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February 26, 1971
Honorable Bruce A. Wilson
State Senator, 2nd District
Olympia, Washington 98501
Cite as: AGLO 1971 No. 32 (not official)
This is written in response to your recent letter requesting our opinion on the following two questions:
"1. Is the applicable portion of the Generation Tax against Public Utility districts, imposed by RCW 54.28.020, and distributed by the State to the Counties, pursuant to RCW 54.28.050, to be distributed pursuant to RCW 54.28.090, by the Counties (1) to all school districts lying in the County and within the boundaries of the Public Utility District, (2) to the school districts lying within the County and having any Public Utility district property within their boundaries, or, (3) to the school districts lying within the County and having property acquired by the Public Utility District from within their boundaries for generating facilities and land acquired for reservoir purposes?
"2. Is the land acquired by a Public Utility District for reservoir purposes to be construed as 'operating property' as the same is defined in RCW 54.28.010 for the purpose of computing the obligation of the Public Utility District to the School District under RCW 54.28.080?"
Before responding directly to these two questions, we should point out, preliminarily, that each question deals with a separate and independent source of school district revenue. Specifically, your first question involves the distribution of proceeds derived from an excise tax on public utility district operations which is imposed under RCW 54.28.020, distributed to certain counties pursuant to RCW 54.28.050, and then apportioned among the taxing districts [[Orig. Op. Page 2]] located within such counties on the basis of a formula which is spelled out RCW 54.28.090. On the other hand, your second question involves payments in lieu of property taxes which are required to be made by certain public utility districts directly to school districts having bonded indebtedness and which have lost a portion of their property tax base by reason of public utility district acquisition of "operating property" located within their boundaries. See our opinion to the Clallam county prosecuting attorney dated July 10, 1969, copy enclosed, for a more detailed explanation of the difference between these two school district revenue sources. With regard to the uses which the receiving school district may make of these revenues, compare AGO 63-64 No. 48 [[to Superintendent of Public Instruction on August 13, 1963]](dealing with the payments in lieu of property taxation which are provided for under RCW 54.28.080) with AGO 63-64 No. 79 [[to Superintendent of Public Instruction on January 22, 1964]](involving the use of a school district's share of the public utility district privilege tax revenues). Copies of these two opinions are also enclosed.
With this explanation of the scope of your questions in mind, we turn now to RCW 54.28.090, which governs the allocation of public utility district privilege tax revenues which have previously been distributed to a county under RCW 54.28.050.1/ This statute reads as follows:
[[Orig. Op. Page 3]]
"The county commissioners of each county shall direct the county treasurer to deposit funds to the credit of each taxing district in the county according to the manner they deem most equitable; except not less than thirty-five percent of all moneys so received shall be apportioned to the school districts within the county having district properties within their limits, and not less than an amount equal to three‑fourths of one percent of the gross revenues obtained by a district from the sale of electric energy within any incorporated city or town shall be remitted to such city or town. Information furnished by the district to the county commissioners shall be the basis for the determination of the amount to be paid to such cities or towns." (Emphasis supplied.)
On the basis of the portion of this statute which we have underscored, we believe that the correct answer to your first question is in accordance with the second of the three alternative constructions of the statute which you have set forth. If a school district is located within a county to which privilege tax revenues are distributable under RCW 54.28.050, and if any of the properties of the revenue producing public utility district are located within the limits of the school district, then such school district becomes [[Orig. Op. Page 4]] eligible for apportionment of that portion (i.e., not less than thirty-five percent) of the county's total distribution which is allocable to school districts.2/
Most certainly, a school district is not required by RCW 54.28.090 to be totally located within the boundaries of the revenue producing public utility district in order to be eligible to share in the subject revenues ‑ as would be contemplated by the first alternative construction of the statute which is expressed in your question. As for your suggested third alternative construction of the statute, it is also to be seen from a reading of its provisions that this statute (unlike RCW 54.28.080, quoted below in answering your second question) does not purport to specify any particular types of public utility district property which must be located within a school district in order for the school district to qualify for a share of the revenues in question.
RCW 54.28.080, which governs certain payments which are required to be made by a public utility district to a school district in lieu of property taxation, reads as follows:
"Whenever any district acquires an operating property from any private person, firm, or corporation and a portion of the operating property is situated within the boundaries of any school district and at the time of such acquisition there is an outstanding bonded indebtedness of the school district, then the public utility district shall, in addition to the tax imposed by this chapter, pay directly to the school district a proportion of all subsequent payments by the school district of principal and interest on said bonded indebtedness, said additional payments to be computed and paid as follows:
[[Orig. Op. Page 5]]
The amount of principal and interest required to be paid by the school district shall be multiplied by the percentage which the assessed value of the property acquired bore to the assessed value of the total property in the school district at the time of such acquisition. Such additional amounts shall be paid by the public utility district to the school district not less than fifteen days prior to the date that such principal and interest payments are required to be paid by the school district. In addition, any public utility district which acquires from any private person, firm, or corporation an operating property situated within a school district is authorized to make voluntary payments to such school district for the use and benefit of the school district." (Emphasis supplied.)
Here, then, the criterion is not "any property" ‑ but rather it is "an operating property." Moreover, as you have pointed out in your letter, the term "operating property" is specifically defined in RCW 54.28.010 to mean:
". . . all of the property utilized by a public utility district in the operation of a plant or system for the generation, transmission, or distribution of electric energy for sale;
". . ."
Based upon this statutory definition, our answer to your second question is as follows:
If a public utility district has acquired land which is located within a school district for reservoir purposes and is utilizing this reservoir in the operation of a plant or system for the generation, transmission, or distribution of electric energy for sale, then such reservoir may be regarded as "an operating property" for the purposes of RCW 54.28.080, supra.
[[Orig. Op. Page 6]]
We trust that the foregoing will be of some assistance to you.3/
Very truly yours,
FOR THE ATTORNEY GENERAL
Philip H. Austin
Deputy Attorney General
*** FOOTNOTES ***
1/RCW 54.28.050 provides:
"After computing the tax imposed by this chapter, the tax commission shall instruct the state treasurer, after placing four percent in the state general fund, to distribute the balance collected under RCW 54.28.020 subsection (1) to each county in proportion to the gross revenue from sales made within each county; and to distribute the balance collected under RCW 54.28.020 subsections (2) and (3) as follows: If the entire generating facility, including reservoir, if any, is in a single county then all of the balance to the county where such generating facility is located. If any reservoir is in more than one county, then to each county in which the reservoir or any portion thereof is located a percentage equal to the percentage determined by dividing the total cost of the generating facilities, including adjacent switching facilities, into twice the cost of land and land rights acquired for any reservoir within each county, land and land rights to be defined the same as used by the federal power commission. If the powerhouse and dam, if any, in connection with such reservoir are in more than one county, the balance shall be divided sixty percent to the county in which the owning district is located and forty percent to the other county or counties or if said powerhouse and dam, if any, are owned by a joint operating agency organized under chapter 43.52, or by more than one district or are outside the county of the owning district, then to be divided equally between the counties in which such facilities are located. If all of the powerhouse and dam, if any, are in one county, then the balance shall be distributed to the county in which the facilities are located."
2/See, again, our opinion to the Clallam county prosecuting attorney dated July 10, 1969, supra, with respect to the discretion which is possessed by the county commissioners in determining how the funds in question shall be apportioned between all eligible school districts within the county. With respect to the criteria to be considered in determining whether a school district is located "within the county" see our opinion dated September 29, 1970, to the Chelan county prosecuting attorney, copy enclosed.
3/Of course, the application of each of the foregoing answers to such factual situations as gave rise to your questions will be dependent upon all of the facts of each particular case.