This is an appeal by the plaintiff from a decree of the circuit court in favor of the defendants, which was *Page 64 entered after the court had overruled a motion made by the plaintiff for the entry of a decree in his favor on the pleadings and had sustained a similar motion of the defendants for the entry of a decree in their favor. The plaintiff is a taxpayer. The defendants are the members of the State Tax Commission (§ 110-501, O.C.L.A.). Succinctly stated, the purpose of the suit is to require the defendants to comply with Oregon Laws 1947, chapter 477.
The prayer of the complaint seeks (a) a prohibitory injunction restraining the defendants from applying in the state tax levy for the fiscal year 1948-1949 any revenue yielded by the Personal Income Tax Act (§ 110-1601 to § 110-1638, O.C.L.A.) and by the Corporation Excise Tax Act (§ 110-1501 to § 110-1527, O.C.L.A.) except to reduce or offset property taxes; (b) a mandatory injunction requiring the defendants to make the findings and issue the certificate delineated in Oregon Laws 1947, chapter 477, § 2; (c) a mandatory injunction requiring the defendants, in preparing the state tax levy for the fiscal year 1948-1949, to deem as the tax base (Art. XI, § 11, Constitution of Oregon) the sum of $7,137,671.51.
The assignments of error are predicated upon contentions that the court erred in entering its decree and in failing to grant the relief sought by the prayer.
Although the attacked decree is based upon the pleadings, we deem it unnecessary to set forth a review of the latter. Apart from challenging the construction and applicability of Oregon Laws 1947, chapters 439, 466 and 477, the defendants otherwise concede the duties which our laws impose upon them. The plaintiff does not impugn the motives and fidelity *Page 65 to duty of the defendants. The sole issue between the parties is the construction and application of those laws.
Chapter 439, Oregon Laws 1947, is an amendment to the disposition section of our Corporation Excise Tax Act, and chapter 466 is an amendment to the disposition section of our Personal Income Tax Act. By the term "disposition section" we mean the part of the act which specifies the disposition which shall be made by the defendants of the revenue produced by the act.
Chapters 439 and 466 which are, respectively, amendments to the excise tax act and the personal income tax act adopted in 1929, contain virtually the same language. Each of those acts at the time of its adoption set forth in its disposition section this provision:
"It is the expressed intention of this act that the revenue derived from the tax shall reduce by corresponding amount the direct tax levy which the tax commission would otherwise apportion to the several counties of the state."
The excise tax act was chapter 427, General Laws of Oregon 1929, and the income tax act was chapter 448 of the same compilation. The title of the act last mentioned began thus:
"Providing for property tax relief by the levying, collecting and paying of taxes on incomes; * * *."
The title of the excise tax act contained no similar statement. The first section of chapter 448 follows:
*Page 66"This act shall be known and cited as the `Property Tax Relief Act of 1929.'"
We shall hereafter refer to it under that title although we shall omit "of 1929". The act just mentioned imposes a tax upon personal income. The other act secures its revenue from corporation income. Apart from the differences of which we have taken notice, the two acts are sufficiently similar so that the parties deal with them as though they were one. We shall do likewise. Both acts have been amended several times since their enactment in 1929.
Section 110-533, O.C.L.A., as amended by Oregon Laws 1941, chapter 440, renders it the duty of the tax commission, of which the defendants are the members, annually in July to determine the amount of revenue which the state will need for the year ahead and after having done so apportion the total among the counties. Section 110-534, as amended by Oregon Laws 1941, chapter 440, states the manner in which the commission must determine the state's needs. That section of our laws is basic in the delineation of the duties of the defendant commission. It is divided into five subsections, the first of which directs the commission to "prepare a tabulated statement, consisting of all the items of expense * * * to which the state will be subject under existing laws for the fiscal year * * *." Since there is no controversy concerning the items which must be included as "items of expense", we will quote that subsection no further, but will go on to the second subdivision, which says:
"From the sum total of the aforesaid items shall be deducted any surplus or estimated surplus remaining in the state treasury from all funds, however derived, if not applied by law to some special purpose."
It is the words "not applied by law to some special *Page 67 purpose" which is largely the battleground of this suit.
The third subdivision of § 110-534 says:
"The remainder so obtained shall be the total amount of revenue to be raised for state purposes for the current fiscal year, and such remainder shall be apportioned among the several counties in the manner hereinafter provided."
It will be observed that the provision starts with the words "The remainder". "The remainder" is the state tax levy (SchoolDistrict No. 1, Multnomah County v. Bingham, 174 Or. 540,149 P.2d 963), provided it does not exceed the sum permitted by Article XI, § 11, Constitution of Oregon, which we shall later consider. We deem important the fact that "the remainder" is the state tax levy, and shall have occasion to mention the matter again.
As we shall presently show, the defendant commission, since the enactment of these two tax acts and until about five months ago, regarded the revenue produced by the acts as "applied by law to some special purpose" and, therefore, did not make the deductions "from the sum total" mentioned in the language quoted from the second subsection of § 110-534. The deduction was made by the commission from the state tax levy. The "special purpose" to which the commission deemed the revenue yielded by the two acts "applied by law" was property tax relief. Such being its belief, it made the deduction from the tax levy and certified to the counties for collection only the balance. The agency did not view the taxes imposed by the two tax acts as additional sources of revenue for the avail of the state's general expenditures, but as substitutes, partial or complete, for the revenue which the tax on *Page 68 property would otherwise have been compelled to produce.
Article XI, § 11, Constitution of Oregon, says:
"Unless specifically authorized by a majority of the legal voters voting upon the question neither the state nor any * * * body to which the power to levy a tax shall have been delegated shall in any year so exercise that power as to raise a greater amount of revenue for purposes other than the payment of bonded indebtedness or interest thereon than the total amount levied by it in any one of the three years immediately preceding for purposes other than the payment of bonded indebtedness or interest thereon plus 6 per centum thereof; * * *."
We direct attention to the words "levy a tax" which appear in the quoted language. It is upon the "levy" that the restrictive effect of the constitutional provision operates. The levy is the tax base. The latter term has come into current use as denoting the maximum amount upon which the six per cent increase authorized by Article XI, § 11, Oregon Constitution, operates. The point where the deduction of the revenue produced by these two acts is made is highly important, as we shall now show. If the deduction is made from "the sum total", as that term is employed in subsection 2 of § 110-534, O.C.L.A., previously quoted, the amount available for expenditures is expanded in the amount of the produced revenue, but the tax levy and the tax base are reduced to the same extent. In fact, if the produced revenue equals or exceeds "the sum total" (subsection 2 of § 110-534) there will be no need for a tax levy and, hence, in three consecutive years of such operation the state would lose its tax base. If the deduction is made from "the remainder" (subsection 3 of § 110-534), that is, from the tax levy, expenditures are subject *Page 69 to whatever control is exerted by the aforementioned constitutional provision, and a tax levy is necessary, at least as a bookkeeping matter. As is stated in School District No. 1,Multnomah County v. Bingham, supra, the levy of a tax and the collection of the levied tax are distinct operations. Hence, if the deduction of the revenue produced by these two tax acts is made from "the remainder", the latter remains as the tax levy and the tax base. The deduction, in that event, from the tax levy is nothing else than a step in the collection of the tax. It is the application of money already collected for a specific purpose to the intended purpose. In that way the tax base is preserved.
Recently the commission acting upon the advice of the Attorney General, given February 13, 1948, signified a purpose to deem revenue produced by the two acts, or, at any rate, some which is now on hand, available for the discharge of the general obligations without a levy first taking place. After the commission had shown an intention to depart from its previous practice, the plaintiff instituted this suit. The issue is whether or not the revenue produced by the acts is "applied by law to some special purpose." The plaintiff urges that it is; the defendants take the other view.
In our opinion, the issue is largely governed by chapters 439, 466 and 477, Oregon Laws 1947. In view of the fact that chapters 439 and 466 are virtually alike, we shall employ for our purpose chapter 466, and will refer to it as the 1947 disposition section. We now quote it (chapter 466):
"All costs incurred in the administration of this act shall be paid out of the revenue from the tax imposed by this act and the net revenue from the tax, after deduction of said administrative costs, shall become a part of the general fund in the hands *Page 70 of the state treasurer. Such revenue, like that from other sources, shall be taken into account by the tax commission in making the annual levy for state purposes, but shall not affect the base for computing the limitation on such levy imposed by section 11, article XI, Oregon Constitution. It is the expressed intention of this act that the net revenue derived from this tax shall be applied first to reduce the state tax levy on property inside the 6 per cent constitutional limitation and then to reduce the state levy on the property outside said constitutional limitation. In the event that the revenue from this tax and the revenue from any other tax on or measured by net income for any fiscal year shall exceed the amount necessary to eliminate the state levy on property otherwise required to be paid into the state treasury by the several counties for such year, the remainder of such revenues shall be accounted in the state levy of taxes and applied as follows:
"(1) To reduce by corresponding amount the property tax otherwise to be apportioned to the several counties for the state elementary school fund, and the state treasurer hereby is directed to transfer such amount to an account in the general fund to be known as the state elementary school fund account. On or before October 15 of each fiscal year the secretary of state shall draw warrants on the state treasurer, payable to the treasurers of the several counties, for not less than one-half of the respective amounts apportioned in the state levy of taxes for payment from said state elementary school fund account; similarly, the secretary of state shall draw warrants on or before April 15 of such fiscal year covering the entire remainder of said account.
"(2) Next, from the remainder of such revenue, if any, the state treasurer shall transfer an amount not in excess of five million dollars ($5,000,000); provided, however, in each of the fiscal years 1945-1946 and 1946-1947 an amount not in excess of eight million dollars ($8,000,000) shall be so transferred *Page 71 to a fund in the state treasury to be known as the state school support fund, for apportionment as provided by law in reduction of property taxes otherwise to be levied for the support of the public elementary and high schools.
"(3) Next, the remainder of such revenues, if any, in an amount not exceeding five million dollars ($5,000,000), the state treasurer shall transfer to an account in the general fund to be known as the property tax reduction account, to be applied in the state levy of taxes for the next ensuing fiscal year for the several purposes and in the order hereinbefore stated; provided, however, that in the event that that certain measure enacted by the forty-third legislative assembly of the state of Oregon, designated and introduced in such assembly as house bill No. 415 and which was referred to the people by said legislative assembly, shall not be approved by the people, then there shall be transferred to such account, in addition to the funds herein provided, in each of the fiscal years 1945-1946 and 1946-1947 the additional sum of five million dollars ($5,000,000).
"In the event that the amount in said property tax reduction account at the close of any fiscal year plus the estimated receipts from this tax and from any other tax on or measured by net income, as accounted in the state levy of taxes for the next ensuing fiscal year, shall exceed by not less than five million dollars ($5,000,000) the total amount required to offset all the aforesaid state taxes otherwise to be levied on property, including the tax for the state elementary school fund and the aforesaid transfer to the state school support fund for such fiscal year, together with the additional sums herein required to be transferred in each of the fiscal years 1945-1946 and 1946-1947 to the property tax reduction account, then the state treasurer shall transfer to a fund in the state treasury to be known as the state and county school fund any excess over the amounts heretofore specified up to *Page 72 an amount aggregating with other moneys in said fund, not more than ten dollars ($10) per capita for all children within the state between the ages of 4 and 20 years, as shown by the last preceding school census compiled and certified by the superintendent of public instruction, for apportionment as provided by law in reduction of property taxes otherwise to be levied for the county school funds of the several counties. In the event that at the end of any fiscal year, the estimated receipts from this tax and any other tax on or measured by net income, required to be accounted for in the state levy of taxes for the ensuing fiscal year, shall exceed the aggregate of the amounts hereinbefore required to be transferred or accounted for, there shall be allowed upon tax returns for tax years beginning in the calendar year during which such excess is determined a discount of 5 per cent for each one million dollars excess or major part thereof; provided that in the case of fractional years, the discount shall be applied to the 12 months succeeding the beginning of the first such fractional year; and further provided, that no discount shall be determined for the calendar year 1947 or the calendar year 1948 or for fiscal years beginning within each of said calendar years."
The commission's brief, in endeavoring to support the construction which it recently placed upon chapter 466, repeatedly refers to the disposition section of the property tax relief act as adopted in 1929. The extended arguments about the 1929 disposition section appear to us as being a battle within a grave, for virtually all of the 1929 disposition section has been carried away by the erosion of amendment. As originally adopted (see chapter 448, § 37, General Laws of Oregon, 1929), the section read:
"* * * The proceeds of this tax, like that from other miscellaneous sources, shall be taken account of by the tax commission in making the annual levy *Page 73 for state purposes. It is the expressed intention of this act that the revenue derived from the tax shall reduce by corresponding amount the direct tax levy which the tax commission would otherwise apportion to the several counties of the state. In December, 1929, or the first year for which this act shall become operative, and for every year thereafter, the commission shall estimate the total amount of revenue to be raised under the several millage taxes in force and the amount necessary for miscellaneous state purposes as enumerated under section 4215, Oregon Laws; and shall deduct therefrom any surplus or estimated surplus remaining in the state treasury from all funds, however derived, and also the estimated net proceeds of this tax for the next ensuing calendar year. Only the remainder left after subtracting said surplus and the estimated receipts of this tax shall be apportioned among the several counties as provided by law."
In its brief the commission concedes that, beginning with 1929 and continuing until five months ago, it interpreted the excise tax act and the property tax relief act as meaning that the revenue which they produced was devoted by law to a special purpose and that it was not available for general disbursement. The brief argues, however, that the repeated interpretations were erroneous. After the brief has reviewed the disposition section of an act which preceded the present one, it says:
"The court may well ask — why, if the original distribution provisions of the law were so clear in treating income tax collections as a part of miscellaneous receipts, did the tax commission follow a different computation in its levies beginning with 1930? Those levies were, of course, the responsibility of a differently constituted commission and should not bind the present commission; nevertheless, the court is justified in asking — `why?'"
We shall later give the defendants' explanation. *Page 74
By reverting to our quotation of the 1929 disposition section it will be seen that it includes the phrase, "The proceeds of this tax, like that from other miscellaneous sources, * * *." The quotation which we made from the commission's brief which speaks of "miscellaneous receipts" refers to the words in the 1929 disposition section which we quoted. The 1943 legislative assembly eliminated from the section the word "miscellaneous". Oregon Laws 1943, chapter 441, § 1.
Frequently courts derive help in the construction of statutes by taking note of their history and antecedents. We shall, therefore, go back to the beginning of the state's experience with income tax legislation. In so doing, we shall pay attention to the commission's interpretation of our first income tax statute and the reasons which prompted the interpretation.
As early as 1923 an income tax act was adopted by this state: Chapter 279, General Laws of Oregon 1923. In the eighth biennial report of the defendant commission (1923-1924), page 12, is set forth the reasons which prompted the enactment of the 1923 act. It is there said:
"Oregon is tax valued at only a little more than one billion dollars. The needs of the various governmental functions throughout the State necessitate an annual tax levy of more than forty million dollars. This means over four per cent annually for taxes, a rate greater than property should be required to bear. A means had long been sought to lessen this burden and attempts at income tax legislation were made during different sessions of the legislature, including the regular 1919 session, the special session of 1920 and the regular session of 1921, but that method of taxation did not become a reality until the enactment of house bill No. 350 by the thirty-second legislature. This act, known as chapter 279, General Laws of Oregon, was referred to the *Page 75 people and approved by them at the special election of November 6, 1923, and became effective as of January 1, 1923."
At an election held in November, 1924, the act was repealed. The 1927 legislative assembly referred to the people for approval or rejection chapter 129, Oregon Laws 1927, which was another income tax act. The voters rejected it. Then came the act now before us.
The 1929 act was part of a comprehensive program for solving the taxation problem. Companion measures to the property tax relief act were the excise tax act and the intangibles tax act. In addition to those measures, the 1929 legislative assembly remade the tax commission and conferred additional duties and powers upon it. The commission's eleventh biennial report (1929-1930) to the legislative assembly dwelt at length upon the state's tax laws. One chapter of the report which was headed Property Tax Relief, said:
"So much has been said in support of the popular view that real estate is heavily overburdened under the general property tax that it would appear unnecessary to emphasize the urgent need of property tax relief. Evidence clearly indicates that state and local taxes have grown into a burden on real estate entirely disproportionate to its value or income.*Page 76"Sentiment in favor of tax relief for real property has been practically unanimous but the means of affording such relief has developed a wide diversity of opinion. * * * Obviously, if real estate is heavily overloaded under the general property tax, as the facts clearly indicate, the only practical remedy involves the shifting of a part of the load to broader shoulders. There can be no other logical solution."
The foregoing statements were followed by chapters devoted specifically to the excise tax and the property tax relief acts.
As we have already said, the tax commission, in administering the 1929 property tax relief act, deemed that its revenue was assigned to a special purpose. It took the same position in regard to the excise tax act. The following quotation, taken from the commission's brief, brings into sharp contrast the construction placed by the commission upon the newly adopted 1929 act as distinguished from the construction which the previous commission had placed upon the 1923 act:
"The method followed by the commission under the 1923 law was to add income tax collections to miscellaneous receipts from other sources, deducting the total from the requirements of the state, leaving only the balance as the amount to be levied for state purposes. This procedure was entirely in accord with the distribution proceeding of the 1923 and the 1929 laws. The language of those laws is so clear that it is difficult to understand at the present time why the commission changed its levy practice following the 1929 law."
It will be observed that the commission's construction of the 1929 act was manifested, not only in its biennial reports, but also by entries and deductions which it made annually in determining the state's tax levy.
By reverting to our synopsis of § 110-534, O.C.L.A., one will see that subdivision 2 of that section says that "from the sum total of the aforesaid items," that is, of expenses, "shall be deducted any surplus * * * remaining in the state treasury from all funds, however derived, if not applied by law to some special purpose." It was at that point that the commission which administered the 1923 act made the deduction. *Page 77 But the commission which went into office when the 1929 act was adopted made the deduction from the state tax levy; that is, from "the remainder" as that term is used in subdivision 3 of § 110-534, O.C.L.A. The point of deduction, as is shown in a previous paragraph of this opinion, is vitally important because it not only affects the total of permissible expenditures, but determines (a) the state's tax levy, and (b) the state's tax base. The new commission, unlike its predecessor, regarded the revenue yielded by the two tax acts as special purpose money, available only for the reduction of the levy. The present commission, after having proceeded since 1929 in the manner just indicated, now wishes to abandon its practice and embrace the course which its predecessor pursued in administering the short-lived 1923 act.
The part of the brief filed by the commission which we shall now quote recites facts which, according to the plaintiff, indicate in part why the new commission adopted the construction which it embraced in its administration of the 1929 act:
"The legislature in wording the original 1929 income tax law had in mind not only the practical effects of the language used in the law but, equally important, the certainty or near certainty that the act would be subject to a referendum. This referendum did occur. Thus, it was important that the voters be advised in simple language of the legal effect accomplished by paying the proceeds of the income tax into the general fund to be used `like that from other miscellaneous sources' by the tax commission in making `the annual levy for state purposes.' That language would have meant nothing to the average voter as to the property tax relief resulting to him; therefore, the legislature added: `It is the expressed intention of this act that the *Page 78 revenue derived from the tax shall reduce by a corresponding amount the direct tax levy which the tax commission would otherwise apportion to the several counties of the state."
Equally persuasive with the new commission, as we shall presently show by quotation from its brief, was the danger to the state's tax base if the commission continued the practice inaugurated by its predecessor of making the deduction from "the sum total (subsection 2 of § 110-534, O.C.L.A.). The commissioners saw that if they continued their predecessors' course, the tax base might vanish and the state have no means of raising revenue if these tax acts were repealed or if they brought in a dwindling amount of revenue.
The opinions previously announced in this case bestowed attention upon the construction given to the 1929 act by the defendant commission, and in one of the dissenting opinions some sentences taken from several of the commission's biennial reports are quoted. Those interpretations, of course, concerned the original act. We are now confronted, not with the original disposition section, but with the 1947 section. We, however, deem the repeated interpretations as important, not only because the commission's brief frequently bases argument upon the 1929 disposition section, but also because the interpretation of that section may have influenced those who wrote the 1947 section. The commission, of course, concedes that its reports contain the statements just mentioned, and likewise admits that its previous interpretations of the act are adverse to its present position. Its brief says:
"The tax commission cannot help but be embarrassed at the `dicta' quoted from its biennial reports to the legislature."*Page 79
Were we now called upon to construe the 1929 disposition section, it would be important for us to determine whether the commission's interpretation of the section is correct. But, we are not required to do so. The important fact now is the circumstance that for nineteen years the commission, in obedience to statutory requirements, placed before the legislature its interpretation of the disposition section, and the legislature, far from rejecting that interpretation, based future legislation upon it.
The biennial reports show that the commission deemed the revenue produced by these tax acts as special purpose money, available for the discharge of the state's general obligations only after the obligations had been made the subject of a levy. One can readily infer, as we shall now show, that the legislature concurred in that view. Subdivision 10 of § 110-505, O.C.L.A., includes among the duties which the commission shall perform the following:
"To report to the legislative assembly, at each regular session thereof * * * the proceedings of the commission, and such other matters of information concerning the public revenue as may be deemed of general interest."
The commission has faithfully performed that duty, and its biennial reports are worthy of attention by all who are concerned with the taxation problem. Subdivision 11 of the same section of our laws renders it the duty of the commission:
"To recommend to the legislative assembly at each regular session thereof such amendments or modifications of the Constitution or laws as may seem proper or necessary * * *."*Page 80
When the legislature received biennially the commission's reports in which was set forth, among other matters, the agency's construction of the disposition section, it made no amendments to the acts setting aside the commission's construction. To the contrary, the amendments which were adopted are readily susceptible to an interpretation that the legislature concurred in the agency's interpretation. For instance, Oregon Laws 1939, chapter 488, § 19, Oregon Laws 1943, chapter 441, § 1, Oregon Laws 1945, chapter 408, § 1, and Oregon Laws 1947, chapter 466, § 1, made important changes in the disposition section. In the form given to it by the 1939 amendment, the section read:
"It is the expressed intention of this act that the revenue derived from the tax shall reduce by corresponding amount the direct tax levy which the tax commission would otherwise apportion to the several counties of the state. Said proceeds shall be first applied to reduce the state tax levy on property inside the six per cent constitutional limitation, and the remainder of such proceeds, if any, shall then be applied to reduce the state levy on property outside said constitutional limitation, * * *. Should said proceeds in any year exceed the amount necessary to entirely eliminate the state levy on property otherwise required to be paid into the state treasury by the several counties, the excess shall be applied to reduce by corresponding amount the property taxes otherwise to be apportioned to the several counties for elementary school purposes * * *."
The foregoing is clear, specific language and states exactly where the deduction must be made. Nothing is left in doubt or subject to conjecture. The amendatory language seizes upon the entry in the commission's tabulated statement entitled State Tax Levy, *Page 81 and says: "This is the place." Let us read once more the legislative mandate; it is: "* * * revenue derived from the tax shall reduce * * * the direct tax levy". Shortly it adds that the net income produced by the act "shall be applied to reduce the state tax levy." We have seen that the term "state tax levy" has a well-defined meaning, and that ever since 1930 the defendant agency, with the knowledge of the legislature, has made the deduction from the state tax levy. In short, the defendant agency, after coining that phrase, employed it in its tabulatory statement and made the deduction at that point. Thus the legislature, by adopting the 1939 amendment, approved the agency's practice and transmuted the practice into statutory form. It directed the agency to continue the course it had embraced.
We now leave the 1939 amendment. The 1943 session (Oregon Laws 1943, chapter 441), as we have already indicated, deleted the word "miscellaneous" from the second sentence of the disposition section. In addition, the 1943 amendment authorized the use of the revenue produced by these two tax acts to discharge additional obligations included in the state levy which the owner of property would otherwise have to meet. It retained the above-quoted language which we took from the 1939 amendment.
About a year after the 1943 legislative assembly adjourned, this court announced its decision in School District No. 1,Multnomah County v. Bingham, supra, wherein we interpreted the meaning of the term "tax levy" in precisely the same way as the defendant commission had been doing. The decision approved the action of the assessor of Multnomah County in subtracting from the levy the amount of money received by the district as its allocated share of the state school *Page 82 fund. The latter is raised by the very taxes now under consideration. Thus, there was approved a procedure closely analogous to that pursued by the defendant commission.
About six months after the Bingham decision was rendered, the 1945 legislative assembly convened. It amended still further the disposition section but retained unimpaired the provisions which said that the revenue earned by the act "shall be applied first to reduce the state tax levy". We believe that we are warranted in assuming that the legislature was familiar with the Bingham decision, and, being familiar with it, acted in accordance with its holding. The 1945 amended section directed the use of revenue produced by this tax to defray additional charges which otherwise would have to be met with money secured by taxes upon property. We deem those provisions immaterial to the issues before us.
We now go on to the 1947 disposition section. A preceding paragraph of this opinion quotes it in full. It, and not its antecedents, controls this suit. Its predecessors are important only so far as they cast light upon the meaning of the 1947 section. And the important matter concerning the predecessors is not their actual phraseology but the interpretation which was placed upon them, for, after all, words are significant only so far as they impart ideas.
Now let us analyze the 1947 disposition section. By reverting to our quotation of it, it will be seen that its first sentence, after charging all revenue produced by the act with the cost of administration, assigns the balance to the state's general fund. A glance at the financial statement which appears at page 1191 et seq. of 1947 Oregon Laws shows that much of the money *Page 83 in the general fund is carried in accounts. A subheading of the financial statement reads: "Receipts from following sources credited to General Fund and appropriated for specific purposes." Under that subheading we find this entry: "Property tax reduction account, state income taxes — $38,800,000.00." In that way the daily balances of the many accounts are rendered available for general disbursements. For all other purposes each account remains a separate unit.
We go on to the second sentence of the 1947 disposition section, which says:
"Such revenue, like that from other sources, shall be taken into account by the tax commission in making the annual levy for state purposes, but shall not affect the base for computing the limitation in such levy imposed by Section 11, Article XI, Oregon Constitution."
The quoted words beginning with "Such revenue" and ending with "state purposes" are the same as the similar clause in the 1929 disposition section, with the exception that the latter includes the word "miscellaneous" immediately preceding "sources". We are aware of no reason why the foregoing words, taken from the 1947 disposition section, should be interpreted less favorably to the plaintiff than their antecedent in the 1929 section. Further, they are general words which are shortly followed by specific words which delineate precisely what the legislature wished to be done.
We come now to the third sentence of the 1947 disposition section, which begins thus:
"It is the expressed intention of this act that the net revenue derived from this tax shall be applied first to reduce the state tax levy on property inside *Page 84 the 6 per cent constitutional limitation and then to reduce the state levy on the property * * *."
The words which begin with "It is" and end with "shall", together with those mentioned in the preceding paragraph, are all that remain of the 1929 disposition clause.
It is manifest from the "expressed intention" sentence just quoted that that provision imposes upon the defendant commission the duty to reduce "the state tax levy" with so much of the net revenue produced by the act as is necessary for that purpose. The reduction must be made in "the state tax levy" and not in any other entry of the commission's tabulations.
We deem so significant the words of the 1947 act that the reduction must be made in "the state tax levy" that we will thrash over once more some facts which have already had our attention. Ever since the commission was reorganized in 1929 it has made the deduction in the tax levy. It will be remembered that a state tax levy, if it does not exceed the limitation invoked by Article XI, § 11, Oregon Constitution, is determinative of the tax base. The latter, of course, is the highest of three consecutive years. We have shown that the defendant commission, when faced with the ambiguous 1929 disposition clause, resolved doubts in favor of the preservation of an adequate tax base and, therefore, made the deduction, not from "the sum total" (subsection 2 of § 110-534, O.C.L.A.), but from the levy (subsection 3 of § 110-534, O.C.L.A.). In that way the commission accomplished two important purposes: (1) it employed the proceeds of this tax to the special purpose of property tax relief, and (2) preserved for the state an adequate and stabilized tax base. We have seen that as early as 1939 the legislature *Page 85 confirmed the course which the commission was taking. We now quote again from the commission's brief:
"It may be conceded at once that the legislature has from the inception of the income and excise tax laws, attempted to preserve the property tax base. Since 1939 when the particular saving language was omitted, the language of the distribution sections has carried the legislative assumption that the base had been preserved, and the language of the present law provides that the net revenue derived `shall be applied first to reduce the state tax levy on property inside the 6 per cent constitutional limitation * * *.'"
Reading on, we come to the paragraph which we already quoted and which suggests:
"The court may well ask — why, if the original distribution provisions of the law were so clear * * * did the commission follow a different computation * * *?"
After that paragraph is the following:
"The purpose appears fairly obvious when considered in the light of the situation which existed at that time. Remembering the quick repeal by the people of the 1923 income tax law and the loss of tax base as a result of applications of income tax receipts to reduce the net levies for the several years that collections continued under that law, the legislature declared its emphatic desire in the concluding paragraph of the distribution sections of the 1929 acts that the tax base should not be lost in the event of the repeal of the acts. The declaration of this purpose, however, was in no way tied to the express direction requiring the commission to add income tax receipts to other miscellaneous receipts in arriving at the net amount to be apportioned among the several counties as a direct property *Page 86 tax levy. The original commission therefore had to seek a bookkeeping method which would accomplish the desired use of income tax funds, and at the same time show a technical preservation of the existing tax base unreduced by income tax applications."
Continuing, the brief shows that in order to accomplish the double purpose of (1) using property tax relief money for property tax relief, and (2) retaining the tax base, the commission made the deduction from the tax levy.
In the Official Voters' Pamphlet (§ 81-2109, O.C.L.A., amended by Oregon Laws 1941, chapter 409) issued for the special election held June 22, 1945, appears the following:
"Under Oregon law, income tax revenues can be used for property tax reduction and for no other purpose. In order to make legal use of income tax revenues for this proposed building fund it is necessary to levy it as a property tax to be offset by income tax revenues, and a property tax, above the 6% limitation, can only be levied by a vote of the people. Members of the legislature gave this proposal almost unanimous approval."The bill further provides that in case this measure is not approved by the voters, this $10,000,000 of income tax revenues will be collected anyway, and held in surplus reserve."
This argument was signed by Senator Dean H. Walker, Representative Giles L. French and Representative Burt K. Snyder, who were authorized to present the matter to the voters on behalf of the legislature (Oregon Laws 1945, page 479).
There is before us a printed document, sixteen pages in length, prepared by the defendant commission and *Page 87 entitled State Levy of Taxes for the Year 1947-1948. A perusal of it shows that the commission makes the deduction of the revenue produced by these two tax acts from the state tax levy, and that our delineation of the commission's practice is correct.
Without resort to further analysis, we express our conclusion that the 1947 disposition section directs the defendant commission to make the deduction of the net income yielded by the excise tax and the property tax relief acts from the state tax levy. In our analysis we have frequently mentioned the commission's practice. The latter we have deemed important only so far as it casts light upon the legislative meaning. We think that the meaning of the 1947 disposition section is clear.
Before analyzing other contentions concerning features of the 1947 disposition section, we shall take notice of Oregon Laws 1947, chapter 477, which reads:
"Section 1. Prior to July 1, 1948, the state budget director shall report to the board of control the expenditures under appropriations made by the 44th legislative assembly and his estimate of the requirements for expenditure during the remainder of the biennium ending June 30, 1949. The board of control shall review the report and make a determination as to the amount needed to meet necessary requirements and, in its discretion, certify that amount to the state tax commission."Section 2. At the time of making the apportionment of required state revenues for the fiscal year beginning July 1, 1948, the state tax commission shall make a finding as to whether or not the revenues available within the six per cent limitation imposed by section 11, article XI, of the constitution of Oregon, plus estimated miscellaneous receipts, are in an amount sufficient to meet the requirements of appropriations for which the commission is required to levy a tax, taking into account the *Page 88 determination and certification by the board of control of the amount needed to meet requirements for expenditures during the remainder of the biennium ending June 30, 1949, and the items referred to in subsection 1 of section 110-534, O.C.L.A., as amended. If the commission finds that said revenues, plus estimated miscellaneous receipts, are insufficient therefor it shall certify to the secretary of state that, to meet said requirements as determined and certified by the board of control, a necessity exists for levying a tax in excess of the said constitutional limitation.
"Section 3. Upon certification by the tax commission to the secretary of state, he shall, in the manner provided by law, refer to the people of the state of Oregon, for their approval or rejection, the question of whether such levy in excess of the said limitation imposed by the constitution shall be made. In no event shall said proposed levy be in an amount in excess of $8,000,000. The secretary of state shall be and hereby is authorized and directed to set aside two pages in the official pamphlet containing measures referred to the people to be voted on at the next special or general election in which an argument in support of this act may be printed. A joint committee consisting of one senator to be appointed by the president of the senate and two representatives to be appointed by the speaker of the house shall prepare such argument and file the same with the secretary of state.
"Section 4. If the majority of the legal voters voting upon said question authorize such levy in excess of the limitations imposed by section 11, article XI, of the constitution, said levy shall be offset, as are other state taxes, by funds derived from taxes on or measured by net income.
"Section 5. If, upon making its estimate for the fiscal year beginning July 1, 1949, the state tax commission shall find that the amount so levied is not needed, taking into consideration unexpended *Page 89 balances of appropriations, the levy shall not be made."
Briefly stated, and omitting details, section 1 of the above act requires the preparation for the period ending June 30, 1949, of a statement showing all contemplated expenditures. Section 2 renders it the duty of the defendant commission to enter a finding as to whether revenue available within Article XI, § 11, Oregon Constitution, "plus estimated miscellaneous receipts" will meet the contemplated expenditures. When this work has been done, the state possesses a current balance sheet. If the latter shows that a deficit will be incurred, a further provision of section 2 directs the commission to certify to the secretary of state that "a necessity exists for levying a tax in excess of the said constitutional limitation." Section 3 authorizes the secretary of state, upon receipt of the certificate, to refer to the people for their approval or rejection the issue as to whether a levy shall be made to meet the deficit. According to section 4, the commission must, if a deficiency levy is favored by the voters, offset the levy "by funds derived from taxes on or measured by net income."
It is manifest from the above that money on hand and produced by either of these two tax acts was not deemed by the legislature as "miscellaneous receipts." The act directs that if a deficiency levy is authorized by the voters, the income tax money must be used to offset the levy. Hence, the legislature in adopting chapter 477 made it clear that income tax money is special purpose money available only to offset tax levies. Obviously, income tax money on hand can not be counted twice — once as miscellaneous receipts, and a second time as offset money. If counted as miscellaneous *Page 90 receipts, there would be no deficit, no need for a deficiency certificate and no need for an election. It goes without saying that chapter 477 authorizes income tax money to be counted and used only once. It can be used only after a levy has been made. Its use is confined to a reduction or offsetting of the levy.
We now return to the 1947 disposition section. The defendant commission argues that a surplus in the general fund created by this tax act must be deducted from "the sum total" of expenditures (subsection 2 of § 110-534, O.C.L.A.), and not from the tax levy. By reverting to our quotation of the 1947 disposition section, it will be observed that it nowhere uses the word "surplus". If the legislature, in writing that law, intended that any revenue produced by our income tax statute should be regarded as surplus, it did not so indicate. To the contrary, by constantly employing the term "account" in reference to the revenue produced by the act, it seems manifest that the legislature had no thought of deeming any part of the revenue as surplus. Moreover, the 1947 disposition section includes among its provisions a clause whereby those who will file returns in 1949 and other future years will pay less than was paid this year, if the account possesses an excess after all charges against it have been defrayed. The reduction in the tax will be at the rate of five per cent for each one million dollars in the excess. It is, therefore, seen that if at the end of the current fiscal year the account possesses an excess, the discount will go into effect automatically and next year's income taxpayers will pay less. If the excess is sufficiently large, they will pay nothing. The curtailed returns will, of course, diminish the account. Their lessened amount, together with authorized appropriations, may *Page 91 cause the account to vanish, with the exception of the five million dollar nest egg for which the disposition clause makes provision. We know of no reason to believe that the legislature was thinking of a surplus when it wrote the 1947 disposition section. It is true that it made provision for a possible excess, but it used the latter as the basis for graduating the rate of taxation upon future returns. Clearly, it intended the excess to remain in the account, for if it was disbursed by the defendants it would not be available for (1) lowering the rate upon next year's returns, and (2) taking the place of the future curtailed revenue. Thus, we see that the legislature has put to use every dollar in the account and has not deemed a single penny as surplus. Whenever there is no excess, the rate fixed in 1929 governs; if there is an excess, it remains in the account, but the rate is lowered. Whether or not there was a surplus in some bygone year is immaterial. We are concerned only with the facts as they appear today from the record placed before us by the parties.
In short, our conclusion is that the net income produced by these two tax acts must be deducted from the state tax levy. The latter, if not violative of Article XI, § 11, Constitution of Oregon, is the state tax base.
The question remains whether Article XI, § 11, Oregon Constitution, authorizes the course which Oregon Laws 1947, chapter 477, § 3, directs the secretary of state to take upon his receipt of a deficiency certificate issued by the commission after it has found that a deficit will be incurred. It will be recalled that chapter 477, § 3, says that the secretary of state, upon receipt of the certificate, shall "refer to the people * * * for their approval or rejection, the question of whether such levy * * * shall be made." If the people vote in *Page 92 favor of the levy, chapter 477 does not contemplate that the levy will be collected from the taxpayers. The levy will be met by a transfer of "funds derived (previously) from taxes on or measured by net income." The words just quoted, with the exception of the one in parenthesis, were taken from section 4 of chapter 477. Article XI, § 11, Oregon Constitution, authorizes deficiency elections "to raise" revenue. The question is whether or not the word "raise" authorizes a submission to the voters of a deficiency levy, which, if favored by the majority, will be offset by money already on hand.
The word "raise" has an extensive connotation, as is indicated in the Oxford Dictionary. The twenty-fifth definition of that word given in that great lexicon is:
"To levy (a tax, etc.); to collect (rents or other charges); hence, to bring together, obtain, procure by means of collecting or in any other way."
The above is continued with the following illustrations:
"1821 Byron, Juan 111, XIV, Let not his mode of raising cash seem strange. 1852 Thackeray, Esmond 1, XIV. The correspondence related to a new loan my lord was raising. 1875 W.S. Gilbert, Tom Cobb 1, Me so pinched for money till I can hardly raise an egg for breakfast."
From 52 C.J., page 794, we quote:
"Applied to money, `to raise,' in its ordinary sense, means to bring together, to collect, to get together, to levy, to procure, or to realize a supply of money by some of various allowable methods, such as by loan, sale, subscription, or taxation."Frost v. Hoar (N.H.), 160 A. 51, which concerned municipal law, quoted from Childs v. Hillsborough *Page 93 Electric Light Power Company, 70 N.H. 318, 324, 47, Atl. 271, 272, the following:
"To `raise' money, as the word is ordinarily understood, is to collect or procure a supply of money for use."
In New York R. Cement Co. v. Keator, 71 N.Y.S. 185, 62 A.D. 577, the court said:
"To `raise money,' in its ordinary import, is simply to procure it. When applied to an individual or a business corporation, it means the procuring of money in any of the usual methods, — by note, mortgage, or other obligation. As applied to municipal corporations, its ordinary import is the procuring of money by taxation or by the obligations of the corporation."
From Hand v. Stapleton, 140 Ala. 555, 37 So. 362, we quote:
"It is provided in the seventh that the cost as to the county should be allowed by orders on the county treasury, provided that the amount `is on hand and can be raised by said county without increasing the present tax rate.' And the same proviso is, in effect, found in the tenth, which makes the condition on which the act is to go into effect to rest upon the ascertainment that the county contribution would not require an increase of the present tax rate `to pay the same.' `Raising money' contemplates a sale of property for money, or a borrowing on engagements to pay in the future. The legislature well knew that the county had no property to sell, and therefore, in authorizing payments to be made with money on hand or raised, must have had reference to payments out of revenue of subsequent years, arising without any increase of the tax rate, especially as the contribution that could be made for 1901 was to be certified as a preliminary proceeding. The transfer or delivery of the warrants falling due for subsequent years to the contractor, as cash, is the *Page 94 same as if they had been sold, and the money raised thereby, and then paid to the contractor."
It is, of course, obvious that the word "raise" as it appears in the constitutional provision under consideration, does not authorize the procurement of money by a loan, subscription, or the sale of property. Nevertheless, since the above-quoted definitions show that the word "raise" has a flexible meaning, they are not without significance.
We think that a favorable vote under Oregon Laws 1947, chapter 477, sections 3 and 4, accomplishes two purposes: (1) it authorizes a deficiency levy; and (2) it authorizes the collection of the needed money out of "funds derived from taxes on or measured by net income." As we have seen, those funds are kept in a separate account and, as we have also seen, they are available only for the purpose of reducing or offsetting levies. A favorable vote enables the needed transfer or collection to take place. Accordingly, Article XI, § 11, authorizes the election for which chapter 477 makes provision.
The above disposes of all issues which we believe require our attention. We are satisfied that the circuit court erred when it entered the challenged decree. It should have overruled the motion made by the defendants and should have sustained the one presented by the plaintiff. The latter is entitled to the relief sought by his prayer.
The previous decision announced in this case is supplanted by this one. Our views are reflected by the foregoing.
LUSK, **BELT, KELLY and BAILEY, JJ., concur. LUSK, J., will file an opinion later.
** Belt, J., not present at oral argument, but participated in the rehearing and concurs in the foregoing opinion. *Page 95