This is an original proceeding in mandamus to compel the secretary of state to receive and file a petition for the referendum of chapter 184, Laws 1933, being an act entitled, "An Act Imposing a Tax on Gross Incomes, Providing Generally for the Levy, Assessment, Collection and Distribution Thereof; for Regulatory Measures for the Enforcement of the Act, Providing for Exemptions, Imposing Penalties for Violations of the Provisions of the Act, and Repealing Section 7922 of the 1919 Revised Code of South Dakota, and Chapter 107 of the Session Laws of South Dakota of 1919."
The respondent declined to file the petition. An alternative writ of mandamus having been issued, the Attorney General appeared on behalf of the respondent, moved to quash the alternative writ, and demurred to the complaint and affidavit of the relator on the ground that no facts were stated sufficient to constitute a cause of action or to entitle relator to relief by way of mandamus or otherwise.
The one question to be determined is whether this legislative enactment is subject to referendum. Within the exceptions to the right of referendum are, first, such laws as are declared by the act itself to be necessary for the immediate preservation of the public peace, health, or safety of the state; and, second, such laws as are necessary for the support of the state government and its existing public institutions. Section 1, article 3, state Const.; Hodges v. Snyder, 43 S.D. 168, 178 N.W. 575. The act under consideration imposing a tax on gross incomes and providing that a portion of collections therefrom shall be credited to the general fund and the balance to the interest and income common school fund of the state is concededly for the support of the state and its existing *Page 346 public institutions, but the relator contends, relying upon the decision of this court in State ex rel Wegner v. Pyle, 55 S.D. 269, 226 N.W. 280, that the act is not necessary for such purpose. In that case the question of whether an act providing for a registry tax on motor vehicles was excepted from the reserved right of referendum was considered. The act expressly provided that the levy against real and personal property shall be reduced in proportion to the amount of tax collected under such statute. This court held that the act being designed to shift a portion of the general property tax for use of the general fund to purchasers of automobiles was not necessary for the support of the state government; that the test in determining whether or not a law is necessary for such purpose is what will be the effect on the state if the law is suspended until a vote can be taken or what will be the effect if it is finally defeated; that while the act was intended to raise revenue, and the support of the government is dependent upon revenue, it did not purport to increase revenue, but expressly provided that it should not do so; and that the actual support of the government would be unaffected by the delay or possible defeat of the measure rendering the act subject to the referendum.
Section 1, chapter 185, Laws of 1933, reads as follows: "It is hereby expressed as the intent of the legislature that the entire income derived from the tax on Gross Incomes imposed by the provisions of Senate Bill No. 101 passed at this session of the legislature and approved by the Governor on _____ 1933 [chapter 184, Laws 1933], shall, in its distribution and use, operate as a direct relief, replacement and reduction in the tax heretofore, now and hereafter imposed upon and against the taxable property of the state, and the authorities having supervision of the levying of property taxation are specifically directed and required to eliminate or reduce property tax levies to the full extent of the revenues made available by the collection of the tax imposed by said act."
The argument of the relator is that by reason of this statutory provision no additional revenues will be collected and that within the holding of this court in the Pyle Case the tax statute under consideration is not necessary for the support of the state government. The effect of the section quoted cannot be distinguished in any controlling particular from the replacement section considered in that case. *Page 347
[1-4] The declaration in the Pyle Case that the presence of a so-called replacement provision in a revenue measure in itself establishes the fact in every instance that the act merely provides for a shift of the tax burden and that the support of the state government will be unaffected is unsound. Though an act may not be intended to produce additional revenues, facts and circumstances nevertheless may render the enactment of such a revenue measure necessary for the support of the state government. The Legislature is presumed to have determined the facts and may have concluded that by reason of the present economic conditions the burden upon general property must be partially relieved. If a point has been attained where present levies are burdensome and cause defaults in tax payments and sales of realty and personalty for taxes result, the necessity may not consist in securing additional revenue, but in maintaining existing amounts and preventing a shriveling of present sources of revenue. Opportunity is afforded the Legislature and it must be conclusively presumed that it availed itself of such opportunity to determine the facts, and by the determination of such facts and the passage of the law it has determined the question of necessity for itself in the affirmative. For this court the question is not one of wisdom or expediency of legislation. Conceding that the necessity of an act for the support of the state government in determining whether it is subject to referendum is a judicial question, the inquiry would not extend beyond the scope of judicial knowledge and every reasonable presumption must be indulged in favor of the determination of the necessity of the legislation. In its inherent nature, an inquiry as to necessity upon disputed facts would extend beyond the application of ordinary legal principles, and caution must be exercised that this court may not encroach within the scope of legislative powers. We are convinced that within the contemplation of the referendum provision of the Constitution it is not intended that this court should determine a factual controversy as to the necessity of a statute for the support of the state, upon which minds may reasonably differ, and that this court may substitute its judgment for that of the Legislature.
[5] A contradiction of necessity does not exist upon the face of the act and the companion act appropriating the incomes to be derived from the collection of the tax, and from other facts which *Page 348 we may judicially notice we cannot say that the act in question is not necessary for the support of the state government and its existing public institutions. As the Supreme Court of Washington in the case of State v. Hinkle, 116 Wash. 1, 198 P. 535, 537, considering the necessity for the enactment of a statute reorganizing the departments of the state government, said: "But to resolve the immediate problem, obviously its intricate and complicated nature requires the exertion and application of an amount of expert knowledge, experience, and judgment, necessarily without the scope of the restricted doctrine of judicial knowledge, and, as we have intimated, properly commanded only by the Legislature."
The motion to quash the alternative writ of mandamus is therefor granted and demurrer to the complaint is sustained.
POLLEY, J., concurs.