Advisory Opinion re Constitutionality of 1973 Pa 1 & 2

Williams, J.

(concurring in the result). I concur in that part of my Brother T. G. Kavanagh’s opinion dealing with the first question asked this Court. I concur in the result of his opinion as to the second question but for different reasons.

The second question asked this Court follows:

"Is a school .district subject to the 15 mill limitations of Section 6 of Article 9 of the Michigan Constitution of 1963 if it imposes an ad valorem tax to pay principal and interest on notes or bonds issued to fund present or projected operating deficits as provided in Section 681 of Act No. 269 of the Public Acts of 1955, as amended by Act No. 1 of the Public Acts of 1973, being sections [sic]340.681 of the Compiled Laws of 1970?”

*186The pertinent part of Const 1963, art 9, § 6 reads as follows:

"Sec. 6. Except as otherwise provided in this constitution, the total amount of general ad valorem taxes imposed upon real and tangible personal property for all purposes in any one year shall not exceed 15 mills on each dollar of the assessed valuation of property as finally equalized. * * * These limitations may be increased to an aggregate of not to exceed 50 mills on each dollar of valuation, for a period of not to exceed 20 years at any one time, if approved by a majority of the electors, qualified under Section 6 of Article II of this constitution, voting on the question.
"The foregoing limitations shall not apply to taxes imposed for the payment of principal and interest on bonds or other evidences of indebtedness or for the payment of assessments or contract obligations in anticipation of which bonds are issued, which taxes may be imposed without limitation as to rate or amount; or to taxes imposed for any other purpose by any city, village, charter county, charter township', charter authority or other authority, the tax limitations of which are provided by charter or by general law.”

The provisions of 1973 PA 1 relevant to our determination of constitutionality under art 9, § 6 are §§ 681(2) and 681(4).

Section 681(2) provides as follows:

"(2) Notwithstanding subsection (1) a district that at any time has an operating or projected operating deficit in excess of $100.00 per membership pupil may borrow a sum of not more than $75,000,000.00 and issue its negotiable interest bearing notes or bonds for the purpose of funding the deficit in accordance with this section. * * * ”

Section 681(4) provides as follows:

«(4) * * * The notes or bonds shall pledge primarily *187for their payment either of the following sources of revenue:
* * *
"(b) Receipts derived from the levy and collection of an ad valorem tax levied upon all taxable real and personal property within the district of not more than 2.25 mills, for each year the notes or bonds are outstanding.”

Determination of the impact of art 9, § 6 on §681 causes us to revisit the leading case of Butcher v Grosse Ile Twp, 387 Mich 42; 194 NW2d 845 (1972). What that case really held is often lost sight of in the judicial speculation as to the ultimate impact of art 9, §6’s second and "nonapplication” paragraph on the first or "15-mill” limitation paragraph.

The opinions in Butcher, all of which agreed on the result and supported the actual holding, covered the whole spectrum from the conclusion that the second, "nonapplication” paragraph in effect nullified the first, "15-mill limitation” paragraph of art 9, § 6 to the conclusion that construction of the words and in fact the Constitutional Convention meant the "15-mill limitation” to have some definite meaning and not to be nullified by the nonapplication paragraph.

At one end of the spectrum Justice Black and three Justices spoke of nullification. He said:

"Whether the money borrowed is or is not to be used for operating expenses, 'taxes imposed’ to retire all such borrowing may be levied without limit as to rate or amount, subject only to legislative restriction, if any.” 387 Mich 42, 58 (1972).

At the other end of the spectrum, Chief Justice T. M. Kavanagh held that elementary rules of *188construction require the Court to find some meaning in the first paragraph despite the sweeping "nonapplication” of the second (p 71). He concluded that the second paragraph’s nonapplication operates on capital outlay only, whereas the first paragraph continues to. operate on "operational expenditures.” He expressed this as follows:

"What is the net effect of our construction of Const 1963, art 9, § 6, paragraph 2, clause 1? It means that all governmental units with power to tax, including those specified in paragraph 2, clause 2, viz., 'city, village, charter county, charter township, charter authority or other authority,’ as well as unchartered units, are not limited, either as to rate or amount, as to tax imposed for capital outlay expenditures or bonded indebtedness, which is approved by the voters. As to operational expenditures, the maximum millage which may be levied is limited either by the charter provisions for those units subject to paragraph 2, clause 2 or to those unchartered units and school districts subject to paragraph 1 of section 6, in 15-18-50 millage.” 387 Mich 42, 81. See also p 75.

The Chief Justice also convincingly argued against the idea that the second paragraph wiped out the first by noting that the Constitutional Convention Committee expressly voted down that idea when it refused to agree to turning all tax limitations over to the Legislature and taking it away from the Constitution and the vote of the people. See particularly footnote 9, the McCauley amendment, bottom of p 77 and top of p 78.

Two other Justices took an in-between position with the following sentence in both the Adams and Williams opinions:

"The limitations of the first paragraph do apply to counties, townships and school districts, and all of the operations of such governmental units, except for au*189thorized operations of such units involving bonds or other evidences of indebtedness or assessments or contract obligations in anticipation of which bonds were issued.” 387 Mich 42, 66 and 67.

Parenthetically it may be observed that in Alan v Wayne County, 388 Mich 210, 316 [particularly footnote 69]; 200 NW2d 628 (1972) Chief Justice T. M. Kavanagh’s reasoning was referred to with approval.1

The majority opinion interpreting the nonapplication paragraph to eliminate any constitutional bonding and taxing limitation of the first paragraph relies convincingly on the construction of the actual words used in the nonapplication paragraph.

The other opinions recognize the force of such verbal construction but hold that there are other rules of construction that must also be considered. First of these is that the several parts of a constitution must be construed together to give each part meaning if possible. Second the convention history shows that a provision specifically substituting legislative for constitutional tax limitations was rejected. Third the Message to the People indicated that the 15-mill limitation was being retained. In sum, the other opinions tried to give recognition not only to the nonapplication language of the second paragraph but to the language of limitation of the first paragraph.

Since the opinion emphasizing the "nonapplication” paragraph represented the majority of the Court it is entitled to great precedential respect.

However, the actual holding in Butcher was much more limited than the doctrinal speculation. Butcher on the facts simply affirmed that the *190Court of Appeals and the trial court correctly upheld a township tax in excess of the maximum allocated millage levied without vote of the people to liquidate bonds issued to build a sewage system. While not discussed in the opinions, the sewage system was ordered by the State Health Commissioner to abate a health hazard and pollution nuisance, making the whole matter a very special and limited one. Decision of the case, therefore, did not on the facts require holding that the "non-application” paragraph permitted bonding and taxing within legislative limits "[w]hether the money borrowed is or is not to be used for operating expenses”. 387 Mich 42, 58.

The decision in this case does not on the facts require this Court to take the final plunge of "nullification” either, although the facts require us to examine somewhat closer to the brink.

While the second question inquires in general terms about the constitutional validity of §681, 1973 PA 1, this Court can take judicial notice of the fact that the Senate’s real concern is whether the City of Detroit school system can constitutionally bond and tax under § 681(2) and § 681(4). The reason such judicial notice is taken is that the Detroit schools have an accumulated "operating deficit in excess of $100.00 per membership pupil”, which means that this Court does not need to consider the more speculative part of § 681(2) "or projected operating deficit”.

The significance of limiting our inquiry to the actual accumulated "operating deficit” is that our consideration of the "nonapplication” paragraph is thereby limited to the consideration of bonding and taxing for actual accumulated deficit or debt, although derived from operations, as opposed to the possibility of bonding and taxing for a "pro*191jected operating deficit”. In short the case sub judice concerns bonding and taxing to help liquidate a school district’s obligations rather than bonding and taxing to help a school district increase its obligations. The difference obviously is important.

Limiting our decision to the facts of the case, it is therefore possible to give recognition to the stark "nonapplication” second paragraph of art 9, §6 and at the same time recognize the 15-mill limitation of paragraph one as to actual operations, current and future.

This opinion therefore would limit our construction of the dichotomy between paragraphs one and two of art 9, §6 to the specific facts of this case and recognize that art 9, § 6 permits bonding and taxing without limitation for accumulated deficits, even if of operational origin, but reserve for future consideration when the facts so require whether the second, "nonapplication” paragraph of § 6, art 9 so modifies the first 15 mill paragraph as to permit bonding and taxing without limitation for current and future operations as well.

. Justice Black also discusses Butcher in his specially concurring opinion in Alan. He refers to the fraud of § 6.