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February 8, 1971
Honorable Robert F. Goldsworthy
State Representative, District 9-A
Olympia, Washington 98501
Cite as: AGLO 1971 No. 19 (not official)
This is written in response to your recent letter requesting our opinion as to the constitutionality of a certain bill authorizing the payment of bonuses to veterans of the current conflict in Vietnam.
As you have indicated, your present bill bears a substantial similarity to House Bill No. 9, which was enacted by the 1970 special session of the legislature but was then vetoed by the governor. In response to your request during that session, we reviewed this previous bill in some detail ‑ specifically in order to answer several questions you posed regarding the availability of certain cigarette excise tax revenues as a base for the payment of the proposed bonuses. By letter dated January 20, 1970, we concluded that § 7 of this bill, dealing with this matter, would be unconstitutional as violating the "contract clause" of Article I, § 23 of our state Constitution.1/ We explained this conclusion in the following manner:
"To the extent that they are inconsistent with the portion of § 9, chapter 180, Laws of 1949 (RCW 73.32.130), supra, which provided for transfer to the general fund of those cigarette excise tax revenues not needed for debt service on the 1949 veterans' bonus bonds, each of these three subsequent public school bond authorization acts must be looked upon as an implied amendment to this 1949 act. Accord, Abel v. Diking & Drainage Imp. Dist., [[Orig. Op. Page 2]] 19 Wn.2d 356, 363, 142 P.2d 1017 (1943), and cases cited therein. And clearly, their respective additional commitments of the proceeds derived from the cigarette excise taxes imposed pursuant to RCW 82.23.020 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 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. Yet this is precisely what the proposed amendment to RCW 73.32.130, supra, which is contained in § 7 of House Bill No. 9 (as quoted above) would attempt to do, in contravention of the constitution."
In submitting the present version of this proposed legislation to us, you have called our attention to an addition to § 7, appearing on page 8 of the bill at lines 5 through 10, which would provide as follows:
"The amounts directed to be paid into the war veterans' compensation fund as provided by this 1971 amendatory act 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 collected pursuant to RCW 82.24.020, 73.32.130, and 28A.47.440."
While we believe that this language might possibly be regarded by a court as constituting a sufficient legislative recognition of the prior legislative commitments of cigarette excise tax revenues to the various school construction financing bond issues, we would recommend a somewhat different approach. Specifically, as indicated in the footnote appearing [[Orig. Op. Page 3]] at page 8 of our January 20, 1970 opinion we would suggest that the amendment to § 7 be written so as to exclude from placement in the war veterans' compensation fund of any of the cigarette excise tax revenues which are necessary for debt service on the previously issued school construction bonds.
To this end, we would suggest that instead of adding the new paragraph which we have quoted above, the preceding amendatory paragraph of the bill (beginning on line 28 of page 7) should instead be rewritten to read as follows:
"When all bonds herein authorized and all interest thereon have been fully paid, all proceeds thereafter received from the excise tax on cigarettes imposed by chapter 82.24 RCW as now or hereafter amended, except such proceeds as are certified by the treasurer to the finance committee as being necessary for the payment of interest on and retirement of bonds heretofore issued under chapter 3, Laws of 1955, Ex. Sess., chapter 234, Laws of 1957, or chapter 8, Laws of 1959, Ex. Sess., shall be paid into the war veterans' compensation fund, herewith created, for distribution to veterans who served during the Vietnam conflict as provided by this 1971 amendatory act: PROVIDED, That whenever the receipts in the war veterans' compensation fund during any year exceed four million five hundred thousand dollars all sums received above that amount shall be transferred to the state general fund."
If this language were thus placed in § 7 of the bill (in place of the language which you are now considering), any reservations which we might have regarding its constitutionality in the light of Article I, § 23, supra, would be eliminated. However, in addition to counseling you in this regard, our present critique of your bill would not be complete if we were not, again, to draw your attention as well to Article VIII, § 5 of our state Constitution which provides that:
"The credit of the state shall not, in any manner be given or loaned to, or in aid of, any individual, association, company or corporation."
[[Orig. Op. Page 4]]
Because of the more limited scope of your earlier opinion request we did not, in our opinion to you of January 20, 1970, specifically pass upon the question of whether the actual payment of veterans' bonuses would violate this section of the Constitution. However, by a footnote appearing on page 2 of this earlier opinion, we did comment upon this issue as follows:
"We are, of course, aware that in Gruen v. State Tax Commission, 35 Wn.2d 1, 211 P.2d 651 (1949), the 1949 veterans' bonus act was sustained by the Washington supreme court against a challenge based upon this constitutional provision. However, subsequent court decisions have cast considerable doubt upon the continuing viability of that decision on this particular constitutional issue. See, Highway Commission v. Pacific Northwest Bell Telephone Co., 59 Wn.2d 216, 367 P.2d 605 (1961); and State ex rel. O'Connell v. Pt. of Seattle, 65 Wn.2d 801, 399 P.2d 623 (1965), both of which rejected the 'public purpose' rationale of the Gruen decision and held that a gratuitous expenditure of public funds is unconstitutional regardless of the purpose of the expenditure. Because of these two recent decisions a serious constitutional question must be said to exist with respect to the payment of veterans' bonuses as contemplated by House Bill No. 9. Therefore, if this bill should be enacted, a test case would in all probability be necessary before any payments could be made."
Clearly, in the absence of any intervening supreme court decisions since the Gruen case, that 1949 ruling could be fully relied upon as supporting the constitutionality of veterans' bonuses. However, because of two later cases cited in the above footnote, no such complete and unqualified reliance upon Gruen can presently be expressed. Accordingly, with respect to the Article VIII, § 5 issue, we can only say again ‑ as we did a year ago ‑ that if this or any similar veterans' bonus bill should be enacted, its constitutionality would probably have to be tested in court before any payments could be made thereunder.2/
[[Orig. Op. Page 5]]
It is hoped that the foregoing will be of assistance to you.
Very truly yours,
FOR THE ATTORNEY GENERAL
Philip H. Austin
Deputy Attorney General
*** FOOTNOTES ***
1/Section 7 provided, in material part, as follows:
"When all bonds herein authorized and all interest thereon have been fully paid, all proceeds thereafter received from the excise tax on cigarettes imposed by chapter 82.24 RCW as now or hereafter amended, shall be paid into the war veterans' compensation fund for distribution to veterans who served during the Viet Nam conflict as provided by this 1970 amendatory act: PROVIDED, That, whenever the receipts into the war veterans compensation fund during any year exceed four million five hundred thousand dollars, all sums received above that amount shall be transferred to the state general fund." (Emphasis supplied.)
2/Unless, of course, Article VIII, § 5, should in the meantime be materially amended or repealed. See, e.g., S.J.R. No. 22.