section may f i x the r a t e , not t o exceed s i x m i l l s . This r a t e can vary each year f o r a period of ten years. This authorization i s a matter of continuing l e g i s l a t i v e judgment t o be determined by each legis- l a t i v e assembly, a s it deems necessary by means of a levy. The Forty-Fourth Legislative Assembly did not make a levy pursuant t o t h i s authority. Past l e g i s l a t i v e assemblies have construed and interpreted section 84-3804 a s authorization t o levy and furnish revenue t o be appropriated f o r support of the University System. The Forty-First Legislative Assembly levied f o r these purposes f o r t h e years 1969 and 1970 (Ch. 321, Laws of Montana 1969). The Forty-Second Legislative Assembly levied f o r the years 1971 and 1972 (Ch. 170, Laws of Montana 1971). The Forty- Third Legislative Assembly levied f o r the years 1973 and 1974 (Ch. 478, Laws of Montana 1973). Each of these enactments contained t h i s language: "Section 1. The following tax levies for s t a t e purposes a r e hereby made upon a l l property i n the s t a t e of Montana, subject t o taxation * * *." Each enactment i n determining the r a t e of levy provided: 11 For the university millage fund, t o provide funds f o r the support of the Montana university system, a s provided i n Referendum Measure No. 65 and passed by vote of the people a t the general election held November 5, 1968, s i x (6) m i l l s , o r so much thereof a s may be necessary t o r a i s e the amount appropriated by the l e g i s l a t i v e assembly from the university millage fund f o r support of the u n i t s of t h e Montana university system. I I Thus, it i s evident t h a t the three l e g i s l a t i v e assemblies preceding the Forty-Fourth regarded section 84-3804 a s authoriza- tion t o make and specify the levy f o r university system purposes. The f a c t t h a t i n each instance they decided upon a s i x m i l l levy o r so much thereof a s necessary t o m e e t the appropria- t i o n , does not detract from the f a c t they acted under the author- i z a t i o n , made t h e levy, and specified the r a t e . Each of these assemblies based on the circumstances, could have specified the levy a t 5 m i l l s , 4 m i l l s , 3 m i l l s , o r even 2 m i l l s . The point i s , each assembly did make the determination and did specify the r a t e authorized by the referendum and existing law. These enact- ments were not ritualistic, were not idle gestures. The enactments manifest the legislative construction and interpretation of section 84-3804 and Referendum No. 65 that this section and referendum are not self-executing, but rather constitute authorization to make the designated levy. In Swartz v . Berg, 147 Mont. 178, 181, 411 P.2d 736, this Court said: "It is a basic premise of the law of taxation that the foundation for levying and assessing a tax depends upon the existence of a valid legislative act specifically designating the imposition of the tax. Nothing is taxable unless clearly authorized by statute. State ex rel. Tillman v . District Court, 101 Mont. 176, 53 P.2d 107, 103 A.L.R. 376." There are valid reasons for requiring formality and specific designation of the imposition of a tax. Under the 1889 Montana Constitution, and its Article XII, many restric- tions were placed upon the power of the legislature as to taxation. Those restrictions were set out in 1896 in State v. Camp Sing, 18 Mont. 128, 139, 140, 4 4 P. 516. The 1972 Montana Constitution does not expressly set out the same restrictions in its Article VIII, but does set out many of them. If an appropriation bill could be construed as a levy of taxes, these safeguards would be lost. To sum it up, the Legislature simply failed to make a levy as authorized by section 84-3804 and thus, the appropriation is not valid since no revenue was provided. This Opinion shall constitute a declaratory judgment. ' Chief ~ h s t i c e 1 fl 0 l M Justices.