Mesa County Board of County Commissioners v. State

Justice EID,

dissenting.

Today the majority holds that SB 07-199-which in effect authorizes a $117 million tax increase on Colorado taxpayers-complies with article X, section 20 of the Colorado Constitution, even though the voters never approved it. 'The majority's rationale for its decision-namely, that SB 07-199 is simply not covered by article X, section 20-is, in my view, utterly unconvincing. In order to reach this result, the majority discovers that a gaping hole exists in article X, section 20-a hole so big that, according to the majority, SB 07-199 falls right through it. Yet it is undisputed in this case that, prior to SB 07-199, state law prevented local school districts from keeping the $117 million in excess revenues that they had collected after conducting waiver elections. It is similarly undisputed that SB 07-199 removed that provision of state law and allowed the districts to keep those funds. SB 07-199 is thus a "tax policy change directly causing a net tax revenue gain to any district" under the plain language of article X, section 20, and requires a vote of the people. Colo. Const. Art. X, § 20(4)(a). There has never been (and under the majority's opinion today, never will be) a vote of the people authorizing this change in state tax policy. Because the majority deprives the people of their right to vote on SB 07-199 and the $117 million tax increase it permits, I must respectfully dissent from its opinion.

Under article X, section 20, "[Dlistricts must have voter approval in advance for ... a tax policy change directly causing a met tax revenue gain to any district" Colo. Const. Art. X, § 20(4)(a) (emphasis added). Prior to the passage of SB 07-199, the School Finance Act required school districts to abide by article X, section 20's revenue limitations. See § 22-54-106(2)(c), C.R.S. (1994) (capping raoill levies at "[the number of mills that may be levied by the district under the property tax revenue limitation imposed on the district by [article X, section 20]") (emphasis added); maj. op. at 525. SB 07-199 removed the School Finance Act's requirement that school districts abide by article X, section 20 and permitted districts to retain more revenue than article X, section 20's limitations would allow. § 22-54-106(@)(a)(III), C.R.S. *538(2008) (providing that article X, section 20's limitations apply only to "a district that has not obtained voter approval to retain and spend revenues in exeess of the property tax revenue limitation imposed on the district by [article X, section 201"); maj. op. at 525. The bottom line is that, prior to SB 07-199, state law prevented districts from keeping the $117 million in excess revenues that they had obtained through local waiver elections. SB 07-199 authorized them to keep the money. SB 07-199 is thus a "tax policy change directly causing a net tax revenue gain to any district" under article X, section 20(4)(a)-plain and simple.

Should there be any doubt about this point, one need only turn to the testimony of Colorado State Treasurer Cary Kennedy who, in response to questioning by the district court below, acknowledged that SB 07-199 was a state tax policy change. Treasurer Kennedy was asked:

In your view, did Senate Bill 199 alter the effect of how mill levies are calculated for a taxpayer in the State of Colorado?

Treasurer Kennedy answered:

It altered the policy, yes.

In my view, Treasurer Kennedy is entirely correct on this point. Subsection (4)(a)-in plain, straightforward, and unambiguous language-requires "voter approval in advance" for such a "tax policy change."1

The majority comes to the contrary conclusion, finding that a vote of the people is not required because SB 07-199 isn't a "tax policy change directly causing a net tax revenue gain to any district" under subsection (4)(a) in the first place. The majority holds that subsection (4)(a)'s voter approval requirement applies to only those tax policy changes that result in revenue gains that "exceed[ ] one of the subsection (7) revenue limits." Maj. op. at 529. Apparently, the majority believes that because SB 07-199 allowed the local school districts, rather than the state, to exeeed revenue limitations, it cannot be covered by subsection (4)(a). See, eg., id. at 580-31.

The answer to the majority's argument is simple: the language of subsection (4)(a) is not so limited. Subsection (4)(a) requires that "districts must have voter approval in advance for ... a tax policy change directly causing a net tax revenue gain to any district." (emphasis added.) As applied in this case, the language requires that the "dis-trie[t] [here, the state] must have voter approval in advance for ... a tax policy change [here, SB 07-199] directly causing a net tax revenue gain [here, the $117 million] to any district [here, the local school districts]. The majority creates a loophole through which SB 07-199 slips, but the plain language of subsection (4)(a) is loophole-free.2

The majority claims such a loophole is necessary because the language of subsection (4)(a) could not really mean what it says. The majority reasons that if the language actually meant what it says-that is, if the state had to obtain voter approval for all tax policy changes directly causing revenue gains-voter approval would be required even for de minimis revenue gains. Maj. op. at 529. This argument is a red herring. The amount of tax revenue involved in this case-$117 million-is hardly de minimis. In my view, it is wrong for the majority to deprive the voters of their right to vote on a decidedly non-de minimis tax increase simply because it can imagine an "absurd" application of the voter approval requirement. Id.

The majority also argues that voter approval is not required for SB 07-199 because the legislation did not change state tax poli*539cy-it simply "implemented" the waiver elections conducted by the local school districts. The majority can call SB 07-199 anything it wants: a "reflect[ion}" of the fact that various local school districts had conducted elections to waive the revenue limitation of subsection (7), maj. op. at 528; a "recogniltion]" of those elections, id. at 526; an "implement[ation]" of those elections, id.; a "stabi-liz[ation]" of mill levies, id.; a legislative "direct[ion]" regarding "the use of the funds" received as a result of the waiver elections, id. at 529; or "clear statutory direction" to the Colorado Department of Education "to allow school districts to implement the earlier elections and retain property tax revenue above the waived revenue limit." Id. at 535. Whatever label is affixed, the result is the same: SB 07-199 enacted a change in state tax policy, and therefore voter approval was required under subsection (4)(a). No election has ever been held-statewide or otherwise-asking the voters to approve SB 07 199. The legislation is therefore contrary to article X, section 20.

The majority points out that SB 07-199 is presumed to be constitutional. Maj. op. at 525-24; 527. The majority is of course correct that courts must not lightly set aside statutes passed by the General Assembly as unconstitutional. See Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161, 172-73 (Colo.2008) (Eid, J., dissenting). I have two major concerns, however, about the majority's application of the presumption of constitutionality in this case. First, the presumption of constitutionality cannot save a constitutional interpretation that is flatly wrong, which I believe the majority's to be. Second, and more importantly, I fear that the highly deferential approach articulated by the majority today may apply, at least in practice, only to interpretations of article X, section 20. Maj. op. at 528, 527 (relying on Barber v. Ritter, 196 P.3d 238 (Colo.2008), which held that transfers from cash funds to the general fund do not violate article X, section 20). In my view, the presumption of constitutionality cannot be used as a cover to excise article X, section 20 from our Constitution. The wisdom of that constitutional provision is a question for the voters, not this court, to decide.

After concluding that SB 07-199 does not constitute a "tax policy change" requiring voter approval, the majority candidly engages in judicial overreaching by considering whether the individual elections held by the local school districts satisfied the requirements of subsection (7)(c) to waive property tax revenue limitations. Maj. op. at 531-85. The majority forthrightly admits that the plaintiffs in this case "did not sue any of the school districts" alleging that their individual waiver elections were insufficient. Id. at 528 n. 12. And in fact, the plaintiffs' complaint in this case is clearly limited to challenging SB 07-199 under article X, section 20, and is brought against state entities only. The majority further acknowledges that "[olrdinarily this defect would prevent us from determining the validity of the missing defendants' actions." Id. Yet the majority plows ahead to consider the validity of hypothetical claims that the plaintiffs could in the future bring against hypothetical defendant school districts, just in case the plaintiffs had the inclination to do so after today's decision rejecting the claim they did in fact bring.

The majority justifies its consideration of these hypothetical claims "because of the public importance of the School Finance Act" and because "the issues have been fully briefed." Id. Yet these hypothetical claims have not been "fully briefed;" indeed, they haven't even been brought. The defendants in this case did raise an alternative argument-namely, that if this court were to find that SB 07-199 was a tax policy change requiring voter approval, the local school district waiver elections satisfied that voter approval requirement. But the majority does not address this alternative argument, instead opting to consider the conduct at the state and local level as distinct inquiries. Id. While I would find the defendants' alternative argument unpersuasive,3 I find the ma*540jority's consideration (and rejection) of the plaintiffs' hypothetical claims deeply troubling for an altogether different reason. In my view, such consideration demonstrates the lengths to which the majority will go to ensure that no vote of the people ever be required with regard to issues surrounding this case.

In the end, if the majority were truly correct in its ultimate conclusion that the local waiver elections were sufficient to waive subsection (7) revenue limitations, maj. op. at 531-35, one must wonder why SB 07-199 was necessary in the first place. Indeed, under the majority's interpretation, the school districts should have simply kept the money once the local school district waivers were in place. See, eg., maj. op. at 585 ("The waiver elections were effective immediately and gave the school districts, which are the relevant taxing authorities, the right to receive property tax revenue above the subsection (7)(c) limit."). The majority attempts to explain the districts' actions by blaming the Colorado Department of Education, which continued to calculate the districts' portion of education funding under the limitations even after the waiver elections had taken place. Id. at 585. According to the majority, the General Assembly passed SB 07-199 to give the Department "clear statutory direction to allow school districts to implement the earlier elections and retain property tax revenue above the waived revenue limit." Id.

The majority may very well be correct about the General Assembly's motivation for passing SB 07-199. The point, however, is irrelevant. SB 07-199's "clear statutory direction" to the Department to allow the local school districts to keep the excess revenue was, as developed above, a change in state tax policy-that is, the removal of the School Finance Act's requirement that school districts abide by the revenue limitations imposed by article X, section 20. To put it somewhat differently, the Department continued to calculate the districts' portion of education funding according to the limitations imposed by article X, section 20 even after the waiver elections took place because the School Finance Act required it to do so. It could not remove those limitations until the General Assembly enacted, with voter approval, the state tax policy change contained in SB 07-199.

The purpose of article X, section 20 "is to require that the voters decide for themselves the necessity for the imposition of new tax burdens." Submission of Interrogatories on SB 983-74, 852 P.2d 1, 4 (Colo.1998). Today the majority deprives the voters of this opportunity regarding SB 07-199. I therefore respectfully dissent.

. Treasurer Kennedy took the further position that the waiver elections held by local school districts constituted the requisite voter approval for SB 07-199-a position with which I disagree, as discussed below.

. The majority opinion also includes a lengthy discussion of our caselaw interpreting dual funding systems. Maj. op. at 527-28. The majority seems to attach significance to the fact that the local school districts, not the state, actually collected the tax revenue in this case. See, eg., id. at 530-31; see also conc. op. at 536-37 (Coats, J.). The fact that the state in this case does not collect the tax revenue is irrelevant. Under the plain language of subsection (4)(a), the "district" making the tax policy change-here, the state-must obtain voter approval for its tax policy change, regardless of whether it takes in the tax revenue or not.

. The local school district waiver elections do not satisfy the requirement that SB 07-199 obtain voter approval in this case for variety of reasons. First, as noted, supra note 2, subsection (4)(a) requires the "district" making the policy change (here, the state) to obtain voter approval, and *540there has been no statewide vote on SB 07-199. Second, such an argument ignores the fact that the local school districts occupy a subordinate position vis-a-vis the state. Local school districts have no authority to hold elections that would approve a statewide change in the law such as SB 07-199; in other words, local districts cannot change state law. And finally, even if approval of a state tax policy change by the local districts were possible, which it is not, the local elections held in this case were insufficient to approve SB 07-199 because those elections did not seek approval of a change in the School Finance Aci, and indeed were held long before SB 07-199 was even proposed.