AGO 1980 No. 24 - Dec 23 1980
PENSIONS ‑- RETIREMENT ‑- INITIATIVE NO. 62 ‑- IMPACT ON PROPOSED PENSION LEGISLATION
(1) In the event that the legislature amends the statutes governing the Public Employees' Retirement System (PERS) by increasing post-retirement benefits in such a manner as will require all employers, including local taxing districts, to make increased employer contributions to the retirement system, the provisions of section 6(1) of Initiative 62 will not require the state to reimburse those taxing districts for such increased contributions.
(2) If the legislature amends the statutes governing the Teachers' Retirement System (TRS) in such a manner as to require that local school districts make some form of "employers' contribution" to the system, the provisions of section 6(1) of Initiative 62 will likewise not require the state to reimburse those local school districts for such contributions; however, such legislation could cause section 6(3) of the initiative to become applicable unless the full cost to the school district resulting from the legislation is, in turn, covered by state funding in accordance with Wash. Const., Art. IX, section 1.
(3) If the legislature acts to require that persons seeking to be employed as municipal fire fighters or law enforcement officers meet minimum medical and health standards in order to become eligible for such employment, and the taxing districts by which those personnel are employed thereby incur additional costs either in establishing or implementing such standards, the state will not be required by section 6(1) of Initiative 62 to reimburse those taxing districts for such costs.
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December 23, 1980
Honorable A. N. "Bud" Shinpoch
State Senator, 11th District
361 Maple Avenue N.W.
Renton, Washington 98055
Cite as: AGO 1980 No. 24
By letter previously acknowledged, you directed our attention to the following language of section 6(1), chapter 1, Laws of 1980 (Initiative 62):
[[Orig. Op. Page 2]]
"The legislature shall not impose responsibility for new programs or increased levels of service under existing programs on any taxing district unless the districts are reimbursed for the costs thereof by the state."
You then requested our opinion on three questions which we paraphrase as follows:
(1) If the legislature amends the statutes governing the Public Employees' Retirement System (PERS) by increasing post-retirement benefits in such a manner as will require all employers, including local taxing districts, to make increased employer contributions to the retirement system, will the state be required by section 6(1), supra, to reimburse those taxing districts for such increased contributions?
(2) If the legislature amends the statutes governing the Teachers’ Retirement System (TRS) in such a manner as to require that local school districts make some form of "employers' contribution" to the system, will the state then be required by section 6(1),supra, to reimburse those local school districts for such contributions?
(3) If the legislature acts to require that persons employed in the future as municipal fire fighters or law enforcement officers meet minimum medical and health standards in order to become eligible for such employment, and the taxing districts by which those personnel are employed thereby incur additional costs either in establishing or implementing such standards, will the state be required by section 6(1), supra, to reimburse those taxing districts for such costs?
We answer all three questions in the negative for the reasons set forth in our analysis.
[[Orig. Op. Page 3]]
At the outset it would be helpful to set forth a brief overview of the purposes and objects of the law involved along with the rules of statutory construction applicable to initiatives.
Initiative 62, as approved by the voters in 1979, is essentially a tax limitation measure. It limits the growth of general state tax revenues to an amount no greater than the growth rate of state‑wide personal income. See, sections 3 and 4. This tax limit, however, does not apply to taxes imposed by local governments. Instead, the initiative prohibits the legislature from requiring local governments to offer new or expanded services unless the costs are paid by the state. See, again, section 6(1),supra.
Presumably, one of the central purposes of this prohibition is to prevent the legislature from doing an "end run" around the fiscal constraints imposed by the initiative through the device of requiring local governments to pay for services mandated by the legislature. Its language is broad and nonspecific‑-perhaps deliberately so. Thus, the provision speaks of "programs" mandated by the legislature, but the initiative contains no definition of the term "program." Nevertheless, in consultation with the Office of Financial Management (OFM), the legislature is required to determine the cost of new or expanded "programs." See, section 6(4).
Your questions arise because of the uncertainty flowing from the use of this broad, nonspecific language.
Initiative 62 was originally submitted to the 1979 legislature. Then, following the failure of that body to enact it into law, it was submitted to and adopted by a substantial majority of the voters at the November, 1979, general election. Consequently, there is little legislative history to assist us in its interpretation. We are aided, however, by several established rules of statutory construction which apply to direct legislation by the people as well as legislative enactments. Department of Revenue v. Hoppe, 82 Wn.2d 549, 512 P.2d 1094 (1973). Strand v. Department of Motor Vehicles, 8 Wn.App. 877, 509 P.2d 999 (1973).
The primary purpose of statutory construction is to discern and give effect to the intent of the legislature. Krystad v. Lau, 65 Wn.2d 827, 400 P.2d 72 (1965). "The collective intent of the people becomes the object of the court's search for 'legislative intent' when construing a law adopted by a [[Orig. Op. Page 4]] vote of the people. . . ."Hoppe, supra, at p. 552. Legislative intent is to be ascertained from the statutory text as a whole, interpreted in terms of the general purpose and object of the act. Amburn v. Daly, 81 Wn.2d 241, 501 P.2d 178 (1972). The language of an initiative should be given a construction which makes it purposeful and effective; unlikely, strained or absurd consequences are to be avoided. Strand,supra. In discerning the collective intent of the people, we may resort to the legislative history, if any, and the explanatory statements and arguments contained in the Official Voters' Pamphlet. Hoppe,supra;Port of Longview v. Taxpayers of Longview, 85 Wn.2d 216, 232, 533 P.2d 128 (1974).
With these introductory remarks and rules in mind, let us now turn to your three questions.
This question relates to the Public Employees' Retirement System (PERS) and assumes a legislatively-mandated increase in the level of post-retirement benefits payable by the state to PERS retirees which would, in return, require an increase in employer contributions to the system. See, RCW 41.40.361 and RCW 41.40.650. The issue is whether Initiative 62 requires the state to pay for the local government employers' share of such increased contributions. And the answer turns on the meaning to be given the phrase ". . .new programs or increased levels of service under existing programs . . ." as used in section 6(1) of the initiative,supra.
That provision was not intended to require the state to reimburse local governments forany and all costs which might be incurred as a result of legislative action‑-for to construe section 6(1) to require such reimbursement would lead to strained and absurd consequences. For example, if the legislature increased the state minimum wage, such a construction would require the state to pay the costs of increased salaries for all local government employees affected thereby. But that flies in the face of the historical preference of Washington citizens for local control of‑-and fiscal responsibility for‑-exclusively local government services. See,e.g., Washington Constitution, Art. XI, sections 11 and 12. Furthermore, such a construction would raise serious doubts about the [[Orig. Op. Page 5]] constitutionality of section 6(1) under Washington Constitution, Art. XI, section 12‑-at least to the extent that it would require the expenditures of state imposed taxes for exclusively local purposes. See, generally,State ex rel. Clausen v. Burr, 65 Wash. 524, 528-530, 118 Pac. 639 (1911).
Rather, section 6(1) only requires reimbursement for those costs incurred because of a legislatively-imposed responsibility ". . . for new programs or increased levels of service under existing programs . . ." We, therefore, construe it to require reimbursement only where, and to the extent that, mandatory state legislation results in either new services to the general public or in an actual increase in local governmental services offered to the public in some measurable, quantifiable sense.
First, we believe the terms "program" and "services" as used in section 6(1) are largely synonymous. The term "program" is nothing more than a shorthand reference to a group of services designed to accomplish specific public goals and result in specific public benefits. Moreover, this was recognized by both the proponents and opponents of the initiative. Thus, the "statement against" Initiative 62 appearing in the 1979 Official Voters' Pamphlet1/ read in part:
". . . 62 would substitute a computer for human judgment in determining the appropriate size of state government and its programs.
"Decisions about vital state services‑-the education of our children, the health and dignity of our senior citizens, the maintenance of our prisons, the establishment of quality mental health care‑-these decisions should be made by the people's elected representatives, not by a computer. Vote No on Initiative 62." (Emphasis supplied)
[[Orig. Op. Page 6]]
Likewise, the "rebuttal of the statement against" the initiative (prepared by the proponents) read in part:
". . . 62 forces politicians to prioritize spending. Without the ability to 'keep going back to the well,' legislators will have to provide for basicservices instead of giving in to pressures for newspending programs. 62 is not 'tax reform'‑-it's 'tax limitation' designed to stop taxes from growing faster than our pocketbooks." (Emphasis supplied)
Additionally, the explanatory statement on the effect of Initiative 62 which was prepared by this office and also appeared in the Voters' Pamphlet said:
". . . the initiative, however, would prohibit the legislature from requiring local governments to offer new or expanded services unless the costs are paid by the state. . . ." (Emphasis supplied)
These statements clearly show that this aspect of the initiative was intended to encompass only such state legislation as requires units of local government to actually increase the level of services rendered to the general public‑-whether the services are "new" ones in the sense that the service has not been offered to the public before or, instead, are services like, but in addition to, those already offered to the public (i.e., "increased levels of service under existing programs").
Second, any such new or increased services to the public must be measurable or quantifiable in some sense‑-for we cannot attribute to the voters an intent to require state reimbursement for services which result in public benefits of only a remote, ephemeral or subjective nature. Indeed, we note again that section 6(4) of the initiative requires the legislature, in consultation with the Office of Financial Management, to determine the costs of new programs or increased levels of service under existing programs. Therefore, in order to make both section 6(1) and section 6(4) purposeful and effective, the public benefits must be measurable or quantifiable in some manner.
[[Orig. Op. Page 7]]
For example, in AGO 1980 No. 3 (copy enclosed), we earlier concluded that the reimbursement requirement of section 6(1) would be triggered by the enactment of legislation increasing the number of superior court judges in certain counties because the level of judicial service to the public would presumably be thus increased‑-through easier and faster access to the court system. But if, instead, we had there been asked whether the same reimbursement requirement would be invoked by the enactment of legislation requiring locally-funded salary increases for existing judges, our answer would undoubtedly have been in the negative. Such salary increases‑-enacted primarily if not solely to allow the recipients merely to keep up with the ever-increasing cost of living‑-would only have been remotely related (if at all) to the resulting level of judicial service rendered to the public.
Similarly, when this same analysis is applied to your present question regarding pension benefits, it leads us to a like answer to that question. Public employee pension benefits are merely another form of compensation. See,Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956). Moreover, an increase in this form of compensation cannot possibly result inany increased services being rendered to the general public for, after all, the recipients are already retired and no longer performing any governmental tasks whatsoever.
We thus answer question (1) in the negative.
Your second question asks:
If the legislature amends the statutes governing the Teacher's Retirement System (TRS) in such a manner as to require that local school districts make some form of "employers' contribution" to the system, will the state then be required by section 6(1),supra, to reimburse those local school districts for such contributions?
We also answer this question as thus stated in the negative.
[[Orig. Op. Page 8]]
We first observe that this question involves proposed legislation which would not reflect either a "new program" nor an increase in the level of service to the general public under some existing program. What is contemplated is simply a partial changing of the funding for an existing program.2/ Therefore, under the analysis utilized in responding to your first question, section 6(1),supra, would likewise not require state reimbursement here.
While that, however, answers your stated question, it does not end our inquiry. Because the state now directly appropriates money to TRS each biennium to cover the entire "employers' contribution"‑-and local school districts pay no portion of that cost‑-what is actually contemplated by this proposed legislation is a transferring of a portion of the employer's contribution responsibility from the category of a "state cost" to that of a "local district cost." And that, in turn, brings into play section 6(3) of Initiative 62 which provides that:
"If by order of any court, or legislative enactment, the costs of a federal or taxing district program are transferred to or from the state, the otherwise applicable state tax revenue limit shall be increased or decreased, as the case may be, by the dollar amount of the costs of the program."
Therefore, while the passage of this legialative [legislative] proposal would not result in a reimbursement requirement pursuant to section 6(1),supra, its enactment would theoretically result in a reduction in the state tax revenue limit pursuant to this requirement of section 6(3) of the initiative. There is, however, a further complicating factor; namely, the "full funding" requirement for basic education (K-12) imposed by Wash. Const., Art. IX, section 1. See, [[Orig. Op. Page 9]] Seattle School District v. State of Washington, 90 Wn.2d 476, 585 P.2d 71 (1978).
Under that case the state legislature is constitutionally required to "fully fund" the costs of "basic education"‑-and one of those "costs" is the employer's contribution to TRS. Thus, if the legislature were to require local school districts to pay a part of the "employers' contribution" to TRS, it would then have to effectively fund that contribution by correspondingly increasing the appropriation to local school districts to cover that additional cost. Accordingly, to the extent that "basic education" is "fully funded" by the state, there would not be such a transfer of costs of a program from the state to local school districts as would trigger section 6(3),supra. Rather, the state would simply be paying the cost by indirection rather than by direct appropriation to TRS. And, therefore, under those circumstances, section 6(3) would not operate to reduce the state tax revenue limit.3/
Your third question, also repeated for ease of reference, asks:
If the legislature acts to require that persons employed in the future as municipal fire fighters or law enforcement officers meet minimum medical and health standards in order to become eligible for such employment, and the taxing districts by which those personnel are employed thereby incur additional costs either in establishing or implementing such standards, will the state be required by section 6(1),supra, to reimburse those taxing districts for such costs?
This question, unlike your first two, does not necessarily assume a legislative amendment to apension statute.
Under existing laws, persons employed as municipal law enforcement officers or fire fighters are not required to [[Orig. Op. Page 10]] meet minimum medical and health standards as conditions of employment.4/ This proposed legislation, however, would require them to do so and would require their local government employers to pay the costs of resulting medical examinations.
Even assuming that some additional costs might be incurred by the various taxing district employers, we would, nevertheless, also answer this question in the negative. As we explained earlier in this opinion, section 6(1), supra, is not invoked by the legislature every time it passes some form of legislation which results in increased costs to a taxing district. Rather, it is only when those increased costs stem from a legislatively-imposed responsibility ". . . for new programs or increased level of service under existing programs . . ." that the requirement for state reimbursement applies. Here, however, establishment by the legislature of minimum medical standards for the employment of local law enforcement officers or fire fighters would not constitute either a new program‑-since the local fire departments and police departments already exist‑-nor even necessarily an increased level of service to the public under those existing programs.
In this regard, we would also observe that this proposed legislation would not require the affected taxing districts to increase the number of fire fighters or police officers. Compare, AGO 1980 No. 3,supra, relating to legislation increasing the number of superior court judges for certain counties. Instead, the number of law enforcement officers and fire fighters would be left entirely to the discretion of local taxing districts. To be sure, adoption of entry level minimum medical and health standardsmight result in better qualified applicants for police and fire positions. However, it is not at all certain that this would necessarily result in "increased levels of service" to the general public in a quantifiable, measurable sense any more than would, for example, a requirement that police and fire fighters possess college degrees or other specified educational qualifications.
[[Orig. Op. Page 11]]
We trust that the foregoing will be of assistance to you.
Very truly yours,
MATTHEW J. COYLE
Assistant Attorney General
*** FOOTNOTES ***
1/See, again, Department of Revenue v. Hoppe, and Port of Longview v. Taxpayers,supra.
2/Presently, there is no employer's contribution, as such, under the Teachers' Retirement System; instead, all benefits are funded by direct state appropriations and employees' contributions. See, RCW 41.32.401.
3/We would caution you, however, that to the extent the state is not fully funding "basic education," or local school districts employ members of TRS whose services are not paid for by legislative appropriation, section 6(3) could very well operate to reduce the state tax revenue limit. Resolution of that issue depends upon numerous facts which are outside the scope of our knowledge, and consequently we express no opinion thereon.
4/Prior to July 1, 1979, persons employed as law enforcement officers or fire fighters were, however, required to meet certain minimum medical and health standards in order to obtain membership in the Law Enforcement Officers' and Fire Fighters' Retirement System. See, RCW 41.26.045, as amended by section 3, chapter 249, Laws of 1979, 1st Ex. Sess.