Oklahoma Capitol Imp. Authority, Application of, 90101

Citation958 P.2d 759
Decision Date20 March 1998
Docket NumberNo. 90101,90101
PartiesIn the Matter of the Application of the OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY for Approval of Not Exceeding $300 Million Oklahoma Capitol Improvement Authority State Highway Capital Improvement Revenue Bonds, Series 1997, for the Construction, Improvement, Maintenance and Repair of All or Part of Certain Roads, Highways and Bridges by the Oklahoma Department of Transportation.
CourtSupreme Court of Oklahoma

W.A. Drew Edmondson, Attorney General, Douglas F. Price, Assistance Attorney General, Gary M. Bush, Oklahoma City, Thomas G. Hilborn, Jr., Tulsa, for Applicant Oklahoma Capitol Improvement Authority.

Edwin Kessler, Norman, Pro se opponent.

Dave Herbert, Oklahoma State Senator, Oklahoma City, Pro se opponent.

Russell Fister, Oklahoma City, for opponents Jerry R. Fent and Margaret B. Fent.

¶1 KAUGER, Chief Justice

¶2 The dispositive issue presented is whether highway improvement bonds authorized by 73 O.S. Supp.1997 § 168.6 1 create a prohibited debt within the meaning of the Okla. Const. art. 10, §§ 23, 2 24 3 and 25. 4 We find that the highway improvement bonds issued pursuant to 73 O.S. Supp.1997 § 168.6 are constitutional. Because the statute in question does not bind future Legislatures to make the anticipated appropriations, the highway improvement bonds do not create "debts" within the meaning of the Oklahoma Constitution. The full faith and credit of the state is not pledged, because there is only the prospect, not the promise, of future annual appropriations. This finding is supported by: 1) the statutory scheme requiring taxes and user fees and some Rainy Day Funds to be apportioned to the State Transportation Fund which was established specifically for the construction, repair and maintenance of the state highways; 2) the self-liquidating annual amortization of the proposed bonds; 3) Oklahoma jurisprudence upholding multi-year financing plans whether the plans are "self-liquidating" or "profit producing"; 4) Oklahoma's statutory and case law which clearly recognizes a distinction

between "moral" and "legal" obligations; and 5) the overwhelming majority of decisions in sister states.

FACTS

¶3 After a consideration of the proposal to improve Oklahoma's highway infrastructure, both Houses of the Legislature passed, with only one dissenting vote, 5 73 O.S. Supp.1997 § 168.6. The statute authorizes the Oklahoma Capitol Improvement Authority (Capitol Improvement Authority) to issue bonds (highway bonds) sufficient to generate $300,000,000.00 in proceeds to fund the construction and improvement of the state's highway system. The funding derives from pre-paid user fees and direct taxes and certain Rainy Day Funds dedicated specifically to the State Transportation Fund. 6

¶4 On September 23, 1997, the Capitol Improvement Authority filed an application for approval of the highway bonds. Under 73 O.S.1991 § 160, 7 this Court has exclusive original jurisdiction to determine the validity of bond issues proposed by the Capitol Improvement Authority. Protests were filed in response to the application and the briefing cycle was completed on November 14, 1997. Oral argument was held before the Court en banc on December 2, 1997.

I.

¶5 AS A MATTER OF FUNDAMENTAL LAW, THE FISCAL POLICY OF THIS STATE IS DETERMINED BY THE LEGISLATIVE DEPARTMENT OF GOVERNMENT. UNLESS A STATUTE IS FRAUGHT WITH CONSTITUTIONAL INFIRMITIES BEYOND A REASONABLE DOUBT, THE COURT IS BOUND TO ACCEPT AN INTERPRETATION WHICH AVOIDS DECLARING THE STATUTE UNCONSTITUTIONAL.

¶6 The authority of the Legislature indubitably extends to all rightful subjects of legislation pursuant to the Okla. Const. art. 5, § 36. 8 The framers of the Constitution, however, gave even more explicit recognition of the Legislature's authority with respect to roads and transportation. Pursuant to the Okla. Const., art. 16, § 1, the Legislature, not the voters, is given the express power to provide for building and maintaining public roads. This provision states:

"The Legislature is directed to establish a Department of Highways, and shall have the power to create improvement districts and provide for building and maintaining public roads, and may provide for the utilization of convict and punitive labor thereon."

¶7 The Okla. Const. art. 21, § 1 9 authorizes the Legislature to establish and ¶8 The protestants must carry a very heavy burden indeed, if the bonds are to be invalidated because every presumption must be indulged in favor of the constitutionality of a statute. The protestants have failed to do so. If there are two possible interpretations--one of which would hold the statute unconstitutional, the construction must be applied which renders it constitutional. 13 Unless a statute is shown to be fraught with constitutional infirmities beyond a reasonable doubt, 14 this Court is "bound to accept an interpretation that avoids constitutional doubt as to the validity of the provision." 15

                to provide support by the State for such other institutions as the public good may require as may be "prescribed by law."   The term "prescribed by law" denotes legislative enactments--statutes promulgated by the governing legislative body. 10  Just as the Legislature prescribed review of the trust agreement by this Court 11 in Matter of the Petition of University Hospitals Auth., 1997 OK 162, 953 P.2d 314, the Legislature, by law, has established the Capitol Improvement Authority.  It has given the Capitol Improvement Authority the power to sell bonds paid by annual appropriations--provided by the Oklahoma Legislature to the Oklahoma Department of Transportation. 12
                

¶9 Except where it encounters a specific constitutional prohibition, the Legislature has the right and the responsibility to declare the fiscal policy of Oklahoma. This Court has no authority to consider the desirability, wisdom, or practicability of fiscal legislation. 16 It is not this Court's prerogative to question the sagacity of the expressed policy. Whether an act is wise or unwise, whether it is based on sound economic theory or whether it is the best means to achieve the desired result are matters for legislative determination. This Court, may not, based on its perception of how the State should conduct its business dealings, direct legislative decision making. 17 In construing constitutional debt-limitation provisions, it is the judiciary's duty to guard against indebtedness, not against modern methods of financing. 18 It is not unconstitutional to accomplish a desired result, lawful in itself, by innovative, legal measures. 19 Because these bonds are self-liquidating and because they can be marketed without creating a debt or obligating, in a legal sense, either the state or future legislatures, art. 10, §§ 23, 20 24 21 and 25 22 are simply inapplicable. 23

II.

¶10 THE BONDS ARE SELF-LIQUIDATING BECAUSE A PRE-PAID DIRECT, DEDICATED TAX ON MOTOR FUELS, SPECIAL FUELS, DIESEL FUEL, GASOLINE, AIRCRAFT FUEL, AND VEHICLE LICENSES IS SPECIFICALLY EARMARKED BY 73 O.S. SUPP.1997 § 168.6 TO RETIRE THE BONDS ON AN ANNUAL BASIS.

¶11 The Legislature has determined that the highway infrastructure in Oklahoma is vital to the health, safety, and welfare of the traveling public and to the economic development of the state. The funding for the improvements to the transportation system made through the issuance of bonds pursuant to 73 O.S. Supp.1997 § 168.6 come from pre-paid user fees and direct taxes dedicated specifically to the State Transportation Fund and earmarked for the payment of highway bonds on an annual basis. Those taxes derive from direct taxes on motor fuels, 24 special fuels, 25 diesel fuel, 26 gasoline, 27 aircraft fuel, 28 and from vehicle license and registration fees, 29 all of which are assessed annually. The State Transportation Fund also receives a portion of the assessments levied under an environmentally-based indemnity fund. 30 Additionally, there is a newly authorized revenue stream dedicated to the funding of highway improvements--the Constitutional Reserve Fund (Rainy Day Fund). Ch. 380, § 1, 1997 Okla. Sess. Laws, provides for an appropriation of "Fifty Million Dollars ($50,000,000.00) or so much thereof as may be necessary to perform the duties set forth in Enrolled House Bill No. 1629." [Title 73 O.S. Supp.1997 § 168.6 is § 7 of H.B. 1629.] The "duties" referred to in Ch. 380, § 1 are highway improvements. The bonds are, in the most elemental sense, "self-liquidating."

¶12 This combination of taxes and fees creates a revenue stream which is directly related to the construction and maintenance of highways in the self-evident sense that the creation, maintenance--indeed the very existence--of the State's highway system is the prerequisite for the generation of the revenue stream. The self-liquidating features of the present proposal compares most favorably with past propositions approved by this Court.

¶13 Most notably, one's attention is drawn to Application of Oklahoma Capitol Improvement Auth., 1966 OK 6, 410 P.2d 46, and Application of Oklahoma Capitol Improvement Auth., 1960 OK 2097, 355 P.2d 1028, 1031. There, the Court characterized bonds for state office buildings as self-liquidating because the Legislature appropriated to the tenant state agencies monies sufficient to pay the rent which would amortize the bonds. Although no revenues derived from sources outside state appropriations were involved, this Court found that the bonds for state office buildings were self-liquidating. In both cases, "self-liquidating" entailed putting enough state dollars in one pocket to support the rental payments which had to be made from the other pocket. Contrasted with this standard of "revenue generating", this proposal is far superior. Here, pre-paid direct dedicated taxes are earmarked on an annual basis to pay the bonds. Money goes directly into the state pocketbook from reliable, predictable...

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