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No. 1-3075 LN T?IE SUPKPiMli dOUKT OF THE STATE d l MONTANA 1975 ART LONNICK, .IKT W O S a n d OD iHRIS GARDNER, a s t h e Board o f County Commissioners o f LE3JIS AND CLARK COUNTY, S t a t e o f Montana, T H O U S L. J U D G E , Governor af o f Montana, he S t a t e Counsel o f Record: For P l a i n t i f f s : Thomas F. Dowling, GourlCy . I c r u r n e y , H e l e n a , Montra Lid L e i f B. E r i c k s o n , Deputy County A t t o r n e y , a r g u e d , Helena, Montana Louis F o r s e l l a r g u e d , Helena, Montana %or Defendants : Hon. R o b e r t L. Woodahl, A t t o r n e y G e n e r a l , Helena, Montana % t r i c k E. Melby a r g u e d , Helena, Montana Yarry L. H j o r t , Helena, Montana Submitted: Decided : 5iLed: LA3 j k,,k, July s, 1975 J r 8 3 agpj ki PER CURIAM: T h i s i s an o r i g i n a l p r o c e e d i n g w h e r e i n p l a i n t i f f c o u n t y commissioners of Lewis and C l a r k County s e e k a d e c l a r a t o r y judgment a s t o whether t h e Montana F o r t y - F o u r t h L e g i s l a t i v e Assembly l e v i e d a p r o p e r t y t a x f o r t h e y e a r s 1975 and 1976 f o r T h i s Court p e r m i t t e d t h e t h e s u p p o r t of t h e U n i v e r s i t y System. f i l i n g o f t h e c o m p l a i n t and o r d e r e d s e r v i c e on t h e Governor, S t a t e A u d i t o r , S u p e r i n t e n d e n t of P u b l i c I n s t r u c t i o n and t h e Board of Regents. The Governor f i l e d an answer. The S t a t e A u d i t o r a p p e a r e d The i s s u e r a i s e d i s whether t h e F o r t y - F o u r t h L e g i s l a - by b r i e f . t i v e Assembly l e v i e d a p r o p e r t y t a x f o r t h e y e a r s 1975 and 1976 t o s u p p l y t h e fund from which a p p r o p r i a t i o n s have been made. Does t h e a c t of a p p r o p r i a t i n g money from a s p e c i f i c fund a c t a s a levy of a t a x t o c r e a t e t h a t fund? The F o r t y - F o u r t h L e g i s l a t u r e i n House B i l l s No. 269 and No. 2 7 1 , Laws o f Montana 1975, a p p r o p r i a t e d v a r i o u s sums from t h e fund c r e a t e d f o r d e p o s i t of t h e monies c o l l e c t e d by t h e l e v y a u t h o r i z e d under s e c t i o n 84-3804, R.C.M. 1947, by name and a c c o u n t number a s i l l u s t r a t e d by t h e f o l l o w i n g e x c e r p t from House B i l l No. 271: " S e c t i o n 11. The f o l l o w i n g moneys a r e a p p r o p r i a t e d t o t h e b o a r d of r e g e n t s f o r t h e r e s p e c t i v e u n i v e r s i t y system u n i t s f o r t h e biennium e n d i n g June 30, 1977: For F i s c a l Year Ending 6130176 'I* 9 : For F i s c a l Year Ending 6/30/77 ;'c "UNIVERSITY OF MONTANA "* 9: * II From t h e earmarked r e v e n u e fund 02106 U n i v e r s i t y m i l l a g e ERA [earmarked r e v e n u e a c c o u n t ] 3,041,786 3,165,627". Funds i n t h e t o t a l sum o f $15,836,528 f o r f i s c a l y e a r s 1976 and 1977 w e r e a p p r o p r i a t e d from t h i s fund f o r t h e s u p p o r t , maintenance, and o p e r a t i o n of t h e U n i v e r s i t y System. The Uni- v e r s i t y m i l l a g e earmarked r e v e n u e a c c o u n t was o r i g i n a l l y e s t a b l i s h e d i n 1949 a s d i r e c t e d by t h e laws which preceded s e c t i o n 84-3804, R.C.M. 1947. (See Chapter 217, Laws of Montana 1947, and Chapter 218, Laws of Montana 1957). It has been used ex- c l u s i v e l y f o r t h e d e p o s i t of t a x r e c e i p t s c o l l e c t e d by t h e levy f o r t h e support of t h e U n i v e r s i t y System. Those a r e t h e only monies e v e r d e p o s i t e d i n t h e account and t h a t i s t h e only account i n which t h o s e t a x r e c e i p t s have e v e r been d e p o s i t e d . The Governor, a s defendant, argues t h e i n t e n t t o levy t h e t a x i s c l e a r l y shown by t h e a p p r o p r i a t i o n of money from t h e account c r e a t e d by t h e t a x , and, e r g o , t h e t a x was l e v i e d . W e do n o t a g r e e . A r t i c l e V I I I , Section 1, 1972 Montana C o n s t i t u t i o n , s t a t e s : "Ta.xes s h a l l be l e v i e d by g e n e r a l laws f o r p u b l i c purposes. I I A r t i c l e V I I I , S e c t i o n 9, 1972 Montana C o n s t i t u t i o n s t a t e s : "Appropriations by t h e l e g i s l a t u r e s h a l l n o t exceed a n t i c i p a t e d revenue. 1 I I t i s obvious then t h a t s p e c i f i c l e v i e s of t a x e s s h a l l be made. taxes. Merely a p p r o p r i a t i n g funds does n o t c o n s t i t u t e a levy of Otherwise, i f a p p r o p r i a t i o n b i l l s were s e l f - e x e c u t i n g t a x l e v i e s , t h e r e would be no purpose i n A r t i c l e V I I I . S e c t i o n 84-3804, R.C.M. 1947, provides: "Upon t h e approval of t h e e l e c t o r s of t h i s s t a t e , t o be determined by t h e i r v o t e a t t h e g e n e r a l e l e c t i o n t o be h e l d i n November of 1968, t h e l e g i s l a t i v e assembly s h a l l levy a p r o p e r t y t a x of n o t more than s i x (6) m i l l s on t h e t a x a b l e v a l u e of a l l r e a l and ' p e r s o n a l p r o p e r t y each y e a r f o r t e n (10) y e a r s beginning w i t h t h e y e a r 1969. A l l revenue from t h i s p r o p e r t y t a x l e v y s h a l l be a p p r o p r i a t e d f o r t h e s u p p o r t , maintenance, and improvement of t h e Montana u n i v e r s i t y s y s tern. " (Emphasis s u p p l i e d ) . This s e c t i o n , t o g e t h e r w i t h t h e referendum approving i t , a u t h o r i z e s t h e l e g i s l a t u r e t o levy a p r o p e r t y tax. c o n s t i t u t e a levy. I t does n o t The l e g i s l a t u r e under t h i s s e c t i o n may f i x t h e r a t e , n o t t o exceed s i x m i l l s . f o r a p e r i o d of t e n y e a r s . This r a t e can vary each year This a u t h o r i z a t i o n i s a m a t t e r of c o n t i n u i n g l e g i s l a t i v e judgment t o be determined by each l e g i s l a t i v e assembly, a s i t deems n e c e s s a r y by means of a levy. The Forty-Fourth L e g i s l a t i v e Assembly d i d n o t make a l e v y pursuant t o this authority. P a s t l e g i s l a t i v e assemblies have construed and i n t e r p r e t e d s e c t i o n 84-3804 a s a u t h o r i z a t i o n t o levy and f u r n i s h revenue t o be a p p r o p r i a t e d f o r support of t h e U n i v e r s i t y System. The F o r t y - F i r s t L e g i s l a t i v e Assembly l e v i e d f o r t h e s e purposes f o r t h e y e a r s 1969 and 1970 (Ch. 321, Laws of Montana 1969). The Forty-Second L e g i s l a t i v e Assembly l e v i e d f o r t h e y e a r s 1971 and 1972 (Ch. 170, Laws of Montana 1971). The Forty- Third L e g i s l a t i v e Assembly l e v i e d f o r t h e y e a r s 1973 and 1974 (Ch. 478, Laws of Montana 1973). Each of t h e s e enactments contained t h i s language: "Section 1. The following t a x l e v i e s f o r s t a t e purposes a r e hereby made upon a l l p r o p e r t y i n t h e s t a t e of Montana, s u b j e c t t o t a x a t i o n * * *." Each enactment i n determining t h e r a t e of l e v y provided: 11 For t h e u n i v e r s i t y m i l l a g e fund, t o provide funds f o r t h e support of t h e Montana u n i v e r s i t y system, a s provided i n Referendum Measure No. 65 and passed by v o t e of t h e people a t t h e g e n e r a l e l e c t i o n h e l d November 5 , 1968, s i x (6) m i l l s , o r so much t h e r e o f a s may be n e c e s s a r y t o r a i s e t h e amount a p p r o p r i a t e d by t h e l e g i s l a t i v e assembly from t h e u n i v e r s i t y m i l l a g e fund f o r support of t h e u n i t s of t h e Montana u n i v e r s i t y system. I I Thus, i t i s e v i d e n t t h a t t h e t h r e e l e g i s l a t i v e assemblies preceding t h e Forty-Fourth regarded s e c t i o n 84-3804 a s a u t h o r i z a t i o n t o make and s p e c i f y t h e levy f o r u n i v e r s i t y system purposes. The f a c t t h a t i n each i n s t a n c e t h e y decided upon a s i x m i l l levy o r s o much t h e r e o f a s n e c e s s a r y t o m e e t t h e appropria- t i o n , does n o t d e t r a c t from t h e f a c t t h e y a c t e d under t h e a u t h o r i z a t i o n , made t h e l e v y , and s p e c i f i e d t h e r a t e . Each of t h e s e assemblies based on t h e circumstances, could have s p e c i f i e d t h e l e v y a t 5 m i l l s , 4 m i l l s , 3 m i l l s , o r even 2 m i l l s . The p o i n t i s , each assembly d i d make t h e determination and d i d s p e c i f y t h e r a t e authorized by the referendum and existing law. These enactments were not ritualistic, were not idle gestures. The enactments manifest the legislative construction and interpretation of section 84-3804 and Referendum No. 65 that this section and referendum are not self-executing, but rather constitute authorization to make the designated levy. In Swartz v. Berg, 147 Mont. 178, 181, 411 P.2d 736, this Court said: "It is a basic premise of the law of taxation that the foundation for levying and assessing a tax depends upon the existence of a valid legislative act specifically designating the imposition of the tax. Nothing is taxable unless clearly authorized by statute. State ex rel. Tillman v. District Court, 101 Mont. 176, 53 P.2d 107, 103 A.L.R. 376." There are valid reasons for requiring formality and specific designation of the imposition of a tax. Under the 1889 Montana Constitution,and its Article XII, many restrictions were placed upon the power of the legislature as to taxation. Those restrictions were set out in 1896 in State v. Camp Sing, 18 Mont. 128, 139, 140, 44 P. 516. The 1972 Montana Constitution does not expressly set out the same restrictions in its Article VIII, but does set out many of them. If an appropriation bill could be construed as a levy of taxes, these safeguards would be lost. To sum it up, the Legislature simply failed to make a levy as authorized by section 84-3804 and thus, the appropriation is not valid since no revenue was provided. constitute a declaratory judgment. This Opinion shall ' 1 Chief ~ h s t i c e fl 0 Justices. lM
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