CITIZENS FOR FINANCIALLY RESPONSIBLE GOVERNMENT, ET AL, Aрpellants, v. THE CITY OF SPOKANE, ET AL, Respondents.
No. 47859-7
En Banc.
April 21, 1983.
Reconsideration denied June 20, 1983.
339
James C. Sloane, Corporation Counsel, and Thomas F. Kingen and Pat Dalton, Assistants, for respondents.
BRACHTENBACH, J.--The main question is whether a city ordinance enacting a business and occupation (B & O) tax is subject to referendum. It is.
A group of Spokane citizens sought a writ of mandamus to compel the City of Spokane to accept for filing certain referendum petitions. The purpose of the petitions was the repeal of, or in the alternative, a referendum on city ordinance C-25792, an ordinance relating to and providing for a B & O tax upon businesses, occupational pursuits and privileges within the city. The city clerk refused to accept the petitions for filing because of the city attorney‘s opinion
The trial court denied the plaintiffs’ application for writ of mandamus to compel the clerk to accept the petitions. The court concluded that the ordinance was not subject to referendum on three grounds: (1) the exercise of municipal taxing power was limited under
The facts of this case are not in dispute. Ordinance C-25792 was passed in 1980. It is a license tax for the purpose of revenue upon all occupations and trades and all and every kind of business authorized by law to be made subject to a municipal B & O tax. The ordinance levies a tax for the act or privilege of engaging in business activitiеs in amounts to be determined by application of the rates set forth in the ordinance to the gross income of the business. The ordinance was enacted by the Spokane City Council by a vote of 7 to 3. A month later, the ordinance was amended by ordinance C-25832.
Prior to passage of ordinance C-25792 in 1980 no such tax, with one exception, had been imposed on all businesses; the exception was in 1971 when a broadly based B & O tax was imposed to provide funds for the Expo ‘74 World Expоsition. This was expressly represented to the city voters as a “one-time tax“. A license or occupation tax had been imposed by the City of Spokane on telephone, telegraph, electricity, steam, and communication companies since 1934.
Shortly after the enactment of ordinance C-25792, Citizens for Financially Responsible Government, an organiza-
I
The first issue is whether the power to enact and repeal B & O taxes rests solely with the elected officials of Spokane or whether this power is shared with the electorate by means of referendum. We hold that the right of referendum for taxing ordinances is established in Spokane‘s city charter and this right is not restricted by any limitations contained in the Washington State Constitution or the general laws enacted by the state Legislature.
Article 1, section 4 of the Spokane City Charter provides:
All power of the city, unless otherwise provided in this Charter, shall be exercised by the mayor, city council and city manager. They shall be subject to the control and direction of the people at all times by the initiative, referendum and recall provided for in this Charter.
Article 9, section 83 of the Spokane City Charter sets forth the procedure to be followed in subjecting an ordinance to the referendum process.1 The charter is perfectly clear. No
limitations on the right to referendum are specifiеd therein or in other sections of the charter. Citizens for Financially Responsible Government followed the proper procedure in its attempt to file the petitions against ordinance C-25792. The City of Spokane contends, however, that the right to referendum in this context is limited by state law.
The general rule is municipalities possess, with respect to taxation, only such power as has been granted to them by the constitution or the general laws of the state. 16 E. McQuillin, Municipal Corporations § 44.05 (3d ed. 1981). Where there is a conflict between a general law enacted by the state Legislature and any charter provision, the general law is superior to and supersedes the charter provisions. State ex rel. Guthrie v. Richland, 80 Wn.2d 382, 384, 494 P.2d 990 (1972). Our state laws do not, however, conflict with Spokane‘s referendum provisions.
Any city of the first class shall have power:
...
(32) To grant licenses for any lawful purpose, and to fix by оrdinance the amount to be paid therefor, and to provide for revoking the same . . .
Cities of the first class are also granted all of the powers that are granted by
The City contends, however, that the Washington State Constitution prohibits referendums on taxes at the municipal level. It interprets
The legislature shall have no power to impose taxes upon counties, cities, towns or other municipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may, by general laws, vest in the corporate authorities thereof, the power to assess and collect taxes for such purposes.
(Italics ours.) The issue is whether the reference to “corporate authorities” is meant to restrict taxing power exclusively to legislative bodies or is a general reference to the corporate entity, including the electorate.
This court has repeatedly recognized the distinction between a grant of authority by the legislature to a city as a corporate entity and to its legislative and other corporate authorities. State ex rel. Haas v. Pomeroy, 50 Wn.2d 23, 25, 308 P.2d 684 (1957).
In the context of statutory interpretation, we have previously held that a city‘s “corporate authority“, also referred to as a “legislative authority“, means exclusively the mayor and city council. State ex rel. Haas v. Pomeroy, supra (construing the term “corporate authorities“); State ex rel. Walker v. Superior Court, 87 Wash. 582, 152 P. 11 (1915) (construing the term “legislative authority“); Neils v. Seattle, 185 Wash. 269, 53 P.2d 848 (1936) (construing the term “legislative authority“); State ex rel. Bowen v. Krue-gel, 67 Wn.2d 673, 409 P.2d 458 (1965) (construing the term “legislative body“). Therefore, a statutory grant of power to a legislative authority does not generally permit delegation to the vоters through an initiative or referendum. Neils v. Seattle, 185 Wash. 269, 277, 53 P.2d 848 (1936) and cases cited therein. Here, however, the statutory grant is to “[a]ny city of the first class“. (Italics ours.)
In a constitutional context, the phrase “legislative authority” has not been restrictively interpreted by this court. In State ex rel. Linn v. Superior Court, 20 Wn.2d 138, 155, 146 P.2d 543 (1944) we held that the phrase “legislative authority“, as used in the constitutional provision being examined, “includes the voters acting by way of an initiative or referendum“. In Linn, our cases which interpreted “legislative authority” otherwise were expressly distinguished:
Several of our decisions . . . reviewed at length in Neils v. Seattle, 185 Wash. 269, 53 P. (2d) 848, refer to the phrase legislative authority, as used in the constitution and statutes of this state, as meaning the mayor and city council. In none of these cases was the meaning or scope of these words, as contained in . . . the constitution . . . before the court for construction. . . . The matter of the meaning of the phrase referred to, as contained in certain stаtutes, was before the court, but statutes cannot control the constitution. . . . [T]he act of the people of a municipality in adopting a city charter and in amending the same are legislative acts, and . . . that authority under the constitution remains in the people. Obviously when the people perform a legislative act, they are exercising legislative authority.
(Citations omitted. Italics ours.) 20 Wn.2d at 151. Thus, under Linn, even if the phrase “corporate authorities” in
The Washington Constitution begins with the statement that:
All political power is inherent in the people, and governments derive their just powers from the consent of the governed . . .
Other jurisdictions have also reached the conclusion that a grant of power to a legislative authority does not negate the people‘s right to referendum. As articulated by the California Supreme Court:
It was doubtless recognized by the framers of the constitution, as it must be by every one, that in the conduct of municipal affairs, it would be impracticable to do without the presence of a local legislative body of some kind, which should possess such powers in that behalf as might be granted to it, and that such a body would exist in every municipality. The words “legislative authority” . . . were not intended to define the powers of that body, or place it in a position where it would be beyond restrictions by the organic act of the city.
(Italics ours.) In re Pfahler, 150 Cal. 71, 89, 88 P. 270 (1906), cited with approval in State ex rel. Linn v. Superior Court, supra at 151-52.
Linn stands for the basic proposition that a constitution should not receive too narrow or too literal an interpretation, but should be construed to give effect to the manifest purpose for which it was adopted. Linn, at 143-45; see generally 16 C.J.S. Constitutional Law § 16 (1956). The focus of
In sum,
II
Next, it is contended that ordinance C-25792 embodies an administrative, not a legislative act, and is therefore not subject to referendum. The rule is that the referendum power extends only to matters legislative in character and not to merely administrative acts. Leonard v. Bothell, 87 Wn.2d 847, 557 P.2d 1306 (1976); Ruano v. Spellman, 81 Wn.2d 820, 505 P.2d 447 (1973); 5 E. McQuillin, Municipal Corporations § 16.55 (3d rev. ed. 1981). In distinguishing between the two, several criteria have been used:
Actions relating to subjects of a permanent and general character are usually regarded as legislative, and those providing for subjects of a temporary and special character are regarded as administrative.
5 E. McQuillin, § 16.55, at 194. Another test has been whether the proposition is one to make new law or to execute law already in existence.
The power to be exercised is legislative in its nature if it prescribes a new policy or plan; whereas, it is administrative in its nature if it merely pursues a plan already adopted by the legislative body itself, or some power superior to it.
5 E. McQuillin, § 16.55, at 194; Durocher v. King Cy., 80 Wn.2d 139, 152-53, 492 P.2d 547 (1972); Ruano v. Spellman, supra at 823.
Under either of these tests, ordinance C-25792 is legislative in character. Whereas the 1971 tax on all businesses for the specified purpose of raising funds for Expo ‘74 was designated as a “one-time tax“, this ordinance was
Moreover, under the second test, ordinance C-25792 cannot be viewed as an execution of a policy already in existence. The ordinance never refers to an existing policy. The title and the language of the ordinance are phrased as a new law. For example, a key provision states:
There is hereby levied upon and there shall be collected from every person as hereinafter provided, for the act or privilege of engaging in business activities, a tax . . . [u]pon every person engaging within the City in business. . .
Ordinance C-25792, § 8.11.140(a).
Common sense compels the conclusion that a tax on all business is a new policy, not simply an extension of a tax levied solely on utility companies. Were this not true, a municipal body could enact a tax applicable to a minute sector of the population, then later greatly expand its application and effectively circumvent any meaningful right of referendum by the people.
The City‘s argument that the ordinance only modifies the method used to collect the tax, and therefore is administrative in character, is unsupportable. As stated above, the tax reflects a new policy of imposing a B & O tax on all businesses. Moreover, a change in methodology may in fact represent a new policy and be characterized as a legislative act. Cf. Ballasiotes v. Gardner, 97 Wn.2d 191, 642 P.2d 397 (1982) (conversion and funding of voting system from lever machines to punch card voting/computer tallying system, held by a plurality to be legislative in character). In short, the enactment of this ordinance was a legislаtive act under any applicable test.
III
It is also contended that this ordinance is exempt from referendum by
such laws as may be necessary for the immediate preservation of the public peace, health or safety, [or] support of the state government and its existing public institutions . . .
Spokane‘s city charter does not have a similar “support of government” exception to the right to referendum. Instead, it states that
All power of the city . . . exerсised by the mayor [or] city council . . . [is] subject to the control and direction of the people at all times by . . . referendum . . .
Spokane City Charter art. 1, § 4. This grant of referendum power over municipal actions is unequivocal and without exception.
IV
Two other issues raised by the City deserve a brief analysis. First, it is contended that the signatures on the referendum petition were not properly certified; therefore,
Seсond, the City claims the amendment of ordinance C-25792 by ordinance C-25832 renders the referendum issue moot. This claim is also raised for the first time on appeal. It must be considered, however, because it is directed at the jurisdiction of the court, and this issue may be raised at any time. CR 12(h)(3). As a general rule, we will not review a question that has become moot. Rosling v. Seattle Bldg. & Constr. Trades Coun., 62 Wn.2d 905, 385 P.2d 29 (1963).
We do not believe, however, that this issue is moot. The City relies on Yakima v. Huza, 67 Wn.2d 351, 407 P.2d 815 (1965) for the proposition that once an ordinance is amended, the issuе of a referendum pertaining to the original ordinance is moot. Such an interpretation of Huza is much too broad, however. In Huza, the “amending” ordinance was complete in itself, it made no reference to the previously enacted ordinances which were the object of the initiative, and its effect was to repeal the ordinances under attack. Thus, the amendment eradicated the subject of the referendum. In contrast, ordinance C-25832 is not an independent act, but simply an amendment to pоrtions of ordinance C-25792. Unlike the ordinance in Huza, this second ordinance cannot stand alone and it does not repeal the first. Therefore, the passage of ordinance C-25832 did not render the referendum issue moot.
Moreover, we find persuasive the dissent‘s argument in Huza that a repealing and reenacting procedure by a legis-
Finally, even if this case were moot, we consider the issue of the right of referendum over taxing ordinances enacted in the face of the Spokane charter language and comparable situations to be a matter of continuing and substantial interest and one presenting a question of a public nature which is likely to recur. Given these considerations, review is proper. See Alderwood Assocs. v. Washington Envtl. Coun., 96 Wn.2d 230, 635 P.2d 108 (1981); In re Patterson, 90 Wn.2d 144, 579 P.2d 1335 (1978).
The trial court is reversed and the application for writ of mandamus ordering the City of Spokane to accept plaintiffs’ referendum petitions is granted.
WILLIAMS, C.J., and ROSELLINI, STAFFORD, UTTER, DOLLIVER, and DIMMICK, JJ., concur.
DORE, J. (dissenting)—I believe the enactment of the City of Spokane‘s business and occupation tax ordinance C-25792 is not subject to referendum, as it is an administrative act. Additionally, the ordinance falls under the “support of government” exception to the referendum power. For these rеasons, I dissent.
The general rule is that the right to act directly through referendum is not an inherent power of the people, such that the referendum power extends only to matters legislative in character as compared to administrative actions. Leonard v. Bothell, 87 Wn.2d 847, 557 P.2d 1306 (1976); Ruano v. Spellman, 81 Wn.2d 820, 505 P.2d 447 (1973). The criteria for determining when an act is administrative or legislative in nature are:
Several criteria have been suggested for determining whether an act is legislative or administrative. One such is whether the subject is of a permanеnt and general character (legislative) or of temporary and special character (administrative). 5 E. McQuillin, Municipal Corporations § 16.55 (3d ed. rev. 1969). We believe a preferable standard, at least for this case, to be whether the proposition is one to make new law or declare a new policy, or merely to carry out and execute law or policy already in existence. People v. Centralia, 1 Ill. App. 2d 228, 117 N.E.2d 410 (1953); Heider v. Common Council, 37 Wis. 2d 466, 155 N.W.2d 17 (1967).
(Italics mine.) Ruano, at 823-24.
Another test, cited by the majority at page 347, is whether the ordinance makes new law or merely executes law already in existence.
The power to be exercised is legislative in its nature if it prescribes a new policy or plan; whereas, it is administrative in its nature if it merely pursues a plan already adopted by the legislative body itself, or some power superior to it.
5 E. McQuillin, Municipal Corporations § 16.55, at 194 (3d rev. ed. 1981); Durocher v. King Cy., 80 Wn.2d 139, 152-53, 492 P.2d 547 (1972).
Ordinance C-25792 does not adopt a new tax policy or program for the City of Spokane, but merely expands a policy already in existence. The City of Spokane has been collecting a business license tax on all businesses within the corporate limits of the city since 1968. This ordinance is not a new tax bill. In effect, the ordinance reintroduced the same tax but increased the rates on all businesses except utilities by extending the percentage-of-gross-proceeds method to these businesses. Although the initial passage of the business and occupation tax ordinance previously may have been subject to referendum, the current ordinance modifies the method used to collect the tax. The passage of the ordinance was, therefore, an administrative rather than legislative action and, as such, is not subject to referendum.
Even if the ordinance could be classified as a “legislative” action, however, it falls under the “support of government”
The corporate authorities of municipal government have a responsibility to support the institutions previously enacted. State ex rel. Blakeslee v. Clausen, 85 Wash. 260, 148 P. 28 (1915). Without the business and occupation tax funds, the operations of the city government of Spokane would be financially weakened, if not jeopardized. Even if the passage of ordinance C-25792 were to be construed as legislative in character, the funds are necessary to support the City‘s government.
As I have concluded the ordinance should not be subject to referendum, I would affirm the trial court.
Reconsideration denied June 20, 1983.