I dissent from the opinion of the majority in this case upon the ground that the act of assembly approved June 28, 1935, P. L. 452, known as the General State Authority Act, imposes no obligations or agreements on the part of the Commonwealth which in a constitutional sense would violate the limitation on debt provided in section 4, of article IX, of the Constitution. Unfortunately, there can be no other effect given the majority opinion in this case than that it reverses, at least by implication, the very recent decision of this court in *Page 478 Tranter v. Allegheny Co. Authority, 316 Pa. 65, where the act there under review is substantially similar to that with which we are here confronted. There is no escape from the conclusion that the best authority in Pennsylvania to sustain the validity of the present act is the decision of this court in the Tranter case, and as such, should be a controlling precedent for it in every sense. These two cases should stand or fall together. The majority opinion should frankly and consistently reverse the decision of the court in the Tranter case in express words. There is no weight to the argument that there are vital differences between the Allegheny County Authority, and the General State Authority Acts. Save in minor particulars only may variances be discovered therein. It is apparent on the face of the two acts that they are similar, not only in the language employed, but also in their fundamental conceptions, objects and purposes.
In the Tranter case, as here, a public corporation was created for the purpose of constructing, maintaining and operating public projects, the construction of which was to be financed by a gift from the federal government of part of the cost and a loan by that government of the balance. As in the case before us, bonds of the authority were to be issued to the federal government in the amount of the loan, and as security therefor the authority was authorized to pledge revenues from the projects. Property of the county, already devoted to public purposes, was to be conveyed to the authority for use in connection with the projects. The property held by the authority and the obligations issued by it were by the act exempted from taxation, and it was further provided that the authority should have no power to pledge the credit of or create any debt of the Commonwealth or any county or other municipality thereof. The act likewise stipulated that neither the Commonwealth nor any political subdivision thereof should diminish or impair the authority's power to own and control its properties or to *Page 479 levy and collect tolls, rents and other charges in connection therewith, so long as any of its obligations remained unpaid and until adequate provision was made by law for the protection of persons advancing money upon these obligations. After the cost of all of the projects and improvements had been fully paid, the properties which had been conveyed to the authority, together with the improvements thereon, were to revert to and become the property of the county, without cost to the county. The only difference between the arrangement in that case and the one in the present case, in no way affords a valid reason for arriving at a diametrically opposite result. The projects there proposed were to be self-liquidating — i. e., the bonds of the authority were to be paid out of revenues collected from the users of the improved facilities. In the case before us, while some of the projects are to be self-liquidating, others, it is contemplated, will be paid for, at least in part, by rentals from the Commonwealth. This one ground of differentiation of the two acts, when analyzed, offers no real basis for distinguishing the two cases.
These proposed rentals afford the principal ground of attack upon the General State Authority Act, the argument being that they constitute an indebtedness of the Commonwealth in violation of the constitutional restriction thereon.
In the Tranter case we said, at page 75: "In dealing with the objections to the validity of the statute, it is necessary to keep in mind the rule, stated in Sharpless v. Mayor of Phila.,21 Pa. 147, 164, and frequently repeated since, 'that we can declare an act of assembly void, only when it violates the Constitution clearly, palpably, plainly; and in such manner as to leave no doubt or hesitation in our minds.' " We likewise pointed out, by quoting from Com. v. Reeder, 171 Pa. 505, 513, that, except in the fields of power specifically granted to the United States, and except for the specific restraints imposed by the Constitution of the Commonwealth, the *Page 480 "right of the people through the legislature to enact such laws as they choose, is absolute. Of the use the people may make of this unrestrained power, it is not the business of the courts to inquire. We peruse the expressions of their will in the statute; then examine the Constitution and ascertain if this instrument says, 'Thou shalt not,' and if we find no inhibition, then the statute is the law simply because it is the will of the people and not because it is wise or unwise." In answer to the argument that the creation of the authority was a fiction designed to evade the constitutional restrictions on indebtedness, Justice LINN well said in the Tranter case, at page 84: "It is never an illegal evasion to accomplish a desired result, lawful in itself, by discovering a legal way to do it." These observations are equally pertinent and of equal force here.
It seems that the principal objection raised against the General State Authority Act is that it is in violation of section 4, of article IX, of the Constitution. That section provides: "No debt shall be created by or on behalf of the State, except to supply casual deficiencies of revenue, repel invasion, suppress insurrection, defend the State in war, or to pay existing debt; and the debt created to supply deficiencies in revenue shall never exceed, in the aggregate at any one time, one million dollars; Provided, however, that the General Assembly, irrespective of any debt, may authorize the State to issue bonds, to the amount of one hundred millions of dollars, for the purpose of improving and rebuilding the highways of the Commonwealth."
Under the provisions of section 4 of the act before us, the General State Authority has no power to pledge the credit or taxing power of the Commonwealth, and none of its obligations may be considered obligations of the Commonwealth. This reads as follows: "Provided, however, that the Authority shall have no power at any time or in any manner to pledge the credit or taxing power of the Commonwealth or any of its cities, counties, or other *Page 481 political subdivisions, nor shall any of its obligations or debts be deemed to be obligations of the Commonwealth or any of its cities, counties, or political subdivisions, nor shall the Commonwealth or any city, county, or political subdivision thereof be liable for the payment of principal of or interest on such obligations." The authority thus cannot of its own motion impose obligations upon the Commonwealth. The argument is made, however, that, under the proposed scheme, the authority will lease projects to the Commonwealth, which will in turn maintain the projects and pay the stipulated annual rentals therefor for a period of 30 years, at the conclusion of which the projects will be conveyed in fee to the Commonwealth. The necessary implication of this arrangement, it is claimed, is that the Commonwealth undertakes to pay the stipulated rentals, as well as pay for maintenance and upkeep of the projects, and that this obligation constitutes a debt within the meaning of section 4 of the Constitution, supra.
We must therefore consider whether, under the facts before us, any such invalid obligation is imposed upon the Commonwealth. Only one project is outlined in the record — the proposed waterworks at Selinsgrove. As indicated above, the obligation which it is contemplated the Commonwealth will assume in connection therewith, is the promise to pay the stipulated annual rentals, which are not to exceed $2,800 for the first third of the term, $2,500 for the second third, and $2,240 for the balance of the term. A further obligation will arise from the promise to maintain the waterworks. It was stated at the bar of the court, without contradiction, that the revenues of the Commonwealth in the present biennium will exceed expected revenue already appropriated by some fourteen millions of dollars.1 *Page 482
In the recent case of Kelley v. Baldwin, 319 Pa. 53, we held that where the amount of an obligation of the Commonwealth is restricted to current revenues, it is not invalid under said section 4, of article IX. In that case we said, at page 60, speaking of the validity, under section 4, of tax-anticipation notes payable out of current revenues: "The prohibited mischief was the accumulation of a state debt (subject to the $1,000,000 leeway for deficiency in revenue) by expenditures in excess of current biennial revenue. Unless a challenged debt is within that prohibition, it is permitted. The creation of these notes for payment out of current revenue adds nothing to the state debt as defined." Since City of Erie's App., 91 Pa. 398, it has been settled that a contract of a municipality which is within the current revenues of the municipality does not constitute a debt within the meaning of the constitutional restrictions thereon. It was there said, at page 403: "If the contracts and engagements of municipal corporations do not overreach their current revenues, no objections can lawfully be made to them, however great the indebtedness of such municipalities may be; for in such case their engagements do not extend beyond their present means of payment, and so no debt is created." In Athens Nat. Bank v. Ridgebury Twp., 303 Pa. 479, we stated, at page 484: "A temporary borrowing in anticipation of current revenue and to be repaid therefrom is not an increase of indebtedness prohibited by the Constitution."
Nor would the Commonwealth's obligation be invalidated by the fact that it contemplated payments beyond *Page 483 the present biennium. A long-term obligation of a municipality, payable in periodic installments, is not a debt within the meaning of the constitutional provisions relating thereto where the amount of the periodic payments is clearly within the municipality's ability to pay from current revenues: Wade v. Oakmont Boro., 165 Pa. 479; Scranton Elec. Co. v. Old Forge Boro., 309 Pa. 73.
It is plain, therefore, that in so far as an obligation of the Commonwealth is within its ability to pay from its current revenues, and thus entails no expenditure in excess of such revenues, it is not within the prohibition of section 4, of article IX, of the Constitution. Such an obligation is wholly in accord with the "pay-as-you-go" principle, the preservation of which in the financial administration of the Commonwealth is said to be the purpose of the limitation on debt. There could be no objection to an obligation the payment of which was provided for when the obligation was incurred, or which was restricted to the current revenues available at the time payment fell due.
In Com. v. Snyder, 279 Pa. 234, 242, we said at page 239: "When the constitutionality of an act of assembly is attacked, it is the duty of every judge, — without regard to his opinion as to the necessity for the statute, or its wisdom, — to seek a construction which will support the legislative interpretation of the Constitution, and an act can never properly be declared void unless this is found to be impossible." We there held that the portions of the act involved under the facts before us were constitutional but expressly reserved decision as to the situations not presented by the record.
It cannot be maintained that the General State Authority Act itself, in so far as it is to be applied in the transaction set forth in this record, imposes upon the Commonwealth an obligation in violation of the constitutional restriction on debt. The obligations and agreements of the authority do not themselves constitute obligations *Page 484 of the Commonwealth. The proposed annual rental to be paid by the Commonwealth for the waterworks here described is not to exceed $2,800 at any time during the term. It would be futile to say that this rental, or in fact the maximum total rental for the life of the lease ($75,600), could not be met out of the current revenues of the Commonwealth, particularly when it is remembered that the surplus unappropriated revenues of the present biennium should amount to fourteen millions of dollars.
It would seem equally fair and more reasonable to anticipate that funds will be on hand in current revenues of future years to meet the payments required, as to suppose there will be no such adequate revenues. To predicate the decision of this case upon that conclusion, which involves rather a fiscal than a legal question, is to disregard the common experience of past years during which the current revenues of the Commonwealth have enabled it, not only to pay its ordinary governmental expenses, but in addition thereto, as it is of common knowledge, to make grants in sums aggregating millions each biennium to worthy and needing hospitals, schools, colleges and charitable institutions. Moreover, it should be taken into account that included within the term "ordinary governmental expenses" (See Com. ex rel. v. Liveright, 308 Pa. 35, 66) are large sums for rental of offices, buildings, and properties necessary to house the activities and operation of the state government and its agencies. The buildings to be erected as projects under this act will undoubtedly be a factor in assumption and relief of at least a portion of the rentals paid.2 *Page 485
The cost of maintenance of the waterworks does not appear, but it may reasonably be supposed that it, too, will be well within current revenues, and if this is so, an obligation on the Commonwealth's part to pay to that extent would clearly be valid. It was on that ground that an agreement of maintenance by the county was sustained in the Tranter case. It there appeared that the parties had agreed "that the cost to the county of performing such agreement will be well within its annual current revenues." In reference thereto we stated, on page 89: "On that understanding we sustain the agreement [of maintenance]; the costs of operation, repairs and maintenance described above can never exceed the annual current revenues applicable thereto. . . . If these annual expenditures are made out of current revenues, the obligation to make them is not a debt within the constitutional sense."
We should go no further, however, than to sustain the act to the extent to which obligations incurred under it by the Commonwealth are limited to current revenues. The act provides a structure whereby the Commonwealth may enter into restricted undertakings within current revenues. To this extent it must be held valid. This is effected under the act before us without in any sense permitting the legislature or any branch of the executive to depart from the principle that the obligations of the Commonwealth shall, subject to the specified exceptions, be kept within the limits of current biennial revenue, so long as that principle remains in our Constitution.
In this view of the matter, whether or not the proposed arrangement between the authority and the Commonwealth be considered a lease, or an acquisition by purchase of a capital asset, is of no consequence. To the extent that the contemplated payments are kept within the bounds of the current revenues available as the payments fall due, the Commonwealth is fully within the principle of paying as it goes. Where it does *Page 486 not appear that an obligation incurred by a municipality can be met out of current revenues, the obligation must be considered a debt in the constitutional sense: Brown v. City of Corry,175 Pa. 528; McKinnon v. Mertz, 225 Pa. 85; Lesser v. Warren Boro.,237 Pa. 501. This must be true regardless of the purpose for which the obligation was incurred. In those cases it was not shown that the amount of the periodic payments which the municipality contracted to make would in fact be within its current revenues, and, since that amount was in excess of the indebtedness authorized by the Constitution, the contract was invalid. Where, however, it is clear that the amount of the obligation is in fact within current revenues, or where it is reasonably thought to be so when the obligation is incurred (see Addyston-Steel Co. v. City of Corry, 197 Pa. 41; Schilling v. Ohio Twp., 260 Pa. 113), the mischief which the restriction on debt is intended to prevent is avoided, and a further inquiry as to whether the expenditure is an ordinary or an extraordinary one is beside the point. Nowhere in our cases is it expressly held or said that an obligation which is within current revenues is nevertheless invalid unless it involves only an ordinary expenditure. Any such rule would be unsound.
The real question is whether or not a debt is incurred, and, if it in fact appears that current revenues will be available to meet the required payment when it falls due, no debt in the constitutional sense is created. If it appears or is reasonably thought that the Commonwealth will have on hand thirty years hence available current revenue to the extent e. g. of $2,240, a promise now made to apply that revenue to the rental of this waterworks is not a debt within the constitutional sense since it is not beyond the Commonwealth's ability to pay. The situation intended to be prevented by the restriction on the debt of the Commonwealth is that in which the Commonwealth, having promised to pay, has no available revenue with which to meet the payment *Page 487 when it falls due. Accordingly, where it is reasonably certain at the time the obligation is incurred that the Commonwealth will have sufficient revenue to meet future payments as they become due, the vice of incurring indebtedness beyond available means of payment is not present. In the present case, it cannot be doubted that the Commonwealth will have sufficient available revenue to meet the payments stipulated. It follows that no debt is incurred, and the prohibition of section 4 of article IX is not transgressed.
I think the bills should be dismissed. Therefore I dissent.
1 By stipulation between counsel filed of record, for which permission was given at bar, an estimate of the Secretary of Revenue of the Commonwealth was furnished by which it appeared that based upon the experience in the six months' period from June 1, 1935, to November 30, 1935, the revenue of the following taxes indicate an excess of actual receipts over budget estimates as follows: Cigarette tax, $2,500,000 per year, or $5,000,000 for the biennium; gasoline tax, $1,000,000 per year, or $2,000,000 for the biennium; excess profit on liquor stores, $1,500,000, or $3,000,000 for the biennium. He certified that from all sources of state revenue the excess for the biennium will be not less than $4,000,000.
2 It may be here stated that the Department of Property and Supplies of the Commonwealth reports that the total rentals for space paid by the Commonwealth during the fiscal year expiring May 31, 1935, amounted to the sum of $874,734.26; that for the fiscal year of 1936, due to the increase in the number of stores opened by the State Liquor Control Board, it is estimated such total rentals to be paid will aggregate $1,150,000.