Opinion ID: 1381117
Heading Depth: 2
Heading Rank: 1

Heading: does section 530 impermissibly delegate the legislature's taxing powers to private associations and a state administrative agency?

Text: The plaintiffs present two major grounds upon which they claim section 530 should be held to be unconstitutional delegation of the legislature's taxing power. First, they contend that the taxing power is an essential legislative power which cannot be delegated by the legislature. Second, they assert that the state constitution expressly provides that the legislature's taxing power may be delegated to boroughs and cities only. The associations and the state maintain that the regional associations constitute service areas in the unorganized borough and that under the state constitution the state may validly delegate taxing powers to such a service area. In this case, two types of delegation made by section 530 are questioned. The first is the discretion vested in the Commissioner of Commerce and Economic Development to approve the salmon assessments. The second is the delegation to the regional associations of the decision to impose the assessment. Because we have determined that the delegation to the regional association is unconstitutional, we need not reach the question whether the delegation to the Commissioner is an impermissible delegation to an administrative agency. We think article X, section 2 of the state constitution makes it clear that the legislature may not delegate its taxing power to an entity other than a borough or a city. The legislature is, of course, free to itself impose an assessment on limited entry permit holders, but it may not create an independent entity with authority to decide whether to impose the tax. The Alaska Constitution's framers sought to proscribe just such entities when they wrote the constitutional provisions at issue here. The framers of the Alaska Constitution were aware of and were determined to avoid the proliferation of special districts with taxing powers that had occurred in other states. Thus, article X, section 1 provides in relevant part: The purpose of this article is to provide for maximum local self-government with a minimum of local government units, and to prevent duplication of tax-levying jurisdictions. Section 2 of the same article states: All local government powers shall be vested in boroughs and cities. The State may delegate taxing powers to organized boroughs and cities only. Examination of the convention proceedings shows the delegates' determination to ensure centralized planning and coordination of government functions by limiting the taxing power to governmental units with broad rather than specialized concerns. See 4 Alaska Const.Conv.Proceed. 2611-7, 2701-3. See also Alaska Statehood Commission, Constitutional Studies, supra, pt. VIII, 3-8, 18-24, 51-64. [9] The report made by the convention delegates to the voters also expresses this sentiment. It states: The convention sought to provide for a simple, flexible system of local government adapted to the needs of the people of Alaska. It was determined to guard against the creation of unnecessary local units and taxing authorities or the establishment of anything like the typical county with its tight unchangeable boundaries, its heavy overhead of elected officials, and independent boards, and its inadequate powers and finances. There will be just two classes of local governments: boroughs and cities. Proposed Constitution for the State of Alaska: A Report to the People of Alaska from the Alaska Constitutional Convention 3. In an effort to get around the prohibitions on the delegation of taxing powers contained in article X, sections 1 and 2 of the constitution, the defendants rely on the following provisions: First, section 5 of article X provides: Service areas to provide special services within an organized borough may be established, altered, or abolished by the assembly, subject to the provisions of law or charter. A new service area shall not be established if, consistent with the purposes of this article, the new service can be provided by an existing service area, by incorporation as a city, or by annexation to a city. The assembly may authorize the levying of taxes, charges, or assessments within a service area to finance the special services. Second, Section 6 of the same article states: The legislature shall provide for the performance of services it deems necessary or advisable in unorganized boroughs, allowing for maximum local participation and responsibility. It may exercise any power or function in an unorganized borough which the assembly may exercise in an organized borough. Third, AS 16.10.380(c) provides: (c) A qualified regional association, when it becomes a nonprofit corporation under AS 10.20, is established as a service area in the unorganized borough under AS 29.03.020 for the purpose of providing salmon enhancement services. The defendants argue that AS 16.10.380(c) is effective to make the regional associations service areas within the unorganized borough since the two associations here cover mostly unorganized borough area. They then maintain that the legislature may, by acting in the role of a borough assembly, grant an association independent taxing powers, as service areas in an unorganized borough under article X, section 6. The trial court found this argument unpersuasive under the circumstances of this case. We agree. First, the service areas envisioned in sections 5 and 6 must either be within a ... borough under section 5, or in unorganized boroughs under section 6. This is certainly not true in the present case where two associations span the entire Alaska panhandle, an area that includes several organized boroughs and cities. Second, the statute states that the private, nonprofit corporation itself becomes the service area. Such an association is completely independent of any government control. In addition, there is no representative relationship between its directors, officers, and members and the commercial fishermen to whom it is to provide services. AS 16.10.380. Such an entity has no political responsibility and cannot be granted unfettered discretion in governing a service area. In conclusion, then, we hold that the statute impermissibly delegates the taxing power to the regional associations, violating article X, section 2 of Alaska's constitution.