Title: Fent v. Oklahoma Capitol Improvement Authority

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

Fent v. Oklahoma Capitol Improvement Authority  Fent v. Oklahoma Capitol Improvement Authority 1999 OK 64 984 P.2d 200 70 OBJ 2100 Case Number: 92390 Decided: 06/28/1999 Supreme Court of Oklahoma Jerry R. FENT and Margaret B. Fent, husband and wife, as resident taxpayers and voters of the State of Oklahoma, Petitioners, v. OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY, a body corporate and politic of the State of Oklahoma. [984 P.2d 202] ACTION TO ASSUME ORIGINAL JURISDICTION AND TO DETERMINE STATUTES AND BONDS UNCONSTITUTIONAL ¶0 Petitioners, two taxpayers, brought an original proceeding challenging the constitutionality of 73 O. S. Supp. 1998, §§ 168.3 and 301, two statutes authorizing respondent, the Oklahoma Capitol Improvement Authority (OCIA), to issue over $300 million dollars in bonds to fund various governmental projects. Petitioners seek disapproval of any bonds issued under the statutes, primarily based on the argument the bonds would create prohibited debt in violation of OKLA. CONST. art. 10, §§ 23 and 25 (balanced budget provisions) without a vote of the State's citizens. Petitioners also assert the statutes were passed in violation of one or more of the strictures of OKLA. CONST. art. 5, § 33, which requires revenue bills to originate in the State House of Representatives, that no such bill be passed in the last five days of a legislative session and that such bills must garner a 75% super-majority vote in both the State House and Senate to avoid being submitted to a vote of the people. OCIA counters that neither statute authorizes prohibited debt, neither is a revenue measure controlled by § 33, and OCIA seeks approval of two proposed bond issues in the approximate amount of $165 million dollars. Held: Petitioners have not shown either § 168.3 or § 301 are unconstitutional. Neither authorizes debt in the constitutional sense because both statutes only allow the issuance and sale of what are known as appropriation-risk or moral obligation bonds. [984 P.2d 203] Oklahoma constitutional balanced budget provisions are, thus, inapplicable. Further, §§ 168.3 and 301 are not revenue bills controlled by OKLA. CONST. art. 5, § 33 because their principal object is not the raising of revenue, but to provide adequate facilities and/or equipment for State agencies, departments and/or instrumentalities and no taxes are levied or authorized to be levied by either statute. ORIGINAL JURISDICTION ASSUMED; STATUTES AND BOND PROPOSAL ISSUES HELD CONSTITUTIONAL. Russell B. Fister, Oklahoma City, Oklahoma for Petitioner. Douglas F. Price, Assistant Attorney General, Oklahoma City, Oklahoma; Thomas J. Hilborne, Jr. of Hilborne & Weidman, Tulsa, Oklahoma; and Gary M. Bush of Fagin, Brown, Bush, Tinney & Kiser, Oklahoma City, Oklahoma for Respondent. PER CURIAM: ¶1 Under 73 O. S. 1991, § 160, this Court is given exclusive original jurisdiction to determine the validity of bond issues proposed by respondent, Oklahoma Capitol Improvement Authority (OCIA). Petitioners, Jerry R. Fent and Margaret B. Fent (husband and wife), two resident taxpayers and registered voters of Oklahoma (hereafter taxpayers) brought this original proceeding challenging the constitutionality of two statutes, 73 O. S. Supp. 1998, §§ 168.3 and 301, which together authorize OCIA to issue over $300 million dollars in bonds to fund various governmental projects. ¶2 [984 P.2d 204] We hold taxpayers have failed to show either § 168.3 or § 301 are unconstitutional. Neither authorizes debt in the constitutional sense because they only allow for the issuance of what are known as appropriation-risk or moral obligation bonds. Oklahoma constitutional balanced budget provisions are, thus, inapplicable. Further, §§ 168.3 and 301 are not revenue bills controlled by OKLA. CONST. art. 5, § 33 because their principal object is not the raising of revenue, but to provide adequate facilities and/or equipment for State agencies, departments and/or instrumentalities and no taxes are levied or authorized to be levied by either statute. Finally, the two proposed bond issues in the total amount of $165 million dollars sought to be approved by OCIA are valid as authorized by either § 168.3 or § 301. PART I. STANDARD OF REVIEW. ¶3 In considering a statute's constitutionality, courts are guided by well established principles. Application of Oklahoma Capitol Improvement Authority, ¶4 It is also firmly recognized that it is not the place of this Court, or any court, to concern itself with a statute's propriety, desirability, wisdom, or its practicality as a working proposition. Application of Oklahoma Capitol Improvement Authority, supra, 355 P.2d at 1031; Oklahoma Industries Authority v. Barnes, ¶5 Furthermore, this Court recognized only last year that unless there is a specific constitutional prohibition, the Legislature has the right and responsibility to declare Oklahoma's fiscal policy. Application of Oklahoma Capitol Improvement Authority, supra, 958 P.2d at 763. Simply, in ruling on the constitutional validity of a statute relating to this State's fiscal affairs, we are not allowed to consider whether it is based on sound economic theory or whether it is the best means to achieve the desired result because such matters are for legislative determination. Id. With these principles understood, we turn to review the statutes involved here and the two proposed bond issues. PART II. THE BONDS AUTHORIZED BY §§ 168.3 AND 301 ARE NOT DEBT IN A CONSTITUTIONAL SENSE BECAUSE THEY DO NOT CREATE A LEGAL OBLIGATION TO PAY STATE MONIES BEYOND A CURRENT ANNUAL LEGISLATIVE APPROPRIATION. BECAUSE THE BOND PROPOSALS BEFORE US DO NOT CREATE PROHIBITED CONSTITUTIONAL DEBT, THE BUDGET BALANCING AMENDMENTS OF OKLA. CONST. ART. 10, §§ 23, 24 AND 25 ARE INAPPLICABLE. ¶6 Although we have considered all arguments raised by taxpayers in an attempt [984 P.2d 205] to show the two statutes involved here and the bonds authorized to be issued thereunder, violate OKLA. CONST. art. 10, §§ 23, 24 and 25, we are convinced neither statute authorizes State debt as contemplated by those constitutional provisions and, therefore, those constitutional balanced budget provisions are simply inapplicable to the bonds sought to be issued and sold by the OCIA under the grant of authority contained in §§ 168.3 and 301. At most, the statutes authorize only appropriation-risk or moral obligation bonds, and under our previous cases the issuance and sale of such bonds do not create debt in a constitutional sense. ¶7 Section 168.3 authorizes OCIA to issue and sell bonds to fund certain building projects at the Oklahoma School of Science and Mathematics. ¶8 [984 P.2d 207] As we interpret both statutes, OCIA is authorized thereunder to fund the costs of the various projects by borrowing monies on the credit of the income and revenues to be derived from the projects. The money borrowed will, of course, come from the issuance and sale of the bonds. In turn, the bonds are to be retired by payments made to OCIA by the various agencies, departments and/or instrumentalities using and/or benefitting from the projects under lease or other agreements with OCIA. Although each statute expresses an intent to appropriate sufficient monies to the various agencies, etc. to make such payments to OCIA for the purpose of retiring the bonds, nowhere in either statute is there a provision obligating a future legislature to do so. In such regard, we find applicable the following statement made only last year by this Court in a case concerning the approval of bonds proposed to be issued by OCIA to fund construction, repair and maintenance of state highways: [984 P.2d 208] Unquestionably, provisions obligating future legislatures are unconstitutional. However, here, there is simply nothing to bind future legislative bodies to make the anticipated appropriations. Future revenues are not pledged . . . for retirement of the proposed bonds. The present Legislature's intent to appropriate the monies is not a binding commitment on future legislatures to do so. Application of Oklahoma Capitol Improvement Authority ¶9 Further, the two bond resolutions before us each contain a copy of the form of bond to be sold and on the face thereof is contained the following disclaimer: This bond is not an indebtedness of the State of Oklahoma, nor shall it be deemed to be an obligation of the State of Oklahoma and neither the faith and credit nor the taxing power of the State of Oklahoma or any political subdivision thereof is pledged or may hereafter be pledged to the payment of the principal of or the interest on this Bond or the series of which it forms a part. This Bond is not a general obligation of [OCIA] nor a personal obligation of the members of [OCIA], but it is a limited obligation payable solely from the revenues specifically pledged to its payment. In substance, the two statutes at issue here, and the bonds which they authorize, are indistinguishable from those held valid by this Court on previous occasions. See Application of Oklahoma Capitol Improvement Authority, ¶10 Like our previous cases, all the monies bond holders can expect to recover are actual appropriations made by individual legislative bodies. Application of Oklahoma Capitol Improvement Authority, supra, 958 P.2d at 772. "If [OCIA] doesn't have monies to retire the bonds, because legislative appropriations are not made, there is nothing for the bondholder to recover." Id. at 775. In other words, should future legislative bodies fail to appropriate sufficient funds to retire the bonds, the risk of default is assumed by the bondholders. At most, only appropriation-risk or moral obligation bonds are involved here, not legally enforceable ones, except to the extent each succeeding legislative body actually appropriates funds for their retirement. Furthermore, there is no legally enforceable contract between this State's Legislature and either OCIA, the various agencies, etc. or the citizens of Oklahoma to make the anticipated appropriations necessary to retire the bonds. Id. at 776. Simply, no debt or obligation as contemplated by OKLA. CONST. art. 10, §§ 23, 24 and 25 is created against the State if money is not appropriated and, thus, those provisions of our fundamental law are not applicable. [984 P.2d 209] PART III. BECAUSE NEITHER § 168.3 NOR § 301 ARE REVENUE BILLS THE STRICTURES OF OKLA. CONST. ART. 5, § 33 ARE NOT IMPLICATED. ¶11 Petitioners also contend §§ 168.3 and 301 were passed by the Legislature in violation of one or more of the strictures contained in OKLA. CONST. art. 5, § 33 which provides: A. All bills for raising revenue shall originate in the House of Representatives. The Senate may propose amendments to revenue bills. B. No revenue bill shall be passed during the five last days of the session. C. Any revenue bill originating in the House of Representatives shall not become effective until it has been referred to the people of the state at the next general election held throughout the state and shall become effective and be in force when it has been approved by a majority of the votes cast on the measure at such election and not otherwise, except as otherwise provided in subsection D of this section. D. Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths (3/4) of the membership of the House of Representatives and three-fourths (3/4) of the membership of the Senate and is submitted to the Governor for appropriate action. Any such revenue bill shall not be subject to the emergency measure provision authorized in Section 58 of this Article and shall not become effective and be in force until ninety days after it has been approved by the Legislature, and acted on by the Governor. Because it is quite plain that neither § 168.3 nor § 301 are revenue bills within the contemplation of OKLA. CONST. art. 5, § 33, we assume for purposes of our disposition of this proposition that both statutes, as petitioners contend, were promulgated without meeting one or more of the strictures contained in § 33. ¶12 The accepted definition of a revenue bill falling under § 33 is the two-pronged test set forth in Leveridge v. Oklahoma Tax Commission, ¶13 The principal object of § 168.3 is to provide adequate and proper facilities for the Oklahoma School of Science and Mathematics. The principal object of § 301 is to provide adequate and proper facilities and/or equipment for various State agencies, departments and/or instrumentalities. More importantly, no tax at all is either levied or authorized to be levied by either enactment. Accordingly, petitioners' assertion that one or more of the strictures of OKLA. CONST. art. 5, § 33 were violated in relation to the passage of §§ 168.3 and 301 is without merit because neither statute is a revenue bill controlled by § 33. [984 P.2d 210] PART IV. CONCLUSION. ¶14 Neither § 168.3 nor § 301 are unconstitutional as authorizing debt in the constitutional sense because they only allow for the issuance of what are known as appropriation-risk or moral obligation bonds. Oklahoma constitutional balanced budget provisions are, thus, inapplicable. Further, neither provision is a revenue bill controlled by OKLA. CONST. art. 5, § 33 because their principal object is not the raising of revenue, but to provide adequate facilities and/or equipment for State agencies, departments and/or instrumentalities and, more importantly, no taxes are levied or authorized to be levied by either statute. Finally, the two proposed bond issues in the total amount of $165 million dollars sought to be approved by OCIA are valid as authorized by either § 168.3 or § 301. ¶15 ORIGINAL JURISDICTION ASSUMED; 73 O. S. SUPP. 1998, § 168.3 AND § 301 AND BOND PROPOSAL ISSUES HELD CONSTITUTIONAL. ¶16 Any petition for rehearing in regard to this matter shall be filed by noon, Tuesday, July 6, 1999. ¶17 SUMMERS, C.J., HARGRAVE, V.C.J., HODGES and SIMMS, JJ., concur. ¶18 KAUGER and WATT, JJ., concur specially. ¶19 LAVENDER, J., concurring in part; dissenting in part. ¶20 OPALA and WILSON, JJ., dissenting. ¶21 As to ¶ 16 of opinion - HARGRAVE, V.C.J. and OPALA, J., not voting. FOOT