Terry v. Mazur

CARRICO, C.J.,

dissenting.

The majority refuses to apply the Special Fund Doctrine in this case because, it says, the special fund involved here would consist of “tax revenues that the General Assembly is legally obligated to pledge, impose, and appropriate.” The majority acknowledges that the Doctrine is not rendered inapplicable by the inclusion of tax revenues appropriated to a fund as a result of a “moral obligation.” See Harrison v. Day, 202 Va. 967, 121 S.E.2d 615 (1961). In my opinion, however, it makes no difference whether the tax revenues involved in this case find their way into a special fund as *460the result of a moral obligation or as the result of a legal obligation undertaken by contract. The tax revenues in question traditionally have been considered and treated as special fund revenues, and so long as bondholders may look only to the special fund for payment, the full faith and credit of the Commonwealth are not involved. And, if the full faith and credit of the Commonwealth are not involved, Subsection d of Section 9 of Article X of the Constitution exempts the bonds from constitutional debt restrictions.

The test for determining if particular obligations involve the full faith and credit of the Commonwealth is whether “the obligations are payable only from the specified revenue sources and the holders may not look to the State’s general revenue for payment.” Button v. Day, 205 Va. 739, 743, 139 S.E.2d 838, 840 (1965) (Button II). Here, the answer is a clear and resounding “no” to the question whether bondholders, in the event the special fund is inadequate to discharge the bonds, may look to the State’s general revenue for payment. Unquestionably, bondholders may look only to the special fund.

Code § 33.1-277 expressly states that bonds issued pursuant to the Bond Act shall not be deemed to constitute a debt of the Commonwealth or a pledge of the faith and credit of the Commonwealth. As required by the Code section, the bonds themselves must state on their face that the Commonwealth is not obligated to pay the obligations except from the special fund created by the Bond Act and that the faith and credit of the Commonwealth are not pledged to the payment of the bonds. The section further provides that the Commonwealth is not obligated directly, indirectly, or contingently to levy or pledge any form of taxation or to make any appropriation for the payment of bonds other than “to impose highway user revenues, tolls and appropriate available funds,” all of which constitute the special fund as the sole source for the payment of bonds.

I would reply in the negative, therefore, to the first question posed by the Comptroller, viz., whether the Bond Act creates a debt to which the Commonwealth’s full faith and credit are pledged or committed. I would also reply in the negative to the other questions posed by the Comptroller.

One of these questions involves the two and one-half year limitation imposed on appropriations by Art. X, § 7 of the Constitution. I do not believe that the amendments to Code § 58.1-2425 *461violate this limitation. While § 58.1-2425(A) states that highway user revenues “are hereby appropriated to the Commonwealth Transportation Board for transportation needs,” the language can be construed, as the Attorney General suggests, to mean that the funds were appropriated on a one-time basis from the effective date of the amendments until the next session of the General Assembly, when the appropriation would be included in a regular appropriation act, with the appropriation repeated at each subsequent session, the amendments are presumed to be valid. We can assume, therefore, that the General Assembly enacted the amendments with one eye on Art. X, § 7 of the Constitution and that it intended the appropriation made in Code § 58.1-2425(A) to be effectual for no longer than the Constitution permits.

The remaining question is whether the Bond Act violates the language of Art. IV, § 15 of the Constitution that “[a]ny general law shall be subject to amendment or repeal” by the General Assembly. This constitutional provision, however, must be read in conjunction with Art. I, § 11 of the Virginia Constitution and Art. I, § 10 of the United States Constitution, both of which proscribe the impairment of contracts.

The Bond Act authorizes the Commonwealth to agree with bondholders to maintain at a minimum level the special fund created by the Act. This is a contractual undertaking protected against impairment by both the State and the Federal constitutions and, to this extent, the authority of the General Assembly under Art. IV, § 15 to amend or repeal a general law is restricted.

The manner selected by the General Assembly to finance highway improvements may or may not be the wisest choice. It is not the province of this Court, however, to pass upon the wisdom of the legislation, only its validity. Believing the legislation to be valid, I would grant the writ.