AGLO 1977 No. 9 - Mar 2 1977
DISTRICTS ‑- PORTS ‑- ELECTIONS ‑- BONDS ‑- TAXATION ‑- REAL PROPERTY ‑- PASSAGE OR FAILURE OF PROPOSITION
Where a port district has submitted to its voters a proposal for the issuance of general obligation bonds under RCW 53.36.030, and in order to fund those bonds has, as a part of the same proposition, sought approval by the voters of an increase in the aggregate limitation upon regular property taxes above that described in RCW 84.55.010 the entire proposition must be deemed to have been defeated by the failure of at least 60% of the voters to have cast affirmative votes.
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March 2, 1977
Honorable A. A. Adams
State Representative, 27th District
212 House Office Building
Olympia, Washington 98504 Cite as: AGLO 1977 No. 9
By recent letter you have advised us that on November 2, 1976, the Port of Tacoma submitted to its voters a proposal for the issuance of general obligation bonds in accordance with a ballot proposition which read as follows:
"PORT OF TACOMA
"For the purpose of constructing, acquiring and developing necessary harbor improvements and terminal facilities, shall the Port of Tacoma, Washington issue its general obligation bonds in the principal amount of $16,750,000 payable from annual levies of property taxes and maturing in from two to twenty-five years from date of issue and increase the aggregate limitation on all port property tax levies from the present rate of $.5296 per $1,000 to $.8796 per $1,000 in accordance with Chapter 84.55 RCW all as [[Orig. Op. Page 2]] more specifically provided in Resolution No. 3505 of the Port adopted September 9, 1976.
"BONDS YES [ ] BONDS NO [ ]"
Thereupon, at the subject election this proposition received affirmative votes from 59.08% of those casting ballots on the measure. Because of that fact you have acknowledged that the proposal must be deemed to have been defeated, insofar as the issuance of general obligation bonds is concerned, in view of so much of RCW 53.36.030 as provides that a port district
". . . with the assent of three‑fifths of the voters voting thereon at a general or special port election called for that purpose, may contract indebtedness or borrow money for district purposes and may issue general obligation bonds therefor provided the total indebtedness of the district at any such time shall not exceed three‑fourths of one percent of the value of the taxable property in the district: . . ." (Emphasis supplied.)
At the same time, however, the percentage of persons voting in the affirmative on the measure obviously constituted more than the simple majority referred to in RCW 84.55.050 which deals with the imposition of regular property taxes in excess of what is commonly referred to as the 106% levy limitation fixed by RCW 84.55.010. You have therefore asked whether, in our opinion, the Port of Tacoma may now levy the additional property taxes contemplated by the proposition even though it is unable to issue the proposed general obligation bonds.
We answer your question in the negative for the reasons set forth below.
RCW 84.55.010 provides, with certain exceptions not here relevant, as follows:
"Except as provided in RCW 84.55.020 through 84.55.050, the levy in 1973 and years subsequent thereto for a taxing district other than the state or a school district in any year shall be set so that [[Orig. Op. Page 3]] the regular property taxes payable in the following year shall not exceed one hundred six percent of the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction and improvements to property by the regular property tax levy rate of that district for the preceding year: . . ."
RCW 84.55.050 then says, however, that:
"Subject to any otherwise applicable statutory dollar rate limitations, regular property taxes may be levied by or for a taxing district in an amount exceeding the limitations provided for in RCW 84.55.010 through 84.55.040 if such levy is authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters. . . ." (Emphasis supplied.)
In AGLO 1975 No. 86 [[to Robert L. Charette, State Representative, on October 6, 1975, an Informal Opinion, AIR-75586]], copy enclosed, this office concluded that the term "regular property taxes" in RCW 84.55.010 and 84.55.050 encompasses all property taxes which may be levied by a port districtincluding those levied to provide debt service on general obligation bonds issued by such a district. It was for that reason, presumably, that the bond proposition to which your opinion request pertains also asked the voters to authorize the port district to:
". . . increase the aggregate limitation on all port property tax levies from the present rate of $.5296 per $1,000 to $.8796 per $1,000 in accordance with Chapter 84.55 RCW all as more specifically provided in Resolution No. 3505 of the Port adopted September 9, 1976.
Nevertheless, as we read it, the basic ballot proposition [[Orig. Op. Page 4]] submitted to the voters was for the issuance of general obligation bonds payable from annual levies of property taxes and not merely for an increase in the aggregate limitation on such tax levies irrespective of whether or not the bonds were in fact approved and issued.
Moreover, it is further to be noted that this same interrelationship between the proposed bonds and the increased property taxes is also expressed in the bond resolution which is expressly referred to in the ballot proposition. Thus, in the third paragraph of § 3 of the resolution1/ we find the following provision:
"For the purposes provided in this resolution the Port shall increase its aggregate property tax levies. For the tax levy year next succeeding the election herein provided for, such increase shall be from the present rate of $.5296 per $1,000 of assessed valuation of such taxable property to $.8796 per $1,000. If the proposition herein provided to be submitted to the voters of the Port District shall be duly approved by such voters, the amount of such levies shall be in excess of the present levy limitations provided for in RCW 84.55.010 through 84.55.040 without a vote of the people. The date, interest rate or rates, denominations, maturities, options of redemption, form and covenants of such bonds shall be as hereafter fixed by resolution of the Port Commission in the manner provided by law."
This provision, in turn, is immediately preceded in § 3 of the resolution by the following two paragraphs:
"The bonds herein authorized to be issued shall bear interest at an effective rate not to exceed the maximum rate permitted by law, which except for the first interest payment shall be payable semiannually. The bonds shall mature as provided by law and the resolution authorizing their sale in from two to twenty-five years from the date of issue and the life of the improvements to be acquired and constructed from the proceeds of such bonds is hereby found and declared to be at [[Orig. Op. Page 5]] least twenty-five years.
"Both principal of and interest on the bonds shall be payable out of annual tax levies to be made upon all of the taxable property within the Port District sufficient to pay such principal and interest as the same shall become due."
And then, immediately prior to that portion of the resolution we find, in § 2 thereof, the basic bond authorization as follows:
"The total estimated cost of making the improvements described in Section 1, including all costs incident thereto and to the issuance of the bonds, is hereby declared to be as nearly as may be the sum of $16,750,000. To pay such costs the Port shall contract a general indebtedness in the principal amount of $16,750,000 and issue and sell its general obligation bonds in such amount for strictly Port District purposes as herein provided."
Finally, in § 1 of the resolution to which reference is thus made in § 2,supra, there appears a detailed listing of the projects, and their estimated costs, which were proposed to be funded with the bond proceeds in the event that the proposition was approved by the voters.
It is also of considerable significance that the ballot proposition, as quoted at the outset in this opinion, specifically called upon the voters to vote "Yes" or "No" on bonds ‑ not taxes. Clearly, then, bonds were the essence of the proposition and increased property taxes were merely the proposed vehicle for meeting debt service requirements in connection with the bonds. The capital projects contemplated by the proposal were to be paid for out of the bond proceeds and not directly out of property tax revenues ‑ and because of the form of the proposition that, in turn, must be deemed to have been the premise upon which the voters cast their ballots. They were not, instead, given two separate and unrelated propositions, one for the issuance of bonds and the other for an increase in the tax rate over the 106% limit.
This last observation, in turn, best identifies the crux of the matter as we view it. It is true that more than a simple majority of those voting on the proposition, as presented to them, voted for it. But how many of those voting would have cast affirmative ballots on the question of increased taxes if the question had been submitted separately [[Orig. Op. Page 6]] to fund the same projects on the basis of a construction schedule extending over a period of years rather than a project to be completed all at once with bond proceeds? Perhaps a majority still would have approved, but perhaps, by the same token, they would not have. Thus to answer the question is to speculate upon an unknown and unknowable factor.
The critical issue is really one of fair notice to the voters. It is not statutorily required that the specific purpose for levying the additional taxes be stated in a proposition to lift the 106% lid under chapter 84.55 RCW. However, where such a purpose is actually stated, as was the case here, that purpose must be deemed to constitute a limiting condition on the validity of the additional tax, in our opinion.
Therefore, as above indicated, we are constrained to answer your question in the negative. The object of the proposed increased property tax levies having failed in this case because of the failure of at least three‑fifths (60%) of those voting on the proposition to have cast affirmative votes, it must be concluded that even though the lesser voting requirements of RCW 84.55.050, supra, were, in fact, met the additional property taxes contemplated by the bond resolution and ballot proposition to fund the bonds may not now be levied.
We trust that the foregoing will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General