ASSOCIATION OF NEIGHBORHOOD STORES v. State

• Decision Date: 08 May 2003
• Docket Number: No. 72456-3.,72456-3.
• Citation: 70 P.3d 920,149 Wash.2d 359
• Parties: WASHINGTON ASSOCIATION OF NEIGHBORHOOD STORES; The Convenience Group LLC, d/b/a Quick Shop Minit Mart Neighborhood Stores; El Gaucho, L.L.C.; Waterfront, LLC, d/b/a Waterfront Seafood Grill; Runland Grocery; Mahoney Chevron, Inc.; The Spar, Inc., d/b/a Spar Café Bar; Harbor Wholesale Grocery, Inc.; and R.H. Smith Distributing Co., Inc., Appellants, v. STATE of Washington, Respondent, Healthcare for Washington's Working Families, Respondent-Intervenor.
• Court: Washington Supreme Court

70 P.3d 920

149 Wash.2d 359

WASHINGTON ASSOCIATION OF NEIGHBORHOOD STORES; The Convenience Group LLC, d/b/a Quick Shop Minit Mart Neighborhood Stores; El Gaucho, L.L.C.; Waterfront, LLC, d/b/a Waterfront Seafood Grill; Runland Grocery; Mahoney Chevron, Inc.; The Spar, Inc., d/b/a Spar Café Bar; Harbor Wholesale Grocery, Inc.; and R.H. Smith Distributing Co., Inc., Appellants, v. STATE of Washington, Respondent, Healthcare for Washington's Working Families, Respondent-Intervenor.

No. 72456-3.

Supreme Court of Washington, En Banc.

Argued October 15, 2002.

Decided May 8, 2003.

Michael B. King, James L. Robart, Kathleen D. Benedict, Robin Dale, Olympia, Lane Powell Spears Lubersky, Seattle, for Appellants.

Maureen A. Hart, Assistant Attorney General, Jeffrey T. Even, Office of Attorney General, Olympia, Thomas F. Ahearne, Foster Pepper & Shefelman, Seattle, for Respondent.

JOHNSON, J.

This case involves a challenge to the constitutionality of Initiative 773 (I-773; the initiative), commonly referenced to as the Tobacco Tax Initiative. Washington Association of Neighborhood Stores (appellants) claim the initiative is unconstitutional under article VIII, section 4; article II, section 19; and article II, section 37 of the Washington State Constitution.

In February 2002, appellants filed a declaratory judgment action challenging the constitutionality of I-773. This measure would impose an additional sales tax on cigarettes and a surtax on wholesaled tobacco products. The State of Washington and initiative sponsor Healthcare for Washington's Working Families (respondents) intervened in support of the initiative. On cross-motions for summary judgment, Thurston County Superior Court entered summary judgment in favor of respondents and dismissed appellants' complaint. We granted direct review of the trial court's decision and affirm.

Facts

I-773 was approved by Washington voters on November 6, 2001. The enactment of 773 imposed cigarette sales taxes and tobacco product taxes to fund low-income health care programs and other programs and to reduce consumption of tobacco through these new taxes. However, reduced consumption would also result in reduced preinitiative tobacco tax revenues dedicated to supporting existing programs. I-773 addresses this concern by earmarking a portion of the new tobacco tax revenues and transferring them to accounts dedicated to funding existing programs such as violence reduction, drug enforcement, water quality, and health care. As I-773 explains, this is done "to ensure the continued availability of previously dedicated revenues for certain existing programs." Laws of 2002, ch. 2, § 2(3). The remaining revenues are then designated to fund certain health care service programs for low-income recipients, including tobacco prevention and control programs, as well as the basic health plan. Laws of 2002, ch. 2, § 2(2)(a)-(c).

I-773 consists of four sections. Section 1 provides a statement of intent, section 3 imposes a cigarette tax and section 4 enacts a wholesale tobacco products tax.

Section 2 amends the health services account statute, RCW 43.72.900, providing how the additional tax revenues will be allocated.¹ Section 2 establishes priority in funding to three existing programs before any money will go to new programs: section 2(3)(a) guarantees funding for the violence reduction and drug enforcement account, section 2(3)(b) for the health services account, and section 2(3)(c) for the water quality account. Once these guaranties are met, the remaining funds will be routed to low-income health programs and Washington's basic health plan, per section 2(2). Section 2(2)(a) instructs the legislature to allocate funds to programs to improve the health of low-income people, while section 2(2)(b) allocates funds to the Washington state tobacco prevention and control plan to supplement existing funding. Section 2(2)(c) directs the remainder to be used to expand enrollment in Washington's basic health plan. The initiative does not include a severability clause.

Issues

The challenge to I-773 raises four issues. First, appellants claim the language of I-773 mandating the use of tobacco sales tax revenues for low-income health care calls for continued allocations of funds beyond a single biennium in violation of article VIII, section 4. Second, they contend I-773 contains multiple subjects in violation of the single subject rule of article II, section 19. Third, appellants claim I-773 violates the subject-intitle requirement of article II, section 19, because it fails to provide proper notice of its contents. Finally, appellants claim I-773 violates the disclosure requirements of article II, section 37.

Article VIII, Section 4

Appellants first claim I-773 violates the single biennium bar of article VIII, section 4. Article VIII, section 4 imposes a bar on appropriations continuing beyond the next ensuing biennium. Article VIII, section 4 reads:

No money shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payments be made within one calendar month after the end of the next ensuing fiscal biennium, and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object to which it is to be applied, and it shall not be sufficient for such law to refer to any other law to fix such sum.

(Emphasis added.) In short, under this provision money cannot be paid out of the treasury unless the legislature passes an appropriation bill. Under article VIII, section 4, payments under a bill cannot be made later than one month after the ensuing two-year biennium. The object behind this provision is to prevent the spending of public funds without authorization by the legislature. King County v. Taxpayers of King County, 133 Wash.2d 584, 604, 949 P.2d 1260 (1997). A statutory provision which instructs the legislature to spend money or make an appropriation serves this purpose. Long ago, we recognized the central object of section 4 was "`to secure to the legislative department of the government the exclusive power of deciding how, when, and for what purposes the public funds shah be applied in carrying on the government.'" State v. Clausen, 94 Wash. 166, 173, 162 P. 1 (1917) (quoting Humbert v. Dunn, 84 Cal. 57, 59, 24 P. Ill (1890)).

On numerous occasions we have made it clear that the disbursement of treasury funds must be preceded by a clear appropriation. In State v. Clausen, 160 Wash. 618, 630, 295 P. 751 (1931), we held the earmarking of funds within the treasury for a general purpose does not alone constitute an appropriation of those funds. Later, in Our Lady of Lourdes Hospital v. Franklin Co., 120 Wash.2d 439, 450, 842 P.2d 956 (1993), it was held that agencies may not continue to spend once their appropriation has been exhausted.

Article VIII, section 4 contains three requirements. First, it prohibits the payment of money out of the state treasury without an appropriation. The purpose of this requirement is to prevent the expenditure of public funds without legislative authorization by those who have charge of them. Taxpayers, 133 Wash.2d at 604, 949 P.2d 1260 (quoting State v. Clausen, 94 Wash, at 173, 162 P. 1).

Second, it requires payments pursuant to an appropriation to be made within one calendar month after the end of the biennium in which the appropriation is made.

Third, article VIII, section 4 requires every appropriation to specify the sum it appropriates for expenditure and the object to which the appropriation is to be applied.²

To determine whether I-773 commands an appropriation we turn first to the text of the initiative. If the text is clear then we need not go any further. Enactments are not subject to judicial interpretation where they can be well understood according to their natural and ordinary meaning. State v. Thome, 129 Wash.2d 736, 762-63, 921 P.2d 514 (1996). In all cases, an initiative should be read as an average informed voter would read it. See, e.g., Amalgamated Transit Union Local 587 v. State, 142 Wash.2d 183, 205, 11 P.3d 762, 27 P.3d 608 (2000)

.

Appellants base their challenge on sections 2(2)(b) and 2(2)(c) of I-773 which provide that the legislature shall appropriate certain funds from the tobacco prevention and control plan, and certain funds in the health service fund shall be appropriated by the legislature for the basic health plan enrollment. Relying on those two sentences, appellants argue I-773 is unconstitutional because it mandates appropriation beyond a single biennium. We disagree with the appellants in their interpretation of the effect of the initiative's language. Directing a legislative appropriation, as in this case, is not the same as making an appropriation.

In State ex rel. Brainerd v. Grimes, 7 Wash. 191, 193, 34 P. 833 (1893), we dealt with the question of what constitutes an appropriation. In Brainerd, the legislature enacted a statute fixing the salaries of the state board of land commissioners. The statute directed the state treasurer to pay them out of any moneys in the treasury not otherwise appropriated. We held that this was an appropriation because the language used in the statute "is amply sufficient to show that the intention of the legislature was to appropriate[,] [it has] designated the amount, and [has] directed that it be paid out of any moneys in the state treasury not otherwise appropriated." Brainerd, 7 Wash, at 193, 34 P. 833. Therefore, merely earmarking funds is not enough to signify an appropriation; contrary to the dissent, there must also be express legislative authorization for the payments of funds from the state treasury. While I-773 specifies the purpose, of amount, and source of the proposed appropriations, it does not itself make the appropriation, nor does it contain the legislature's...