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Bob Ferguson

AGO 1957 No. 102 - Jul 25 1957
Attorney General John J. O'Connell


Legislation making a direct appropriation of moneys from the motor vehicle fund as a subsidy in aid of the operation of an integrated Puget Sound transportation system, including bridges and ferries; or providing for an annual pledge of fuel excise taxes from the motor vehicle fund as a guaranty of toll facility revenue bonds would not be invalid as contravening the provisions of Art. II, § 40, Art. VIII, §§ 1 and 5 and Art. XII, § 9.

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                                                                    July 25, 1957

Honorable Julia Butler Hansen
State Representative, 18th District
Cathlamet, Washington                                                                                                              Cite as:  AGO 57-58 No. 102

Dear Mrs. Hansen:

            You have requested an attorney general's opinion on the following questions:

            Is there any objection on constitutional grounds to an enactment by the legislature (1) appropriating moneys from the motor vehicle fund as a subsidy toward the operation of an integrated Puget Sound transportation system, including the operation of ferries and bridges constructed to replace ferries; or (2) providing for an annual pledge of moneys from state excise taxes on motor vehicle fuels to secure bonds issued to finance the various projects?

             [[Orig. Op. Page 2]]

            It is our opinion that there could be no valid constitutional objection to either such provision.


            We will consider first the question of direct subsidy.  The 18th amendment to the Washington constitution (Article II, § 40) provides as follows:

            "All fees collected by the State of Washington as license fees for motor vehicles and all excise taxes collected by the State of Washington on the sale, distribution or use of motor vehicle fuel and all other state revenue intended to be used for highway purposes, shall be paid into the state treasury and placed in aspecial fund to be used exclusively for highway purposes.  Such highway purposes shall be construed to include the following:

            "(a) The necessary operating, engineering and legal expenses connected with the administration of public highways, county roads and city streets;

            "(b)The construction, reconstruction, maintenance, repair, and betterment of public highways, county roads, bridges and city streets; including the cost and expense of (1) acquisition of rights-of-way, (2) installing, maintaining and operating traffic signs and signal lights, (3) policing by the state of public highways, (4) operation of movable span bridges, (5) operation of ferries which are a part of any public highway, county road, or city street;

            "(c) The payment or refunding of any obligation of the State of Washington, or any political subdivision thereof, for which any of the revenues described in section 1 may have been legally pledged prior to the effective date of this act;

            "(d) Refunds authorized by law for taxes paid on motor vehicle fuels;

            "(e) The cost of collection of any revenues described in this section:

             [[Orig. Op. Page 3]]

            "Provided, That this section shall not be construed to include revenue from general or special taxes or excises not levied primarily for highway purposes, or apply to vehicle operator's license fees or any excise tax imposed on motor vehicles or the use thereof in lieu of a property tax thereon, or fees for certificates of ownership of motor vehicles."  (Emphasis supplied)

            The initial question for determination is whether expenditure of moneys from the motor vehicle fund for the purpose of constructing and operating ferries and bridges as part of an integrated Puget Sound transportation system, is proper as within the purposes enumerated in the 18th amendment.  We believe it is clear from the language of the provision itself that such expenditure for bridges would be proper.  That any ferry operated as a part of such a transportation system would in fact be "part of any public highway" is clear from cases decided by our court and by the federal courts.  U.S. v. Puget Sound Nav. Co., 24 F. Supp. 431; State ex rel. Washington Nav. Co. v. Pierce County, 184 Wash. 414; andState ex rel. King County v. Murrow, 199 Wash. 685.

            Our court, in theMurrow case, was called upon to construe what is now RCW 36.82.070, and which provides in part that "Any money paid to any county from the motor vehicle fund may be used for the construction, alteration, repair, improvement, or maintenance of county roads and bridges thereon . . . and for ferries, . . ."  The court said, on page 691:

            "We think it is almost inescapable that the legislature, . . . considered public ferries, operated or maintained by a county, a part of the county road system, and we think it follows as a reasonable conclusion that it was the intention of the legislature to make the words 'for the construction, alteration, repair, improvement, or maintenance' apply to such ferries, as a part of the county road system. . . ."

            We know of no constitutional or statutory provision which would prevent the expenditure of money from the motor vehicle fund to subsidize the operation of the proposed Puget Sound transportation system, if the legislative and executive branches of the state government determine that such an expenditure is desirable, and if the expenditure is made pursuant to a proper appropriation by the legislature.

             [[Orig. Op. Page 4]]

            We now turn our attention to the question of pledging moneys from the motor vehicle gas taxes to secure revenue bonds issued to finance the various bridge and ferry projects which might be undertaken as a part of a Puget Sound transportation system.

            We shall assume for the purposes of this opinion that the legislative enactment which we are considering would provide for an annual pledge of a specified sum of money to be taken from that portion of the motor vehicle fund which results from the imposition of excise taxes on motor vehicle fuels; that it would be made available to the toll bridge authority to the extent that revenues from the bridges and ferries were insufficient to provide for the maintenance of the projects and payment of principal and interest on the bonds issued to finance the same.  (This is in essence what was provided by the Toll Road Act, chapter 268, Laws of 1955.  This act was declared unconstitutional on the ground that it embraced more than one subject in violation of Article II, § 19, of the Washington constitution,Washington Toll Bridge Authority v. State, et al., 149 Wash. Dec. 502 [[49 Wn.2d 520]], and was repealed by chapter 211, Laws of 1957.  It is to be emphasized that our court did not consider the question of the validity of the pledge of money from the motor vehicle fund.)

            We believe that such a pledge or guaranty would be subject to possible attack on at least two constitutional grounds, as follows:

            (1) Article VIII, § 1, of the Washington constitution providing that debts of the state shall not, save in certain specified situations, exceed $400,000.

            (2) Article VIII, § 5, and Article XII, § 9, of the state constitution providing 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.

            We believe that if these constitutional objections were raised by legally interested parties, our court would uphold the constitutionality of the act.  We shall consider the two objections in the order named.

            (1) Article VIII, § 1, of the state constitution provides as follows:

            "The state may to meet casual deficits or failure in revenues, or for expenses not provided for, contract debts, but such debts, direct and contingent, singly  [[Orig. Op. Page 5]] or in the aggregate, shall not at any time exceed four hundred thousand dollars ($400,000), and the moneys arising from the loans creating such debts shall be applied to the purpose for which they were obtained or to repay the debts so contracted, and to no other purpose whatever."

            We are of the opinion that if the legislation as we have outlined it above were attacked as in violation of this section of our constitution, the court would uphold its constitutionality on the authority of Comfort v. Tacoma, 142 Wash. 249; Gruen v. State Tax Commission, 35 Wn. (2d) 1;State ex rel. Bugge v. Martin, 38 Wn. (2d) 834.

            TheGruen case involved a test of the veterans' bonus act which provided for bonds to be paid from a special fund created solely from revenues to be derived from an excise tax on the sale of cigarettes.  The act obligated the state to continue the tax until the amount of the bonds had been paid in full.  Our court held in theGruen case that the debt limitation contained in Article VIII has no application where the obligation in question is payable from a special fund, and out of excise taxes rather than property, or ad valorem, taxes.  In theBugge case this so-called "special fund doctrine" was reaffirmed by our court, holding that by the issuance of bonds payable only out of the motor vehicle fund, the state incurs no obligation, and that "An indebtedness incurred for highway purposes, to be paid out of such a fund, is not a 'debt' contemplated by Art. VIII."

            InComfort v. Tacoma, supra, a statute creating the local improvement guaranty fund was attacked as in contravention of Article VIII.  This statute provided that any first class city could by ordinance create a fund to guarantee the payment of the local improvement bonds issued subsequent to the passage of the ordinance, and that "After the creation of such guaranty fund, the city or town shall levy, from time to time as other taxes are levied, such sums as may be needed to meet the financial requirements of the fund."  In this case, it was necessary to determine whether bonds issued under the provisions of the guaranty law became a debt of the city, for, if so, they would increase the debt of the City of Tacoma beyond the one and one‑half per cent statutory limit without a vote of the people.

            It was admitted by appellant in the Comfort case that bonds, if issued without the guaranty, were not debts of the city.  The court in noting this admission stated:

             [[Orig. Op. Page 6]]

            ". . . if the bondholders who are restricted to a single fund, to wit:  the local assessment fund, can have no general claim against the city, it is hard to understand how the restriction to two funds, to wit: the local assessment and guaranty fund, can give any greater right than that provided by the additional fund itself."

            The same reasoning can be applied with equal force to the financing of the proposed Puget Sound transportation system.  Bondholders would look primarily to the bond redemption funds of the projects, and secondarily to the motor vehicle fund for payment of principal and interest on their bonds.  Furthermore, this secondary liability of the motor vehicle fund could hardly be said to create a debt of the state within the inhibition of Article VIII when, as established byState ex rel. Bugge v. Martin, supra, the fund could be used as theexclusive source of payment of the bonds, and we believe this to be true even though the prospective legislation here in question obligates the legislature to continue to impose excise taxes on motor vehicle fuels in amounts sufficient to meet required payments of principal and interest on the bonds.

            This leaves for our consideration whether or not a pledge or guaranty of moneys from the motor vehicle fund as outlined, supra, would be in violation of Article VIII, § 5, and Article XII, § 9, of the Washington constitution as a prohibited giving or loaning of the credit of the state.  As we conceive it, the "loan of credit," if any, would be to the toll bridge authority, and not to individual bondholders.  Although this problem has never been squarely answered by our court, it is our opinion, from the language of the constitutional provisions themselves and from a consideration of cases decided in other jurisdictions, that the restriction applies only to the loan of credit to private individuals, associations, companies or corporations, and not other public bodies, such as the toll bridge authority.  Article VIII, § 7, which forbids the lending of credit by a county, city, town or other municipal corporation, is substantially identical to Article VIII, § 5.  Several cases have been decided in which § 7 has been considered, and our court has stated:

            ". . . the framers had in mind individuals, associations, companies and corporations engaged in purely private enterprises, or enterprises only quasi public, not to enterprises carried on by the corporations whose functions are wholly public . . ." (Rands v. Clarke, 79 Wash. 152, and cases cited.)

             [[Orig. Op. Page 7]]

            Moreover, it can be argued that the constitutional provisions cited refer only to the lending of the general credit of the state, and that since in this case a special fund would be the source of the "credit," the general credit of the state is not involved.  This point has never been decided by the Washington court; but in at least one other state (Michigan), where the special fund doctrine has been adopted, the court, under a constitutional provision forbidding the lending of state credit substantially identical with our own, has so held.  Ziegler v. Witherspoon, 49 N.W. (2d) 318.

            In summary, it is our conclusion that legislation either making a direct appropriation of moneys from the motor vehicle fund as a subsidy in aid of the operation of an integrated Puget Sound transportation system, including bridges and ferries, or providing for an annual pledge of fuel excise taxes from the motor vehicle fund as a guaranty of toll facility revenue bonds, could probably withstand attack under Article II, § 40, Article VIII, § 1, Article VIII, § 5, and Article XII, § 9.  We wish to emphasize, however, that our court might consider such legislation invalid on other grounds.  It is impossible to predict with accuracy in a given case that particular legislation is or is not constitutional.  This is especially true in the case before us because we have only the barest outline of what the legislation would seek to accomplish.  A statute of this nature would necessarily be long and complex, and would in its final form doubtless provide legally interested parties with opportunity to attack the legislation on additional grounds.

            We trust that the foregoing will be of assistance to you.

Very truly yours,

Attorney General

Assistant Attorney General