Granite Falls Library Capital Facility Area v. Taxpayers of Granite Falls Library Capital Facility Area

Sanders, J.

(dissenting) — The issue here is whether the “governing body” of the Granite Falls Library Capital Facility Area performs a legislative function. If it does it quite obviously exercises an unconstitutional delegation of the taxing power because (1) the body is not democratically constituted and (2) the State Legislature has not provided procedural safeguards to control whatever arbitrary administrative action it might undertake.

I posit an unconstitutional delegation of taxing authority has occurred in this case based upon the following admission in the majority opinion:

After issuance of the bonds, the governing body would levy excess property taxes on a yearly basis upon all the taxable property in the Library Facility Area at a rate sufficient to pay the principal and interest on the bonds. The rate is substantially dependent upon, and would vary directly with, the rate of interest the governing body establishes to be paid on the bonded indebtedness.

Majority at 831 (emphasis added).

The Legislature may not constitutionally grant the power of taxation to persons over whom the taxpayers can exercise no control. State ex rel. Tax Comm’n v. Redd, 166 Wash. 132, 141, 6 P.2d 619 (1932). Any delegation of the taxing power is impermissible unless the Legislature clearly defines the purpose of the delegation and creates procedural safeguards to control arbitrary administrative action. Barry & Barry, Inc. v. State Dep’t of Motor Vehicles, 81 Wn.2d 155, 159, 500 P.2d 540 (1972).

Malim v. Benthien, 114 Wash. 533, 196 P. 7 (1921), provides an example of such an impermissible delegation. In Malim a diking district was organized and its boundaries fixed. A statute permitted the diking district to assess benefited properties lying outside the district’s boundaries. Residents who lived outside the boundaries could not par*846ticipate in electing the officers of the diking district. The court explained that fundamental principles of fairness and free government forbid public officials from dictating policy or determining what money should be spent and how it would be spent when the residents have no voice in the selection of those officials. We held: “To uphold such a course would be a denial of the principle [prohibiting taxation without representation] upon which our government is founded, and which as a nation we have always maintained is the only true principle upon which a free government can be founded and maintained.” Malim, 114 Wash. at 539. See also Foster v. Sunnyside Valley Irrigation Dist., 102 Wn.2d 395, 406, 687 P.2d 841 (1984) (Malim found statute unconstitutional because residents outside the district could not vote for district officers.); Carstens v. Public Util. Dist., 8 Wn.2d 136, 111 P.2d 583 (in Malim voters had no vote or voice relative to the imposition of taxes, resulting in taxation without representation), cert. denied, 314 U.S. 667, 62 S. Ct. 128, 86 L. Ed. 533 (1941); King County Water Dist. No. 54 v. King County Boundary Review Bd., 87 Wn.2d 536, 554 P.2d 1060 (1976) (although a municipality managed a water district affecting those outside the city boundaries, adequate safeguards existed to protect those outside the city); King County Water Dist. No. 75 v. City of Seattle, 89 Wn.2d 890, 577 P.2d 567 (1978) (municipality’s business and occupation tax could not be passed on to purveyors whose districts were outside city limits); Weaver v. Recreation Dist., 328 S.C. 83, 492 S.E.2d 79, 81 (1997) (Commission given discretion to levy tax not exceeding five mills per annum. Such action was impermissible delegation and “taxation without representation.”); City of Sacramento v. Drew, 207 Cal. App. 3d 1287, 255 Cal. Rptr. 704, 715 (1989) (“Imposition of an unlawful levy is a species of taxation without representation.”).

This case resembles Malim and directly violates the constitutional prohibition against “taxation without representation.” The taxpayers in the Granite Falls Library Capital Facility Area approved a debt not to exceed $1.6 million and authorized the sale of bonds to raise the funds, *847subject to interest at the rate the governing body had the sole discretion to set. Once the interest rate is determined taxes must be levied sufficient to retire both the principal indebtedness and the accrued interest. Therefore the majority correctly states the tax rate “is substantially dependent upon, and would vary directly with, the rate of interest the governing body establishes to be paid on the bonded indebtedness.” Majority at 831. However since the rate of interest is within the discretion of the governing body, the amount of the tax ultimately levied is also within its discretion. As such the governing body exercises sole control when it determines the ultimate amount of tax to be levied absent procedural safeguards.46

Because the governing body is vested with the power to tax, it must either be directly accountable to the taxpayers or limited by sufficient procedural safeguards. However neither is the case here. This governing body will consist of three members of the Snohomish County Council, and the three members are selected by the county council from its full membership, not by the voters of the library district.

Snohomish County is operated pursuant to a Home Rule Charter which provides that only those registered voters in a particular district are permitted to vote for candidates nominated in that district. Herein lies the problem. The vast majority of the Library Capital Facility Area lies within Snohomish County Council District No. 1. District No. 5 contains only small sparsely populated portions of the Library Capital Facility Area. No portion of the Library Capital Facility Area lies within Snohomish County Council District Nos. 2, 3, or 4. It is therefore possible that a member of the governing body, or any of the three members, may not be subject to election by the taxpayers.

While the majority examines whether the Legislature *848defined its purpose when delegating the power to tax, it fails to address whether sufficient procedural safeguards exist to curb arbitrary action. But no legislated limits exist on setting the interest rate. The governing body has absolute discretion to set the rate and therefore the amount of tax. It also determines the general terms of issuance other than maximum maturity date and maximum debt. Further, Snohomish County allows residents to vote only for council members within their district. Taxpayers living within the Library Capital Facility Area cannot recall or vote out of office members of the Board unless the members live within the taxpaying voters’ district.

Undoubtedly George III had some worthy projects in mind in the 1770s, but taxation without representation was not popular with the colonists then and is unconstitutional today. The importance of prohibiting taxation without representation carries with it the “stamp of history” upon which our country was founded and continues to flourish.47 City of Sacramento, 255 Cal. Rptr. at 715.

Thus, this Governing Body, a nonrepresentative body, *849does indeed possess the sole discretion to determine the interest rate and, in consequence, may determine without legislated standard the ultimate tax to be imposed upon the residents of the Granite Falls Library Capital Facility Area. Such violates the essence of the constitutional prohibition against “taxation without representation.” I therefore dissent.

Madsen and Alexander, JJ., concur with Sanders, J.

Similarly, Respondent suggests Parkinson v. Seattle Sch. Dist., 28 Wash. 335, 68 P. 875 (1902), holds that once voters approve the principal amount of the bonds, the interest rate need not be submitted to voters. Majority at 841-42. Parkinson is easily distinguishable. In contrast to this case, the interest rate in Parkinson was capped at 10 percent per annum and the board of directors of the district was elected by the taxpayers and directly accountable to them.

The constitutional prohibition against taxation without representation was first articulated in America by the early colonists. John C. Miller, Origins of the American Revolution 25, 31, 138, 212-13, 215, 220 (1943). Great Britain’s imposition of the Stamp Act in 1765 and other revenue-raising measures sparked a revolutionary protest that “taxation without representation is tyranny.” Gregory C. Sisk, Questioning Dialogue by Judicial Decree: A Different Theory of Constitutional Review and Moral Discourse, 46 Rutgers L. Rev. 1691, 1720 n.100 (1994) (citing Robert Middlekauf, The Glorious Cause 76-93 (1982)).

The British response to the colonists’ charge was that the colonists were represented in Britain’s Parliament to the same extent as other subjects. Britain reasoned that members of Parliament represented the entire nation, rather than the particular constituency who elected them. Parliament, as opposed to the people, ruled Great Britain. Deborah A. Ballam, The Evolution of the Government-Business Relationship in the United States: Colonial Times to Present, 31 Am. Bus. L.J. 553, 571 (1994).

However, the colonists rejected the notion of virtual representation and “no taxation without representation” became the rallying cry of the American Revolution. The colonists believed public officials should serve as “liaisons for the people” because sovereignty resided in the citizenry. By consenting to a system of government, citizens agreed to delegate sovereign power to the state, subject to the right of the people to choose and remove public officers. Bernard Bailyn, The Ideological Origins of the American Revolution 167-74 (1967). See also Nevada v. Hall, 440 U.S. 410, 99 S. Ct. 1182, 59 L. Ed. 2d 416 (1979). This right was so important to the Framers that they staked a revolution, as well as their lives, upon it. John C. Miller, Origins of the American Revolution 25, 31, 138, 212-13, *849215, 220 (1943). See also In re Brooks, 57 Wn.2d 66, 79, 355 P.2d 840 (1960) (referring to the “colonists [who] believed so strongly that there should be no taxation without representation that they went to prison rather than pay certain taxes”), cert. denied, 365 U.S. 813, 81 S. Ct. 694, 5 L. Ed. 2d 692 (1961).

The premise of “no taxation without representation” is no less viable now as it was at the time of the American Revolution. Any power delegated by the people remains subject to their ultimate control. This principle is enshrined in our State Constitution which provides:

All political power is inherent in the people, and governments derive their just powers from the consent of the governed, and are established to protect and maintain individual rights.

Wash. Const, art. I, § 1. The court has explained the power to tax serves as the most important of governmental powers. For

“[t]he power of taxation is, of all the powers of government, the one most liable to abuse, even when exercised by the direct representatives of the people, and if committed to persons who may exercise it over others without reference to their consent, the certainty of its abuse would be simply a question of time

State ex rel. Tax Comm’n v. Redd, 166 Wash. 132, 141, 6 P.2d 619 (1932) (citation omitted).