Sprague v. Fisher

• Decision Date: 15 July 1948
• Parties: SPRAGUE <I>v.</I> FISHER ET AL.
• Court: Oregon Supreme Court

184 Or. 1

197 P.2d 662

203 P.2d 274

SPRAGUEv.

FISHER ET AL.

Supreme Court of Oregon.

Argued June 24, 1948.

Affirmed July 15, 1948.

Rehearing August 11, 1948.

Reversed August 19, 1948.

Taxation — Surplus — "Remainder"

1. Under statute stating manner in which Tax Commission must determine the revenue needs of state for the year ahead and providing for total of expenses to which state will be subject, to be deducted from any surplus remaining in state treasury if not applied by law to some special purpose, with "remainder" to be apportioned among the several counties, the "remainder" is the state tax levy, provided it does not exceed the constitutional limit. O.C.L.A. § 110-534, subds. 1-3; Const. art. 11, § 11.

Taxation — Corporation Excise Tax Act and Personal Income Tax act

2. Under disposition sections of Corporation Excise Tax Act and Personal Income Tax Act, the Tax Commission must deduct net income yielded from the acts for remainder resulting when estimated surplus remaining in state treasury is subtracted from expenses to which state will be subject for following fiscal year, rather than from the sum total of expenses. O.C.L.A. §§ 110-534, subds. 110-1501 to 110-1527, 110-1601 to 110-1638; Laws 1947, cc. 439, 466, 477.

Taxation — "Raise" — Procurement of money

3. Under constitutional provision prohibiting state, unless authorized by voters, from raising a greater amount of revenue for other than specified purposes than levied in any of three preceding years, the word "raise" does not authorize the procurement of money by loan, subscription, or the sale of property. Const. art. 11, § 11.

See Words and Phrases, Permanent Edition, for all other definitions of "Raise". Taxation — Deficiency levy

4. Constitutional provision authorizing deficiency election to "raise" revenue authorizes a submission to voters of a deficiency levy, which, if favored by majority, will be offset by money already on hand, and authorizes secretary of state pursuant to statute, upon receipt of deficiency certificate issued by Tax Commission, to refer to people question whether a tax in excess of constitutional limitation should be levied, with levy to be met by transfer of funds derived previously from taxes on or measured by net income. Laws 1947, c. 477; Const. art. 11, § 11.

                  See 61 C.J., Taxation § 684; 43 C.J.S., Injunction § 122; 100
                A.L.R. 859; 108 A.L.R. 184; 51 Am. Jur. 155, 1040
                

IN BANC.

Appeal from the Circuit Court, Marion County.

GEORGE R. DUNCAN, Judge.

William E. Dougherty and Roy F. Shields, both of Portland, argued the cause for appellant. On the brief were Maguire, Shields, Morrison & Bailey, and James G. Smith and William E. Dougherty, of Portland.

George Neuner, Attorney General, and Dean Ellis, Assistant Attorney General, of Salem, argued the cause and filed a brief for respondents.

Suit by Charles A. Sprague, as a taxpayer, to restrain the Tax Commission from applying in the state tax levy for the fiscal year 1948-1949, any revenue or receipts or estimated revenue or receipts of taxes collected under the so-called Property Tax Relief Acts, for any purpose other than to reduce or to offset taxes which otherwise would be levied on property. From a decree dismissing the suit, the plaintiff appeals.

AFFIRMED.

BRAND, J.

This is a test case brought by the plaintiff, as a citizen and taxpayer, in which he seeks to restrain the Tax Commission from an alleged improper diversion of funds derived from collections under the provisions of the Personal Income Tax Law of 1929, (O.C.L.A., § 110-1601) as amended, which is cited as the Property Tax Relief Act of 1929, and under the Excise Tax of 1929, (O.C.L.A., § 110-1501) as amended. Upon the filing of the complaint and answer, the plaintiff and defendants each moved for judgment on the pleadings in accordance with their respective prayers. The case is here upon appeal from a decree of the Circuit Court dismissing the suit.

The Personal Income Tax Law, cited as the Property Tax Relief Act of 1929 as amended, and the Corporation Excise Tax of 1929 as amended, each impose taxes on incomes. Both statutes have been referred to as the "Property Tax Relief Acts" because they provide for the application of certain revenues derived therefrom to the reduction of taxes which would otherwise be levied on property. Without summarizing the pleadings separately, we shall set forth as facts the undenied allegations of the respective parties. The estimated balance as of June 30, 1948, of receipts from the taxes imposed by said Property Tax Relief Acts, plus estimated receipts from those sources during the fiscal year 1948-1949, all of which are to be considered in preparing the state tax levy for the fiscal year 1948-1949, total about $81,000,000.

Article XI, section 11 of the Oregon Constitution was adopted by vote of the people in 1916. As amended in 1932 it provides in part as follows:

"Unless specifically authorized by a majority of the legal voters voting upon the question neither the state nor any county, municipality, district or body to which the power to levy a tax shall have been delegated shall in any year so exercise that power as to raise a greater amount of revenue for purposes other than the payment of bonded indebtedness or interest thereon than the total amount levied by it in any one of the three years immediately preceding for purposes other than the payment of bonded indebtedness or interest thereon plus 6 per centum thereof; provided * * *"

The items of expense to which the state will be subject for the fiscal year 1948-1949, which will be taken into consideration by the Commission in preparing the state tax levy for such fiscal year, total approximately $38,200,000 divided as follows:

                  (1) General expenses inside 6%
                      limitation ____________________________ $19,000,000
                  (2) Levies authorized by vote of
                      people outside 6% limitation __________  19,200,000
                

If the state tax levy for 1948-1949 should be prepared in accordance with the plaintiff's contentions and on the basis which the plaintiff asserts has been heretofore employed by the Commission, the situation could be summarized as follows:

                  (a) State expenses for             Inside 6%       Outside 6%
                      which levy is to be           Limitation       Limitation
                      made ______________          $19,000,000       $19,200,000
                  (b) Miscellaneous
                      receipts __________            6,000,000
                                                   ___________       ___________
                                                   $13,000,000       $19,200,000
                  (c) Revenue from
                      property tax relief
                      acts to be applied
                      "inside" and
                      "outside" limitation        7,137,671.51        19,200,000
                

                  (d) Balance for which
                      a tax cannot be
                      levied without authorization
                      by the
                      people but which
                      if so authorized
                      would be offset by
                      application of revenues
                      from property
                      tax relief acts             5,862,328.49       ___________
                                                  _____________      ___________
                

In addition to the foregoing expenses, Oregon Laws, 1947, chapters 466 and 439, also provide for a distribution (which will be about $3,200,000) to the state and county school fund for local property tax relief.

The various figures in the summary, as submitted by the plaintiff, require the following explanations: O.C.L.A., § 110-533, as amended by Oregon Laws 1941, chapter 440, imposes upon the State Tax Commission the duty in July of each year to ascertain by computation and estimate, the total amount of revenue necessary for the current fiscal year, and to apportion such total revenue among the several counties. O.C.L.A., § 110-534 as also amended by Oregon Laws 1941, chapter 440, provides as follows:

"The state tax commission shall proceed as follows:

"1. Prepare a tabulated statement, consisting of all the items of expense, given separately, to which the state will be subject under existing laws for the fiscal year next after that year or period for which the last preceding apportionment of state revenues was computed and declared; also all items of deficiency, including interest on unpaid warrants left over from the previous year, the payment of which has been authorized by law; and also when such apportionment is made on the assessment of an even year, the estimated expense of one biennial session of the legislative assembly; and also when such apportionment is made on the assessment of an even year, such additional amount or amounts as the governor may deem necessary to meet the expenses of the state for the fiscal year.

"2. From the sum total of the aforesaid items shall be deducted any surplus or estimated surplus remaining in the state treasury from all funds, however derived, if not applied by law to some special purpose.

"3. The remainder so obtained shall be the total amount of revenue to be raised for state purposes for the current fiscal year, and such remainder shall be apportioned among the several counties in the manner hereinafter provided.

"4. The total amount of revenue to be raised for state purposes for the current fiscal year, ascertained and determined as above provided, shall be apportioned among and charged to the several counties in that proportion which the total value of all the taxable property in each county bears to the total value of all the taxable property of the state as equalized and certified to the secretary of state by the said state tax commission.

"5. Immediately after the said commission has completed the ascertainment of the total amount of revenue necessary to be collected for state purposes, as aforesaid, and apportioned the same among the several counties as heretofore provided, a certificate thereof shall be signed by the chairman and secretary of the commission, authenticated by the official seal of the commission, and shall be delivered to the secretary of state, and a similar certificate shall be filed in...