Response to questions propounded by the Governor.
Questions propounded by the Governor to the Justices of the Supreme Court, under Code 1940, Tit. 13, § 34.
Questions answered.
To the Justices of the Supreme Court of Alabama.
Gentlemen:
Under the provisions of Code 1940, Title 13, Section 34, I request your opinion on important constitutional questions relating to the use of the surplus in the Property Tax Relief Fund for the purpose of reducing pro rata the State levy on all State Ad Valorem Tax assessments.
The Property Tax Relief Fund is set up by the provisions of Code 1940, Title 51, Section 16, the last paragraph of which reads: "Should any surplus remain in the property tax relief fund after the charges hereinabove set out have been paid off or discharged in accordance with the provisions of this section, then the governor is directed, by proclamation, to reduce pro rata the state levy on all state ad valorem tax assessments, and the tax collectors and tax assessors are authorized and required to enter such reduction pro rata in the assessment and collection of all state ad valorem taxes."
There is today in the Property Tax Relief Fund a surplus of $1,783,616.46.
Question No. 1. Would the use of this surplus by me, as Governor of Alabama, to reduce pro rata the State levy on all State Ad Valorem Tax assessments, as directed in the last paragraph of Title 51, Section 16, supra, offend the provisions of Sections 21, 42, 43 and 212 of the Constitution of Alabama, 1901, or any of them?
Question No. 2. Should your answer to question number one be in the negative, then would such reduction be applicable to taxes assessable as of October 1, 1941, and payable as of October 1, 1942, or would such reduction first become applicable to taxes assessable as of October 1, 1942, and payable as of October 1, 1943, in view of the provisions of Section 100 of the Constitution of Alabama, 1901?
For the convenience of the Court, I attach hereto a list of certain statutory provisions which have to do with the Property Tax Relief Fund.
Respectfully submitted, Frank M. Dixon, Governor.
Hon. Frank M. Dixon, Governor State of Alabama, Montgomery, Alabama.
Dear Sir:
Concerning your inquiries hereto attached, we respectfully submit the following advisory opinion:
The question for decision is succinctly stated by the Assistant Attorney General as follows:
"The surplus of $1,783,616.46 now in the Property Tax Relief Fund consists of the *Page 58 surplus in the Special Educational Trust Fund for the fiscal year 1940-41 which, under the provisions of the third paragraph of Section 16 of Title 51 of the Code of 1940, was transferred, on September 30, 1941, to the Property Tax Relief Fund. This paragraph of said Section reads as follows:
" 'Any surplus in the special educational trust fund on September thirtieth of each fiscal year, remaining after all appropriations now or hereafter payable from the special educational trust fund have been paid in full, shall be transferred into and become a part of the property tax relief fund.'
"The last paragraph of said section purports to authorize the use of this surplus, by the Governor, for the reduction of State ad valorem taxes. Said paragraph reads as follows:
" 'Should any surplus remain in the property tax relief fund after the charges hereinabove set out have been paid off or discharged in accordance with the provisions of this section,then the governor is directed, by proclamation, to reduce prorata the state levy on all state ad valorem tax assessments, and the tax collectors and tax assessors are authorized and required to enter such reduction pro rata in the assessment and collection of all state ad valorem taxes.' (Emphasis supplied.)
"Code 1940, Tit. 51, Section 16, derives from Act No. 127, S. 16, approved February 23, 1937, General Acts, 1936-37, Sp. Sess. p. 142."
It is established in this jurisdiction that while the legislature can not delegate its power to make law, it can make a law to delegate a power to a commission, board or governmental agency to determine some fact or state of things upon which the law makes or intends to make its use depend. Such is the effect of the decision in Alabama Public Service Commission v. Mobile Gas Co., 213 Ala. 50, 104 So. 538, 41 A.L.R. 872, wherein Johnson v. Craft, 205 Ala. 386, 407,87 So. 375 is cited. See, also, Ex parte City of Birmingham, 199 Ala. 9,74 So. 51; Opp Cotton Mills v. Administrator of Wage Hour Division, 312 U.S. 126, 61 S.Ct. 524, 532, 85 L.Ed. 624.
The power to levy taxes, that is to say, the fixation of the tax rate, within the limit prescribed by Section 214 of the Constitution is peculiarly a legislative function, not to be delegated to any officer or agency. In re Opinions of the Justices, 232 Ala. 56, 166 So. 706.
The last paragraph, above quoted, is omissive, leaves much to be implied.
Taken in connection with third paragraph, it would appear that on September 30th, the close of each fiscal year, the status of the Property Tax Relief Fund derived from or including the transfer of the surplus remaining in the Special Educational Trust Fund shall be fixed in amount; that any such surplus shall then be devoted to the reduction of the rate of taxation, namely, the 6 1/2 mills levied and assessed for the several state purposes. Says the statute: "Then the governor isdirected, by proclamation, to reduce pro rata the state levy on all state ad valorem tax assessments." [Italics supplied.] The tax assessor and the tax collectors are charged with the duty to enter such reduction pro rata, thus giving the taxpayer the benefit of a proportionate reduction in his taxes.
The statute fixes no date for the Governor's proclamation, but it appears to be contemplated that it be issued in time for a reduction in the rate of taxation upon assessments already made and in the hands of the collector for collection from and after October 1st. Certainly, it must be implied that this Property Tax Relief Fund, accruing at the end of each fiscal year, shall be used to replace the depletion in the several state funds during the same period such depletion has lowered the revenues available for the several governmental purposes.
Again, it must be noted the statute does not say the state levy is hereby reduced pro rata, and the Governor shall ascertain from available data the per centum or extent of reduction, and issue his proclamation declaring the same. He isdirected to reduce pro rata, c. But we are mindful of the rule that statutes should be so construed as to uphold their constitutionality, if they may be reasonably so construed.
Assuming that the words "Governor is directed * * * to reduce" are not to be construed literally, what then?
The entire paragraph, in view of the subject matter, in our considered opinion, undertakes to vest in the Governor in directory, not mandatory terms, a discretion as to when the occasion has arisen for a *Page 59 reduction of the tax rate and what that reduction shall be.
In the first place, the surplus in hand at the end of any fiscal year may be but a few hundred or a few thousand dollars. The constitution deals with the lawful tax rate in terms of mills and half mills. Sections 214, 215, 216.
The statutes levying taxes for the several funds now and from time immemorial have dealt in like terms. To us it is inconceivable and unreasonable to attribute to the legislature an intent to impose an arbitrary rule reducing the rate of taxation by an impractical fraction so as to absorb whatever sum, however small, might be in the Property Relief Tax Fund from year to year. Such construction would involve confusion and administrative difficulties and labors out of all proportion to benefit to the taxpayer.
A more compelling reason for holding the statutes directory and discretionary in character is that no basis of fact upon which the Governor shall figure the pro rata deduction is fixed by the statutes, nor available to the Governor. For the expression "pro rata", as used in the statute, to have a proper meaning, reference must be had to some rule or standard. 50 C.J. 792. Vol. 34, Words and Phrases, Perm.Ed., pp. 611-613.
The statute says shall reduce "all state ad valorem tax assessments." The assessment rolls, certified for the fiscal year, now in course of collection, do not and cannot include all the assessments to be so reduced. Escapes are to be assessed and collected all through the year. Ad valorem taxes on motor vehicles, probably the largest source of revenue from ad valorem taxes of any species of personal property, are not assessed and on the tax rolls, but are assessed and collected at one and the same time all during the year. Of necessity, all property, including escapes and automobiles, must have the same benefit of a reduced rate as property on the tax rolls. Otherwise, the tax law would run counter to the constitutional requirement that all property be taxed at the same rate. Const. §§ 211, 217.
It follows this statute could not accomplish its purpose unless the Governor exercise a discretion to adopt some tentative figure upon which to base a pro rata calculation, and, as we have indicated, exercise a further discretion as to the rate of reduction having in mind such substantial reduction in practical decimals as the fund in the Property Tax Relief Fund will replace. Such discretion to fix a tax rate from year to year is clearly a delegation of legislative power. Both the third and last clause of the statute, being interdependent, are unconstitutional and void. Const. § 43. It follows this surplus remains in the Special Educational Trust Fund, available only for appropriations for educational purposes. Code of 1940, Title 51, §§ 16, 910. Title 55, § 104.
Answering your inquiry Number 1, we therefore advise that the provisions of the statutes embraced in said inquiry are unconstitutional and void as violative of Section 43 of our Constitution and other constitutional sections need not be considered. There is therefore no occasion for an answer to your inquiry Number 2.
Most respectfully submitted,
LUCIEN D. GARDNER Chief Justice.
WILLIAM H. THOMAS Associate Justice.
VIRGIL BOULDIN Associate Justice.
Opinion of Justices BROWN, FOSTER, and LIVINGSTON The Governor's inquiry calls for an interpretation and application of the last paragraph of § 16, Tit. 51 of the Code of 1940, which said section purports to provide for a "property tax relief fund."
Said section of the Code contemplates that the Governor shall act promptly on the 30th of September of each year, when the comptroller draws the warrants payable out of said fund in amount sufficient to reimburse the general fund, the state soldiers' relief fund and the public school fund, reimbursing each of said funds "for revenues lost by the exemption of homesteads," the levy to be reduced is the levy of twenty-five cents on each hundred dollars of assessed value "for the use of the state and to raise revenue therefor," made by subsection (c) of § 19, Title 51, Code of 1940.
The reduction is to be made by proclamation of the Governor under existing law, Code of 1940, Tit. 51, § 16, in pari materia with § 19, which makes the levy and fixes the percentage thereof, upon the ascertainment of a fact — the relation or percentage the existing surplus bears to total revenue *Page 60 produced by said levy. This is not the delegation of legislative power by the Legislature to the Governor but is the delegation of power to ascertain a fact upon which the statute operates to reduce the percentage of the levy.
The question arises, can this statute be effectively applied without violating the letter and spirit of §§ 100 and 217 of the Constitution of 1901?
The following pertinent information of fact, matters of judicial knowledge, has been furnished by the State Commissioner of Revenue:
"For the fiscal year which commenced October 1, 1940 and ended September 30, 1941 the ad valorem taxes collected for the general fund, amounting to 25¢ on each $100 of the assessed value of taxable property (subsection (c), Section 19, Chapter 3, Title 51, Code of 1940) amounted to $1,928,483.89. These collections were made on assessments made by the tax assessor during the assessment year commencing October 1, 1939 and ending September 30, 1940 and represent net collections after the allowance of all homestead exemptions, errors, insolvencies, and commissions to assessors and collectors.
"During the current fiscal year (October, 1941 to September 30, 1942) the several tax collectors are collecting ad valorem taxes based on assessments made by the several tax assessors during the assessment year October 1, 1940 to September 30, 1941. These assessments, exclusive of the exempted homesteads and also exclusive of the motor vehicles, the assessments of which have not yet been reported, total $799,934,426. It is estimated that the assessed value of motor vehicles will amount to $32,000,000, making a total valuation which is subject to the levy for general State taxes amounting to $831,934,426. This valuation would produce taxes for the State general fund in the gross amount of $2,079,836.06. If we allow for the commissions of the assessors and collectors and also allow for errors and insolvencies it is estimated that the net collection for the general fund, based on these known assessments, will be approximately $2,050,000.00."
It is apparent from the foregoing that such reduction can not be applied to the levy for the tax year, 1940-1941, for the reason that the taxes under said levy have, in the main, been collected and no provision of law exists for a return of the money so paid to the taxpayers for whose benefit the reduction was intended to operate, and some of the taxes arising from said levy — the ad valorem levy on motor vehicles — has come into the state treasury through payments prior to November 15, 1940. Such payments represent more than one-third of the state levy. To reduce the twenty-five per cent of levy on other property, not including motor vehicles would result in violating, in spirit at least, the provisions of § 217, which require uniformity in the levy. Moreover, a large per cent of the tax from such levy applied to property other than motor vehicles has been paid since the 1st of October, 1941, and can not be refunded because there is no provision of law therefor. To refund without existing law, that is law enacted prior to the attempted reduction of the levy, would violate the letter and spirit of § 100 of the Constitution.
The statute can not be applied to the 1941-1942 levy for the reason that the taxes on motor vehicles have, in the main, been paid prior to November 15, 1941, and for like reason can not be refunded to the taxpayer.
It can not be applied to the levy on other than motor vehicles, because the amount of the tax that will arise therefrom can not be definitely ascertained, so as to make a pro rata reduction as contemplated by the law, and can not be so applied because such application would violate the uniformity provision of the Constitution. Therefore, we are of the opinion that said statute is incomplete and the last clause thereof is unenforceable, now or in future in its present form. It does not contemplate a permanent reduction but a reduction from year to year, depending upon the condition and amount of surplus in the "tax relief fund" on September 30th of each year. *Page 61