*1 of the order Accordingly, provision requiring reversed; otherwise, of a account is establishment savings is affirmed. judgment Moss, C. J., Bussey, Littlejohn, Brailsford and JJ-, concur. ROBINSON, Jr., Individually, representing E. the tax- Charles Carolina, Greenville, payers City Appellant, v. South WHITE, Jr., Simkins, Mayor; H. F. Cooper R. as James Joe Heller, Jr., Jordan, Joseph Bryson, Gregory, R. E. Max M. R. Wayne Wuestenberg, constituting the members of Greenville Council; City municipal corporation; McLeod, Attorney R. of South Daniel General the State Carolina, Respondents.
(182 744) (2d) S. E. *2 Robert A. Clay, of Esq., the Plaintiff-Ap- for pellant, Arnold, Gibbs, H. Greenville, Sinkler,
W. of Esq., Guerard, Charleston, Simons & Quinn, G. Timothy Asst. A Gen., tty. Columbia, the Respondents, for 28, 1971.
July
Littlejohn, Justice.
This action was instituted declaratory judgment on his own behalf and plaintiff representing taxpayers of the of Greenville to City of moneys pledging enjoin derived in the of Green- City ville, City for revenue bonds to issued securing off-street facilities. constructing purpose City City are the Council Mayor defendants General of the State of Attorney Greenville and South Carolina.
In his the Mayor plaintiff alleges complaint $5,500,000.00 Council Greenville City propose in accordance with City of Greenville 59-415, inclu- Bond Act 59-361 to the Revenue (Sections Carolina, sive, Laws of as amended). Code of South defendants, addition, that the Mayor In alleges plaintiff Council, utilize the “Off-Street also intend to 59-566.5, Act” inclu- 59-566 to Parking (Sections Facilities Carolina, sive, Laws of South as amended) Code of referred to as the authorizes a “Act”), (hereinafter as additional for revenue security municipality *3 issued, facilities, so much build to off-street parking as may derived from business license taxes the moneys reve- on the to interest necessary pay principal from on-street and bonds, nue to the extent that revenues meet off-street are insufficient to said principal parking interest payments. event from business moneys
Plaintiff that in the alleges bonds, such license taxes used to are pay for the of the moneys general will be unavailable of the now expenses City they applied, from will the result additional taxes moneys that of the It is City. necessary plaintiff’s expenses business to the that such position moneys extent used, will constitute license taxes are the bonds “bonded VIII, 7, Article of the debt” within the Section meaning Constitution, Carolina and that therefore Section 59- South Act is in it 566.5 unconstitutional allows (1A) bonded to incur debt without a City favorable vote as to the thereof City. creation electors qualified Plaintiff also that Section 59-566.5 is uncon- alleges (1A) in stitutional that it allows the de- revenues pledge rived from business license taxes to an unrelated project.
Defendants in their Answer admit that the City proposes bonds, the aforesaid revenue and intends to utilize the authorization embodied the Act as addi- pledge tional security be neces- moneys may from the business sary City’s license taxes. Defendants deny such a constitutes bonded pledge debt within the meaning of Article Section of the South Carolina Constitu- tion and deny that Section 59-566.5 is unconstitu- (1A) tional as in conflict with being virtue of its allowing of revenues to pledge an unre-
lated project.
The lower court found “that the Off-Street Fa- Parking cilities isAct constitutional in that the of business license taxes authorized does not thereby violate Article VIII, Section 7 of the South Carolina Constitution.” The injunction was denied. We reverse. sought relevant the “Off-Street Facili- portions Parking ties Act” are as follows: Further 59-566.5. as to bonds. powers municipalities
“§ Provide that revenue bonds issued this “(1) under interest, article shall be both as to payable, principal from such of the revenues of either or both of its portions off-street facilities and its on-street facili- parking ties as the shall municipality prescribe proceedings in the issuance of bonds to this but adopted article pursuant *4 to any revenues derived from on-street pledge respect shall in facilities reserve the parking right municipality to discontinue the use of on-street facilities when- ever traffic conditions so require; secure the
“(1A) Additionally payment principal and interest of bonds issued to this article a pursuant of so much of the shall as pledge moneys municipality from derive business license taxes as to necessary of and interest on principal bonds issued under any granted that all article, powers and covenant and agree
this taxes shall impose to such municipality enable the municipality as will be exercised to such degree ** authorized; herein first the covenant to discharge municipalities, 59-566.5 (1) of Section the terms Under to borrow authorized of the City including con- of bonds for the purpose revenue money by issuing facilities, for and to pledge off-street parking structing from the derived operation is not Sec- challenged. of the law That part facilities. as addi- the city authorizes tion 59-566.5 (1A) borrowed, the business bond moneys tional security extent that revenues operation license taxes to the to meet the are not sufficient pay- the facilities constructed the law is ment. This challenged. part VIII, of Article The relevant portion is as follows: South Carolina Constitution debt; certificates of indebted- Bonded “Article 7. § * * * debt; No fund; city bonded ness; refunding sinking incur bonded debt shall hereafter or town in this State indebtedness, shall exceed which, bonded existing including of the taxable centum of the assessed value prop- eight per debt shall be created without therein, no such erty thereof to as to the creation submitting question town, as provided electors of the qualified elections; unless for such this special Constitution be in shall electors on the question of such majority voting debt, none shall bonded such further favor of creating * * *” created: answer the court is called upon question follows: brief as appellant’s
phrased Code South Carolina “Is Section 59-566.5 (1A), as an Laws, 1962, attempt unconstitutional amended, a city ‘bonded indebtedness’ by authorize the creation of of Article Sec- with the provisions without compliance Carolina Constitution?” tion of the South *5 If the section is in with the constitutional code conflict unless not be issued until and provision, electors is submitted to the and approved question qualified in an election. The resolution of this by them appropriate one on a determination as to whether the question hinges the Act of business license tax revenue authorized by fact, and in intended to utilized admittedly City, law, or as a matter of constitutes “bonded debt” as that term is used in Article 7 of the VIII, Section Constitu- tion of South Carolina.
It has been that the city stipulated: proposes (1) $5,500,000.00 in revenue to the of which will be the revenue derived from both on-street and pledged off-street from the facilities to revenues parking, including be built with the bond that the money; city proposes (2) tax; derived from business license pledge moneys (3) and off-street will not be on-street facilities parking interest, sufficient to and to the exent principal sufficient, that such interest revenues are not principal will be from revenues derived from business license paid taxes; that, estimation, in the first (4) year opera- $313,000.00 tion of the facilities of the busi- approximately ness license taxes will be in addition to parking required revenue; facilities in fifth year operation, (5) $154,000.00 will be approximately required, $75,000.00 tenth will be year operation, approximately revenues derived and that thereafter required; (6) shortly from business license taxes will no longer required facilities. revenues supplement constitutional We first consider the provi- purpose sion. It is officials from city borrowing designed prevent first must without money having taxpayers repay limitation on the obtained their consent. The is a provision officials. It authority city city’s government protects structure, tax- financial but more it especially, protects who form the incurred. must debts payers repay constitutional limitation set forth purpose set 7 is the same as limitation *6 In of X, 11. the case Briggs
forth
288,
If business taxes pledged consideration of bonds as without revenue proposed, derived revenue constitutional then all municipal provision, on source other ad valorem taxes property from than was If all such revenue pledged likewise might pledged. fall on the ad the entire burden of would current expenses valorem owner would be called and the taxpayer to fund the full burden upon carry general obligations. the a hurried calculation that over It would from appear million than one and one-half dol- first more ten-year period over and lars would be required It neces- above revenues usable from lot facilities. swelled funds sarily follows that general presently license taxes by collections of business would depleted is to continue to that extent. If Greenville city government to its is facilities and services it provide people, inescapable val- have to be an ad revenue would replaced orem other alter- tax or some other source of revenue. The is facilities must be curtailed. nate that services and with posi- this court has no Obviously way knowing would have tive what effect this certainty plan financing on the it is realistic to as- but not taxpayers sume that be reduced the extent would budget amounts $313,000.00 the first year, corresponding years. subsequent the time
This is unlike those wherein a at city, proposal Here, debt, the fund to it. the city it creates a creates to use funds which would be otherwise available proposes for general purposes. extent that to
It is the contention of appellant service used to license unrelated funds tax) (business will be depleted funds of the city the general to re- then look authorities will taxpayers the city is result that the end fund. It argued plenish general of the bonds is burdened with that the taxpayer issued as as if had been general obligation fully they just unrelated funds bonds in an pledged. amount equal We agree. court predict nor this can
Neither the taxpayer solve the problem council would exactness how the is a funds, think there but we depletion created be the tax- final it will in the analysis real very danger *7 burden which would additional financial who bears the payer a new solved by adding be result. Whether problem taxes, in- or revenue, ad valorem or source of increasing existence, curtailing by other already taxes creasing the bond issue. services, bear the brunt of the people the debt that, payments operation, fact as a bookkeeping instead of from license tax gen- made from the business are foots the not alter the fact that taxpayer eral funds does the tax- effectively deprive of the would bill. Approval plan Article afforded by the constitutional protection payers and the that the plan financing 7. We think if business license tax violates spirit, pledging letter, It of the constitutional provision. per- not the very it could not do do indirection that which mits the city facts, the constitutional the stipulated direction. Under sufficient to necessi- certainty is jeopardized guaranty of this court. The taxpayer the intervention tate and require issued, until the bonds have been cannot until after wait his have been proven rights such time as it positively violated, from the court. to seek relief
It is common that in substantial city knowledge financing such licenses, are derived from collections as revenues per- mits, fines, forfeitures, sewer and other similar charges, sources. It is also common or ad knowledge valorem taxes are then added as needed make the dif- up ference to balance the budget.
At this time the cannot with certainty plaintiff positive that the ad valorem will used to make tax be prove up revenue and is not are depleted proof We required. convinced that the debt to the extent of the depleted will fall at least indirectly who taxes of upon people pay various kinds to the It fall city. will such a upon large seg- ment of the as to people effectually of tax- obligation payers generally.
This is a case of first this state impression involving Article Section 7 The cases municipal financing. X, Section 11 and involving state financing considerable interest but not under facts here. controlling
In al., the case of Trinidad v. et Haxby, Colo. 168, 315 P. (2d) Court Colo- (1957), Supreme rado had before it a situation similar to the one we quite must now determine. The of Trinidad proposed bonds to build a all net revenue hospital operation with such hospital, together part city’s cigarette meter fees and rev- unpledged enue of its electric light power system, would sufficient the bonds and interest. The arose question as to whether such an created a debt in con- obligation stitutional sense. That said: court *8 substance,
“In of Trinidad is that argument any all revenue derived from source other than municipal ad valorem taxes on can be property pledged pay- ment of contracted specific and that obligations by city, said thus secured first liens on obligations by reve- specific nues do not create ‘debts’ within the of the con- meaning stitutional It does not prohibition. wisdom of require Solomon to if construed out that be so point provision it would be all revenue other than possible prop- taxes to erty and facilities’ financing ‘projects may, not, be demanded the inhabitants a by and that the property taxes-would then be called upon carry full burden of general fund Such obligations. already burdensome, would soon become confiscatory.”
We conclude that Section 59-566.5 violates the (1A) provisions Section 7 of the Constitution of South Carolina. It deprives taxpayer the protection afforded by constitutional limitation.
Reversed.
Moss, C. J., J., Lewis, concur. Bussey Brailsford, dissent. JJ., Bussey, : (dissenting) Justice
The authorities cited order the lower court and in the briefs of counsel clearly fully support judg- ment below, which should be affirmed. None of these perti- nent authorities is discussed or to be attempted distinguished in the majority opinion.
For at least a half a the terms “bonded debt” and century indebtedness”, “bonded 7, contained in Article Sec. X, and Article Sec. 5 of the Constitution have been con- defined in sistently numerous decisions this by Court. These terms a signify primary obligation of the particular political involved,
subdivision secured ad primarily an valorem tax all levied upon the taxable therein. Among other cases Breeland, see: Jackson v. 184, 103 S. C. 128, 130; 88 S. E. Wharton, Bolton v. 163 S. 242, C. E. 454;
S. Thomson v. 92, Christopher, S. C. E. 139 S. 178; Matthews, Barnwell v. 712; 132 S. C. 128 S. E. v. Greenville Briggs 137 S. E. County, C. 135 S. 153. The bonds in the instant case are secured primarily by revenues from the facilities; secondarily by por- tion fees, of the business license and not at all an ad val- orem tax levied upon any taxable It fol- property. clearly lows that these do obligations not constitute a “bonded debt” *9 has as such term Constitution,
within the purview definition defined this Court. Our prior been consistently discarded currently established to be and well firmly too discussion. without even that the diversion of portion
Appellant argues cost of defray fees to help such into a “bonded debt” because possible converts ad valorem taxes resulting of an increase contingency think, I is, contention met fully from such This diversion. the rationale of opinion Briggs disposed cases therein cited analyzed. case and other various Trinidad Haxby, case of v. Colo. The Colorado is not in the opinion, 315 P. cited majority (2d) to be fun- all there Historically, at persuasive. appear quite laws of damental differences between pertinent But, be re- even if case state and those this state. re- without it should not followed garded persuasive, to, of, or discussion our own decisions. gard J., Brailsford, concurs. STATE, PITTS, Respondent, Appellant. v. Robert James
(182 738) (2d) S. E.