Sheehan v. Central Puget Sound Regional Transit Authority

136 J.M. Johnson, J.

(dissenting) — I agree with only one part of the majority’s analysis: precedent requires that we uphold some vehicle taxes by both Central Puget Sound Regional Transit Authority (Sound Transit)5 and Seattle Popular Monorail Authority (Monorail) (collectively, the Authorities). I disagree, however, with the majority’s conclusion that these Authorities possess statutory power to *809levy their respective taxes annually and ad infinitum. The majority’s conclusion contradicts the plain text of each pertinent statutory scheme, neither of which authorizes or even mentions an “annual” tax. That conclusion also contradicts Sound Transit’s voter authorization measure which, unlike Monorail’s voter measure, did not authorize “annual” exactions. The majority’s stretch to uphold all taxes for these (arguably) desirable facilities has violated long-standing principles of statutory construction and our tax jurisprudence.

¶37 I would limit each Authority’s taxing power to those taxes expressly authorized by the text of that Authority’s enabling legislation and to taxes expressly allowed by ballot measures approved by the people (a step required by each statute). Tax charges not authorized by statute and the requisite voter approval should be terminated and the excess refunded. Accordingly, I dissent.

¶38 Our analysis begins with the text of the relevant statutes. “Our primary goal when interpreting a statute is to ascertain and give effect to the legislature’s intent.” Schrom v. Bd. for Volunteer Fire Fighters, 153 Wn.2d 19, 25, 100 P.3d 814 (2004) (citing Kitsap County v. Moore, 144 Wn.2d 292, 297, 26 P.3d 931 (2001); Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 813, 828 P.2d 549 (1992)). Construing the statute as a whole and giving effect to every provision, we derive the intent from the text of the statute where its language is unambiguous. Schrom, 153 Wn.2d at 25.

¶39 The Sound Transit Vehicle Tax was authorized by former RCW 81.104.160(1) (1998), which was repealed by Laws of 2003, chapter 1, section 6 (Initiative Measure No. 776, approved November 5, 2002, an initiative which was upheld by this court in Pierce County v. State, 150 Wn.2d 422, 78 P.3d 640 (2003)).6 In pertinent part, the statute empowered Sound Transit to

*810submit an authorizing proposition to the voters, and if approved, [to] levy and collect an excise tax, at a rate approved by the voters, but not exceeding eighty one-hundredths of one percent on the value, under chapter 82.44 RCW, of every motor vehicle owned by a resident of the taxing district, solely for the purpose of providing high capacity transportation service.

Former RCW 81.104.160(1). Note that there is no reference to an annual tax.

¶40 The Monorail Vehicle Tax is authorized by a different statute: RCW 35.95A.080. That statute empowers the Monorail, upon voter approval, see RCW 35.95A.080(5), to “levy and collect a special excise tax not exceeding two and one-half percent on the value of every motor vehicle owned by a resident of the authority area for the privilege of using a motor vehicle.” RCW 35.95A.080(1).

¶41 Nothing in the language of either statute suggests that the total authorized taxes are to be levied more than once on any particular vehicle, let alone annually. Our inquiry does not stop here, however. It is important to look not only at this statute but also at “all that the Legislature has said in. . . related statutes which disclose legislative intent about the provision in question.” Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 11, 43 P.3d 4 (2002).

¶42 The majority looks to former RCW 82.44.020(1) (1993),7 which authorized the now-repealed State motor vehicle excise taxes (MVET) statute, and asserts that “[s]ince 1937, a ‘motor vehicle excise tax’ has meant a tax on the privilege of relicensing a motor vehicle for use on public roadways collected by [the Department of Licensing] at the point of annual registration.” Majority at 802.

¶43 It is true that chapter 82.44 RCW deals with “Motor Vehicle Excise Tax,” the chapter title states as much. However, these Authorities do not appear anywhere in that *811MVET chapter, and this phrase appears nowhere in these Authorities’ enabling legislation. I fail to see how this supposed term of art, actually the heading of a different chapter of the RCW, is applicable here. Accordingly, I will use the more accurate Vehicle Tax to describe the taxes at issue.

|44 Even more relevant to my conclusion under our precedent is the fact that when Washington’s legislature adopted that separate MVET, the statute expressly provided for an “annual” tax, former RCW 82.44.020(1). That earlier MVET expressly provided that “[t]he annual amount of such excise tax shall be two percent of the value of such vehicle.” Id. (emphasis added). As noted, neither of these statutes had such language. Further, the only reference to chapter 82.44 RCW in either relates to the determination of value of vehicles.

¶45 We presume that the legislature knows the existing state of the case law in the areas in which it legislates, Price v. Kitsap Transit, 125 Wn.2d 456, 463, 886 P.2d 556 (1994). Thus, our decisions require that we recognize that these differences in statutory language are intended by the legislature and must be given meaning. Haley v. Highland, 142 Wn.2d 135, 147, 12 P.3d 119 (2000).

¶46 “It is well settled that where the Legislature uses certain language in one instance but different, dissimilar language in another, a difference in legislative intent is presumed.” Millay v. Cam, 135 Wn.2d 193, 202, 955 P.2d 791 (1998) (citing United Parcel Serv., Inc. v. Dep’t of Revenue, 102 Wn.2d 355, 362, 687 P.2d 186 (1984) (citing Seeber v. Pub. Disclosure Comm’n, 96 Wn.2d 135, 139, 634 P.2d 303 (1981))).

¶47 The presence of the term “annual” in former RCW 82-.44.020(1) stands in stark contrast to its absence in the Authorities’ enabling statutes. Accordingly, the majority’s assertion that “we cannot conclude by negative implication that the legislature . . . necessarily intended the Authorities’ MVET to operate as a onetime cap,” is unpersuasive and violates our case law. Majority at 802-03.

*812¶48 The majority’s conclusion is particularly unlikely where the purpose of each tax is a one-time capital project (as in both cases here) instead of ongoing state highway maintenance and improvements, such as financed by the MVET. The earlier MVET funded highways to be driven on by vehicle owners who paid for the improvements; it was a user fee. In contrast, those taxed here — automobile owners and drivers — derive no direct benefit from Sound Transit or the Monorail. They cannot drive cars on Monorails or Sound Transit railroad tracks. Thus the common basis of “excise,” that it is a tax on use and not a property tax, does not apply.

¶49 Further, not only may we conclude by negative implication that the Authorities’ Vehicle Tax in each statute was intended to operate as a cap on total tax rather than annual taxing, but fundamental principles of our tax jurisprudence require this conclusion:

It is elementary that the power of taxation, subject to constitutional limitations, rests solely in the legislature. Municipal corporations have no inherent power to levy taxes. Their powers are derived through legislative grant, and are strictly construed. No implications are indulged to expand the powers granted.

State ex rel. Tacoma Sch. Dist. No. 10 v. Kelly, 176 Wash. 689, 690, 30 P.2d 638 (1934) (emphasis added). Accord Coveil v. City of Seattle, 127 Wn.2d 874, 879, 905 P.2d 324 (1995); Margola Assocs. v. City of Seattle, 121 Wn.2d 625, 854 P.2d 23 (1993).

¶50 This court has repeatedly held that “ [i] f there is any doubt about a legislative grant of taxing authority to a municipality, it must be denied.” Okeson v. City of Seattle, 150 Wn.2d 540, 558, 78 P.3d 1279 (2003) (emphasis added) (citing Pac. First Fed. Sav. & Loan Ass’n v. Pierce County, 27 Wn.2d 347, 353, 178 P.2d 351 (1947)). Accord Arborwood Idaho, L.L.C. v. City of Kennewick, 151 Wn.2d 359, 374-75, 89 P.3d 217 (2004); Ivy Club Investors Ltd. P’ship v. City of Kennewick, 40 Wn. App. 524, 699 P.2d 782 (1985).

¶51 Given the considerations above, and despite the majority’s assertion to the contrary, see majority at 802-03, *813there is obviously serious doubt as to whether the Authorities may levy their Vehicle Tax annually. The only way to find such power here is to imply it, and our cases require us to decline to do so. We are not a legislative body.

¶52 The majority also contends that we may imply this power from the fact that the Department of Licensing (DOL) is authorized to collect the Authorities’ Vehicle Tax. Majority at 803. This administrative procedure does not mean that the Authorities are also empowered to levy their taxes annually; it simply means that when the vehicle taxes are collected, they are to be collected at the same time a driver registers his vehicle with the DOL. The same may be said of a first-time registration when paying a use tax for a vehicle bought out of state — it is collected at registration, but not annually. More fundamentally, our jurisprudence is clear; we do not indulge implications when assessing a municipality’s taxing authority.

¶53 Finally, the majority contends that we must construe the Authorities’ enabling statutes to approve the annual levy of vehicle taxes because if we don’t, they would no longer operate as valid excise taxes, but could constitute forbidden ad valorem or property taxes. Majority at 803-04 (citing RCW 82.44.130). This may well be true. Insofar as the Authorities’ taxes are calculated with reference to a vehicle’s value, they bear a strong resemblance to ad valorem or property taxes. See Harbour Vill. Apartments v. City of Mukilteo, 139 Wn.2d 604, 611, 989 P.2d 542 (1999) (Talmadge, J., dissenting) (summarizing our case law explaining the differences between excise and property taxes); Black’s Law Dictionary 605, 1498 (8th ed. 2004) (defining “excise tax” and “property tax” respectfully); see also 1 Thomas M. Cooley, The Law of Taxation §§ 39, 46, 52 (Clark A. Nichols ed., 4th ed. 1924). However, the majority does not purport to overrule State ex rel. Hansen v. Salter, 190 Wash. 703, 70 P.2d 1056 (1937). Presuming that it remains good law, it may control but we should analyze the taxes.

¶54 Salter rejected the argument that the then newly enacted State MVET in 1936 was in fact a property tax. The *814case still stands for the proposition that a tax based on a vehicle’s value, if levied in exchange for the privilege of using that vehicle on the public roads, is a valid excise tax.8 However, the taxes here are not directly related to use of the car, nor are they used to fund public roads.

¶55 The Monorail tax purports to be “for the privilege of using a motor vehicle,” but the repealed Sound Transit tax was imposed on “every motor vehicle owned by a resident.” RCW 35.95A.080(1) (and former RCW 81.104.160(1) quoted above). Thus the latter is most like a property tax.

¶56 This court’s decisions hold that the distinction between excise and property tax is not whether a tax is levied once or annually. Real property taxes are imposed annually, but they are still property taxes. Excise taxes on inheritance of property or on its sale — and the use tax on cars bought out-of-state — are often one-time, rather than annual. However, they are still excise taxes.

¶57 Nor is the nature of the tax determined by the label, “ ‘[t]he character of a tax is determined by its incidents, not by its name,’ ” Harbour Vill., 139 Wn.2d at 607 (alteration in original) (quoting Jensen v. Henneford, 185 Wash. 209, 217, 53 P.2d 607 (1936)). The basis for levying is not solely determinative, e.g., whether it is calculated with reference to the value of property.9 See High Tide Seafoods v. State, 106 Wn.2d 695, 699, 725 P.2d 411 (1986) (“If a tax is imposed on the value of property, it may be a property tax.” (emphasis added)); 4 Thomas M. Cooley, The Law of Taxation § 1676, at 3382 (Clark A. Nichols ed., 4th ed. 1924) (“If a tax is in its nature an excise, it does not become a property tax merely because it is proportioned in amount to the value of the property used in connection with the occupation or act taxed.”).

*815¶58 The key to identifying a property tax is whether the tax is triggered by the simple fact of property ownership, creating an “ ‘element of absolute and unavoidable demand.’” Harbour Vill., 139 Wn.2d at 611 (Talmadge, J., dissenting) (quoting Black v. State, 67 Wn.2d 97, 99, 406 P.2d 761 (1965)); see also Covell, 127 Wn.2d at 889; High Tide Seafoods, 106 Wn.2d at 699.

f 59 As construed by the majority, the taxes here may be an annual property tax on cars and thus invalid. This is an issue which we should carefully consider. The case seems strongest that the (repealed) Sound Transit tax was a property tax because the tax was imposed on “every motor vehicle owned by a resident” (former RCW 81.104.160(1) (emphasis added)), rather than on “the privilege of using a motor vehicle” on the public roads. RCW 35.95A.080(1). The latter (Monorail) more clearly fits the traditional incidence of an excise tax.

¶60 A tax is an excise where “(1) the obligation to pay ... is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the . . . tax, and (2) the element of absolute and unavoidable demand is lacking.” Arborwood Idaho, 151 Wn.2d at 367 (citing Covell, 127 Wn.2d at 889; High Tide Seafoods, 106 Wn.2d at 699; Black, 67 Wn.2d at 99). While it is not common, an excise tax may be calculated with reference to the value of property connected with the act, privilege, or occupation taxed. See 1 Cooley, supra, § 52; 4 Cooley, supra, § 1676. The weight tax on use of public roads by trucks is an excise tax calculated with reference to the weight capacity (which also approximately reflects the wear and tear on roads through the truck’s use).

¶61 Here, it has not been determined whether the Authorities’ taxes are triggered by the mere ownership of a vehicle. However, this appears most likely to be true of the Sound Transit tax (“of every motor vehicle owned by a resident”). Excise taxes are supposedly imposed in exchange for the privilege of using the vehicle on the public *816roads. The record here included the argument that a vehicle not registered for such use on a public road would not be subject to either Vehicle Tax. Clerk’s Papers (CP) at 148-49, 152. Such taxes may be excise taxes under our cases. I would remand for this determination.

f 62 If the Authorities’ enabling statutes truly establish ad valorem or property taxes mislabeled as “excise,” we should not hesitate to say so and invalidate the taxes. Though it is true that we generally will seek to avoid interpretations that will produce illegal or unconstitutional results, “there is a difference between adopting a saving construction and rewriting legislation altogether.” Laurence H. Tribe, American Constitutional Law § 12-30, at 1032 (2d ed. 1988), quoted in In re Parentage of C.A.M.A., 154 Wn.2d 52, 69,109 P.3d 405 (2005). “We show greater respect for the legislature by preserving the legislature’s fundamental role to rewrite the statute rather than undertaking that legislative task ourselves.” In re Parentage of CA.M.A., 154 Wn.2d at 69.

¶63 Contrary to the majority, I would follow the plain terms of the Authorities’ enabling legislation and voter authorization ballot measures. I would hold that the Monorail may levy an excise tax of 2.5 percent on the value of each vehicle licensed for use on the public roads by a resident of the Monorail’s taxing district.10 I would further hold that Sound Transit could lawfully levy a one-time excise tax of 0.3 percent on the value of each vehicle licensed for use on the public roads by a resident of Sound Transit’s taxing district. The absence of the word “annual” in Sound Transit’s statutorily required voter authorization ballot measure further precludes it from collecting the full 0.8 percent tax authorized by statute. See CP at 251.11 Because the statute allowed a maximum 0.8 percent tax, *817before the repeal of the statute by initiative, voters could have authorized another onetime 0.3 percent (or 0.5, which with the first 0.3 would achieve the total 0.8 authorized).

¶64 Combined with the other funding sources authorized by these Authorities’ enabling legislation, see RCW 35-.95A.070, .090, .100; RCW 81.104.140(4), these taxes, properly construed, may provide revenue for the proposed projects. If the amount is not sufficient, the voters and/or legislature must be asked for more. This court should not make up any revenue shortfall by allowing taxation neither authorized by the legislature nor by voters.

¶65 I dissent.

Sanders, J., concurs with J.M. Johnson, J.

Reconsideration denied January 27, 2006.

As to Sound Transit, the Vehicle Tax statute was repealed by voters by Initiative 776, discussed infra.

Statewide voters repealed the statute and this court upheld the initiative, supra. The same superior court reversed in that case has enjoined the initiative’s effectiveness as to one bond contract in existence on the date of repeal. Until *810reversed, this requires that the proceeds be dedicated only to those preexisting bonds. Securities law will apply to sanction any diversion from that purpose.

Former RCW 82.44.020(1) was codified by Laws of 1937, ch. 228, § 2 and was repealed by Laws of 2000, 1st Spec. Sess., ch. 1, § 2.

The Salter court specifically characterized the former State MVET as “a tax upon the use of personal property,” id. at 705 (emphasis added), and concluded that it was “no longer open to question” that such a tax “is an excise.” Id.; see also High Tide Seafoods v. State, 106 Wn.2d 695, 700, 725 P.2d 411 (1986). I disagree with this conclusion, and in any event, it is not applicable to both use taxes as indicated.

However, article VII, sections 1 and 2 of the Washington Constitution essentially mandate that any property tax be calculated in this way.

More precisely, the Monorail would be able to levy its voter-approved 1.4 percent tax, see CP at 42, until it has collected 2.5 percent of the value of such a vehicle.

In pertinent part, Regional Transit Authority Proposition No. 1 provided: “To implement a regional rail and express bus system .. . shall the Regional Transit *817Authority impose a sales and use tax of up to four-tenths of one percent and a motor vehicle excise tax of three-tenths of one percent... ?” CP at 251.