Court Opinion

ID: 9577368
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:34:17.034833+00
Date Added: 2024-06-11T13:20:27.874326
License: Public Domain

THOMAS, J.,
concurring.
I concur fully with the Court’s opinion in this case. I write separately because the experience of our sister state of Washington with regard to a statutory scheme substantially similar to that discussed in the main opinion, is highly instructive but has not been mentioned.
In 1949, the Supreme Court of Washington, in a five to four decision, upheld the constitutionality of a statutory scheme which called, in part, for the payment of certain bonds from a “special fund” made up from excise taxes on cigarettes. Fourteen years later, in 1963, the Washington court, in a unanimous opinion, reversed itself when it became apparent that all of the state’s revenue was being carved up into “special funds” to support various bonds. The State of Washington learned the hard way that whenever taxes of any kind are placed into a so-called “special fund,” the treasury can be depleted. Thus, through actual experience, our sister state learned the true meaning of creating debt and lending the state’s credit.
*458Following World War II, the State of Washington enacted legislation to pay a bonus to veterans from that war. The statute called for the issuance of bonds. The funds necessary to pay the bonds were to be secured from the existing excise tax on cigarettes and from the imposition of new excise taxes on cigarettes. Suit was brought attacking the legislation as unconstitutional.
The case was styled Gruen v. Tax Commission, 211 P.2d 651 (Wash. 1949). One basis for challenging the statute was that it violated the state constitutional provision against lending the credit of the state. The court held that the credit of the State had not been lent to the recipients of the bonuses. However, it said nothing about whether the credit of the state had been lent to support the bonds.
The statute was also challenged on the ground that it violated the state constitutional provision against creating debt without following certain procedures set forth in the Constitution. The court held that the bonds did not create a debt within the meaning of the constitution because they were to be paid from a special fund made up of money generated from excise taxes.
In Gruen, the dissenters made several key points. Concerning the creation of debt, one dissenter wrote as follows:
[W]hen bonds are to be paid from future taxes irrevocably allocated to that purpose, which taxes could otherwise be devoted by the legislature to any legitimate public use, a debt is created, and it is immaterial whether the taxes are ad valorem or excise.
Id. at 695 (Hill, J., dissenting).
Another dissenter pointed out that because the statute required the legislature to agree to impose taxes sufficient to fund the bonds, the power of taxation had been unconstitutionally contracted away. Further, it was pointed out that the pledge to use tax money to pay the bonds effectively lent the state’s credit to the bonds.
In 1949, the dissenters were not persuasive. But fourteen years later, in State v. Martin, 384 P.2d 833 (Wash. 1963), their views carried the day completely. By that time, $660,000,000 in bonds had been authorized; $500,000,000 in bonds had been issued; and only $85,000,000 of the authorized amount had ever been submitted to the people for a vote. The Martin court looked back on *459Gruen and wrote as follows: “the very logic of the holding [in Gruen] authorized preemption of portions of the state’s general revenues by each succeeding session of the legislature in the form of segregating future sales tax revenues into special funds.” Martin, 384 P.2d at 837.
The Martin court rejected the type of special fund which had been approved in Gruen, and which is embodied in the legislation here under review. In Martin, the court made this important point:
If the revenues in [the special fund] derive exclusively from the operation of the device or organ of government financed by the fund, as in the case of a toll bridge, or the operation of the State Liquor Control Board, or from sales or leases of publicly owned lands, any securities issued solely upon the credit of the fund are not debts of the state, but debts of the fund only. But if the state undertakes or agrees to provide any part of the fund from any general tax, be it excise or ad valorem, then securities issued upon the credit of the fund are likewise issued upon the credit of the state and are in truth debts of the state.
Martin, 384 P.2d at 842 (emphasis added). We would be unwise, indeed, if the lessons learned in our sister state were ignored in Virginia.
We have no more solemn duty as the Court of last resort for the Commonwealth than to insure compliance with our Constitution. In the instant case, our decision that the Constitution has been violated is supported by logic, reason, and the lessons of history.