*1
In the Matter IMPROVE CAPITOL
OKLAHOMA Approval of
MENT AUTHORITY Exceeding Million Oklahoma $300
Not
Capitol Improvement Improvement
Highway Capital Revenue Construction,
Bonds, Series Repair
Improvement, Maintenance Roads, High All or Part of Certain
ways Bridges De the Oklahoma
partment Transportation.
No. 90101.
Supreme Court Oklahoma. 20, 1998.
March
Rehearings April Denied
761 *2 Senator, Herbert,
Dave Oklahoma State City, opponent. Pro se Oklahoma Fister, City, oppo- Russell Jerry Margaret R. B. Fent. nents Fent *3 ¶1 KAUGER, Chief Justice: ¶2 presented dispositive issue highway improvement bonds au is whether Supp.1997 168.61 cre thorized 73 O.S. meaning of prohibited ate a debt within the Const, 23,2 10, §§ 243 and 25.4 the Okla. art. improvement highway find that We pursuant to 73 O.S. bonds issued Because the stat 168.6 are constitutional. Legisla question not bind future ute does anticipated appropriations, to make tures highway improvement bonds do not cre meaning of the Okla ate “debts” within the The full faith and credit homa Constitution. pledged, because there is of the state is only prospect, promise, not the of future finding sup appropriations. This annual 1) by: statutory requiring ported scheme Rainy Day taxes and user fees and some apportioned to the State Trans Funds portation specifi was established Fund which construction, mainte cally repair for the and 2) the highways; nance of the state self- Edmondson, General, Attorney Drew W.A. pro liquidating annual amortization Price, Attorney Douglas F. Assistance Gen- 3) bonds; jurisprudence up posed Oklahoma Bush, eral, City, Thomas Gary M. multi-year financing plans whether holding Tulsa, Hilborn, Jr., Applicant Okla- G. pro “self-liquidating” “profit plans Authority. Capitol Improvement homa 4) statutory ducing”; and case Oklahoma’s Norman, clearly Kessler, recognizes a distinction opponent. Pro se law Edwin Const, provides perti- Supp.1997 § art. see note 4.The 1. Title 73 O.S. part: infra. nent Const, twenty- “Except specified the debts in sections provides perti- § 23 2. The Okla. art. article, twenty-four of this no debts three and part: nent by or on behalf of shall be hereafter contracted never create or authorize the "The state shall unless such debt shall authorized any obligation, or fund or creation of debt or state, distinctly deficit, object, against de- law for some work or pay partment, thereof, therein; agency regard- impose specified institution or shall and such law form, money from or the source of less of provide of a direct annu- for the collection paid, except may provid- which it is to be pay, the pay, tax sufficient to interest al and in Sections 24 and 25 of ed in this section due, also to such debt as it falls on the Constitution of the State of Article X of discharge principal of such debt within Oklahoma....” twenty-five years from the time of the contract- ing effect until No such take thereof. law Const, shall provides perti- § 24 3. The Okla. election, shall, general have been sub- at a part: nent a ma- and have received mitted power the above limited "In addition to against jority it at all votes cast for and debts, debts to contract contract such election....” invasion, suppress de- repel or to insurrection war ...” fend the State in I. “legal” obligations; and “moral” between 5) overwhelming of decisions A MATTER OF FUNDAMENTAL 5 AS sister states. LAW, OF THE POLICY FISCAL BY IS DETERMINED
THIS STATE DEPARTMENT THE LEGISLATIVE FACTS A UNLESS GOVERNMENT. OF WITH CON- IS FRAUGHT STATUTE proposal After a consideration BE- INFIRMITIES STITUTIONAL highway infrastruc- improve Oklahoma’s DOUBT, A YOND REASONABLE passed, ture, both Houses of TO ACCEPT THE IS BOUND COURT vote,5 Supp. dissenting 73 O.S. only one AN INTERPRETATION WHICH authorizes the The statute 168.6. THE STAT- AVOIDS DECLARING *4 Authority Improvement Capitol Oklahoma UTE UNCOÑSTITUTIONAL. Authority) to issue (Capitol Improvement authority Legislature the indu- of 6 The bonds) generate to (highway sufficient bonds subjects of rightful all bitably extends to $300,000,000.00 to fund the con- proceeds Const, art. to the Okla. legislation pursuant the state’s improvement and of struction Constitution, 5, § framers of the 36.8 The system. funding derives from highway recognition however, explicit gave even more taxes and cer- user fees and direct pre-paid authority respect to Legislature’s the of Day specifically Rainy Funds dedicated tain to the transportation. Pursuant roads and Const., 16, 1, Fund.6 Transportation Legislature, § to the State art. the Okla. voters, express power to given the the ¶4 Capitol September the On maintaining public building provide for and application filed Improvement provision roads. This states: highway bonds. Under the approval of Legislature is directed to establish “The 160,7 § has exclusive this Court 73 O.S.1991 have Department Highways, and shall validity jurisdiction the original to determine power improvement create districts the by Capitol Im- building maintaining issues provide of bond and and roads, may provide for the uti- Authority. public Protests were filed provement punitive labor there- of convict lization briefing application and the response on.” 14, 1997. on November cycle completed Const, en § before the Court l9 argument was held art. Oral Legislature establish and ttf 2,1997. authorizes banc on December Const, any approval bonds § of Oklahoma for 33 of the Okla. that art. 5. We note hereunder, original and exclusive originating in the be issued referring to revenue bills hereby upon inapplicable. jurisdiction conferred the Su- Nev- Representatives, is House ertheless, here, apply preme determine each such the vote in the Court to hear and were it to require- application....” Legislature remove would public. to a vote of the it be submitted ment that provides pertinent D of art. provides: Subsection Okla. Const. art. 8. The part: authority Legislature shall extend "The originating House of “Any in the revenue bill subjects legislation, rightful to all may without be- Representatives become law Constitution, authority grant specific in this if such bill ing a vote of the state submitted to whatsoever, any subject work a upon shall not (3/4) approval of three-fourths receives restriction, limitation, or exclusion of such au- Representa- membership House of of the subject thority upon other the same or (3/4) membership of the and three-fourths tives subjects whatsoever.” submitted to the Governor and is of the Senate appropriate ...” action provides: The Okla. Const. 9. footnotes, accompanying discussion and 6. See "Educational, reformatory, penal institu- 762-763, pp. infra. insane, those for the benefit tions and mute, pertinent blind, deaf, provides other institu- and such Title 73 O.S.1991 good may require, part: shall as the tions authorized, discretion, supported by State in such established and in its Authority is "The prescribed by may law.” as Supreme manner application with the file an validity provide support provi- for such tional doubt as to the public good may other institutions as the sion.” require may “prescribed by law.” The legislative “prescribed Except
term law” denotes where it encounters a promulgated specific prohibition, Legis enactments —statutes governing legislative body.10 right responsibility as the lature has the and the Just Legislature prescribed policy review of the trust declare the fiscal of Oklahoma. This Couyt11 agreement by authority in Matter the Court has no to consider the desir wisdom, University Hospitals ability, practicability Petition legi of fiscal Legislature, by OK prerogative slation.16 It is not this Court’s law, Capitol Improve- question sagacity has expressed established Authority. given Capitol policy. unwise, ment It has Whether an act is wise or Improvement Authority power theory to sell whether it is based on sound economic paid by appropriations pro- annual or whether it is the means to achieve best — vided Oklahoma the desired result are matters for Court, Department not, Transportation.12 determination. This based perception
on its
of how the State should
carry
protestants
dealings,
legisla
8 The
must
conduct its business
direct
*5
indeed,
very heavy
making.17
construing
burden
if the bonds are to
tive decision
consti
every presumption
provisions,
be invalidated because
tutional debt-limitation
it is the
indulged
judiciary’s duty
guard against
must be
in favor of
constitution
indebted
ness,
ality
protestants
against
of a statute. The
have
modern methods of financi
ng.18
If
possible
failed to do so.
there are two
It is not
accom
unconstitutional
result,
itself,
interpretations
plish
of which would hold the
lawful in
desired
—one
unconstitutional,
innovative, legal
statute
measures.19 Because these
construction
applied
self-liquidating
they
must be
which renders it' constitut bonds are
and because
creating
ional.13
a statute
can
Unless
is shown
be marketed without
a debt or
sense,
fraught
beyond
obligating,
legal
with constitutional infirmities
in a
either the state
doubt,14
10,
23,20
§§
legislatures,
reasonable
this Court is “bound to
or future
accept
interpretation
simply inapplicable.23
that avoids constitu-
and 2522are
dismissed,
390,
842,
Strandberg
appeal
10.
ex rel.
v.
Bd.
State
State
Land
343 U.S.
72 S.Ct.
Comm'rs,
65,
234,
131 Mont.
307 P.2d
L.Ed. 1022.
Cook,
391,
(1957); Howard v.
59 Idaho
83 P.2d
208,
443,
(1938);
Hughes,
Winters v.
3 Utah
Antigo,
18. Dieck v.
School Dist.
see
Unified
759,
(1861).
24 P.
618,
note 54 at
infra.
§
Supp.1997
11. Title 63 O.S.
3225.
Giessel,
590, infra;
19. State v.
see note 54 at
Auth.,
65,
Allegheny County
Tranter v.
316 Pa.
36,
Supp.1997 §
12.
73 O.S.
see note
Title
289, 297(1934).
173 A.
infra.
10,
23,
State,
6,
2,
§
Corp.
20. The
note
13. Gilbert Central
v.
26. Title 68 O.S.
27. Title 68 O.S.
500.6.
solely
paid
authority
from user fees—the tolls
trav- ment
and the state. Clear statuto
using
turnpike.
elers
ry language provided
That is akin to the
that the bonds issued
presented
situation
here. The bonds will be were not to constitute debts of the
by pre-paid
retired
direct taxes on the ulti-
protestants
York.
New
The Schulz
also
purchase petroleum
mate consumers who
obligation”
claimed that
the “moral
products through
would,
funds earmarked for im-
matter,
practical
as a
coerce future
provement of Oklahoma’s roads.
legislatures
making appropriations
into
damage
rating.
avoid
to the state’s credit
financing plan presented
15 The
here
acknowledged
The Schulz court
that accord
historically
practice,
has been
the standard
ing
prior precedents multi-year
to its
“moral
only
state,
jurisdic
but in other
obligation”
legally
bonds did not constitute a
tions as well.
In
presenting
a case
almost
debt,
legislatures
enforceable
future
here,
arising
identical facts to those
the New
(and
be) obligated
were not
could not
Appeals upheld
York
transporta
appropriations
make
required
law,
funding
finding
tion
simply
that it
did
approval of the
billion bond issue. Like
$20
prohibited by
not create a state debt
its
wise, prior
require
decisions of this Court
constitution.
Schulz v.
84 N.Y.2d
approve
highway
that we
proposal.
bond
(N.Y.
616 N.Y.S.2d
¶ 16 The bonds in Fund].33 Schulz were to be se- Construction Maintenance *7 . by cured by service contracts and sale- and Fund consists of all monies taxa- received agreements improve- leaseback high- the tion or otherwise for use on the state between Const, VII, individual, § provides any 31.The New York art. 11 loaned to or in aid of or association, pertinent part: private corporation private in or or undertaking, foregoing provisions but the shall "Except refunding specified the debts debts any apply property not fund or now held or article, in sections 10 and 13 of this no debt may by hereafter be held for state shall be hereafter contracted or in behalf of educational, mental health or retarda- mental state, unless such debt shall be authorized purposes. ...” tion law, single purpose, for some work or to be Const, X, provides § The New York art. in distinctly specified therein. No such law shall pertinent part: shall, election, general take effect until it at a any political "... Neither the state nor subdivi- people, have been submitted to the and have any sion thereof shall at time be liable for the received a all the and of votes cast for any obligations issued such a against it at such election nor shall it be sub- public corporation or hereafter cre- heretofore mitted to be voted on within three months after ated, may legislature accept, nor authorize passage general any its nor at election when acceptance impose liability upon of or such any other law or bill shall be submitted to any political state or subdivision thereof ...” against....” be voted for or Const, VII, provides § The New York in 168.6(E), Supp.1997 § 32. Title 73 O.S. see note pertinent part: 36, infra. money given "1. The of the state shall not be any private corpora- or loaned to or in aid of association, 168.6(G), § private undertaking; Supp.1997 tion or 33. Title 73 O.S. see note given nor shall credit of the state be infra. 1501.1,35 authorizing nue described in the stat- O.S.1991 stream ways.34 Pursuant composed tax- Transportation Fund is self-liquidation utes satisfies standard motor fuels and other revenues. es on prior in Even if as described our decisions. specifically Transportation ear- Fund not, highway proposal if or even did for: marked fully self-liquidating, this Court’s were not construction, repair “... and mainte- prior would not warrant its invali- decisions highways; trans- nance of other dation. systems; and for other portation such ex Leasing, In Inc. v. State rel. transportation purposes Legislature as the U.C. n may Affairs, authorize.” 1987 OK State Bd. Public issue P.2d the lease at covered here, payments are made In and Schulz equipment. switching In leasing provisions repairs communications and under improvements paid Dept. from a tax on Bank v. Human are to Indiana Nat’l In highways. Services, the use of state Oklahoma’s case, portion payment will come from of the No computer equipment. one lease was for specifically up purpose— for that a fund set Bank in or in Indiana contended U.C. Construction, Transportation Fund. tangentially revenue would arise even maintenance, repair highways of state equipment. At from the installation of the bridges paid precisely by will minimum, may the' reason them. New York and parties who utilize ably improvement in have concluded that Oklahoma, clearly purchasers in bond major system play a Oklahoma’s road will 1) that: debts cre- advised retirement decisions; factor in business location that the Legisla- depends decision ated on the improvements provide tens thousands .will 2) appropriations; to make sufficient ture jobs; technologi and that location pledge full faith credit is no there cally advanced businesses Oklahoma will state; 3) obligations do higher jobs taxpayers paying result of the state. create debts A generate which will more taxes. first rate transporta economy depends on first rate
III. system. tion THE OF CONSTITUTIONALITY ¶21 IS Here, MULTI-YEAR AGREEMENTS the bonds issued under 73 BY GOVERNED PRINCIPLES NOT Supp.1997 are to’ be retired O.S. 168.636 SELF-LIQUIDATION. OF legislatively appropriated paid funds Department Transpor- from the Proposi- analysis presented [Transportation] leasing tation under the dedicated reve- tion II demonstrates that provides transportation Legisla- perti- purposes as the other 34. Title O.S.1991 part: ture authorize.” nent "(a) or other- All monies received taxation provides 36.Title 73 O.S. 168.6 highways of this state wise for use on the state shall, ' pertinent part: law, provided hy unless otherwise *8 Treasury Capitol Improvement in a be "A. The Oklahoma Au- placed in the fond to State thority hereby Highway to issue as the Construction and is authorized bonds or known State negotiable or evidences of Fund....” instruments Maintenance other principal in the amount indebtedness sufficient provides: 35. Title 69 O.S.1991 1501.1 generate Three Hundred Million Dollars to ($300,000,000.00) proceeds hereby in the to There is created State Trea- available “A. designated improvement sury the construction and of the a fond as the 'State fund system Transportation highway as set forth in this The fond be sub- this state Fund’. shall ject legislative appropriation to and shall con- act. obligations by proceeds of apportioned to fund B. The from the sale sist of revenues such imposing A of this section provisions of authorized subsection shall the Oklahoma Statutes by Authority upon only to fuels such be used fond taxes various motor and of maintenance, construction, improvement, may provided by and law. other revenues as roads, highways bridges repair and Transportation 'be of to B. The State Fund shall construction, by designed and constructed the Oklahoma appropriations for the used for designated Department Transportation of as repair highways; for and maintenance of state transportation to fond other costs systems; for such Section 3 of act or other agreement Capitol Improve- registration to the Oklahoma origination fees. When the traced, Authority years. payments of the actual period ment over a of ten are this trans- action does not arrangements differ from legally binding There is no absolute or com- buildings where state are rented state obligating Transportation mitment in 168.6 agencies pursuant multi-year to leases. The payments. payments to make the The will money for both transactions comes from the “subject receiving made ap- to an annual same coffer —state building monies. The propriation” Legislature.37 from the The constructed from state funds and the rent is provides statute is the intent” of the “[i]t paid appropriations from annual from the Legislature appropriate to sufficient monies Here, Legislature. highways being state are to retire the debt created.38 they being paid constructed and ¶22 The source of the intended annual difference, appropriations. any, if is, appropriations course, mystery. of no It is that the revenue stream payment from the is the combination of special motor fuel and highway of the bonds is from a more reliable fuel taxes combined with vehicle and license source. obligations associated with repaid the issuance of such obli- all are to be from the source gations. specified of revenue in this section. obligations pursuant C. Department issued Transporta- to authori- G. The Oklahoma of ty payments of subsection A tion shall of this section shall be re- make from State (10) paid Transportation years pay obligations in full within ten from the date Fund to in- pursuant agreements of issuance. curred with the Okla- Capitol Improvement obligations pursuant Authority homa D. The issued to authori- roads, highways bridges use of struction, ty of subsection the con- A of this section shall be re- maintenance, improvement, by payments or re- Capi- tired made the Oklahoma pair any proceeds of which is financed with Improvement Authority tol from the Oklahoma obligations from the issuance Department of authorized Transportation. of The Oklahoma pursuant to subsection A of this section. Capitol Improvement No Authority and the Okla- payment Transportation from the State Fund Department Transportation homa shall be using appropriated pursuant the monies to this agreements authorized to enter into leases and any roads, purpose. act shall be made for other respect highways with to the use of Legisla- construction, H. It is the intent of the Oklahoma bridges, applicable, im- maintenance, funding ture to maintain the level of the provement, State repair of which is Transportation required Fund as in order for any proceeds financed with from the issuance Department Transportation fully pay obligations authorized in subsection A of obligations Depart- any and all incurred this section. Transportation respect agree- ment of Department Transporta- E. The Oklahoma Department ments entered into payments tion shall make to the Oklahoma Transportation Capitol and the Oklahoma Im- Capitol Improvement Authority for the use of provement roads, Authority pursuant to subsection D any highways bridges financed from of this section. any proceeds obligations authorized in obligations pur- I. The bonds or other issued pursuant subsection A of this section to the suant to this section shall not at time be agreement. Department The Oklahoma deemed to constitute a debt the state or of Transportation payments shall make the any political pledge subdivision thereof or a Highway Construction and Mainte- the faith and credit of the state or of such specified by nance Fund the manner political subdivision. agreement subject receiving annual obligations J. Such bonds or other shall con- appropriation purpose. for that It is the intent tain on the face thereof statement that nei- appropriate to the Okla- taxing power ther the faith and credit nor the Department Transportation homa any political of the state or subdivision thereof Transportation Fund sufficient monies make pledged, pledged, hereafter be to the payments purposes for the principal of or the interest on retiring pursuant the debt created to this sec- such bonds....” tion. *9 F. The bond indenture or other instrument 168.6(E), Supp.1997 § 37. Title 73 O.S. see note
pursuant Capitol to which the Oklahoma Im- 36, supra. provement Authority obligated becomes for the repayment principal pro- and interest of the 168.6(H), obligations Supp.1997 § ceeds from the sale of authorized in 38. Title 73 O.S. see note 36, provide supra. subsection A of this section shall 25, 10, § requiring art. counterpart IV. into certain that before enter DO NOT CREATE 23 BONDS WHICH “debts”, public required.] a vote of the is PAY TO A OBLIGATION LEGAL ANNUAL THE CURRENT BEYOND McHendry, v. Halstead In NOT ARE APPROPRIATION 131, P.2d we held that 1977 OK BOND THE DEBTS. BECAUSE obligation” “moral constituted evidence a A CREATE DOES NOT PROPOSAL validity a legal lease impediment no DEBT, THE BUDGET BALANCING underlying raising agreement revenue OF THE OKLA. AMENDMENTS designated building of a com bonds 24, 23, AND ART. 10 CONST. munity We reached that re health center. ARE INAPPLICABLE. by acknowledging that constitutional sult called “mor- issue of whether so similar to those at debt-limitation obligation” are within the bonds39 “debts” al here to: issue relate provisions similar meaning of constitutional obligations legally “... enforceable 23,40 10, §§ to the Oklahoma Constitution art. obligations. The fact that the not to moral 42 nothing in either Okla- 2441 and is new agreement might be continued until lease jurisprudence.43 or national Over homa are retired no basis for serves years analyzed twenty ago, this Court voiding agreement ...” municipality’s “moral obli- of a existence expressed Legislative “in- Promises of an arrangement until gation” to a lease continue funding a tent” to continue the revenue underlying obligations be satis- bond could raising project “debts” within the doing, at the Okla- fied. so we looked 10, pro- Constitution, 10, meaning of debt-limitation § [Art. art. 2644. homa political visions. applies § 26 subdivisions is Auth., infra; Bldg. Jersey a to describe Enourato v. New see term coined in the 1960's 39. This State, 54, infra; 54, infra; Ruge legally v. note appropriation-risk could not note see bonds that Inc., Edgerly Honeywell Sys., legislature beyond v. see 54, but would bind a session Information 54, Barron, infra; obligation appropriate mon McFarland v. see note note infra; create ey "moral” Howlett, infra; 54, authority Berger see be unable redeem v. note Book should State, 54, 54, infra; Comm’n, Bldg. v. note its bonds. see v. State see note Schulz 351, Office infra; 1148, Jordan, 54, infra; Armory at N.E.2d D. N.Y.S.2d at v. note State v. see Duff Bd, Mandelker, 54, also, in a Bldg. & Local Government (3d Feder See State see note infra. TexasPub. ed.1990). 54, Mattox, infra; System, p. City- The term "moral al v. Auth. note St. Charles longer histoiy. obligation” 46, Corp., See footnote County Library Library Bldg. has a St. Charles v. infra, Justices, 54, accompanying infra; text. Opinion note see note Giessel, infra; infra; 54, 54, v. note State v. State 10, 23, 2, 54, see, note Const. art. see
40. The Okla. Donahey, note infra. But Montano v. see infra; supra. Gabaldon, 54, State ex rel. Nevada note 54, Bldg. infra. note 10, 24, 3, art. see note 41. The Okla. Const. supra. Const, 10, provides art. 44.The Okla. part: pertinent 10, 4, note 42. The Okla. Const. see "(a) provided, Except as herein otherwise no supra. district, town, county, city, township, school infra; corporation, Anzai, political other or subdivision of Wilson v. In re see note state, indebted, Cabinet, 54, infra; allowed shall be to become Kentucky see note Trans. manner, 54, infra; any purpose, v. note Dieck Uni v. see Schulz 54, infra; year, exceeding, Antigo, the income and amount see note School Dist. of fied Dykes provided year Virginia Transportation revenue for such without the Dist. v. Northern thereof, infra; Department voters vot- Ecolo assent of three-fifths see note Comm’n election, 54, infra; Committee, purpose ing at an held for gy see note v. State Finance County, see note v. School Bd. Sarasota Goldschmidt, 54, infra; version of the Constitution cited. see note The current State v. infra; Although County provision has amended since Lexington School been v. Dist. Caddell infra; McHendry, Bldg. Municipal promulgated Halstead v. Auth. infra; No. see note Lowder, quoted language County Iron v. see note Trust, unchanged in effect remains from the version Heights, v. Bank & Inc. Central Glennon Mazur, 54, infra; was rendered. see note when decision note Baliles see *10 Halstead, sixty ap- ning period of months. although the a 26 In voters consecutive levy explicitly pro- providing agreement for the The lease U.C. proved a resolution Legislature of a health allocate tax to assist in the maintenance that if the failed to a vided - obligation no election was held under the would department, payment, funds for art. provisions of the Constitution there at the end of the term for which cease leasing agreement Although 26 before the funds. did were allocated U.C., completed. Retirement of bond issue were speak obligations” in of “moral raising depended on the revenue recognize that there was no bind- Court did leasing relationship Instead, over a of the continuance ing promise the lease. to continue years. upholding period of fifteen contingent upon Legisla- its terms were financing plan, the discount- Halstead providing funding on an annual basis. ture’s present arguments that actions of the ed said: U.C. Court executing lease County Commissioners entity person or enters into “Where a County “morally” obligate succeeding would proper State offi- valid contract with arrangement Commissioners continuejthe appropriation has been cials and a valid Rather, years. we found that the in future therefore, the has consented to made State leasing arrangement de- continuance of governmental be sued and has waived its pended entirely upon the actions immunity to the extent offits contractual County Commissioners who would consider obligation obligations and such contractual its renewal. in an against enforced of the lease in Halstead 27 The renewal ordinary action at law.” County governed by the Commissioners was legal clearly the" extent of the It limited presented. in office at the time the lease was obligation pay in to the extent that U.C. year-by-year on a The lease was renewed pre- appropriation” had been “valid made — Here, highway program bond basis. Supp. cisely the outlined 73 O.S. situation subject an annual review current also limiting legal factor for as the 168.6 Legis- legislative body. members of the obligations.45 payment of the bond year-by-year on a basis lature will determine process road appropriation in the whether V. through funded improvements should be ¶ 29 THERE IS NO CONSTITUTIONAL Department. appropriations Highway DIFFERENCE LEASING BETWEEN that al- recognized in Halstead This Court EQUIPMENT AND LEASING County might feel though the Commissioners COMMIT- MULTI-YEAR ROADS. lease, obligation to continue the a moral LEASES, MENTS, MULTI-YEAR so, legal obligation to do there no was RENTALS, AND MULTI-YEAR approval leas- impediment to thus no ARE CONTRACTS MULTI-YEAR agreement constitu- ing agreement was —the THE LEGAL ALL BASED ON SAME might, that the tional. The fact PRINCIPLES. program, feel some moral highway under agreement or to obligation to continue the ex Nat’l Bank 30 In Indiana provided for all highways ensure Services, Dept. Human OK rel. it is not mean that citizens of this state does 53, 57, up” the “cleared the Court therefore, the Okla. legally obligated, and that, acquisi for the misconception in a lease Const, 10, §§ 25 are neither equipment non-revenue computer tion of —a bonds, like applicable nor implicated item, —the agency could not a State producing Halstead, are con- leasing agreement agreement lease/purchase enter into a stitutional. year fiscal for a future bind the State would solely on continued Halstead,
¶28 if it were conditioned years after U.C. Ten Legislature. by the year appropriations fiscal ex rel. State Bd. Leasing, Inc. v. State unconstitutional, that this DHS believed Affairs, 1987 OK Public agreement had to contain leasing arrangement span- and that upheld a we supra. see note 45. Tide 73 O.S. *11 or other instrument the bond indenture allowing termination at the end of that
clause fallacy explaining by provide In “shall year. each issued fiscal excessively repaid limi- this view from obligations narrow all are to be po- reiterated the provision, tation specified this section.” source of revenue C, stating: in 17. by sition it took obligation Clearly, created is limited to case future pertinent expressly contingent matters nature of the “After the Leasing, Inc. transpired by we U.C. legislative appropriations decided to be made —not Affairs, Public v. State Board Be indentures. value the bond face (Okla.1987), opinion an which cleared Authority is legal liability of the cause involving acquisi- up of the law the area appropria the amount of its annual limited to by equipment State such entities. tions of tion, provisions of the limitation the debt Leasing consti- we held State U.C. 25 never Okla. Const. year statutory limitation tutional and fiscal play.47 into come not where a clauses were violated see, analysis the correct As we now lessee) (a agency lease as month involved type of instrument turns not on if the explicitly provides that but, rather, obli- on whether an enforceable appropriate funds for fails to allocate year. beyond the gation is created fiscal obligated pay is not to payment, lessee by 62 analysis principle is buttressed This beyond period for which funds have 582(8) provides a functional which O.S.1991 Id. At 1195. converse been allocated. obligations not distin- definition of but does would, course, true, i.e. the of this guish types of transactions. between adequate agency appro- if would be bound a support does not distinction which by Legislature. statute priations were made leases. obligation separates bond transactions is not This is so because the binding in all on the absolute and events This section states: upon contingent is continued but agreement a an “‘Obligation’ means by Legis- year a fiscal basis funding on in- entity principal pay continuing funds to appropriate lature thereon, of a the form terest whether Thus, obligation. it turns satisfy Id. lease, money, repay a contract borrowed concede, DHS, appear all out now contract, purchase or other- an installment on what could wrong its view share, wise, participation or and includes a regard lease/purchase agreed to in any agreement.” interest in other agreement.” strengthened analysis This further difference between is There is no constitutional 3-103(9), a leasing Long- leasing roads. 12A O.S.1991 codification equipment and law, commitments, promise multi-year leases and term basic contract contracts, previously upheld have been defined: Despite DHS’s confusion this Court. “ undertaking to ‘Promise’ means written Bank, said mat- this Court Indiana Nat’l signed money person undertak- pay multi-year commit- ter had been settled — acknowledgment an pay. ing to An contingent on future expressly ments made obligor promise obligation not violate con- legislative appropriations did obligor also undertakes unless provisions. limitation stitutional debt obligation.” Here, Improvement Au Capitol has The clincher is a statute which
thority face value of the liable for the is not us since 189048—when Oklahoma been with appropriations regardless whether incor- Territory which was was Indian made, subject for the nor is suit —and statutory law at statehood. porated into entire of the face value the bonds. amount new, 168.6(F)46 nothing it has been obligation is states Moral Title 73 O.S. (Ind.Terr.1890). 168.6(E), 48. Stat. Ch. Supp. § 46. O.S. see note Title 73 supra. IX, See, Proposition infra. *12 debt, pay money in the future would create 15 107 always.49 us Title O.S.1991 statehood, generally exclude contracts incorpo- but that courts was with us before now, statehood, if the consideration is prob- payable installments into at is rated law provided in the future. That is ably always provides: It also shall be. presented precisely the situation here — resting upon existing legal obligation “An payment purchasers the bond receive will origi- obligation promisor, or a moral hinge independent on the decision future upon the nating in some benefit conferred anticipated appro- legislatures to make the prejudice by the promisor, or suffered priations. good consideration for a promisee, is also corresponding with promise, to an extent case, Application An Okla 38 earlier no further obligation, the extent of the but Auth., 1954 homa Educational Television or otherwise.” 1027, 219, provides guid also OK obligation contracts did concept of moral Authority, legis future ance. Television of the Consti- pose problem not to framers required appropriate . to all latures were first tution elected to Oklahoma’s who were accruing Building to the Fund funds Public Legislature. years of the bonds. in future to retirement 1029, following p. the Court outlines the On VI: as one of the issues must determine: “ ARE NOT OBLI- ‘(4) 85 THESE BONDS pledged That the revenue for the DEBTS BECAUSE GATIONS OR be diverted of said bonds cannot EN- THERE NO LEGALLY IS purposes by fu- appropriated to other WHICH FORCEABLE PROMISE long Legislatures ture as as there are A LEGISLATURE BINDS FUTURE Authority outstanding bonds of the ” APPROPRIATE FUNDS. TO unpaid.’ cases, rec- leasing In the this Court If36 issue, the on In reference to this Court states willing to enter ognized that vendors were p. 1030: multi-year with the state not- transactions point “In to the fourth above reference withstanding the lack of an enforceable partic- quoted clear that since this it seems beyond fiscal the current promise irrevocably pledged is for the ular revenue Perhaps framers of Oklahoma’s year. bonds, same can- payment of said that the pre- limitation cannot be appropriated for other not be diverted financially anticipated a so- sumed to have long Legislatures as purposes future society goods in which and ser- phisticated outstand- there are bonds successfully purchased without vices are ing unpaid.” state, the full faith and credit pledge of pro- language does but the provisions obligating future Unquestionably, argument informed at oral it. were hibit We However, unconstitutional.- legislatures are has the same spread awareness here, nothing to bind future simply there legal principles are the market. The bond anticipated to make the legislative bodies monetary amount of regardless of the same not ir- Future revenues are appropriations. undertaking. although increased travel revocably pledged specifically ear- funds will result increased Application 37 The distinction marked, Transportation through the State Capitol Improvement Fund, bonds. not in for retirement 355 P.2d OK 1032-33 appropri- Legislature’s intent to present are different for leases and bonds whether Rather, binding commitment the monies is not ate purposes. constitutional-debt sense, Legislatures to do so.50 that, on future in a contract noted 765-767, discussion, bonds, supra; and 73 pp. 50. See "appropriation-risk” In the context of 49. 1960’s, 168.6(H), supra, stat- note O.S. appears to date back to the the term ing only to maintain there is an "intent" 54 at 616 N.Y.S.2d v. see note Schulz funding the bonds. sufficient to levels retire infra. 639 N.E.2d v. ex Bd. Leasing, of the fact that fu Inc. rel. State Also illustrative U.C. Affairs, 1191; 737 P.2d legislatures may ture not be bound former Public OK County Dept. legislatures are Bd. Carter and Indiana Nat’l Bank v. State Excise Co., OK -, Services, Ry. Chicago, R.I. P. P.2d 53. & Human OK 1037 and Boardman Okla. County, Ellis Co. v. Board Comm’rs VII. -, P. *13 ¶ THE 41 THE FISCAL POLICY OF by attempts private causes These involved PRE- IS BUILT UPON THE STATE judgments expendi for parties to enforce COURT, AND OF THIS CEDENTS bridge repair, the Court held tures for and THE AND EXECU- LEGISLATIVE attempts to without that incur indebtedness DEPARTMENTS GOV- repair and rebuild TIVE OF vote for of ing ERNMENT ARE ENTITLED TO public bridges of was unconstitutional. legislation to that at AND STABILITY Neither involved similar PREDICTABILITY causes, Instead, pri in IN AFFECT issue here. both DECISIONS WHICH legislation allowing parties alleged vate that THE PUBLIC PURSE. county repair and reconstruction of ¶ legislative people, 42 The as well as the bridges supported payment judg govern- departments and executive of disagreed, noting that The Court ments. entitled, especially are in of ment matters legislation provided nothing in the purse, predictability. state to count on This in excess of either the incurrence of enactment, improvement providing for the of year. or revenue for current fiscal income broad-based, bi-parti- bridges, and had roads County found Carter support, and it course of san charts the respective leg nothing that
Boardman systems improvement transportation of allowed the incurrence debts islation development for the based economic state year paid out of revenues of a one fiscal precedent years prior has been upon of that Here, no succeeding year. there is fiscal well understood. income, all the bond pledge of future monies ap expect are actual holders can recover fully is Legislature 43 The aware propriations made individual previous rec apparent of our decisions. bodies. ognition approval of this of multi- Court’s year Leasing, financing in U.C. Inc. v. State Application It 40 obvious of Affairs, 1987 OK ex rel. State Bd. Public Auth., Capitol Improvement 1960 of Legislature passed 737 P.2d 1028; Application OK Okla P.2d (Bond Oversight Reform Act Oklahoma Bond Auth., 1954 Television homa Educational Act), seq., Oversight et O.S.1991 1027; Bd. OK Excise Carter P.2d July proce It set effective 1987. forth Co., Ry. County Chicago, R.I. & P. v. regarding the and the dures sale issuance 1037; OK -, obligations by govern or other state Ellis Boardman Co. v. Board Comm’rs essential to the well OK -, mental entities economic 276 P. County, 136 Okla. being of entities the state.51 Governmental distinguishable pro from the bond are meaning not, of the Act include they within Even if were posal presented here. board, commission, authority, depart agency, they implicitly been overruled Mat have ment, public is the University trust Hospitals ter the Petition 314; gove beneficiary instrumentality other or 1997 OK 953 P.2d Halstead 134; Capitol Improve- The Oklahoma McHendry, v. rnment.52 provides perti- further declares that there ex- 695.2 Title 62 O.S.1991 oversight part: nent ists need to establish such minimal public protect welfare Legislature hereby finds and declares "The proce- Oklahoma.” there is a need to reform current regarding issuance of bonds dures the sale and 695.3(4) provides: 52. Title O.S.1991 obligations other State Governmental " Entity' 'State means the State hereby Governmental declared be essen- Entities which board, any agency, being commis- well of Oklahoma tial to the economic state.... VIII. pur- squarely within ment falls Oversight Act. view of the Bond DECI- COURTS PREVIOUS THIS BE DISTIN- CANNOT SIONS functions It is clear that HALSTEAD v. UNLESS GUISHED. to a purposes are all tied of the state u.c. leasing, McHendry, inc. v. financing plan funding mechanism which ex rel. STATE BD. OF PUB- STATE upon the issuance of bonds. dependent STATE; AFFAIRS, BOSWELL LIC Oversight Act makes no distinction The Bond BANK v. ex INDIANA NAT’L STATE retiring obligations between the bond SERVICES, HUMAN rel. DEPT. OF fees, pay- payments, other rental user ex rel. APPLICATION OF STATE board, officer, department, ment made SERVICES, AND DEPT. OF HUMAN commission, agency of the state THE OF institution or MATTER OF PETITION AUTH. HOSPITALS UNIVERSITY pledged when the is to STARE DECI- ARE OVERRULED. year.53 obligation for current fiscal *14 SIS MANDATES APPROVAL OF retired, directly These bonds whether will THE BONDS. annual indirectly, partially or at least from decisis mandates the approval 47 Stare legislative appropriations. Multi-year leasing proposed bonds. were, stage If of our fiscal 45 we at this upon the same cases and and bonds rest change and find history, abruptly our mind Prohibiting upon legal same foundation. the necessarily jeopardize other. the multi-year leasing agreements are un- one must that principles potentially operative are The far. constitutional, seriously jeopardize would we seemingly unre- reaching apply and replace development economic and future contexts. lated legal certainty progress with chaos and McHendry, to Halstead v. 48 Pursuant financing government would which state Leasing, Inc. v. State ex rel. supra; U.C. political to a while come standstill the Affairs, supra; v. Bd. Public Boswell State painfully try sort out the conse- branches . State, v infra; Indiana Nat’l Bank jurispru- quences change of a in the Court’s Services, . Matter Dept Human supra; and dence. University Hospitals the Petition jurisdictions54 supra; and the sion, purposes proper public authority, department, public rized and functions trust of municipality beneficiary any county or other or of the state is the of the state which instrumentality government, of state other than (3) beneficiary obligations proposed trust with the state Review issuances of county, by jurisdiction capital expenditures is limited to one whose additions or to fund following: including, governmental obligations but not limited local entities Authority, Municipal Power a. Oklahoma by payments are to be retired state, rental from Authority, Development b. Oklahoma fees from the state or other such user Authority, Finance officer, c. Oklahoma Industrial payment board, commission, by any department, made Authority, Grand River Dam d. agency of the institution or Board, Water Resources e. Oklahoma state, compliance any applicable pro- Facilities Au- Oklahoma Public f. Northeast laws, federal, other when visions of state or thority, pledge expressed and such is a direct Authority, Turnpike g. Oklahoma year current fiscal made the then Housing Authority, and Finance h. Oklahoma of debt a local state for the retirement Public, and Cultural Industrial i. Oklahoma governmental'entity....” Authority.” Facilities 637, Anzai, 1, 642 54. In re 85 Hawai'i 695.8(A)(1) (3) Supp.1994 O.S. 53. Title 62 Cabinet, (1997); Kentucky v. Trans. Wilson pertinent part: provide in State, (Ky.1994); S.W.2d 644-45 Schulz 84 N.Y.2d 616 N.Y.S.2d 639 N.E.2d Oversight Bond Commis- “A. Executive (1994); Dieck v. School Dist. Oversight Legislative Com- Bond and the sion Unified of Antigo, 477 N.W.2d 165 Wis.2d shall: mission (1991); Dykes Virginia Transportation v. Northern (1) as to whether determinations Make Comm’n, S.E.2d obligations proposed Dist. Va. to be purposes for which 941, 942, denied, (1991), entity S.Ct. governmental are for cert. 504 U.S. by a state issued 201, 203; Department accomplishment of autho- 119 L.Ed.2d furtherance appropri- financing legally promise to mecha- is no enforceable considering effect imposed to the one comparable responsibility nisms mandated ate funds or on fact, obligations creat- legislatures Boswell Supp.1997 O.S. future do so. meaning of within the ed are not “debts” requires opposite result. This Court de- provisions statutory simi- constitutional and Legislature’s role matters fined fiscal Constitution art. lar the Oklahoma its Boswell: limitations cases, 24 and 25. Under these it, provi- “As we conceive the constitutional are financing procedures not “debts” either dealing sions with the ‘debt limit’ body legal- enacting is not bound because the adopted purpose for the of fix- state were ly appropriations or because make future power legisla- ing responsibility legislators did not intend it is clear that the relating to fiscal affairs of the tion of the states their obligations them upon existing legislative assem- conditions exist un- Both these subdivisions. bly, prevent assem- one der 168.6. 73 O.S. bly laying upon its mandate a future ¶49 opponents of the bond issue provisions one. The effect these that urge applicability of Boswell v. legislative assembly guarantee cannot one OK -, 435, 74 P.2d A 181 Okla. legislation relating span life of its finding that consti these beyond the fiscal affairs of the state require we tutional does not that overrule period of its biennium. These There, acknowledged Boswell. guarantee Constitution simple declaration subsequent legislative body power of a ei- *15 not a that the considered bonds were always acquiesce repeal ther to shall political its debt the State or of subdivision of existent.” cause, and dispositive of the it held was not Legislature cannot bind another. That One unauthorized “debts” that the bonds created why the faith credit precisely is full of meaning within of Oklahoma Consti here; pledged is not the state of Oklahoma However, 10, 23, 24 tution and 25. created; why why no debt is balanced distinguishable from those the facts here are budget play; amendment is not called into respects. critical In Bos Boswell two why agreement is unconstitu- well, 1) pledge unequivocal an of there was: tional. 2) bonds; of taxes to the retirement ¶ recently approved fifty-year legislative 50 We a promise subsequent of bound University lease Matter Petition appropriations. ficers Neither to continue of of Auth., 162, 314, simply Hospitals There 1997 OK 953 P.2d exists in this cause. situation Mattox, Committee, Bldg. Ecology 116 Texas Pub. Auth. v. 686 S.W.2d v. Finance State of Wash.2d 924, (Tex. 1985); 246, 1241, (1991); City-County 928 St. Charles Li 804 P.2d 1246 State 549, brary Library Bldg. Corp., County, v. Charles 627 v. 561 So.2d St. School Bd. Sarasota of 64, Goldschmidt, (1981) (Fla.1990); [Multi-year termina v. 308 Or. S.W.2d 67 lease 552 State 573, 988, (1989); Lexing municipality a v. at will did not create debt Caddell ble of 783 P.2d 995 1, 397, meaning provisions.]; of County S.C. 373 within constitutional ton Dist. No. 296 School Justices, 376, (1988); Opinion Municipal Bldg. 335 So.2d 379 Auth. Iron S.E.2d 598 1985); (1976) Lowder, 273, (Utah spanning twenty from one to County [Contract 277 v. 711 P.2d Trust, years Heights, Bank is not a "debt" as defined constitutional v. Central & Glennon Inc. 872, (Colo.1983); payable provision v. if annual amount de 658 Bediles P.2d 877-78 695, received.]; Mazur, 462, from current revenues State v. 224 Va. 297 S.E.2d 697-98 rived Giessel, 15, 577, Auth., (1955) (1982); Bldg. Jersey 90 Wis. 72 N.W.2d 583 New 271 Enourato v. 396, 449, (1982); contingent [Obligation pay periodic Ruge v. rentals N.J. 448 A.2d 455 748, 391, enjoyment upon property is not debt or the a Neb. 267 N.W.2d 750-51 201 state.]; (1978); loaning Honeywell Sys., v. Dona Edgerly the credit State v. Information 414, (1916) Inc., 1977); 104, (Me. [Up hey, N.E. v. 93 Ohio St. 113 263 A.2d McFarland 377 108 607, Barron, 639, holding subject appropriations of the 609-10 lease 83 S.D. 164 N.W.2d Howlett, 128, (1969); Legislature.] Despite presence nonappro- Berger 182 25 Ill.2d v. clauses, 673, (1962); priation some courts have invalidated v. State N.E.2d 675 Book Office Gabaldon, See, 273, Comm’n, 120, financing. v. 108 Bldg. N.E.2d lease Montano 238 Ind. 149 94, 1328, (1989); Jordan, (1958); P.2d 1329 State ex Ariz. 311 N.M. 766 v. 82 Duff Hancock, Bd., (1957); Armory Bldg. Nev. Nevada Auth. v. State rel. P.2d v. (1970). also, (1953), 468 P.2d See Kan. 256 P.2d University Hospitals su- had Petition Legislature found that which we ninety pra, promulgated less than 15 of the Oklahoma decision not 'violated art. days ago. cannot do so because of our fifty year funds for indi We Constitution. dealing care, line of decades of case University Hospitals, like consistent law gent finance, public defray with methods of monies to the costs here, appropria come tions. IX. indigent agreement care execut- 51 The THE 54 BECAUSE BONDS STATE ON University and the health ed between THAT THE FULL THEIR FACE pertinent part: provides in
service FAITH AND THE CREDIT OF ‘Subsidy’ appro- the annual (q) “... means PLEDGED, AND BE- STATE IS NOT priation by the of the State DO NOT CRE- CAUSE THE BONDS Authority Indigent ATE A ENFORCEABLE LEGALLY Care....” STATE, THE THE DEBT OF CAPI- Enid, City v. IMPROVEMENT AUTHORITY Relying on Burkhardt TOL recognized in BE THE we CAN ONLY SUED FOR OK BY University Hospitals that the benefits MONEY TRANSFERRED ANNU- satisfy THE flowing were sufficient to AL APPROPRIATIONS FROM to the State THE DEPART- prohibiting gifts , to a TO LEGISLATURE corporation. ex rel. Brown MENT FOR private OF TRANSPORTATION Acres, City THE CAPITOL IMPROVEMENT AU- Warr again recognized that eco THORITY. this Court development legitimate public nomic serves Although Capitol Improve public funds be ex purpose for which instrumentality ment pended. subject some circum state and to suit under stances, protestants did 52 Because the the bonds do not become amendments, budget through Authority’s sta *16 merely raise the balanced the not the state 25,56they only §§23 were not ad sue the Author art. and tus. Bondholders could proba money the De by ity the We could and the transferred from dressed Court. so, Capitol bly especially Transportation because partment should have done of Authority. If the fifty year indigent provision. Improvement care of the bonds, may juris appellate court to retire the be publici matters the doesn’t have monies not legislative appropriations not tendered bel are issues for resolution cause use Nevertheless, made, to nothing would be for the bondholder the outcome there is ow.57 same. recover. the ¶ provides
¶ that specifically 56 The statute opposite to reach an con 53 Were we any at time be deemed here, efficacy bonds shall not cloud the of would clusion we the state or of law, constitute a debt of expressly: Hal prior case this Court’s subdivision, requires that the Leasing, political and supra; McHendry, U.C. stead v. that their face a statement bonds contain on Bd. Public ex rel. State Inc. v. State of the tax- full faith and credit nor supra; neither the Affairs, supra; Boswell any political ing power the state or subdi- Dept. of ex rel. Bank v. State Indiana Nat’l of pledged for the of the Services, is the vision supra; and Matter Human Const, association, otherwise, any company, or provides § art. 55.The corporation....” part: pertinent section, by the Except provided this “A. note art see The Okla. Const. 56. given, pledged, of the State shall not credit art see note supra; the Okla. Const. individual, company, corpora- or loaned to supra. association, tion, municipality, political State, nor shall the State of the subdivision McNeely, in, 57. Matter nor make or stockholder become an owner tax, stock, by gift, subscription donation ¶ does Title 68 O.S. 168.6 of the bonds. There is principal and interest legislatures appropriate compel future not this legally contract between no enforceable bonds. money repayment of the issued Authority, Legislature and either State’s 10, § 2365 the Constitution Art. state or the citizens Department binding prohibits legislative body one appropriations neces- anticipated make entity. cre- It does not successive satisfy created the issu- sary the debts money against the if the ate a debt most, At “moral obli- ance of bonds. compel A appropriated. cannot not creditor funding. gation” arises to continue ap- Legislature anticipated to make the propriations. There is no debt the consti- CONCLUSION Nonetheless, sense. tutional designated has a revenue stream from are 57 Roads matters state non-binding appropriations annual They policy concerns.58 are es wide that, in the to amortize bonds so made support pur of economic to travel sential sense, self-liqui- are bonds development. fanning to suits from industrial dating. avenue for all forms of They provide the misrepresen- This not transaction is They are the life-blood of Okla commerce. at were told ted to the bond markets. We every They, indi homa and of state. unlike argument that the will be rated oral bonds care, in gent generate through income pledge A+ without either insurance or Regardless commerce and taxation. creased full faith and credit of the state. drives, people citizen are bene- whether a can neither make business decisions delivery goods and services. fitted purchasers micromanage their nor for bond upkeep, repair improvement of personal portfolios. Many bond investment necessary legitimate concern roads is buy purchasers choose these bonds will development. in economic they tax-exempt.66 are It is the because quality market which determines that It been shown art. has that perceived and the risk investors bonds 23,5924,60 inapplicable and 2561 are be- willing the Oklahoma Su- are to take —-not obligation created. It has no debt or cause preme will Court. Purchasers bonds Legislature’s that au- also been shown clearly guarantee no advised that there is rely solely thority does not on in this area redemption appropriations to ensure bond granted by general powers the Okla. full backed that Const, Rather, 16, § art. § 36.62 of the state. faith credit conviction art. 21 164reflect the Legisla- everyone 61 Almost understands framers Constitution *17 na- specific responsibilities with at the crossroads of the ture has more Oklahoma sits competitive transportation truly respect to the state’s tion. order to states, a modern road fashioning structures for en- its sister needs of institutional financing with modern system constructed hancing it. Const, 1, 9, 58. supra. § Turnpike art. see note 64. The Okla. Application Oklahoma OK -, 335, 795. 221 P.2d Okla. 2, 23, 10, § art. see note 65. The Okla. Const. 10, § 23, 2, 59. The see Okla. art. note OK -, Const. State, supra. 435, v. 181 Okla. Boswell supra. also, See Halstead v. McHen P.2d 940. 138, dry, supra. 44 at note 3, 10, 24, 60. The see Okla. art. note Const. supra. 168.6(N) provides: 66. Title O.S. section, obligations 25, 4, issued under this 61. The Okla. Const. 10, “N. art. see note on interest earned the transfer thereof and the supra. including any profit obligations, derived such théreof, subject to 36, 8, not be 62. from sale shall supra. §5 note The Okla. Const. art. see Oklahoma, by any kind State of taxation of by any country, municipality political or page or see The Okla. Const. therein.” subdivision supra. accomplishment urgent recourse methods. The of this Holders of these bonds will have no against state for of the bonds if goal require leap either a of faith or does not legislative appropri- simply future assemblies do not departures the law. We need new Therefore, law, ate funds for their retirement. thirty years look of case and to the Thus, the bonds are not debts of the state. developed majority of our law as it has legislation authorizing does the bonds provi- sister states with similar constitutional budget requirements undermine the balanced merely requires sions. It that we follow the 23, 24, By of article sections and 25. doctrine of stare decisis. specific language legislation and direct in the HELD BOND PROPOSAL ISSUE CON- agreements, obligation, and bond there is no STITUTIONAL. moral, by legal compliance either or fu- legislative ture assemblies. C.J., KAUGER, SUMMERS, V.C.J., bonds, 2 In addition to the the 1997 concur. $50,000,000 legislative assembly appropriated HARGRAVE, JJ., HODGES and concur (Rainy from Constitutional Reserve Fund specially. Fund), $9,160,339 Day from the State Trans- Fund, $28,200,000 portation SIMMS, J., concurs reason of stare highway General Revenue Fund to fund the decisis. project. 1997 Okla. Sess. Laws ch. 380. LAVENDER, OPALA, money ALMA appropriated WILSON This from funds WATT, JJ., appropriation legis- dissent. available for to the 1997 bonds, assembly. par- lative Unlike the KAUGER, HODGES, Justice, with whom questioned constitutionality ties have not C.J., joins, concurring specially: Clearly, ap- appropriations. of these these ¶ Although today’s pro I concur propriations comply sections with article Court, separately nouncement I write 23, 24, and 25. emphasize that the bonds further before HARGRAVE, Justice, this Court do not create a debt in violation of with whom KAUGER, C.J., SIMMS, J., join, sections and 25. See Bos article concurring specially: well (1937). Title section 168.6 of the Okla pointed majority, every 1 As out Statutes, bonds, authorizing
homa states: legislature presumed to con- act of the obligations I. The bonds or other issued analy- starting point is the stitutional and pursuant at to this section shall not constitutionality of a sis of the time deemed- to constitute a debt of also sets out the enactment. any political or subdivision the state provi- debt-limitation three Constitutional pledge thereof or a of the faith and cred- obligations against sions for debts political such it of the state state, Article 24 and 25. The
subdivision. majority concludes that because the bonds legal- question self-liquidating and do not obligations shall J. Such bonds or other ly obligate legisla- the state future either contain on face thereof a statement *18 tures, limita- none of the three Constitutional the faith and credit nor the that neither provisions applies. Specifically, in Part tion taxing power any political of the state or opinion, the holds that pledged, may IV of the thereof is or subdivision legal obligation to do create a pledged, bonds that payment of hereafter be not pay beyond appropriation current annual the principal.of or the interest on such the by the prohibited are not that are debts bonds.... therefore, that, §§ 24 Constitution added.) legislation The does not (Emphasis apply. 10 do not and 25 of Article pro- legislative to require future assemblies ¶ holding bonds, majority in it 2 I concur with the funding to retire the but does vide face, by state, prohibited ’are not that that the bonds herein require the bonds to on their Constitution, go I further and pledged. the but would taxing power of the state is not the 778 subject the legal Transportation, but to create a ment is
find a debt that does not that receipt appropriation for that pay beyond current annual of an annual obligation to the legislature are specifically permitted by by Ar- the and the bonds appropriation purpose is carry funding on face §10 23 of the Oklahoma Constitution. the source of to ticle Thus, provides: § no be- Article there is debt created thereof. by legisla- yond appropriation an annual create or authorize “The shall never state bound, legislatures and future are ture obligation, or any debt or the creation of state, precisely kind I which believe describes against pay any or deficit fund § permitted by 23 of Article 10. agency of debt any department, institution or or thereof, regardless its form or ¶ I that am authorized to state Chief be money from is to source of join the Kauger and Justice Simms Justice may provided in this paid, except expressed views herein. and 25 Arti- and in section Sections the State cle X the Constitution Justice, ALA, LAVENDER, OP with whom ” added). (emphasis Oklahoma. JJ., join, WATT, ALMA WILSON dissenting. ¶ language recognizes quoted that 3 The may or obligations or be created autho- debts construing 1 In § by ways, rized state three under give we effect to Constitution must 10, § provides § § that 24 or 25. Article the people its framers the intent of power limited in addition the above adopted it. Boswell who 23), §in (provided contract debts (1937). view, my In invasions, sup- repel contract debts to § cou intent of OKLA. CONST. art. press or to defend insurrection § art. is that Oklahoma pled with § provides 10 25 that all other
war. Article
highway pro
government
including
State
—
state,
by
on
debts contracted
behalf
cash,
jects
pay-as-
on a
be funded
—are
§
§
must
except
specified in
23 and
those
basis,
plan, and
you-go
year
i.e. on a fiscal
object
for some work or
be authorized
law
long-term
reaching beyond the fis
that
levy
of a tax that
paid
that will
for
only
by a
year may
vote of
cal
be incurred
by majority of the voters
approved
shall
words,
polls.
In
at
other
general
Neither
at a
election.
Constitution,
requirements
plain
of our
situation
us.
applies to the
before
simple language,
that
mandate
the Okla
an annual bal
Legislature provide
homa
prior
provides
4 Section
multi-year
are
leg-
budget
anced
and that
debts
regular
convening of each
session
islature,
approved by
unless
the citizens
Equalization
prohibited
State Board of
-
general election.
this State at a
certify
appro-
shall
the amounts available
appropriations
legislative
priation and
contrary
majority opinion,
to this
All
year
exceed it.
shall not
fiscal
mandate, upholds as
clear
of the certifi-
appropriations made
excess
($300,-
million dollar
proposed three hundred
void. The debts that
cation shall be null and
000,000.00)
on
basis the State
bond issue
lawfully may
under Section 23
be created
bondholders,
legal obligation
repay
has no
obligation
be-
incur no
those which
though the holders
the bonds will
even
appropriation.
yond the
annual
current
$300,000,000.00
have conferred
benefit
by providing
upon
all of our State’s citizens
168.6
5 Because 73 O.S.
improve-
funding for construction and
obligation
legisla-
on the
not create an
does
highway/road transpor-
beyond its
ment
Oklahoma’s
appropriate
ture
system.
my opinion, majority
term,
specifically
I
tation
that the debt
believe
allowing
officials to circumvent
majority opinion
permitted
accepting the
mistakenly
funding provisions
23 and
used
recites the various
*19
Legislatures will
emphasizes
future
not be
view
73 O.S.
to
appropriate
to
sufficient revenues
are to be retired
bound
that the bonds issued
Legislatures
Future
money
repay
bondholders.
appropriated
made
payments
from
faith,
able,
good
to refuse to
not
in
annually
Depart-
will
Legislature
Rather,
money
pay
appropriate the
needed to
this
as a “debt”.
is about the State’s
so,
obligation
authority
because failure to do
as Justice
accept
constitutional
—sans
out,
forcefully pointed
has
“would be
approval by
Watt
peo-
antecedent
a vote of the
devastating to Oklahoma’s credit worthiness
ple
proceeds
a
pass
loan that will not
—the
cripple
ability
our
[would]
finance
“self-liquidating” project’s
a
muster as
obli-
project by future bond issues.” From a real-
gation.
today’s pronouncement gives
while
a
then,
will,
fact,
perspective,
istic
the State
green light
proposed
to the
bonded indebted-
obligated
repay
the bonds and interest
ness, I would declare that the transaction is
thereon,
if
and it does not a valid enforceable
fraught
infirmity.
with a fatal constitutional
obligation
exist
virtue of the
would
benefit
otherwise,
upon
conferred
To rule
State.
I.
does,
majority
simply ignores
as
the eco-
and,
reality
nomic
of the situation
at a mini- THE CONSTITUTION OF THE STATE
mum, permits
spirit
violation of the
of our
OF OKLAHOMA COMMANDS THAT
law, something
unwilling
fundamental
I am
THE STATE SHALL NOT BORROW
to sanction.
WITHOUT AN ANTECEDENT VOTE
writing
If I
were
for the Court in this
THE
OF
PEOPLE.
ease,
obligation
I
hold
would
that before this
¶2
authority
has
over
$300,000,000.00in multi-year
debt be in-
fiscal affairs
the State to the extent its
curred,
it must be
submitted
power
is exercised within the bounds set
approval
general
their
at a
election
fundamental
law. The Constitution of the
accompanied by
such authorization must be
a
(its
prohibits
State
the State
provision providing for a
tax
direct annual
institutions)
agencies
borrowing
from
principal
sufficient to
on
interest
contracting
peo-
debts1 without a vote of the
debt,
10, §
such
as art.
25 of the Oklahoma
ple, regardless
duty
repay
of whether the
requires.
majority
Constitution
Because the
merely
legally'
constitutes
a moral or a
en-
places
stamp
approval
its
on the
obligation.
forceable
demanding compliance
bond issue without
requisite
this
with
essential
of our fundamen-
debts,
3 The
cannot
oth-
State
contract
law,
respectfully
tal
I
must
dis-
invasion2,
necessary
repel
er than those
majority opinion
sent to the
matter.
people.3
without a vote of the
To contract a
necessarily
debt does not mean
to create
ALA, Justice,
LAVENDER,
OP
with whom
State)
(against
legally
enforceable obli-
WILSON, WATT, JJ., join,
ALMA
gation. The fundamental
law’s concern is
dissenting.
legally
not
enforceable debts
sen-
stricto
sense,
1 This case is
about the lenders’
su.
In the constitutional
“to contract
not
willingness
money
simply
agreement
to advance
to the State for
a debt” means
to make an
borrowing money.4
loan that
on default
be enforceable
Const., prohibits
agreement
1. Art. 10
Okl.
4.A contract is defined as an
to do or
,
authorizing
creating
thing.
§§
the creation of
not to do a certain
15 O.S.1991
1-2.
obligation, "regardless
of its form or the
presence
personal liability
Neither the
nor of a
money
paid”,
from which it is to be
obligation
source
except
legally enforceable
is included as a
provided
and 25.
qua
explaining
sine
non of this definition.
debts,
authority
State’s
to contract
court
Yelle,
Const.,
Troy
ex. rel.
36 Wash.2d
Okl.
authorizes the State
2. Art. 10
invasion,
(1950),
repel
suppress
Application
to “contract debts to
relied on In re
Indebtedness,
insurrection or to defend the State in war.”
State to Issue Bonds to
Fund
(1912). Troy
II.
in contest here
through the sale of the bonds
MAY
OBLIGATION
THE PROPOSED
acquire
proper-
be used to
or constrict
would
SELF-LIQUI-
BE
NOT BE HELD TO
ty
capable
generating
for
of
funds
BECAUSE THE BONDS
to be
DATING
of
bonds.
loan
retirement
BE
ARE
RETIRED SOLELY
self-liquidating
TO
incurred is not for
true
APPROPRIA-
FROM LEGISLATIVE
retired
project. The bonds
suit are
be
REVENUE.
OF STATE
legislative appropriations which
TIONS
solely from
are
made from available revenues
to be
of
¶4
approved
court has
bonds
This
roads,
buildings,
toll
office
State.6 Unlike
vote—for
provide funds —sans an antecedent
dormitories, highways
to free
dedicated
self-liquidating
construction of
acquisition or
can
be leased nor rented
use
neither
obligation,
kind of
the court
projects. That
by,
placed
originally
otherwise
unless
built
held, does
create a debt because the
of,
Turnpike
charge
tinder the
solely
so
are to be retired
from
bonds
issued
Authority.
project
from the
itself See
revenues derived
Regents
Bd.
Univ.
Application
obligation proposed
of
of
of
here
of
7 The bond
641,
(1945);
Okla.,
reliance on project generate tangible cannot revenue SUMMARY possibility repay- of its own. There is no dependence legisla- ment on annual without proposed transaction is more appropriations. prevents tive This alone financing.” By than a “modern method of qualifying transaction from as a of 73 O.S. “self-liquidating” project’s obligation. the State has indeed been authorized to “con- tract without an antecedent debt” vote short, project itself will not people. The commands of Art. generate revenue that be sufficient would Const., prohibit Okl. repay the issued. For the obli- repayment borrowing money from —sans gation’s repayment nothing there is more approval clearly of the electorate —are legislative appropriations than reliance on offended. existing made streams of State reve- Nothing specifically nue. recognizes has been commit- 13 The Constitution but two (1) repayment obligation money: ted toward to be methods for the State to borrow designed incurred. The revenue stream for where there has been an antecedent vote of (2) markedly approval this case differs from the criteria the electorate or where the self-liquidating “self-liquidating” critical to the birth of a obli- transaction creates a obli- gation. gation. pure- employed The latter model must create a Neither of these has been ly proceeds circular fund flow—from loan I hence for this bond issue. dissent from acquisition project- construction or and from court’s mischaracterization of the transaction generated obligation’s repay- constitutionally revenue to the in contest as a authorized absolutely money. no ment —with need for loan of
APPENDIX
REVENUE STREAM SELF-LIQUIDATING TYPICAL OBLIGATION Appendix. 9. See attached
PROPOSED TRANSACTION *22 constitutionally preserved right repayment people their are available To be used generated by borrowing and deficit than those to control costs sources other itself; legislative ap- Legislature the Execu- project quantum spending. The and uncertain; nothing in there is tive Branch should reconsider the evils propriations today’s that commits some authorizing expenditure. statute course of state revenue to the percentage of total definite ¶2 Capitol Improvement The Oklahoma repayment of the O.S. bonds. (OCIA), agency comprised a state (H). (G) 168.6(E), & Governor, Governor, Lieutenant Treasurer, WILSON, de- J., appointed and executive whom five ALMA WATT, LAVENDER, OPALA, JJ., join, heads, application ap- partment filed its proval proposal approximately to borrow dissenting: through ten-year million dollars bond $325 Today’s judicial confiscation art. in the amount of proceeds, issue. The net right the people § § 23 and annuls dollars, to to million are be utilized $300 multi-year approve disapprove deficit system partially highway fund the statewide governmental func- financing of an essential improvement projects Legisla- in the listed time, gives its tion. For the first Court five-year plan.1 paperwork sub- ture’s legisla- our imprimatur spending to deficit by the to this would mitted OCIA partici- I cannot tive executive officers. obligation part OCIA to create an on the fiscal of our conservative pate in the demise money. In the repay the borrowed management hallmark of is the form, repay promises statehood, bond OCIA we Since Oklahoma Constitution. at matu- money to bondholders borrowed strictly have adhered rity, years, interest on the in ten be man- people’s that the resources dictate basis, on the first leaving principal on semiannual basis to the aged pay-as-you-go on a throughout next five the state over the O.S.Supp.1997, districts 2002 lists more than pro- improvement projects and 6 construction years. eight highway jects be carried out in year day May specifically of each in the November mentioned Constitution. (cid:127) commencing May 1998. The funds Citing the art. and art. pledged principal 1,-§ majority opinion concludes that bonds, form, on the in the interest bond Legislature, people, and not the have the payments to be made to OCIA the Okla- power policy high- to determine for the state Department Transportation homa system. way Never before has this Court (ODOT). payments from ODOT to read the constitutional imposing subject appropriation OCIA are to annual specific provide duties on the Incorporated part ODOT. of the OCIA schools, welfare, public public agree- resolution to issue the bonds is the *23 roads, myriad subjects, and the other as whereby ment between OCIA and ODOT people’s constitutionally limitations on the re- agrees highway improvement ODOT to lease legislative powers. served projects monthly payments from for OCIA as appropriated by Legislature be the for 1924, early recog- 5 As as this Court purpose.2 importance highway nized the of the state’s urges obligation 3 OCIA to re- its system people: “Aside from the build- money the borrowed is not a constitu- ing religious of institutions for education and 1) tional payments debt because: ODOT’s training, probably improvement no civic is of agreement contingent upon under the are greater necessity people than our the con- 2) appropriations; annual future adequate system struction of an legally obligated are bodies not to make the 1937, highways.”3 recog- And in this Court they may appropriations, though even be people’s power nized the reserved to deter- 8) morally obligated; payments and ODOT’s mine whether a debt should be incurred only pledged are the to retire the funds approving “appro- the, bonds. these through highway so-called issuance of for debt, priation-risk” bonds as not a in the however, improvement.4 majori- Today, the sense, majority opinion, the ty opinion public highway sys- removes the first, system highway excludes the state from power people. tem from the people’s legislative powers, the reserved and Second, majority opinion the then, implicitly adopts “expanded special the exception again departs from established expressly fund” which this Court law and rejected sixty years ago. more than adopts “expanded special ex- fund” ception limi- to our constitutional debt ¶4 First, majority opinion seriously provisions. tation The state debt limita- legislative powers confines reserved to 23,5 10, §§ legislative subject are out in art. areas not tions set Childers, OK -, agreement 102 Okla. 2.The between OCIA ODOTis for 3. Edwards v. highway projects 228 P. 477. the lease of the listed in 69 O.S.Supp.1997, § which authorizes ODOT OK -, construct, maintain, 4. Boswell v. 181 Okla. improve, repair "to all 74 P.2d 945. any following highway bridge pro- or jects greatest possible extent pertinent part: 5. reads in Art. Projects, provided.” allocation of funds as de- Legislature undertakings. fined authorize the The state shall never create or O.S.1991, undertaking "Project any obligation, § 231: creation of debt or or fund or —An Commission, state, deficit, Highway governing body pay any against or de- thereof, agency regard- governmental instrumentality high- partment, other institution or or activity money way of its form or source of from construction ... or other work or less paid, except may provid- carry provisions as out the of the federal law for the which it is to highways.” The ed in this section and in Sections 24 and 25 of administration of federal aid for agreement, apparently, promise by X the of the State of is a ODOT to Article Constitution undertakings perform Oklahoma ... authorized in Any department, agency monthly payments or to make to OCIA for the 5.... institution majority opinion operating proceeds. of the state on revenues of derived use of the bond The agree- implies “profit-producing” from law or laws which allocate the reve- that this is a tangible department, nue thereof to such institution or ment and concludes that it is a lease of best, obligations subterfuge agency property. shall not incur in excess of At the lease is a bring cash on hand. within the established ex- the unencumbered balance of the transaction pro- application ceptions herein does not assert that to the constitutional debt limitation proposes $325 which OCIA million dollars visions. 24,6 becoming from effective8 until it has prohibits the state debts and 25.7 Section creating authorizing the creation of a from or approved vote of been deficit, regardless of paying or electorate.9 except payment, as form source of Legislature has observed balancing pro- budget in the annual provided 10, § prohibitions in art. autho- whether § 23 visions of rizing to contract state officials debts prohibits and 25. state officials Section expenses10 ordinary governmental debts, multi-year contracting unless the development through fi- economic creative prohibits law. It also debt is authorized multi-year referring authorizing contracting nancing.11 Legislative intent in not law by issuing "No take bonds is within the current The words such law shall effect" borrow required by year appropriations, is a limitation on the fiscal art. expressed budget balancing clearly provisions in this the state constitution. Jack section. Freeman, -, 217. son Const., 10, § allows 6. debts insurrection, invasion, borrowing is not within the OCIA contends incurred in case of war, therefore, prohibition not of art. need applicable herein. and is *24 the be submitted to electorate. 10, § 7. Art. 25 reads: Laws, 1076, au- 10. 1992 Okla. Sess. H.J.R. No. specified Except the debts sections twen- thorizing capital $350 a indebtedness for million article, ty-three twenty-four and of this no pur- improvement, was to referred the electorate by be contracted or on debts shall hereafter 25, 10, § to as a constitution- suant art. shall of this unless such debt be behalf 10, Cons., 43, § State al amendment. Okla. Question art. by object, for work or authorized law some 649, Legislative No. Referendum No. therein; distinctly specified and such law 3, 293, adopted at the election held on November impose provide the shall for collection of a and 1992; together proposed statutory with a enact- pay, pay, annual tax to and sufficient direct Act, ment, Charity the 3A Games due, it the on such debt as falls and interest O.S.Supp.1997, Sess. enacted 1992 Okla. discharge principal the of such also to and Laws, approved ch. 328 and at the election on years twenty-five the time debt within 3, 1992. November contracting No such law shall the thereof. shall, election, general a take effect until it at Laws, 1028, 11. 1987 Okla. Sess. H.J.R. No. au- people have to the and have been submitted obligation thorizing general $100 million bonds majority of the votes cast for and received a all development for economic credit enhancement pas- against it at such election. On the final by the reserve fund to be issued Oklahoma Devel- Legisla- sage House of the of such bill in either providing opment and Finance that ture, by yeas question taken shall be and Legislature appropriations would make sufficient journals nays, duly entered on the there- 42, Const., 10, § art. retire the bonds. Okla. of, pass, "Shall this bill and and shall be: 610, Legislative Question No. Referendum ought of the the same to receive sanction 267, adopted September at on No. election held people?” 20, 1988. added.) (Emphasis measure, In the Oklahoma Futures 90, Laws, 222, through §§ 72 effective” are Sess. ch. include 8. The "take effect" "become words legislative for and terms and condi- authorization utilized in several 10, $100 indebtedness art. measure has the tions of million delineate when a Const., proceeds § provid- § art. of which are directed to force law. Okla. fund, integral Legislature an ing not “take credit enhancement reserve an act of the shall that adjournment part legislative policy promote pub- days a ninety after of the effect until strategic passed,” exceptions lic/private partnership and the state’s at which it was session enactments, following development efforts. In the referendum emer- economic for initiative and measures, general through appropriations; §§91 declared that gency and well-being were providing § measure referred bonds essential to the economic art. oversight people or referendum "shall of the state established a bond to the initiative system protect Nothing welfare. take in force when it shall have effect development Oklahoma Futures economic approved by of the votes cast been a and, otherwise"; oversight § measure indicates that bond necessi- and not thereon Notwithstanding, originating law. providing a in the tated extant decisional "revenue bill majority opinion that bond over- Representatives not become effec- determines House of shall ap- sight was people established because tive has been referred to until it financing throughout proved multi-year Leasing, in U C. Inc. general at held the'next election Affairs, OK Public effective and be in State Board the state and shall become 1191, affirming money-judgment by majority approved it been force when has multi-year of a lease of law enforcement breach cast....” votes O.S.Supp.1997, excep- to a vote of the future installments for future services 168.6 However, speculated. tion. people only can noted that 1 68.6 was considered and special exception 10 The fund press days final of the enacted in the Carter, OK -, adopted in Baker v. legislative session12 and the failure to refer applica 165 Okla. wherein people could have 168.6 to a vote approval tion was made issue and sell drafting. an omission in been inadvertent bonds to build dormitories at the Oklahoma people approved have not 168.6.13 Agricultural College Mechanical at Still- dormitory that the water. The Court found 8 This Court has held that constitu- special bonds would be retired out of fund expressed plain tional debt limitations rooms; dormitory consisting of rentals of ordinary preserving terms to the state, liability there would be no fixed right to know how much is available for state; obligation nor direct on behalf of the appropriation14 right and the to control the and, showing strong no of a there was reason of the cash on creation of debts excess believing any contingency, immediate or terms, ordinary thing hand.15 a debt is a remote, whereby the would ever arise Notwithstanding owed to another. the clear would fall on the state. The Court concluded expressions, this Court has defined “debt” statutory there is no constitutional or inhibi
within the constitutional debt limitations as
dormitory
against
tion
the issuance of
obligation
an
for the
of which resort
special
payable out of a
fund inasmuch as
may be had to state revenues.16
belong
college
rentals would
without
legislature
only
public obligation
appropriation
9 A
is a constitutional
*25
sinking
obligation
paid
placed
the
will be
in a
the rentals were
the
fund
debt where
year
payment
pledged
payment
and no
subsequent fiscal
and the
will
of bonds
derived,
directly
property
pledged
pay
the rent
part,
in whole or in
would be
through
adopted
special
the
indirectly, from
raised
the
als. Baker v. Carter
revenues
exception:
limi
taxing powers
property.
or from state owned
fund
the constitutional debt
standard,
by
obligation
legal
have
tation is not violated
an
which
Pursuant
to this
we
fund,
exceptions
payable
special
out of a
if the state is
recognized two
to the constitution-
is
1)
general
special
pay
not liable to
the same out of its
al debt limitations:
the restricted
2)
and,
special
prove
self-liquidating exception;
the
revenues should the
fund
fund or
expend money
switching equipment
Legislature
and
the
authorize the OCIAto borrow
which
appropriations.
highway improvement projects;
specified
had made annual
on
(D)
(H)
through
provide
subsections
O.S.Supp.1997, §
73
1997 Okla. Sess.
12.
money
public
out of
revenues
of the borrowed
Laws,
is the last of seven substan-
ch.
and,
appropriated
purpose;
for that
subsection
May
Bill
1629. On
tive sections of House
29,
No.
(L)
money
provides
borrowed
shall be
that the
the first Conference Committee Substi-
repaid
years
no later than ten
from the first
two
tute for H.B.
which contained
substan-
(some
years
maturity
the
date
ten or more
appropriation
providing
from
tive sections
future).
Fund,
rejected
Constitutional Reserve
was
the
Journal, p.
House
and returned to conference.
29, 1997,
May
Subsequently
requirements permit
the sec-
Appropriation
on
14.
the
(the ver-
sovereign
ond Conference Committee Substitute
in disbursements and
to control the
enacted as ch. 329 of the
powers
sion of the measure
of executive
as a
limit on
serve
laws)
adopted by the House.
1997 session
was
department
officers.
and discretion of executive
Journal,
May
p.
Childers,
-,
the
House
1343. On
OK
102 Okla.
Edwards v.
was
Conference Committee Substitute
472, 476;
second
State
228 P.
and Smith v.
Board of
Senate,
Journal,
adopted by the
Senate
read and
OK -,
Equalization,
P.2d 1264.
Governor,
by
p.
approved
the
House
and
Journal, p. 1366.
State,
OK -,
v.
181 Okla.
15. Boswell
deplete
resources
explained
further
Boswell
special
applies
“expanded
fund doctrine”
special fund
v. Carter
11 The Baker
provide
obligations that
for the extension
“restricted”
Boswell
doctrine was
obli-
improvement
property,
of .state
which
OK -,
opinion implicitly adopts “expanded spe- WATT, Justice, special
cial fund confusion of dissenting, doctrine.” The with whom LAVENDER, self-liquidating spe- funds of transactions and OPALA and ALMA WILSON, JJ., deposit join. cial funds for dedicated taxes insignificant, inasmuch as is now ju- Through decades provisions are also of little
the debt limitation
risprudence,
consistently
this Court has
significance
today’s pronounce-
or no
guarded against
attempted
use of
State’s
ments.18
long-term
financing.
sanctioning
us,
decisis,
majority’s
guise
decision
15 Under the
of stare
bond issue before
law,
prior
runs
majority opinion
down our constitu-
flies
the face of our
ease
strikes
language
plain
from afoul of the
of our Constitu-
tional debt limitations.
It is obvious
tion,
the death knell to Okla-
legal principles
set forth
and sounds
established
above,
budget provi-
majority opinion
on homa’s constitutional balanced
does not rest
Rather,
a radical
requires
sions.
I cannot accede to such
stare decisis.
stare decisis
*27
departure
prior precedents,
from
nor can
O.S.Supp.1997,
73
our
this Court
to hold that
I
the demise of this State’s balanced
squarely
plain
§
within the
lan-
endorse
168.6 falls
Contrary
majority’s
the
budget.
§
be
to
asser-
guage of art.
25 that a “debt shall
tions,
“self-liquidat-
not
by
these bonds
be
authorized
law” and “No such law shall
will
shall,
election,
legally binding
ing”
create a
debt
general
until it
at a
and will
take effect
people
a
of the
people
against
have
the State without vote
have
submitted to the
and
been
in violation of the Oklahoma Constitution.
of all the votes cast for
received
Furthermore,
of the current bond
approval
73
against it at such election.”
and
.Until
Application
cept
operation
as the services were received.
be derived
the
the revenues to
Improvement Authority,
Capitol
the toll road.
Oklahoma
OK -,
1028; Application
355 P.2d
1960
for future
18. Likewise the future installments
Improvement Authority,
Capitol
1966
Oklahoma
OK -,
insignificant
exception
the
is
under
services
now
46;
McHenry,
and Halstead v.
exception
ap-
majority opinion.
has been
That
OK
789
purpose
law? The one
was
safe-
through the enactment of
mental
whether
taxpayers of the
guard
§
the citizens and
has authorized the
73 O.S.
handling
...
against the
[mis-]
in violation of
state
creation of a state “debt”
10,
subject
public moneys.
provision
That
§§23
25.
Article
exigency, pays no heed to conve-
to no
Equaliza
In
Bd.
6
Smith v. State
nience, expediency,
emergency.
It is
tion,
57,
1264,
1981
this Court
OK
unconditional, and,
safe, sane,
so far as
purpose underlying
described
We
regarded,
human documents can be
should
held:
observance, interpre-
held sacred in its
adopted by
peo-
Article
23 was
tation, and enforcement. Once this clear
ple
provide
budget balancing
in
for
away,
protecting mandate is whittled
rea-
in
is no
for con-
this state. There
room
around,
disregarded,
soned
for
provision
inquiry
further
struction
cause,
guaranty
orderly
of our
chief
plainly speaks. A
when the Constitution
state,
municipal progress,
in
coun-
whether
constitutional amendment should be con-
town,
district,
ty, city,
township, or school
purpose
of its
strued
consideration
is threatened.
carry
given practical interpretation to
Id.,
P.2d
proposed here.
bond issue
building a toll road
purpose
for
of
issued
'
“solely from the reve
to
retired
and were
pro
a similar
11 This Court invalidated
operation of the
from the
be derived
nues to
State, 1937
in
v.
posed bond issue
Boswell
221 P.2d at
In
question.”
toll road
There,
435,
OK -,
Okla.
ble to the at issue here. bond However, Transportation Fund. as set 1, supra., forth note has approved 14 In each of the bond cases 168.6(E) appro- §in also stated its intent Court, rely upon could bondholders priate to the same fund “sufficient monies to tangible repayment of their some asset payments pur- make case, In each the assets were investment. poses retiring pursuant created capable directly generating the funds that to this section.” repay- were to serve as the sole source of Although factually ment of the bonds. majority’s theory coupled 17 The with issues, incongruous legally with bond beg question: these two stated intentions lease cases discussed above also involved funding If the current level of the State tangible type constituted assets to retire Transportation Fund is sufficient “collateral.” In the event of default debt, why Legisla- proposed has the bond entity, governmental the lessors in those “appropriate” addi- ture stated its intent to rely upon cases could the return their purpose? for that The answer tional monies object of the “collateral” which served as the funding question to this is that the current context, tangible In this no asset will lease. Transportation level of the State Fund is and re- be available here. maintenance only annual sufficient to service the State’s projects here are pair under consideration issue roadway needs. The bond n incapable producing direct revenues. The extraordinary expense create an that will will upon property are afforded no bondholders extraordinary appropri- have to be funded may rely repayment of their they mo- ations. If the Fund contained sufficient default, investments. the event bonds, pay nies to for the repossessed asphalt concrete cannot be “self-liquidating” argument, intimates in its Stare decisis re- and sold to investors. pro- never have been this bond issue would rejection proposed bonds. quires of these posed. Second, argument
¶15 majority’s I find the ad- disagree I also majority legally flawed as by the proposed bonds are self- vanced conclusion that the rejected by having already expressly fees been liquidating certain taxes and because Educ. Application Transportation Fund this Court placed in the State -, Television for the have been “earmarked” Legislature passed a bill majority correctly 1027. There the As the highway bonds. *31 Act, by this then the operation Au- authorized Television authorizing the Educational point, be in thority for construct- cited authorities would issue revenue bonds last facilities. rule the transaction ing keeping television in with such operating from paid be with monies a in of the The bonds were to not create debt violation would Building Fund. The en- quoted the Oklahoma Public section of the Constitution. strikingly abling legislation in that case was added). (emphasis Id. at Au- case at bar: The similar to that the Continuing, the Court held: thority and be sued it was could sue pro- Building Fund] and its state,” If Public [the the designated instrumentality of “an did not exist and therefore was not ceeds proposed bonds “shall the Act stated that the citizenship available for use behalf the obligations the State of never become state, then the state could not have Oklahoma,” neither the provided and it “that purchased credit, things now with that fund taxing power those faith and nor thereof, State, using money any political proceeds without tax subdivision and its or Therefore, principal purpose. of or for such pledged to the the of the state Id., 272 at Fund itself Building on such bonds.” the is not the interest Public while State, proposed the both bonds fund of the it serves In cases a tax revenue solely accruing repaid from funds they were to be if were not served out purposes which fund, existing permanent they necessarily funds of the State. must was bond issue submitted money, neither case the the of tax or State must served out people. a vote of the is no .go without them. Therefore there permanent analogy this fund fair between proposed holding 19 In the bond special funds of the State and revenue we distin- issue Article violated self-liquidating involved each or debts guished previously from sanc- case foregoing ... eases. “self-liquidating” bond cases: tioned the self- [in bond issues debts Those at 1033. Id. not liquidating created cases] bond were case, As true in the above there was against existing funds of the permanent self-liquidating analogy fair is no between state, recurring use in the regularly presently us. cases and the case before bond of the state. interest of citizens projects The construction maintenance is- money realized each of those bond bond proposed be funded instant or facil- sues itself created construction produce no income that will issue ity produced the income and which turn Moreover, the debt. used to retire a against stand- funds which debt as- Transportation Fund exists as valuable specifically ing obligation, and debt It was and fund of the State. not created set any other not be collected could here, projects completed nor will moneys. source, paid any nor other Authority anything add at projects or the But or construction of for the creation purposes this “serves all to fund. Fund cases, against the funds those facilities they if not served out of that which were never have which those debts stood would fund, they necessarily out of must be served But we have the creation existed. here money, go must without tax always against has fund proposed are in no sense them.” The bonds as a valuable asset and existed fund of self-liquidating. by the This is not created state. fund above, constructed, Notwithstanding the the Au- operated,
facility here to be would thority contends bonds facility nor this nor this does meaning create state debt within permanent anything add at all because both 168.6 and If the in this case our Constitution state. fund of language disa- contain paid exclusively from revenue the bonds themselves were to be such How- facility vowing the creation debt.4 in the or received earned obligations pursu- 168.6(1) or other issued The bonds 4. Section states: at time be shall not ant this section ever, powers shall be held to in Boswell v. are “deemed and as this Court stated OK -, 435, 74 P.2d governmental 181 Okla. function of the an essential 943: state.” that the notes statute] recitation in a [A *32 Finally, Authority may the be sued general obligations of the “are not debts or in the of default. Section 152 event Oklahoma,” respect ... no Authority “may and be states that the sue question of conclusive of the matter. The plead impleaded.” sued and and be Section the authorizes a debt of the
whether
bill
18(h)
provides:
of the Resolution
contrary
provi-
to the constitutional
judicial
is a
and not a
sions
agreements
All such
and covenants en-
question.
Authority
tered into
the
shall be bind-
¶23
§
language
The
of both
168.6 and
ing
respects upon
Authority and
in all
the
makes clear that the
proposed
the
bond issue
officials, agents
employees,
its
Authority
“obligated”
pay
the bondhold-
successors,
agree-
upon its
and all such
Ar-
principal
ers
on the bonds.5
interest
enforceable
ments and covenants shall be
“obligation.”
§
or
ticle
23 refers to a debt
by appropriate action or suit at law or
proceedings,
terms
purposes
For
of these
the
by any
equity,
may
brought
be
hold-
synonymous.
American Heri-
are
See The
er or holders of Bonds issued hereunder.
(Second College
tage Dictionary
together,
26 Taken
the above facts lead
Ed.1985) (“debt”
obligation
“[a]n
defined as
proposed
me to
that
conclude
liability
pay
something
render
or
or
obligation against the
else”).
would create a debt or
Moreover,
168.6(E),
§
1n.
someone
Authority
meaning of the
within the
Okla-
proposed
supra, specifically refers to
Therefore,
Legisla-
pursuant
created
homa
bond deal as “the debt
Constitution.
added).
through
also
(emphasis
See
of such debt
[§ 168.6].”
ture’s authorization
168.6(M),
§
certain funds
§
which discusses
Article
enactment of 168.6runs afoul of
may
annual debt
that
be used to
“the
Au-
cognizant
§§23
I am
that the
and 25.
added).
(emphasis
service.”
limit-
thority’s liability
repay
the bonds is
specifically pledged
appropriations
ed to the
Authority is
Equally
clear is that the
Supp.1997
purpose.
that
73 O.S.
agency”
of the
“department,
institution
168.6(F). However,
liability may
§
that
10, §
meaning
of Article
State within
the fact that a
limited does not alter
specifically
Title 73 O.S.
against the Authori-
“debt” has been created
Authority is an “instrumen-
provides that the
ex rel.
ty.
Leasing, Inc. v. State
tality
that the exercise of its
See U.C.
of the state” and
virtually identical lan-
contains
debt of the state or of
the Resolution
to constitute a
deemed
guage.
pledge
any political
thereof or a
subdivision
of the state or of
such
the faith and credit
body
"obli-
168.6 refers to the terms
5. The
political subdivision.
times,
"obligations"
gated"
24 different
some
following
proposed bonds would contain
following excerpt
including
from subsection
language:
(F):
of the State
Bond is not an indebtedness
This
pur-
Oklahoma,
or other instrument
The bond indenture
shall it be deemed to be
nor
Capitol Improve-
to which the Oklahoma
obligation
Oklahoma and nei-
suant
of the State of
repay-
obligated
taxing
Authority
power
ment
becomes
the faith and credit nor
ther
proceeds
principal
of the
any political
and interest
sub-
ment
State of Oklahoma or
of the
obligations....
pledged
from the sale of
hereafter
division thereof is
added).
18(g)
the Reso-
(emphasis
See also
payment
principal of or
pledged
of the
to the
lution, which states:
or the series of which
on this Bond
the interest
agrees
Authority
...
that
general
covenants
part.
is not a
This Bond
it forms
promptly pay
principal of and inter-
personal
Authority
obli-
it will
obligation
nor a
provisions
every
Capi-
Bond issued under
est on
gation
the Oklahoma
of the members of
places, on the
Resolution at the
Authority,
a limited
of this Bond
Improvement
but is
tol
provided herein and
and in the manner
solely
the revenues
dates
obligation payable
The Revenues
and in said Bonds.
pledged
payment.
therein
specifically
to its
hereby
the Bonds in
Authority Sep-
pledged to the
Improvement
Capitol
Resolution,
specified.
herein
and to the extent
13 of
the manner
8. Section
tember
duty to
is our solemn
determine
Affairs,
[I]t
Bd.
Public
intent of the framers
the Constitution
1191.
adopting it with re-
people
argument, the
as-
27 At oral
spect
authority
legislation
at issue created
serted that
pay.
must
incur debts which the
obligation
part
merely
on the
a “moral”
clearly demonstrates
What we have said
Their
to retire
bond debt.
interpretation and construction
previously quot-
argument
upon the
is based
sought
placed upon
these constitu-
language
§of
168.6 and
ed
[Authority]
could
tional
the bonds would
bonds which declare
contemplated by
have
the fram-
been
of the State. There-
never constitute debt
*33
document,
people
the
of that
but that
ers
fore,
argue,
legislatures
they
future
would
government
intended that
the
should
appropriate
“legally”
bound
monies
not
cash,
operated
pay-as-you-go, plan.
on a
or
However, we need
to retire the debt.
not
significant
adoption
that in the
It is
to note
be concerned with whether the bond
here
people
moral,
legal,
of the Constitution the
reserved
rather
create a
than
issue would
power to determine whether
obligation against
itself,
the State
because
themselves all
incurred,
create a
excepting
bonds would
or
the issuance
such
not debts should be
legally
against
debt
an instru-
might
enforceable
only those
which
be incurred
debts
Capi-
mentality
the
The Oklahoma
State:
specific
the
of sections 23
under
Authority.
Improvement
Counsel
the
tol
Constitution,
article
argu-
as much at
Authority admitted
oral
responsibili-
upon
the
also fixed
themselves
against
of such debt
an
ment. The creation
ty
providing
pay-
the revenue for
instrumentality
prohibited by
of the State is
of such debts.
ment
ex-
same
the Oklahoma Constitution
Boswell, supra,
¶ we were in- theAs argument proposed that the formed at oral proposed 30 The bonds in this case are undoubtedly carry an “A+” rat- bonds will self-liquidating and the statute authoriz- not rating simple: such ing. reason for The issuance, ing their O.S. know that the and investors both Financiers people not submitted of Oklahoma default on of Oklahoma dare not State will for their consideration. bonds cre- Regardless of indebtedness. its bonded against Capitol Improvement ate debt proposed are labeled these bonds whether Authority, instrumentality an of the State of “moral,” reality “legal” economic Oklahoma, solely through leg- to be serviced repay bondholders failure State’s general appropriation islative reve- devastating to Oklahoma’s in full would circumventing nues while State ability cripple our credit worthiness called for in Article vote of any project via future bond issues. finance § 25. Notwithstanding to the con- language trary, will indeed be backed these bonds ¶ My requires oath of office me of Okla- full and credit of the State faith support, obey and defend Constitution homa. Oklahoma, repeal it. Ac- State I cordingly, would hold following language, 29 The enunciated 10, §§ 23 is in violation of Article fifty applies bond issue years ago, by this over today: and 25 of Oklahoma Constitution. equal effect force and obligations and such contrac- Leasing, of its contractual In U.C. we held: may against obligation be enforced tual entity person enters into valid Where ordinary at law. action proper and a State with the State officials contract therefor, Id., at appropriation has made 43 at valid been (citation omitted). has to be sued has consented immunity governmental to the extent waived it large-scale financing cap- for future deficit FOR REHEARING ON PETITIONS Approxi- projects ital State officials. WILSON, J., with whom ALMA on-going mately one billion two-thirds LAVENDER, OPALA, WATT, JJ., join, legislation improvement dollar road will be dissenting rehearing: to denial financed via these so-called “moral obli- hallmark, Oklahoma’s gation” bonds. There is evidence the rec- Const., balanced-budget provisions, Okla. our suggests prison similar bonds for ord that 23, prohibits officials in all three art. majority’s is next. The decision construction government from cre- of our state branches legal impediment for is- will serve as no ating multi-year authorizing deficit debts obligation” suance of “moral spending. it is for the laudable Even when capital project. taxpayers improvement highway improvement to encour- purpose of eventually upon to foot the bill. will be called growth support, I age economic without voter not become indebted Const., § 25. approval. Okla. not inherit 2 The of 2000 should Class today’s highway improvements
the cost of *34 parents is the will of their
unless that
grandparents expressed at the ballot box.
prove proposed highway bond indebted- Court, Respondents. tion ness herein.
No. 87628. Justice, LAVENDER, WATT, with whom Supreme Court of Oklahoma. JJ., WILSON, join, OPALA ALMA dissenting: May majority, through original its de- 1 The today, sanctions the
cision and its vote financing long-term debt with-
State’s use of people. a vote of the The actions of
out of this
Legislature —and simply whit- ratifying them —do
Court mandates of away protecting at the clear
tle 10, §§ 23 and 25 of
Article
Constitution, gut the State’s their actions budget amendments. Pursuant
balanced rationale, the will never majority’s against binding obligation legally
create that contain certain if it issues bonds
itself disavowing the creation of
“magic” language debt, regardless of the economic such No decision of this of the situation.
realities fallacy. upon such a should rest disturbing about particularly isWhat of the current bond issue
the ratification iceberg. just tip of the Our
that this is prepare
citizenry be well advised would