TAXATION ‑- MOTOR VEHICLES ‑- CITIES AND TOWNS ‑- APPROPRIATIONS ‑- STATE ‑- USE OF LOCAL MOTOR VEHICLE EXCISE TAX REVENUES FOR STATE PURPOSES
The legislature may not allocate, for general state purposes, revenues derived from the local motor vehicle excise tax provided for by RCW 35.58.273-35.58.279 without amending those preexisting substantive statutes.
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March 19, 1976
Honorable Daniel J. Evans
Governor of the State of Washington
Olympia, Washington 98504 Cite as: AGLO 1976 No. 20
Dear Governor Evans:
This is written in response to your request for our opinion regarding the ability of the legislature to allocate, for general state purposes, revenues derived from the local motor vehicle excise tax provided for by RCW 35.58.273-35.58.279 without amending those preexisting substantive statutes.
In our opinion, based upon the ruling of the state supreme court in Municipality of Metropolitan Seattle, et al. v. O'Brien, 86 Wn.2d 339 (1976), this may not be done.
RCW 35.58.273 provides, in material part, as follows:
"On or after July 1, 1971, any municipality is authorized to levy and collect a special excise tax not exceeding one percent on the fair market value of every motor vehicle owned by a resident of such municipality for the privilege of using such motor vehicle provided that in no event shall the tax be less than one dollar and, subject to the provisions of subsection (2) of RCW 82.44.150, the amount of such tax shall be credited against the amount of the excise tax levied by the state under RCW 82.44.020: . . ."
Also to be noted is RCW 35.58.279, which provides that:
[[Orig. Op. Page 2]]
"All taxes levied and collected under RCW 35.58.273 shall be credited to a special fund in the treasury of the municipality imposing such tax. Such taxes shall be levied and used solely for the purpose of paying all or any part of the cost of acquiring, constructing, equipping or operating a publicly owned mass transportation system, or contracting for the services thereof, or to pay or secure the payment of all or part of the principal of or interest on any general obligation bonds or revenue bonds issued for public transportation capital purposes and until withdrawn for use, the moneys accumulated in such fund or funds may be invested by the treasurer of such municipality in the manner authorized by the legislative body of the municipality.
"If any of the revenue from any such special excise tax shall have been pledged by any municipality to secure the payment of any bonds as herein authorized, then as long as that pledge shall be in effect the legislature shall not withdraw from the municipality the authority to levy and collect the tax. Upon the effective date of this 1969 act any municipality is authorized to pledge that the tax authorized by RCW 35.58.273 shall be levied, collected and applied as provided in this 1969 act to pay or secure the payment of any bonds issued by such municipality after such effective date for authorized public transportation purposes."
InMetro v. O'Brien, supra, the Washington supreme court held that the proceeds of the local motor vehicle excise tax authorized by RCW 35.58.273, supra, may not constitutionally be withheld or diverted by the state from any municipality which has pledged that tax to secure bonds issued under RCW 35.58.279. Accord, the impairment of contract clause of Article I, § 22 of the state constitution.
In addition, the court further held in the Metro case that the subject tax revenues, upon being collected by the state, are statutorily required to be distributed even to those taxing municipalities which have not issued bonds. RCW 82.44.150. In essence, the court held that to the extent the tax proceeds in question have been locally matched, as required by subsection (5) of RCW 82.44.150, they belong to the mucicipality by which the tax [[Orig. Op. Page 3]] was imposed. As was explained by the court at page 346:
". . . it is the municipality which is authorized tolevy andcollect the special excise tax. RCW 35.58.273. The legislature utilized the existing scheme of collecting this tax through the county auditor, but directed the auditor to 'remit the special excise taxescollected for the municipality' and to credit this amount 'collected and paid over on behalf of the municipality' against the amount which he would otherwise be required to pay over to the director of motor vehicles. . . . RCW 35.58.277. Further, '[d]istribution of the special excise taxes paid into the general fund onbehalf of any municipality shall be made to such municipality as provided in RCW 82.44.150. . . .' . . . RCW 35.58.278. Note that the legislature directed distribution as provided in RCW 82.44.150. That statute is the ultimate expression of legislative intent which convinces us that these are not state funds, for it mandates that this tax 'shall be remitted to the municipality levying such tax.' . . ." (Emphasis supplied by the court.)
Accord, AGLO 1976 No. 11 [[to the Municipal Research Council on February 9, 1976, an Informal Opinion, AIR-76511]], copy enclosed, at pp. 3-4. The immediate problem giving rise to your request, as we understand it, is not related to any revenue assumptions by the legislature which purport to include, as a potential source of funds for the operation of state government during the remainder of the current biennium, local motor vehicle excise tax revenues collected on behalf of a municipality which has pledged those revenues as security for bonds issued under RCW 35.58.279,supra. This, of course, the legislature could not constitutionally do and we believe this now to be readily understood by all. What may not be quite so well understood, however, is the current legal status of those local motor vehicle excise tax revenues which have been generated by municipalities that havenot issued such bonds ‑ and this, you have told us, represents the issue with which you are here concerned.
Unlike the tax revenues produced by a municipality which has issued bonds under RCW 35.58.279, those generated by other taxing municipalities are not, under the court's decision inMetro, supra, constitutionally protected against a legislative withholding or diversion. However, notwithstanding [[Orig. Op. Page 4]] certain suggestions to the contrary which this office made last summer in AGLO 1975 No. 63 [[to John Bagnariol, Chairman, House Ways and Means Committee, on July 17, 1975 an Informal Opinion, AIR-75563]], copy enclosed (an opinion issued several months before the Metro case was commenced), it now appears clear that under the court's reasoning in Metro, any such withholding or diversion must be accomplished by the enactment of substantive legislation amending the present provisions of RCW 35.58.273-35.58.279,supra, rather than by the device of a legislative appropriation. See,Metro Etc., supra, at pp. 347-349.1/
Until and unless such substantive legislation is enacted the moneys in question will continue to belong, in words of the court, to the municipalities by which the taxes were imposed ‑ even in the case of those municipalities which have not issued bonds for the security of which the tax revenues have been pledged. That being the case, it necessarily follows that without such amendatory legislation, it would be inappropriate for the legislature to include any of the tax proceeds involved in its revenue assumptions with respect to moneys which will be available, during the remainder of the current biennium, for appropriation or allocation to cover any of the general operating costs of state government.
It is hoped that the foregoing will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/This office, notably, has earlier assisted in the preparation of such an amendatory bill which is now pending before the state senate; i.e., Senate Bill No. 3280.