Pierce County v. State
| Decision Date | 07 December 2006 |
| Docket Number | No. 76534-1.,76534-1. |
| Citation | 159 Wn.2d 16,148 P.3d 1002 |
| Court | Washington Supreme Court |
| Parties | PIERCE COUNTY, a local government in the State of Washington; Gloria Irene Thein, a Pierce County resident, voter, taxpayer, vehicle owner, vehicle driver, and public transportation user; City of Tacoma, a local government in the State of Washington; William LaBorde, a Tacoma resident, voter, taxpayer, vehicle owner, vehicle driver, and public transportation user; King County, a local government in the State of Washington; Karen Uffellman, a King County resident, voter, taxpayer, vehicle owner, vehicle driver, and public transportation user, Respondents, and Central Puget Sound Regional Transit Authority, commonly known as "Sound Transit," a Washington regional transit authority; The Sierra Club, a nonprofit public benefit corporation; 1000 Friends of Washington, a Washington nonprofit corporation; King County Labor Council, a Washington nonprofit corporation; Washington State Labor Council, a Washington nonprofit organization; City of Kenmore, a Washington municipal corporation; Transportation Choices Coalition, a Washington nonprofit benefit corporation; Amalgamated Transit Union Local 587, a labor organization; and Aerospace Machinist Union, a labor organization, Intervenor-Respondents. v. STATE of Washington, in its general capacity as defender of I-776, and through its agency the Washington Department of Licensing, Appellant, and Salish Village Home Owners Association, a Washington nonprofit association; and G. Dennis Vaughn, a citizen and taxpayer resident of King County, Intervenors-Appellants. |
Robert Clayton Rowley, James J. Klauser, Rowley & Klauser LLP, Seattle, WA, for Appellant.
Thomas Fitzgerald Ahearne, Hugh Davidson Spitzer, Ramsey E. Ramerman, Foster Pepper PLLC, Jeffery Allen Richard, Noel Reynolds Treat, Attorney at Law, Thomas William Kuffel, Office of the Prosecuting Attorney, Linda Marie Moran, Attorney General's Tacoma Office, Tacoma, WA, James Kendrick Pharris, Jerald R. Anderson, Attorney at Law, Ofc. Of Atty. General, Olympia, WA, for Respondents.
Desmond Leoron Brown, Sound Transit Union Station, Paul J. Lawrence, Matthew J. Segal, Preston Gates & Ellis LLP, Clifford Freed, Michael Craig Subit, Frank Freed Subit & Thomas LLP, Seattle, WA, for Intervenor-Respondents.
Hugh Davidson Spitzer, William Howard Patton, Foster Pepper & Shefelman PLLC, Seattle, for Amicus Curiae Association of Washington Cities and Washington State Association of Counties.
Roy Jerome Koegen, Rodney G. Wendt, Koegen Edwards LLP, Seattle, Mary J. Edwards, Spokane, for Amicus Curiae Bond Market Association.
¶ 1 The issue in this case is whether Initiative Measure No. 776 (I-776) impairs bonds issued by Sound Transit. Sound Transit was created to address traffic congestion in the central Puget Sound region. Pursuant to statute, Sound Transit was authorized to collect a motor vehicle excise tax (MVET) to finance a transportation system. In the years prior to passage of I-776, Sound Transit issued and sold the bonds in the public debt market in order to obtain capital needed to build the first phase of the system. It pledged the revenue from the MVET as security for its bonds. Section 6 of I-776 repealed Sound Transit's authority to collect the MVET.
¶ 2 In Pierce County v. State, 150 Wash.2d 422, 78 P.3d 640 (2003) this court upheld I-776 against a number of challenges. However, we remanded this case for a determination of whether I-776 violates article I, section 23 of the Washington Constitution. On remand, the trial court found that I-776 impairs the contract between the bondholders and Sound Transit, ruling section 6 of the initiative unconstitutional.
¶ 3 The intervenors (Salish Village Home Owners Association, one of its members, and Permanent Offense, sponsor of the initiative) seek reversal of the trial court ruling, contending, among other arguments, that the bonds are not impaired. The crux of the intervenors' argument appears to be that the people, through initiative, have the right to repeal taxes, pledged as security for capital intensive projects such as highways and bridges, when they no longer want to pay such taxes. However, the contract clause of our state constitution guarantees that "No . . . law impairing the obligations of contracts shall ever be passed." WASH CONST. art. I, § 23.
¶ 4 The intervenors ask this court to ignore the contract clause and longstanding case law in order to repeal MVET taxes securing Sound Transit bonds. Unfortunately, the intervenors point to no authority for their contentions which are contrary to well-settled law and the plain language of our constitution. Indeed, many of these same claims were made and rejected nearly 150 years ago, allowing international bond markets to fund the United States expansion west, eventually into Washington. As noted by Sir Henry Sumner Maine, Sir Henry Sumner Maine, Popular Government 242-43 (Liberty Classics 1976) (1885).
¶ 5 The constitutional impairment is clear in this case. Accordingly, we affirm the trial court.
¶ 6 In November 1996, 56.6 percent of voters in King, Pierce, and Snohomish counties authorized Sound Transit to collect taxes in the three county Sound Transit district (a subset of the counties) to construct a comprehensive, multi-billion dollar regional transportation system.1 This transit system includes 70 transportation projects, including express bus service, commuter-rail lines, light-rail lines, park-and-ride lots, transit centers, and HOV (high occupancy vehicle) access improvements in King, Pierce, and Snohomish counties. The purpose of the regional system is "to improve mobility by providing several convenient, reliable and energy-efficient alternatives to driving alone." Clerk's Papers (CP) at 2893. The projects are designed to work together and with other local transit services "to offer a region-wide integrated system of routes, schedules, and fares." Id. A light-rail line is currently in operation in Tacoma, and a Seattle light-rail line linking Seattle with Sea-Tac International Airport, among other destinations, is currently under construction. By 2009, it is anticipated that the first phase of the system will serve approximately 20 million commuters.
¶ 7 As a result of the 1996 election, Sound Transit was authorized to collect a 0.3 percent motor vehicle excise tax (MVET) and a 0.4 percent sales and use tax (sales tax) to finance construction and operation of the transit system.2 The transit system is funded through a combination of local taxes, long-term bond debt, federal grants, and other revenues. Sound Transit currently imposes a 0.3 percent MVET, a 0.4 percent sales tax and a 0.8 percent rental car tax. The Federal Transit Administration has awarded the agency a $500 million grant for the initial segment of a light rail project.
¶ 8 In 1999, pursuant to chapters 81.112 and 81.104 RCW, Sound Transit issued $350 million in bonds (called the "Central Puget Sound Regional Transit Authority Sales Tax and Motor Vehicle Excise Tax Bonds, Series 1999") (hereinafter "the Sound Transit Bonds") to finance a portion of the initial construction of the transit system, selling the bonds to private investors through the public bond market.3 In its bond contracts Sound Transit pledged the revenues from the MVET and sales tax to the payment of the principal and interest on the bonds and promised to the bondholders that it would levy and collect the MVET and the sales tax while the bonds were outstanding:
Section 8. Covenants. The Authority [Sound Transit] hereby makes the following covenants with the Owners of the [Sound Transit] Bonds for as long as any of the same remain Outstanding:
(a) Tax Levy Covenant. So long as any [Sound Transit] Bonds remain Outstanding, the Authority shall levy the special motor vehicle excise tax authorized by RCW 81.104.160 at a rate of not less than three-tenths of one percent and the sales and use tax authorized by RCW 81.104.170 at a rate of not less than four-tenths of one percent; provided, that the Authority may levy the sales and use tax at a rate of not less than three-tenths of one percent so long as the Sufficiency Test is met.
CP at 2589 (emphasis added). The last maturity date of the bonds is 2028. The Sound Transit bonds are payable from and secured solely by the pledge of Sound Transit's MVET and sales tax.4 The pledge constitutes a prior lien and charge upon the taxes superior to all other charges of any kind or nature.
¶ 9 In November 2002, nearly four years after the Sound Transit Bonds were issued and sold to investors, I-776 was passed. The initiative reduced MVET taxes to $30 for most vehicles across the state. Although the initiative passed statewide, it was not approved by a majority of the voters in the three counties that agreed to fund a portion of Sound Transit's costs in building a transit system in the congested central Puget Sound region.
¶ 10 Section 6 of the initiative amended former RCW 81.104.160 (1998), deleting RCW 81.104.160(1) which authorized Sound Transit to levy and collect the MVET. Section 6 also included new statutory language providing that "Any motor vehicle excise tax previously imposed under the provisions of RCW 81.104.160(1) shall be repealed, terminated and expire on the effective date of this act." CP at 21 (emphasis added).
¶ 11 The initiative also recognized that ...
To continue reading
Request your trial
-
Kellogg v. Nat'l R.R. Passenger Corp.
...State , 150 Wash.2d 422, 437, 78 P.3d 640 (2003) (quoting Tyrpak , 124 Wash.2d at 152, 874 P.2d 1374 ), appeal after remand , 159 Wash.2d 16, 148 P.3d 1002 (2006). ¶32 Here, the parties to the release contract were (1) Amtrak, (2) James' estate, and (3) Thomas, as a personal representative ......
-
Optimer Intern, Inc. v. Rp Bellevue, LLC
... ... In 2005, the state legislature adopted the Uniform Arbitration Act. Laws of 2005, ch. 433. Except for a few ... Educ. Ass'n v. State, 97 Wash.2d 899, 908, 652 P.2d 1347 (1982) (quoting Ketcham v. King County Med. Serv. Corp., 81 Wash.2d 565, 576, 502 P.2d 1197 (1972)). In those circumstances wherein the ... Pierce County v. State, 159 Wash.2d 16, 27 n. 5, 148 P.3d 1002 (2006) (citing Tyrpak v. Daniels, 124 ... ...
-
In re S.E.
... ... 701, Seattle, WA, 98101-3647, for Appellant. Stephanie Rollins, Brennan King County Prosecutor's Office, 516 3rd Ave., Rm. W400, Seattle, WA, 98104-2388, for Respondent. OPINION ... 199 Wash.App. 615 13 To determine whether the state constitution grants the right to a jury trial in a particular proceeding, we engage in a two step ... condition; that on July 11, 1944, he was declared by the superior court of Washington for Pierce county to be sane and not dangerous to be at large, and was discharged from custody. 23 Wash.2d ... ...
-
Dep't of Labor & Indus. of State v. Lyons Enters., Inc.
... ... 14 Both Lyons and L & I appealed the Board's decision, and the administrative law review was consolidated in the Pierce County Superior Court. The superior court held that all of Lyons' franchisees were covered workers. Accordingly, it affirmed the Board in part and ... ...
-
SAVING CITIES OR EXPLOITING CREDITORS? STATE REDIRECTION OF MUNICIPAL ASSETS.
...tax, the proceeds of which had been pledged as security for bonds issued to finance a transportation system. See Pierce County v. State, 148 P.3d 1002,1006-07 (Wash. 2002). But when the issuer argued that continued market for the bonds after enactment of the tax repeal revealed the absence ......
-
State Default and Synthetic Bankruptcy
...analogs to the Contract Clause often apply standards that mirror the federal test. See, e.g., Pierce Cnty. v. State, 159 Wash. 2d 16, 28, 148 P.3d 1002, 1010 (2006) ("This court uses a three-part test to determine if there has been an impairment of a public contract: (1) does a contractual ......
-
Chapter 161, SB 6379 – Vehicles & vessels
...have been contractually pledged to repay a bonded debt issued before December 5, 2002, as determined by Pierce County et al. v. State, 159 Wn.2d 16, 148 P.3d 1002 (2006). In the case of bonds that were previously issued, the motor vehicle excise tax must comply with chapter 82.44 RCW as it ......
-
Chapter 44, SB 5987 – Transportation revenue
...have been contractually pledged to repay a bonded debt issued before December 5, 2002, as determined by Pierce County et al. v. State, 159 Wn.2d 16, 148 P.3d 1002 (2006). In the case of bonds that were previously issued, the motor vehicle excise tax must comply with chapter 82.44 RCW as it ......
-
Chapter 1, IM 976
...have been contractually pledged to repay a bonded debt issued before December 5, 2002, as determined by Pierce County et al. v. State, 159 Wn.2d 16, 148 P.3d 1002 (2006). In the case of bonds that were previously issued, the motor vehicle excise tax must comply with chapter 82.44 RCW as it ......
-
Chapter 285, SB 5528 – RTA supplemental revenue
...have been contractually pledged to repay a bonded debt issued before December 5, 2002, as determined by Pierce County et al. v. State, 159 Wn.2d 16, 148 P.3d 1002 (2006). In the case of bonds that were previously issued, the motor vehicle excise tax must comply with chapter 82.44 RCW as it ......