TAXATION ‑- MUNICIPAL TAXES ‑- PUBLIC UTILITY DISTRICTS ‑- TAXATION OF P.U.D. BY CITY.

TAXATION ‑- MUNICIPAL TAXES ‑- PUBLIC UTILITY DISTRICTS ‑- TAXATION OF P.U.D. BY CITY.

 The payment of a valid city or town tax levied against a Public Utility District may be constitutionally treated as a District expense although the District's income is derived from customers within and without the corporate limits of the taxing city or town.

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                                                                   May 13, 1953 

Honorable Cliff Yelle
State Auditor
Olympia, Washington                                                                                                                Cite as:  AGO 53-55 No. 39

 Attention:  !ttMr. A. E. Hankins,  Chief Examiner

 Dear Sir:

             You have requested our opinion whether a municipal tax imposed upon a Public Utility District pursuant to RCW 54.28.070 may constitutionally be paid by the District as one of its general expenses although the district's consumers reside both within and without the corporate limits of the taxing city or town.

            We conclude that the tax may be treated as a general expense of the District.

                                                                      ANALYSIS

             The proprietary activity of selling electricity by a city is an activity upon which the State may levy excise taxes, without violating the prohibition of Amendment 14, Washington Constitution, in respect to taxation of municipal property.  Tacoma v. State Tax Commission, 177 Wash. 604.  This rule is equally applicable to Public Utility Districts, and the Legislature, by RCW 54.28.020, has levied such a tax on these Districts.  Since the Legislature can levy a state tax on Public Utility Districts, there can be no constitutional objection to legislative authorization for valid municipal taxation of such Districts, see Puget Sound Power & Light Co. v. Seattle, 172 Wash. at 671.  RCW 54.28.070 authorizes municipal taxation of Public Utility Districts and makes such taxes a debt of the District but permits the district to

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            "* * * add the amount of such tax to the rates or charges it makes for electricity so sold within the city or town."

             Whether the District wishes to pass the city tax burden on to its city customers exclusively is purely a matter of internal policy.  The Legislature has merely provided the method.  However, no constitutional question arises from charging the entire District with the debt of the municipal tax.  You have raised no question relative to the constitutionality of the city tax itself.

             We conclude that the payment of a valid city or town tax levied against a Public Utility District may be constitutionally treated as a District expense although the District's income is derived from customers within and without the corporate limits of the taxing city or town.

 Very truly yours,
DON EASTVOLD
Attorney General

KEITH GRIM
Assistant Attorney General