Court Opinion

ID: 9789533
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:37:58.628565+00
Date Added: 2024-06-11T07:37:23.010926
License: Public Domain

BRYSON, J.,
dissenting.
I concur in the dissenting opinion of Justice Tongue wherein it would adhere to the policy and rule of law enunciated in State ex rel Heinig v. Milwaukie et al, 231 Or 473, 373 P2d 680 (1962). In Heinig the state legislature enacted law requiring the home rule city to provide a civil service system for firemen. This court held it could not do so. We further held:
"* * * To be sure, it could be shown that the manner of dealing with personnel of local fire departments may have some relation to the affairs of the state outside of the city boundary — in a sense all events in life are related — but the question requiring our answer is whether the extramural effect is substantial or significant. * * *
*195"* * * The question is, of course, one of degree, and the allocation of power between legislature and municipality must be made by us in accordance with the purpose, as we understand it, of the constitutional amendments which vested in the cities a part and an exclusive part of the power to legislate free from control of the state legislative assembly.
“That purpose, stated broadly, was to make operative the concept that the closer those who make and execute the laws are to the citizens they represent the better are those citizens represented and governed in accordance with democratic ideals. That objective would not be served if we should decide that the legislative assembly pre-empts the field each time it makes a statute applicable to all cities alike.” 231 Or at 481-82. (Footnotes omitted.)
I also dissent from the majority opinion because it allows and encourages a violation of the Oregon constitutional and statutory provisions relating to real property taxes.
In this case the legislature enacted laws requiring that city police officers and firemen be brought under the state Public Employes Retirement System law or that the municipality provide an equal or better system. ORS 237.610-237.640. It also enacted statutes to provide life insurance for police officers and firemen. ORS 243.015 provides:
"* * * [T]he Department of General Services shall enter into a contract with an insurance company licensed to do business in this state to purchase insurance as described in ORS 243.025 for all police officers and firemen in the service of public employers.”
ORS 243.035 provides:
“(1) The premiums and administrative costs incurred by the Department of General Services for the insurance provided for in ORS 243.005 to 243.045 shall be paid by the affected public employers and shall not come from funds of the Public Employes’ Retirement System.
"(2) Every public employer shall include in its budget amounts sufficient to pay the annual premiums accruing on the policies of insurance issued pursuant to ORS *196243.005 to 243.045, and amounts sufficient to reimburse the Department of General Services for its administrative expenses incurred under ORS 243.005 to 243.045.”
In other words, the state legislature is directing the city employer to include in its budget, and subsequently on the tax roll, an item to pay annual premiums.
ORS 291.342 and 291.344 together with ORS 311.657 and 311.658 provide for a state property tax to be collected through the counties and to be paid to the state treasury to insure payment of bonded indebtedness, interest and deficit. However, ORS 311.660(1) specifically provides:
"(1) The State of Oregon shall not for any fiscal year collect a state property tax, either directly or by apportionment among the several counties, in any greater amount than it may be necessary to collect by means of such a property tax for that year to pay bonded indebtedness or the interest thereon.”
Under ORS 311.660 the state clearly could not enact a pension and insurance program for local employees of the city of LaGrande and the city of Astoria by ordering the local cities to place the cost of these items in their budget. When the item is placed in the local cities’ budgets, it becomes a tax levy on real property. By ordering the local governments to fund such a program in the above manner, the state has indirectly levied property taxes for that purpose since the property tax is the chief source of revenue for local governments, and in many instances of small cities it is the sole source of revenue. The state is thus doing indirectly what the statute specifically forbids it to do directly. Such legislation here involved also violates Article XI of the Oregon Constitution:
"Section 11. Tax limitation. (1) Except as provided in subsection (3) of this section, no taxing unit, whether it be the state, any county, municipality, district or other body to which the power to levy a tax has been delegated, shall in any year so exercise that power to raise a greater amount of revenue than its tax base as defined in subsection (2) of this section. The portion of any tax *197levied in excess of any limitation imposed by this section shall be void.
"(2) The tax base of each taxing unit in a given year shall be one of the following:
"(a) The amount obtained by adding six percent to the total amount of tax lawfully levied by the taxing unit, exclusive of amounts described in paragraphs (a) and (b) of subsection (3) of this section, in any one of the last three years in which such a tax was levied by the unit; or
"Go) An amount approved as a new tax base by a majority of the legal voters of the taxing unit voting on the question submitted to them in a form specifying in dollars and cents the amount of the tax base in effect and the amount of the tax base submitted for approval. The new tax hase, if approved, shall first apply to the levy for the fiscal year next following its approval.
"(3) The limitation provided in subsection (1) of this section shall not apply to:
"(a) That portion of any tax levied which is for the payment of bonded indebtedness or interest thereon.
"Os) That portion of any tax levied which is specifically voted outside the limitation imposed by subsection (1) of this section by a majority of the legal voters of the taxing unit voting on the question.[1] «*****”
Pursuant to the above, if the state desired to mandate certain items of payment, such as premiums for police and firemen insurance policies, it must provide the funds to do so. This could be done out of the general fund or it could provide a state "tax base” and levy a state general tax, but if it was outside of the six percent limitation it would have to obtain the voters’ approval. The state, in enacting the legislation objected to in this case, has not followed this statutory and constitutional procedure. Instead, it has taken advantage of the local governments’ tax bases and other property tax machinery to fund state mandated *198programs. In other words, the state is doing indirectly what the constitution says it cannot do directly without following specified procedures.
The "home rule” Oregon constitutional provisions2 were adopted by the people as a limitation on the legislature’s original "legislative supremacy.”
The rule of "legislative supremacy,” with its financial impact on cities, as adopted by the majority, is also contrary to the law generally in "home rule” states. As stated in 2 McQuillin, Municipal Corporations 248-50, § 4.159 (3d ed 1966):
the absence of constitutional prohibition, the legislature may compel a municipal corporation, without its consent, to incur debts or assume obligations as to matters of public concern such as relate to the performance of functions by the municipal corporation as the agent of the state, * * * and this includes obligations for the promotion of the general welfare and security of the state and community * * *.
"The nature and purpose for which the debt or liability is to be incurred, i.e., whether relating to a state or municipal purpose, ordinarily determine whether the legislature may compel a municipality to act. * * *” (Emphasis added; footnotes omitted.)
In "home rule” states, however, the rule is otherwise, as stated by McQuillin in § 4.160 at 251.
"* * * [T]he legislature cannot compel the city to incur a debt or make an expenditure or levy a tax for a strictly local interest or purpose. * * *”
*199Alternatively, as stated by another writer:
"* * * If a matter strictly concerns the state, there is no reason why the city should finance it, in whole or in part. To require the city to do so is a serious invasion of local autonomy.” Mott, Home Rule for American Cities, American Municipal Association 9 (1949).
In City of Portland v. Welch, 154 Or 286, 296, 59 P2d 228 (1936), the court stated:
"* * * [jjt should be borne in mind that the subject matter of the general legislative enactment must pertain to those things of general concern to the people of the state. A law general in form can not, under the constitution, deprive cities of the right to legislate on purely local affairs germane to the purposes for which the city was incorporated.
"Since the late Chief Justice McBride was one of the principal framers of the Home Rule Amendments (Article XI, § 2, and Article IV, § la) he undoubtedly knew the interpretation intended to be placed upon them. In Pearce v. Roseburg, 77 Or. 195 (150 P. 855), he said that he considered it 'settled in this state that as to matters purely municipal the state legislature can not intermeddle by either general or special legislation, although as to matters affecting the people generally the power of the legislature is still unlimited’. While it is true that the result reached in this case was in keeping with Kalich v. Knapp, 73 Or. 558 (142 P. 594, 145 P. 22, Ann. Cas. 1916 E, 1051), which was later overruled, the principal [sic] above announced has never been repudiated by this court. It is as wholesome today as it was 20 years ago when it was first declared as it undoubtedly is in keeping with the purpose and object of the Home Rule Amendments. Such interpretation perpetuates local self-government, yet does not disturb the sovereignty of this state.”
More recently, in Olsen v. State of Oregon, 276 Or 9, 554 P2d 139 (1976), involving the validity of the Oregon system of school financing, this court discussed and approved the concept of "local control” as follows:

*200
"The local control argument is generally based upon the political principle that the governmental body supplying the funds, despite initialprotestations to the contrary, ultimately directs how the funds shall be spent.

s}c * * *
"* * * In Oregon, as well as most states, local government has raised funds locally to furnish services that are provided by local government. Examples of such service are police and fire protection, streets and certain utilities. At least some of these services must be placed in the 'important’ category. If the state’s primary reliance on local taxes to fund education is unconstitutional, its primary reliance on local taxes to fund some of these other services would seem to be equally violative of the Equal Protection Clause. Yet this tradition of local government providing services paid for by local taxes existed at the time of statehood and continues to be a basic accepted principle of Oregon government.
"In Oregon this emphasis on local control is constitutionally accentuated. Art XI, § 2, and Art VI, § 10, of the Oregon Constitution provide for home rule by cities and counties; that is, the voters of the cities and counties can enact their own charters which shall govern on matters of city or county concern.” (Emphasis added.) 276 Or at 23-25.
This certainly includes the amount of taxes to be levied on local real property.
The rule laid down by the majority opinion adopts the theory of "legislative supremacy.” This was the state of the constitutional law prior to adopting the "home rule” provisions in the constitution. Therefore, it is difficult to conceive what the voters accomplished in adopting the home rule provisions if interpreted in accordance with the majority opinion.
It is common knowledge that local governments are now near the end of their financial resources. Budgets outside the six percent limitation are submitted to the voters two and three times before some are passed— some are never approved. As a result, local governments must stay within strict budgetary limits. The problems presented in this case would not arise if the *201state would provide financing to fund its mandated programs, but as long as the state, under the majority opinion, has the power to require the local governments to fund state mandated programs, this inequity will probably continue. The state gets the credit for the programs — sometimes enacted by heavy lobbying— and the local government and property owners or renters pay the bill.
Woe will be the day when the citizens who pay real property taxes realize why their local taxes keep rising — as a result of state mandated legislation. Their indignation will be vented against such legislative action requiring further taxation and higher taxes on local real property. If the legislature desires to enact legislation to provide benefits for one group of citizens it must pay for the same from the general fund.
For all of the above reasons, I dissent from the majority opinion and would affirm the circuit court judges and the Court of Appeals, which held the aforementioned legislation unconstitutional.

1 Adopted originally by people at general election in 1916; amended in 1932 at general election; present language adopted by voters at general election of 1962.

 Article IV, Sec. 1:
«:£ ‡ ‡ ‡
"(5) The initiative and referendum powers reserved to the people by subsections (2) and (3) of this section are further reserved to the qualified voters of each municipality and district as to all local, special and municipal legislation of every character in or for their municipality or district. The manner of exercising those powers shall be provided by general laws, but cities may provide the manner of exercising those powers as to their municipal legislation. * * *” (Emphasis added.)
Article XI, Sec. 2:
"* * * The legal voters of every city and town are hereby granted power to enact and amend their municipal charter, subject to the Constitution and criminal laws of the State of Oregon * *