Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1976 No. 5 - Feb 3 1976
Attorney General Slade Gorton


Because of the provisions of Article VIII, §§ 5 and 7 of the Washington constitution, any legislation proposing to exempt designated classes of property from 1975 property tax levies collectible in 1976 must be enacted before any such taxes have been collected.

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                                                                 February 3, 1976

Honorable Robert Randall
Chairman, Revenue Ways & Means Committee
House of Representatives
Institutions Building
Olympia, Washington 98504

                                                                                                                   Cite as:  AGO 1976 No. 5

Dear Sir:

            By letter previously acknowledged you have made reference to the prohibitions against loans or gifts of state or local governmental funds which are contained in Article VIII, §§ 5 and 7 of the Washington constitution and then have asked for our opinion on the following question:

            "If the Legislature enacts a statute exempting a class of property from the property tax, by what date must such act be effective in order to avoid violation of the constitutional restriction?  For example, if the Legislature wishes to exempt certain property commencing with taxes levied in 1975 for collection in 1976, would such act have to be in effect by the second Monday in October, 1975 when the levies are certified to the assessor (RCW 84.52.070), December 15, 1975 when the taxes must be extended upon the tax rolls and delivered to the treasurer (RCW 84.52.080), February 15, 1976 the first day that taxes may be collected (RCW 84.56.010) or the date when the taxes become delinquent April 30, 1976 and/or October 31, 1976 (RCW 84.56.020)?"

             [[Orig. Op. Page 2]]

            We answer the foregoing question in the manner set forth in our analysis.


            Article VIII, §§ 5 and 7 of the Washington constitution, although differently worded, both have been construed by the state supreme court to prohibit gifts or loans of public funds to private individuals ". . . except for the necessary support of the poor and infirm, . . ."  See,State ex rel. O'Connell v. Port of Seattle, 65 Wn.2d 801, 399 P.2d 623 (1965);Highway Com. v. Pac. NW Bell Tel. Co., 59 Wn.2d 216, 367 P.2d 605 (1961); State v. Guaranty Trust Co., 20 Wn.2d 588, 148 P.2d 323 (1944); Morgan v. Dept. of Social Security, 14 Wn.2d 156, 127 P.2d 686 (1942); andJohns v. Wadsworth, 80 Wash. 352, 141 Pac. 892 (1914).  Section 5 applies to the state itself while § 7 applies to counties, cities and other municipal corporations.

            InYakima v. Huza, 67 Wn.2d 351, 407 P.2d 815 (1965), the court held that because of Article VIII, § 7,supra,

            ". . . where a tax ordinance has been previously validly enacted, it cannot be repealed retroactively, and the tax money heretofore collected validly cannot be refunded simply on the basis of the retroactive repeal."  67 Wn.2d at 359.

            Moreover, inHuza, the court also held that even if the attempted refund of the validly collected taxes were to not be accomplished by the payment of money but rather by a provision for a tax credit against future tax liability, "the effect is a refund of taxes validly collected, and the constitutional prohibition [of Article VIII, § 7] applies."  Huza,id.

            On the other hand, inSnow's Mobile Homes, Inc. v. Morgan, 80 Wn.2d 283, 494 P.2d 216 (1972), the court held that a property tax exemption for mobile homes which took effect on May 11, 1969, could validly be applied to property already on the assessment rolls as of January 1, 1969.  Accord,Gasaway v. Seattle, 52 Wash. 444, 100 Pac. 991 (1909), from which the court in Snow's quoted with approval as follows:

            "All taxes are levied under the express or implied power of the state.  The state can fix the subject of taxation and exempt  [[Orig. Op. Page 3]] property.  It can limit or extend the time of payment.  The authority so delegated, when exercised, is none the less the execution of the state's power.  If it can do all these things, it can take away not only the power to tax but the subjects of taxation as well.  No person or municipality can acquire, as against the state, a vested right to taxes, or the right to insist upon the collection of taxes when levied."

            Based upon the foregoing court decisions this office, in AGLO 1973 No. 92 [[to Martin S. Durkan and Harry B. Lewis, Senate Committee on Ways and Means on September 7, 1973 an Informal Opinion, AIR-73592]], copy enclosed, advised that the legislature could, constitutionally, enact a property tax exemption statute at its then pending September, 1973, special session which would be applicable to 1973 levies for taxes due and payable during the calendar year 1974 even though the subject properties had already been placed upon the 1973 tax rolls, saying, at page 3:

            "Accordingly, so long as a legislative intent is sufficiently expressed to make the tax exemption amendments contemplated by your letter effective with respect to taxes levied in 1973 for collection in 1974, and this legislation itself becomes effective before these taxes are collected, we have no doubt that such legislation would be constitutional and productive of the result intended."

            If this reading ofSnow's Mobile Homes, Inc. v. Morgan, supra, Gasaway v. Seattle,supra, and Yakima v. Huza, supra, is correct, the basic answer to your immediate question should be that as of the date of the present opinion an exemption of certain property from taxes levied in 1975 for collection in 1976 may, constitutionally, still be enacted by the Washington legislature during its current 1976, session.  The fact that (a) the property to which the exemption would apply was placed on the assessment rolls, and (b) the taxes were levied, prior to the effective date of the statutory exemption should not cause such an application of the exemption to be an unconstitutional gift of state or municipal funds.  In so advising you, however, we should add two cautionary remarks.

            First, most certainly, if the tax exemption with which you are  [[Orig. Op. Page 4]] concerned were not be to enacted prior to February 15, 1976, the initial collection date for 1976 taxes under RCW 84.56.010 and RCW 84.56.070, and any of those taxes had thus already been paid, the persons who had paid those 1976 taxes could not be granted either a refund or a credit against future taxes underYakima v. Huza, supra.  Therefore, any statute purporting to provide such a retroactive exemption would be invalid under the court's ruling in that case ‑ presumably because of equal protection considerations as between those taxpayers who had already paid and those who had not.

            Secondly, as in the case of the prospective 1973 legislation with which we were concerned in AGLO 1973 No. 92, supra, the tax exemption legislation inSnow's Mobile Homes, Inc., supra, was in fact, actually enacted before the 1969 levy had been made while, in the instant case, the 1975 taxes have already been levied and only their collection remains to be accomplished.  Moreover, while the court's observations inGasaway v. Seattle, supra, upon which the court in Snow's and we in AGLO 1973 No. 92 later relied, would certainly seem to support the constitutional validity of a statutory exemption as to 1975 taxes if passed before collection, the precise issue was not before the court in that case either because, factually, Gasaway involved the removal of property from the tax rolls by means of a condemnation of the subject property by a public agency rather than the enactment of a statutory exemption after the date of the levy but before collection.

            Therefore, in conclusion, our advice to you at this time would be as follows:

            (1) If the legislature is currently of a mind to pass a statutory property tax exemption with the objective of having it initially applicable with respect to property taxes already levied in 1975 but not yet collected, it should make every effort to pass that legislation and put it into effect prior to February 15, 1976, when the collection process begins or, if it is not able to do so, at least delay this deadline by amending RCW 84.56.010 and RCW 84.56.070 to set a later date for the commencement of that process.

            (2) In addition, because of the remote but not totally foreclosed possibility that a court might hold the exemption to be constitutionally inapplicable to taxes already levied but not yet collected ‑ notwithstanding the principle stated in  [[Orig. Op. Page 5]] Gasaway v. Seattle,supra, and reiterated in Snow's Mobile Homes, Inc. v. Morgan, supra ‑ the legislature should also include in any bill intended to accomplish the foregoing objective a further indication of the alternative tax consequences it desires if the court so rules.

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

Very truly yours,

Attorney General

Deputy Attorney General

Assistant Attorney General

Assistant Attorney General