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AGLO 1976 No. 13 - February 19, 1976
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Slade Gorton | 1969-1980 | Attorney General of Washington

TAXATION ‑- STATE ‑- CIGARETTE EXCISE TAX ‑- VETERANS' BONUSES

Constitutional ability of the legislature to repeal the state cigarette excise tax once the payments of veterans' bonuses under chapter 73.34 RCW have been completed.

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                                                                February 19, 1976

Honorable A. L. "Slim" Rasmussen
State Senator, 29th District
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1976 No. 13

Dear Senator Rasmussen:

            By recent letter you have asked:

            May the legislature repeal RCW 82.24.030, RCW 73.32.130 and RCW 28A.47.440 once the payment of veterans' bonuses under chapter 73.34 RCW has been completed?

            In making this inquiry you have expressed a particular concern with the continuing existence of certain outstanding public school construction bonds for which a segment of the taxes provided for by these three statutes has been pledged.  Because of the provisions of the law under which those bonds were issued, as explained below, it is our opinion that the statutes to which you have referred may not be repealed until the bonds have all been redeemed.

                                                                     ANALYSIS

            Each of the statutes cited in your question authorizes the imposition of an excise tax on the "sale, use, consumption, handling, possession or distribution . . ." of cigarettes.  Under RCW 82.24.020, a six and one‑half mill tax is provided for, and the moneys derived from this tax initially go into the state general fund.  Secondly, an additional cigarette excise tax of one mill is provided for by RCW 73.32.130, and the moneys derived from this tax are primarily earmarked for the payment of veterans' bonuses.  Finally, under RCW 28A.47.440, there is further imposed a one‑half mill excise tax upon the sale, use, consumption, etc., of cigarettes.  Moneys derived from this component of the tax are to be paid into the public schools' building bond redemption fund where they are to be available for debt service requirements in connection with state bonds issued for the construction of public school facilities.

             Orig. Op. Page 2

            Although there were, at one time or another, three separate school construction bond issues outstanding for which cigarette excise tax revenues were pledged,1/ only one such issue remains out at the present time; namely, a portion of the $34,000,000 bond issue authorized by chapter 8, Laws of 1959, Ex. Sess. (RCW 28A.47.570-28A.47.710).  With regard to that issue, however, RCW 28A.47.590 provides that:

            "The public school building bond redemption fund of 1959 is hereby created in the state treasury which fund shall be exclusively devoted to the retirement of the bonds and interest authorized by RCW 28A.47.570 through 28A.47.710.  The state finance committee shall, on or before June 30th of each year certify to the state treasurer the amount needed in the ensuing twelve months to meet interest payments on and retirement of bonds authorized by RCW 28A.47.570 through 28A.47.710.  The state treasurer shall thereupon deposit such amount in the public school building bond redemption fund of 1959 from the receipts from the taxes on cigarettes imposed by RCW 82.24.020, 73.32.130, and 28A.47.440.  The amount certified to the state treasurer by the state finance committee as aforesaid shall be a first and prior charge, subject only to amounts previously pledged for the payment of interest on and retirement of bonds heretofore issued, against all cigarette tax revenues."

            This statute, in turn, is encompassed by so much of RCW 28A.47.570, codifying § 1 of the 1959 act by which the bonds were authorized, as provides that:

            ". . .  Such bonds shall state distinctly that they shall not be a general obligation of the state of Washington, but shall be payable in the manner and from the proceeds of cigarette taxes as in RCW 28A.47.570 through 28A.47.710 provided.  As a part of the contract  Orig. Op. Page 3 of sale of the aforesaid bonds, the state undertakes to continue to levy the taxes referred to herein and to fix and maintain said taxes in such amounts as will provide sufficient funds to pay said bonds and interest thereon until all such obligations have been paid in full."

            Because RCW 28A.47.590,supra, refers not only to the one‑half mill cigarette excise tax provided for by RCW 28A.47.440 but to the other two components of that overall tax as well (levied pursuant to RCW 82.24.020 and RCW 73.32.130), it therefore follows that this commitment to continue levying for the life of the bonds covers all three components ‑ to the extent that any of their revenues are needed to

            ". . . provide sufficient funds to pay said bonds and interest thereon until all such obligations have been paid in full."

            For that reason, although the legislature could, conceivably, lower the rates of the taxes involved it would be our opinion that any attempt to repeal RCW 82.24.020, RCW 73.32.120 and RCW 28A.47.400 in their entirety before all of the bonds authorized by chapter 8, Laws of 1959, Ex. Sess., supra, have been redeemed would be unconstitutional under Article I, § 23 of our state constitution which provides that:

            "No bill of attainder, ex post facto law, or law impairing the obligations of contracts shall ever be passed."

            Accord, the views expressed by this office several years ago in an opinion dated January 20, 1970, to then State Representative Robert F. Goldsworthy (copy enclosed) an Informal Opinion, AIR-70510with respect to the constitutionality of a then pending bill designed to divert for the payment of further veterans' bonuses a portion of the taxes committed by RCW 28A.47.590,supra, for the funding of public school construction bonds.  See, in particular, page 7 of that opinion where we said:

            ". . . clearly, their respective additional commitments of the proceeds derived from the cigarette excise taxes imposed pursuant to RCW 82.24.020 and (in the case of the 1959 act) the one mill tax under RCW 73.32.130 gave rise to contractual obligations to the bondholders once the three school construction financing bond issues authorized therein were sold.  As such, these obligations are unquestionably subject to the provisions of Article I, § 23 of our state constitution ‑ meaning that they can in no way be impaired by  Orig. Op. Page 4 the legislature so long as any of the subject bonds remain outstanding.  See, 16 C.J.S., Constitutional Law, § 289, and cases discussed therein; cf.,Gruen v. State Tax Commission, supra. . . ."

            Therefore, we must answer your present question, likewise, in the negative.

Very truly yours,

SLADE GORTON
Attorney General

PHILIP H. AUSTIN
Deputy Attorney General

                                                         ***   FOOTNOTES   ***

1/See, chapter 5, Laws of 1955, Ex. Sess. (RCW 28A.47.420-28A.47.450), chapter 234, Laws of 1957 (RCW 28A.47.460-28A.47.560) and chapter 8, Laws of 1959, Ex. Sess. (RCW 28A.47.570-28A.47.710).

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