Court Opinion

ID: 3841683
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:11:00.416737+00
Date Added: 2024-06-11T13:34:03.503891
License: Public Domain

The decision in this case depends upon the proper construction of the "Property Tax Relief Act of 1929" (Oregon Laws, 1929, chapter 448), as amended, and the "Excise Tax Act of 1929" (Oregon Laws, 1929, chapter 427), as amended. The two acts are identical in their provisions with respect to the application of property tax relief funds.
The precise question is whether the surplus funds derived from these two acts can be used for general governmental purposes. In my opinion, such surplus funds must be applied exclusively to tax relief purposes.
The purpose of the first act is clearly expressed in the title thereof: "Providing for property tax relief by the levying, collecting and paying of taxes on incomes; * * *." In what may be called the "disposition section" of the Act (section 37), the intention of the legislature is thus again expressed: * * * It is the expressed intention of this act that the revenue derived from the tax shall reduce by corresponding amount the direct tax levy which the tax commission *Page 58 
would otherwise apportion to the several counties of the state. * * *" The same "disposition" provision is found in section 23 of the Excise Tax Act. It is significant that, in the various amendments to these acts, the legislature has consistently adhered to the "expressed intention" that these funds could be used only for tax relief purposes.
The referendum was invoked on the Property Tax Relief Act of 1929 and was approved by the people in an election held in November, 1930, by a vote of 105,189 to 95,207. It is reasonable to assume that many voters approved the measure because they believed that the funds would be used, as stated in the title of the Act, "for property tax relief". If these same voters had known that such funds could be spent for any other purpose, it is doubtful, in the light of the rejection by the people of other income tax measures, that this one would have received approval. The people at that time were heavily burdened with taxes and were adverse to "just another tax". In my opinion, the people were justified in believing that these funds — and not just a part thereof — would be used to relieve them of property tax burdens.
If there could be any doubt concerning the application of these surplus funds, it seems to me it was removed by the enactment of chapter 447, Oregon Laws, 1947. In that year the legislature was confronted with a serious financial problem. It, of course, knew of the millions in the "surplus fund". Is it not reasonable to assume that the legislature would have used these surplus funds for general governmental purposes, if it believed it had the right to do so? No, the legislature knew that these special purpose funds could only be used for tax relief purposes. It kept the faith and abided by the constitutional mandate (Art. IX, section *Page 59 
3 of the Oregon Constitution) that "every law imposing a tax shall state distinctly the object of the same to which only it shall be applied." The legislature will no doubt be surprised to learn — in view of this court's decision — that it had, for many years, been "looking through glasses darkly", and that these special purpose funds could be diverted as it saw fit.
The 1947 Act provides, in substance, that the Tax Commission shall make a finding as to the sufficiency of available revenues within the six per cent limitation to meet appropriation requirements for the fiscal year beginning July 1, 1948; that, if such revenues, plus estimated miscellaneous receipts, are insufficient for that purpose, the Tax Commission shall certify that fact to the Secretary of State, who shall refer to the people the question whether a levy in excess of the six per cent limitation shall be made, and, if such levy is so approved by the people, it shall, in the language of section 4 of the Act, "beoffset, as are other state taxes, by funds derived from taxes onor measured by net income." Is it not plain, from this last legislative enactment, that such surplus funds were dedicated to a special purpose? Did not the legislature thus recognize the special-purpose character of the fund in question? Certainly such surplus funds could not be offset against a levy and at the same time be considered as a part of "miscellaneous receipts", as the Tax Commission now contends. What did the legislature have in mind in anticipating a "levy deficiency"? If the legislature had considered the surplus available for general governmental purposes, there could have been no deficiency, and it would have been a vain and idle thing to have provided therefor. The majority opinion fails to attach any significance to this 1947 Act, and makes no attempt to explain the purpose of the legislature, *Page 60 
in enacting the same. In my opinion, this Act clearly establishes that the legislature understood and treated this surplus fund as available only for tax relief purposes. The Act stands as an insurmountable wall in the face of the majority opinion. Yet, in the majority opinion, referring to the 1947 Act, it is said:
    "* * * But there seems no reason expressed in the statute why the untransferred surplus in 1947 should not be deducted along with other miscellaneous receipts (the $6,000,000 item) above the line, so that no deficit of $5,800,000 would appear and no tax levy be required."
Clearly, the 1947 Act is not unconstitutional. No unlawful delegation of legislative authority to the Tax Commission is involved. It is proper for the legislature to anticipate a condition likely to arise in the future and to provide for the contingency. Marr v. Fisher, 182 Or. 383, 187 P.2d 966, and authorities therein cited.
The Tax Commission — based upon an opinion of the Attorney General rendered February 13, 1948, — refused to certify to the Secretary of State the necessity of a tax levy, as it considered the surplus funds available for general governmental purposes. Hence, the basic question was raised as to whether such surplus could only be used for tax relief purposes, or whether it was available for general governmental purposes. If the surplus was available for general governmental purposes, then it follows that there would have been no deficiency and hence no necessity for certifying a levy by the Tax Commission.
The proposed diversion violates the Tax Commission's own administrative construction and application of the "Property Tax Relief Act of 1929". Heretofore, *Page 61 
the Commission has consistently held that property tax relief funds can be applied only to reduce taxes on property, as shown by the excerpts from its Biennial Reports set forth in the dissenting opinion of Chief Justice Rossman. These Reports — of which the court may take judicial notice — are entitled to weight in construing the Act. Kelsey v. Norblad, 136 Or. 76,298 P. 199; Eugene School Dist. No. 4 v. Fisk, 159 Or. 245,79 P.2d 262; State ex rel. Galloway v. Watson, 167 Or. 403,118 P.2d 107.
This construction by the Tax Commission of the "Property Tax Relief Act" throughout the years was in accord with the opinion of the Attorney General rendered in May, 1945 (Opinions of Attorney General, 1944-1946, p. 172), wherein it was said:
    "All revenues in the state school support fund are derived from taxes on or measured by net income. The laws imposing the tax from which such revenues are derived distinctly state in each instance that the purpose of the tax is to reduce ad valorem taxes on property. Such revenues can be applied to no other purpose. Section 3, Article IX, Oregon constitution."
Of the nineteen levies made since the property relief program was enacted in 1929, thirteen were made when there were actual surpluses in collections over applications of property tax relief revenues. This is the first time that the Tax Commission has undertaken to apply such surplus funds contrary to its well established practice. In my opinion, the exigencies of the situation do not warrant diversion of funds created for the special purpose of property tax relief.
If the Tax Commission's present position is correct, viz., that these surplus funds can be considered as a part of "miscellaneous receipts", then every one of the *Page 62 
last eighteen state tax levies, beginning with the levy for 1931, has been erroneously prepared, and each legislature during that period has suffered the alleged abuse without correction.
It is urged as a reason for diverting the surplus funds that the tax revenues are today in excess of those needed for tax relief purposes. The fallacy in such argument lies in the assumption that the legislature intended to use such surplus regardless of the uncertainties of tomorrow. It is common knowledge that income tax collections and operating expenses of government fluctuate with economic conditions. How can we reasonably assume that income tax collections will meet the requirements of future expanded tax relief enactments? It is a false assumption that property tax relief has been fully accomplished with an undedicated surplus left over. Can it be that the legislature has completed its task of granting property tax relief? Are there no other taxes against which this surplus fund can be offset?
No amendment of the "disposition section" (37) of the "Property Tax Relief Act of 1929" discloses any intention of the legislature to authorize the "surplus fund", or any part thereof, to be used for any purpose other than property tax relief. If it be argued that chapter 466, Laws of Oregon, 1947, indicates an intention to the contrary, then I submit that, under such construction of the amendment, it would be null and void, since it would not be germane to the purpose of the original enactment. Art. IV, section 20 of the Oregon Constitution. As heretofore stated, the title of the 1929 Act clearly and definitely expresses the purpose of such legislative enactment. It is to provide "Property Tax Relief". As stated in State ex rel. *Page 63 Umatilla County v. Hawks, 110 Or. 497, 509, 222 P. 1071:
    "* * * Provisions of an amendatory act which are beyond the scope of the title of the act amended, and for that reason would have been void if they had been embraced in the earlier act, are likewise void when incorporated in the amendatory act * * *."
The authorization by this court for the legislature to spend this surplus fund marks the end of a wholesome tax relief program, inaugurated by the legislature in 1929. It also marks the dawn of a new tax-spending day.
For these reasons, briefly stated, I respectfully dissent.
Submitted on rehearing August 11, 1948.