State ex rel. Hoppe v. Meyers

• Decision Date: 12 June 1961
• Docket Number: No. 36021,36021
• Citation: 58 Wn.2d 320,363 P.2d 121
• Court: Washington Supreme Court
• Parties: , 100 A.L.R.2d 304 STATE of Washington, on the relation of Harley H. HOPPE, Plaintiff, v. Victor A. MEYERS, as Secretary of State, Respondent.

Page 320

58 Wn.2d 320

363 P.2d 121, 100 A.L.R.2d 304

STATE of Washington, on the relation of Harley H. HOPPE, Plaintiff, v. Victor A. MEYERS, as Secretary of State, Respondent.

No. 36021.

Supreme Court of Washington, En Banc.

June 12, 1961.

Alfred J. Schweppe, Seattle, for plaintiff.

John J. O'Connell, Atty. Gen., Philip R. Meade, Stanton P. Sender, Asst. Attys. Gen., for respondent.

ROSELLINI, Justice.

This matter is before the court on an original application for a writ of mandamus, filed by a registered voter on behalf of himself and a corporation called 'Overtaxed, Inc.,' to compel the secretary of state to submit to the people by referendum a portion of chapter 7, Laws of 1961, Ex.Sess This act increased the motor-fuel tax and use-fuel tax from six and one-half cents to seven and one-half cents per gallon. The act provides that one-quarter cent of the increased tax shall be 'paid into the motor vehicle fund and credited to the Puget Sound reserve account created by section 18 of this amendatory act of 1961.' The relator claims that the levying of this one-quarter-cent increase in the tax is unnecessary and is therefore subject to referendum.

In order to present a picture of the role which this levy plays in the legislative program for the support of the highway system, we will summarize as briefly as we can certain pertinent portions of relevant acts of the 1961 extraordinary session.

Chapter 7, § 18, provides that the moneys deposited in the Puget Sound reserve account shall be used by the Washington toll bridge authority only for the purposes thereinafter set forth. Section 19 provides that when the funds in the Puget Sound reserve account shall exceed one million dollars, the excess shall be transferred from the account and expended by the state highway commission, pursuant to proper appropriation or reappropriation for state highways for other state highway commission purposes.

Section 20 authorizes the pledging of funds in this account to guarantee bonds issued to refund the outstanding ferry system and Hood Canal bridge revenue bonds, or subsequent parity bonds issued to pay costs of constructing additional transportation facilities for the crossing of other parts of Puget Sound, or to meet any sinking fund requirements or reserves established by the authority with respect to any new bond issues provided for in the section.

Section 21 provides that, notwithstanding the provisions of § 19, no funds shall be transferred from the account to be used for highway purposes so long as an obligation for which the account is pledged is due and unpaid. This section also contains an agreement by the state to continue to deposit revenues from taxes in the reserve account and to continue to impose such taxes so long as there exists any outstanding obligation for which the account is pledged pursuant to the authority granted in s20. Section 22 provides for the investment of funds in the account which are not needed for purposes authorized in § 20.

In chapter 9, § 1, Laws of 1961, Ex. Sess., the Washington toll bridge authority is authorized to issue revenue bonds to refund all or any part of the authority's outstanding 1955 Washington state ferry system refunding revenue bonds and 1957 ferry and Hood Canal revenue bonds, and is also authorized to issue additional revenue bonds in parity therewith to pay costs of other improvements, provided they are expressly authorized by the legislature.

In § 2, chapter 9, the toll bridge authority is authorized to establish a fund to be called the 'ferry improvement fund' into which are to be placed the net revenues from the operation of the ferry system and Hood Canal bridge.

Section 3 provides that to the extent these revenues are insufficient to pay obligations on the bonds authorized in § 20, a first and prior charge is imposed upon the reserve account and the revenues derived from the one-quarter-cent fuel tax, which are required to be deposited in that account, and the funds in this account are to be used to pay these obligations.

This section further provides:

'* * * Any moneys from the Puget Sound reserve account used by the authority to pay such obligations shall be repaid by the authority to the motor vehicle fund from tolls of the Washington state ferry system and the Hood Canal bridge and tolls shall be continued for any required additional length of time necessary for this purpose.'

Section 5 directs that the ferry system shall be efficiently managed and maintained as a revenue-producing system and provides for the revision of tolls to meet the minimum annual debt service requirements.

Section 7 provides for the repayment from revenues of any expended part of the appropriation provided in § 8 for the operation and maintenance of the ferries and the payment of principal and interest on the outstanding 1955 and 1957 bonds. Section 8 also provides that the unexpended part of the appropriation shall lapse whenever such bond issues are refunded.

Section 9 directs the toll bridge authority to periodically report to the joint fact-finding committee on highways streets, and bridges its plans and progress relating to the financing and refinancing of the Washington state ferries and Hood Canal bridge, including the issuance of the bonds authorized by chapter 9, to the end that the committee may be informed of plans which may affect its recommendations to the legislature.

Chapter 19, Laws of 1961, Ex. Sess., the general appropriation act for highways, appropriates from the Puget Sound reserve account to the Washington toll bridge authority for the biennium ending June 30, 1963, the sum of one million seven hundred thousand dollars or so much thereof as may be necessary to carry out the provisions of § 3, chapter 9, Laws of 1961, Ex. Sess.

These provisions reveal that the legislature adopted a comprehensive plan for the immediate refinancing of outstanding bonds of the ferry system and Hood Canal bridge. While the revenues from these operations are expected to be used to pay the principal and interest on the refunding bonds, a tax is levied and a reserve account is set up to guarantee the bonds, since the act discloses that it was contemplated that those revenues would not be adequate for the purpose. While the proceeds of the one-quarter-cent increase in the motor-fuel tax are made available to pay the principal and interest when due, provision is made for the ultimate repayment of the funds expended from this reserve account out of revenues of the ferry system and the bridge, so that the highway system as a whole will be the ultimate beneficiary of this tax.

While the toll bridge authority is not directed to issue refunding bonds, but is simply authorized to do so, it is evident that the legislature contemplated that the program would undoubtedly be carried out. For the time being, the reserve account can only be used for this purpose. While there is an appropriation to pay the principal and interest on outstanding bonds, this appropriation will lapse 'whenever such bond issues are refunded.' There is an express appropriation of funds in the account for this purpose, and the toll bridge authority is directed to report to the proper legislative committee on its progress in the matter.

It is quite apparent that the legislature considered this refunding program a necessary and desirable one. The governor's messages to the legislature show that he considered legislation for the relief of the toll bridge authority's financial problems 'urgent and a matter of good business.' One of the compelling considerations for the refunding of the outstanding bonds, as shown by the agreed statement of facts in this case, is that the debt service for the coming biennium could be reduced by $3,000 a day if the refunding were accomplished at a four-percent-interest rate; that it is likely the bonds can be sold at that rate; and that if the refunding is not accomplished, a motor-vehicle-fund subsidy in the sum of $2,170,702 would be necessary during the biennium. The toll bridge authority took immediate action to inaugurate the refinancing program when it received the legislative authorization.

The relator and his principal, 'Overtaxed, Inc.,' do not question the right of the legislature to determine what taxes are necessary to supply the needs of the highway system in general; and we can assume--from the fact that the only portion of the tax which they wish to have referred, is that which is to be used temporarily for the purpose of securing the refunding bonds for the ferry system and the Hood Canal bridge, and eventually to be repaid to the motor vehicle fund from revenues of the system--that had this use of the proceeds of the tax not been authorized, they would claim no right to have the tax measure submitted to the people by referendum. The legal proposition upon which they rest their case is that this portion of the tax is not necessary, because, although the proceeds are earmarked by the legislature for a specific use, the toll bridge authority is not commanded to use the proceeds but is merely authorized to do so. Since it was not a necessary tax, the relator says, the question of whether the tax should be levied must be submitted to the people by referendum if the necessary signatures can be secured to his petition.

Amendment 7, § 1(b), of the state constitution, providing for the power of referendum on any act, bill, law, on any part thereof, exempts from the power,

'* * * such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions.'

The word 'or' was apparently inadvertently omitted before the word 'support,' and this court has always construed the section as though that word had not been omitted.

Chapters 7, 9 and 19 contain emergency clauses reciting that they are necessary for the immediate preservation of the public peace, health,...