DISSENTING OPINION. The importance of this case lies not in its immediate result, but in the announcement of the doctrine that, in determining the amount of money which shall be levied upon the taxpayers of a municipality for municipal purposes, the city council acts ministerially and not legislatively, which is the basis for the conclusion that power to review the action of the city council does not violate the Constitution by delegating legislative power to the state tax board. The statute under consideration seeks to confer power upon the state tax board to reduce levies only, but in the reasoning applied and the principles announced nothing is seen to prevent further legislation delegating power to the state tax board to increase levies or to prevent the delegation of complete original jurisdiction to the state tax board or any other state ministerial board to fix the amount of all levies, local or state, within prescribed maximum limits.
Section 1 of article 3 of the Constitution divides the powers of government into three separate departments, the legislative, the executive, including the administrative, and the judicial, and provides that no person charged with official duties under one of these departments shall exercise any of the functions of another.
The opinion concedes that the power to tax is exclusively legislative, but concludes that, in determining how much money shall be raised by taxation for each authorized municipal purpose, the city council acts as a mere fact-finding body, applying a rule adopted by the General Assembly to the facts in a given case. It is said in the majority opinion: *Page 645
"The City of Indianapolis is in error when it takes the position that the act of its City Council in making up the tax budget and passing the tax ordinance constitutes a legislative act in the sense that a law enacted by the General Assembly is a legislative act. Such is not the case. . . .
"The government of the City of Indianapolis, a creature of the Legislature, is a part of the taxation machinery, acting in an administrative capacity, subject to the restrictions and limitations imposed by the Legislature. The local government of the city does not act either in a judicial or a legislative capacity in applying the tax laws to the needs and necessities of that unit. . . .
"Neither the city officials nor the tax board can levy a tax not provided for by the Legislature. No power is delegated to either to legislate upon that subject; nor do they pronounce judgment. They administer the tax laws as required by the Legislature, and pursuant to the method, standard and rules prescribed by the statute, among which are maximum amounts of the several levies to be made by the local municipalities, and the provision that the State Board of Tax Commissioners only can approve or reduce the levies fixed by the local tax officials."
In other words, the majority opinion is based upon the assumption that, since the municipality may only levy taxes for the purposes authorized by the legislature, and, since the total of taxes that it may levy may not exceed $1.50, the limit fixed by the legislature, the determination of the amount of money which shall be raised and appropriated for city purposes and levied against the taxpayers of the city, and a determination of the amount that shall be levied and expended for each purpose, is a mere ministerial function, and that it does not amount to levying a tax. No authority is cited to sustain this conclusion, which seems inconsistent with every fundamental principle of the law of taxation.
Judge Cooley, generally recognized and highly respected *Page 646 authority upon matters of taxation, said, respecting the delegation of taxing powers:
". . . the powers which cannot be delegated to merely ministerial or judicial officers, include the selection of the property to be taxed, the determination of the purposes for which taxes shall be levied, the fixing of the amount of the tax to be imposed, the fixing of the rate of taxation, and the prescribing of the rules for taxation in general. . . . `It may be laid down as a general proposition,' says the Supreme Court of the United States, `that where a Legislature enacts a specific rule for fixing a rate of taxation, by which rule the rate is mathematically deduced from facts and events occurring within the year and created without reference to the matter of that rate, there is no abdication of the legislative function, but on the contrary, a direct legislative determination of the rate.' . . .
"But to leave to a court of claims or any state officer or board the power to determine whether a tax should be laid for the current year, or at what rate, or upon what property, or how it should be collected, and whether lands should be sold or forfeited for its satisfaction, — all this prescribes no rule, and originates no authority; it merely attempts to empower some other tribunal to prescribe a rule and set in motion the tax machinery. And this is clearly incompetent." Cooley on Taxation (4th Ed.), p. 194, § 78.
The determination of the purpose for which a tax shall be levied, and the amount of money to be collected from the taxpayer for each purpose, is of the very essence of the power to tax, and any formula that confers discretion as to whether or not money shall be raised for any specific purpose, or the amount of money to be raised for that purpose, is a delegation of the sovereign legislative power of taxation.
The majority opinion refers to School City of Marion v.Forrest (1907), 168 Ind. 94, 78 N.E. 187, as holding that the power delegated to the city council to fix *Page 647 and levy taxes, in strictness, "does not arise to the dignity of a legislative enactment by the General Assembly." But there is no language in the opinion which seems susceptible to such a construction. That decision recognizes the power of taxation as legislative. It was contended that the General Assembly could not properly delegate the power to a municipal library board appointed by the council upon the ground, it may be assumed, that such power could only be delegated to a legislative municipal body elected by and directly responsible to the people. It was held that such boards "exercise the whole power of the municipality in respect to public libraries," and that hence delegation of taxing power to such a board was not violative of the Constitution. It was not expressly decided whether the library board was a legislative or a ministerial body, but no question of delegation of power to a state board was involved. Upon authority of decisions of the United States Supreme Court, and the courts of last resort of several states, it is said in 27 Am. Eng. Ency. of Law (2nd Ed.), p. 620:
". . . the imposition of taxes by cities, counties, or towns for their support is as much an exercise of the taxing power of the state as a tax imposed directly by the state."
If the legislature, by appropriate enactment, appropriates money for a specified purpose and levies a tax against the property of the citizens of the state, the tax has the dignity of a lien. The same is true of an enactment by a city council. Both levies go upon the same tax duplicate, and are enforceable in the same manner. Both liens are created by the enactment of a law or ordinance by a legislative body, and therefore it is not clear what is meant by the statement that municipal levies do not rise to the dignity of legislative levies. *Page 648
The case of Zoercher v. Agler (1930), 202 Ind. 214,172 N.E. 186, is referred to as deciding the question here under consideration. An examination of the opinion, and the opinion upon rehearing, in that case, discloses that the question before the court for decision was whether or not the action of the state tax board in decreasing the tax rate of the city of South Bend from 73 cents to 72 cents was unlawful and violative of the vision of the Constitution here under consideration. It appears that the city council determined upon the levy of a specific sum of money to pay the expenses of the city government; that in making its computation to determine the rate it used a figure as representing the taxable valuation of property within the city, which was found by the trial court to be incorrect. It was found that the amount of money which the city council had determined to levy for governmental purposes would be provided by the 72 cent rate fixed by the state tax board, and that the 73 cent rate which the city council had fixed would provide more revenue than the council had elected to raise. While there is much obiterdictum in the opinion, the question that was decided by the court, and the fact that the question was clearly understood, is illustrated by the following language which we quote from the opinion (p. 227):
"The power which the board here exercised was simply to make a mathematical computation from the figures before it and determine therefrom as a matter of fact that the tax levy fixed by the city would raise more money than was needed to provide the sums set out in the budget, and that the rate of assessment must be reduced from 73 cents to 72 cents in order to keep it within the provisions of the law. Clearly the exercise of such power was proper, and it was not a legislative act."
From this it clearly appears that in that case the question of whether the legislature might delegate to *Page 649 the state tax board the power to determine how much money would be levied for the purposes of municipal government, or the specific purposes for which it could be levied, was not before the court for decision, since the state tax board had attempted to do nothing more than correct the clerical error in computation made by the city officers in seeking to apply a rate that would provide the revenue which the city council in its legislative capacity had determined to be necessary. It is true that the following language, unnecessary to the decision of the case, was used (p. 225):
"It is unnecessary here to enter upon a discussion of the existence of `the right of local self-government' in cities, or to determine just what such phrase includes. It cannot include the right of taxation, because that, by § 1, Art. 10, Constitution, § 200, Burns 1926, is vested in the General Assembly."
No authority is cited to support the proposition, and it is inconceivable that a government can exist without power to tax. But, granting that the power to tax is vested by the Constitution in the General Assembly — the legislative branch of the state government — the same Constitution forbids the delegation to that power to the state board, a part of the "executive including the administrative" branch of the state government. It is said in 19 R.C.L., p. 943, § 242, with citation of many supporting authorities:
"The power of taxation is the power of a sovereign state to require a contribution of money or other property in accordance with some reasonable rule of apportionment from the persons, property or occupations within its jurisdiction for the purpose of defraying the public expenses. Such power lies exclusively in the legislature, and a municipal corporation has no right to levy a tax upon the property of its citizens without the sanction of a legislative enactment. But though it is well settled that, as a general proposition of law, the sovereign *Page 650 power of taxation is incapable of delegation, there is a recognized exception to this rule in the case of the political subdivisions of the state, and the power of the legislature to authorize municipal corporations to levy taxes for the purpose of providing the necessary revenue to defray the expenses of municipal government and to pay for the construction of public improvements within their respective limits has been exercised for so long a time that its existence is not open to dispute."
It is said further on page 944, § 244:
"When the power to levy a tax is delegated to a municipal corporation, although the detail work of listing the property or other subjects of the tax, and valuing it, and assessing and collecting the tax is frequently delegated to appointive officials, the power of determining that a tax shall be levied and of deciding upon the amount to be raised or the rate of the tax, and the classes of property or the privileges or occupations upon which the tax shall be assessed, if these points are not covered by the statute, is almost always exercised by the people of the district which is to bear the burden of the tax, either directly or through their elected representatives in the municipal council, and thus the old maxim of the colonists `no taxation without representation' is not violated. It is held by the weight of adjudicated cases that the power of levying a tax cannot be constitutionally delegated to a board of appointive officers, whether their authority is state wide or confined to a particular municipality or district, without the direct consent of the people of the district to be taxed, . . ."
While it has been said that the enforcement of the principle "no taxation without representation" is a judicial usurpation of power delegated to the legislature, it will be noted that where our Constitution speaks it prohibits the delegation of legislative power to "the executive including the administrative" branch of the government. It cannot be doubted that at the time the Constitution was enacted it was clearly established that the exercise of the power of taxation, that is the determination *Page 651 of the amount of revenue that would be collected from the taxpayers for governmental purposes, was the exclusive function of the legislative branch of the government. Adhering to the American tradition, our Constitution provides that "bills for raising revenue shall originate in the house of representatives," which is the popular branch of the legislative arm of the government, and is the one closest to the immediate control of the electorate. Whether or not, in the face of this constitutional provision, the determination of how much money shall be raised for governmental purposes may be delegated to a branch of the municipal government that is not elected by the people, the conclusion cannot be avoided that discretion in determining the amount of taxes that may be levied cannot be delegated to a ministerial branch of the state government, and that the Constitution expressly prohibits such a delegation.
It was said by Chief Justice Marshall, in McCulloch v.Maryland (1819), 17 U.S. (4 Wheat.) 315, that the power to tax is the power to destroy. It was expressly recognized in that opinion, not only that the power to tax property is the power to destroy, but that the power to deny to a government the right to raise revenue by taxation is the power to destroy that government. The power to limit without measure the revenue which a municipal government may raise by taxation is the power to destroy that municipal government in whole or in part. The legislative branch of the state government may limit the purposes for which a municipality may levy a tax and the amount of the levy — grant that it may destroy the state government — but it may not delegate that legislative power.
In the cases of Van Hess v. Board, etc. (1921),190 Ind. 347, 129 N.E. 305; O'Connor v. Board, etc. (1924), *Page 652 194 Ind. 386, 142 N.E. 858; State ex rel. Freeland v. Evans (1926), 197 Ind. 656, 150 N.E. 788; and State Board of TaxCom'rs. v. State ex rel. City of Indianapolis (1926),198 Ind. 343, 153 N.E. 404, 153 N.E. 596, the question of whether the act under consideration sought to delegate the legislative power of taxation was not considered or decided.
The legislature may delegate to the state board of tax commissioners, and to local ministerial or administrative officers, the duty of assessing property, which consists in finding facts as to its true cash value, which is the legislative rule for assessment, and to equalize assessments between units, since the property in all units is required to be assessed upon the same basis, true cash value. But it is a far cry from this to conferring power upon ministerial bodies to determine the purpose for which money shall be levied as a tax, and the amount that shall be levied for each purpose.
The discretion sought to be delegated to the state board of tax commissioners in controlling the amount of money that is to be levied as taxes by the municipality is not limited in the statute, and if there is a valid delegation of the power the board may reduce levies fixed by a city council to any extent that it may see fit in the exercise of its discretion. Such reduction may override the judgment of the city council as to the number of policemen or firemen or employes in the sanitary department that may be necessary to safeguard the public interest, and as to the amount of the salaries that are to be paid to public employes, the amount that will be spent upon schools, and for the employment of teachers, for parks, and playgrounds, and the numerous other activities which are thought to be essential to the health and welfare of communities, and for which they are authorized to raise revenue by taxation. *Page 653 The power to control the amount of such expenditures, to limit them, and to deny the city the right to derive such revenue as it may think necessary to preserve its properties, and efficiently provide for the public welfare and safety, is surely the power to destroy the efficiency of city government and to jeopardize the efficiency, if not the existence, of its established institutions. Not one authority is found that sustains the contention that such power may be delegated to a state administrative or ministerial board. The fundamental principles laid down by every writer on the subject appear to be an insuperable argument against it.
In State ex rel. Geake v. Fox (1902), 158 Ind. 126, 63 N.E. 19; State ex rel. Jameson v. Denny (1889), 118 Ind. 382, 21 N.E. 252; City of Evansville v. State ex rel. Blend (1889),118 Ind. 426, 21 N.E. 267; and State ex rel. Holt v. Denny (1889), 118 Ind. 449, 21 N.E. 274, this court held that the legislature has no constitutional authority to place the management and control of a city's fire department, parks, and other private property under the control of boards appointed a board to be appointed by him, power to levy taxes for specified purposes, fixing a limit to the total tax which he may levy for all state purposes, and leave to his discretion the question of whether taxes will be levied for all purposes, and the amount to be levied for each purpose within the general limitation. In fact, there would seem to be nothing in the Constitution which would prevent the legislature from laying down a rule fixing the purposes for which taxes may be levied in all governmental units, including township, county, city, and state, and fixing a limit of total levies for each, and delegating to one central administrative or ministerial agency the power of determining the amount of taxes, if any, to be levied for each purpose *Page 654 within the general limitation. This clearly was not by the governor of the state. The power to reduce or eliminate the revenues required for the maintenance and operation of such instrumentalities is the power to control their management. The decision of the majority would seem to be in direct conflict with these cases.
Under the reasoning of the majority the legislature may prescribe the purposes for which the state highway commission may collect taxes and fix a maximum limit thereon, and delegate to that commission the power to determine what the needs of the state in respect to highways may be, and how much money will be collected in taxes to supply those needs, under the theory that the ministerial board is merely applying a legislative rule; or it may delegate to the governor, or a board to be appointed by him, power to levy taxes for specified purposes, fixing a limit to the total tax which he may levy for all state purposes, and leave to his discretion the question of whether taxes shall be levied for all purposes, and the amount to be levied for each purpose within the general limitation. In fact, there would seem to be nothing in the Constitution which would prevent the Legislature from laying down a rule fixing the purposes for which taxes may be levied in all governmental units, including township, county, city, and state, and fixing a limit of total levies for each, and delegating to one central administrative or ministerial agency the power of determining the amount of taxes, if any, to be levied for each purpose within the general limitation. This clearly was not the understanding or intention of the people when the Constitution was adopted. It is a fundamental principle of our theory of government that only by legislative enactment can a tax be laid upon the people, and the purposes and amount of taxation determined. *Page 655
It follows that the act, in so far as it seeks to delegate power to the state board of tax commissioners to regulate or control the purposes for which municipalities may levy taxes, or the amount of tax which they may levy, is unconstitutional, and the judgment should be affirmed.