William E. Wall Et Al., V. The State Of Washington, Et Al. (Majority)

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FILED COURT OF APPEALS DIVISION if 2015 AUG 26 PM 12: 54 STATE OF WASHII#GTON IN THE COURT OF APPEALS OF THE STATfLYYOE S DEPUTY GTON DIVISION II WILLIAM E. WALL, ESTATE OF JAMES H. JACK, by SHARON Representative, its through and A. No. 46641 -4 -II Personal JACK and LINDA R. LEIBICH, Appellants, V. THE STATE OF WASHINGTON, acting by and WASHINGTON the through LEGISLATURE STATE McINTYRE, JAMES and UNPUBLISHED OPINION Treasurer of the State of Washington; BRIAN Auditor SONNTAG, of the State of Washington; and BRAD FLAHERTY, Director of the Department of Revenue, State of Washington, LEE, J. — The estate of James Jack (the Estate) appeals the superior court' s order granting summary judgment to the State of Washington, where the Estate challenged the constitutionality of legislative amendments to former RCW 83. 100. 230 that allowed the State to transfer funds out of the education legacy fund and into the state general fund during the 2007- 2009 and 2009- 2011 bienniums.' The Estate argued that the legislature' s plenary power to enact the amendments was William Wall was the other plaintiff in this case; however, the superior court dismissed him as a party based for lack of on lack standing. of standing. Wall does not appeal the superior court' s order dismissing him No. 46641 -4 -II limited and the by Wash. Const. requisite criteria art. to VII, § show 52 and art. a violation II, § of art. 193. II, § We hold that art. VII, § 5 does not apply, 19 has not been shown. Consequently, the Estate has failed to show a constitutional limitation exists on the legislature' s power to enact the challenged amendments. Because it is unable to show the legislation authorizing the discretionary transfer of money to the state general fund was unconstitutional, the Estate cannot establish the subsequent transfer of money from the education legacy fund to the state general fund was unconstitutional. Accordingly, we affirm. FACTS In 2005, the legislature passed the " stand- alone" estate tax, former RCW 83. 100. 040 Former RCW 83. 100. 220 directed that estate taxes paid pursuant to former RCW 2005). 83. 100. 040 be deposited into the education legacy trust account. Under former RCW 83. 100. 230 2005): legacy trust account is created in the state treasury. Money in the account may be spent only after appropriation. Expenditures from the account may The education be used only for deposit into the student achievement fund and for expanding access to higher edi4cation through funding for new enrollments and financial aid, and other educational improvement efforts. Other funds are also deposited into the education legacy trust account. However, all of the funds in the account are comingled, and it is impossible to determine the source of the funds in the account. 2 No tax shall be levied except in pursuance of law; and every law imposing a tax shall state distinctly the object of the same to which only it shall be applied." 3 Art. VII, § 5 Art. II, § 19 states, " states, " No bill shall embrace more than one subject, and that shall be expressed in the title." K No. 46641 -4 -II In an appropriations bill for the 2007- 2009 biennium, the legislature amended former RCW 83. 100. 230 ( 2005) to the account may add a section fund. stated: " be transferred into the also On June 9, 2009, $ 67 general that During the 2007- 2009 fiscal biennium, moneys in state general fund." LAWS OF 2008, ch. 329, § 924. million was transferred from the education legacy trust account to the state In an appropriations bill for the 2009- 2011 biennium, the legislature amended former RCW 83. 100. 230 ( 2008), changing " 2007- 2009 fiscal biennium" to " 2009- 2011 fiscal biennium." 4, 5 LAWS of 2010, 1st Spec. Sess., ch. In 2012, the legislature amended 37, § 953. former RCW 83. 100. 230 a third time as follows: legacy trust account is created in the state treasury. Money in the account may be spent only after appropriation. Expenditures from the account may The be education used only for ((deposit k4e the stu efA aehieve,, ent f, n )) support of common schools, and for expanding access to higher education through funding for new enrollments and financial aid, and other educational improvement efforts. (( Diffkig the state general fun .)) LAWS OF 2012, 1 st Spec. Sess., On May ch. 10, § 7. 31, 2011, the Estate paid $ 171, 403 in estate taxes. On June 8, 2012, the Estate filed a complaint for declaratory judgment. The Estate alleged that the transfer of funds from the education legacy trust account into the state general fund was unconstitutional under art. VII, § 5. The Estate requested that the superior court issue an injunction preventing further diversion of funds out of the education legacy trust account. And, the Estate requested that the superior court 4 The amendments to former RCW 83. 10.230 in 2008 and 2010 were made in bills involving the state' s operations budget. LAWS of 2008, ch. 329, § 924; LAWS of 2010, 1st Spec. Sess., ch. 37, 953. 5 From the record before this court, it does not appear that there was any transfer of funds resulting from the 2010 amendments. 3 No. 46641 -4 -II order the legislature to restore the amount of money transferred out of the education legacy trust account into the general fund. The State alleged several affirmative the Estate' s action was time barred, summary judgment dismissal of and ( defenses including: ( 1) the Estate lacked standing, (2) 3) the Estate' the Estate' s claims s action was moot. based on those The State moved for affirmative defenses. The Estate filed a cross motion for summary judgment. The superior court rejected the State' s affirmative defenses. 6 However, the superior court granted the State' s motion for summary judgment on the merits of the Estate' s claims, denied the Estate' filed s cross motion a motion for summary judgment, for direct review with our and dismissed the Estate' Supreme Court. s complaint. The Estate Our Supreme Court transferred the Estate' s appeal for consideration by this court. ANALYSIS A. STANDARD OF REVIEW We review a superior court' s order on summary judgment in a declaratory judgment action de novo. Internet Cmty. & Entm' t Corp. v. Wash. State Gambling Comm' n, 169 Wn.2d 687, 691, 238 P. 3d 1163 ( 2010). Summary judgment is appropriate if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. CR 56( c). 6 The State argues that this court should not reach the merits of the* Estate' s constitutional arguments, but rather, affirm the superior court' s order based on the threshold issues of standing, mootness, separation of powers, or statute of limitations. The State has not cross appealed the superior court' s order denying their motion for summary judgment in part on these issues. Therefore, we do not address issues raised in the State' s argument. M No. 46641 -4 -II LEGALITY OF THE TRANSFER OF FUNDS B. It is a fundamental principle of our system of government that the legislature has plenary power to enact Bureau Fed' n VII, § 5 laws, v. and art. except as limited by our state and federal constitutions." The Estate claims art. Gregoire, 162 Wn.2d 284, 290, 174 P. 3d 1142 ( 2007). II, § 19 Wash. State Farm of the Washington State Constitution precluded the legislature' s 2008 and 2010 amendments to former RCW 83. 100. 230, and therefore, the amendments were invalid. Because art. VII, § 5 does not apply and art. II, § 19 does not invalidate the amendment, we hold that the Estate' s constitutional challenge fails. Art. VII, § 5 1. Does Not Apply The Estate argues that the amendment to former RCW 83. 100. 230 authorizing the transfer of money from the Education Legacy Trust Account to the general fund violates art. VII, § 5. However, that provision restricts the legislature' s power to impose a tax, not the legislature' s plenary power to spend. Therefore, we hold that art. VII, § 5 does not apply. 7 Art. VII, § 5 of the Washington Constitution states: No tax shall be levied except in pursuance, of law; and every law imposing a tax shall state distinctly the object of the same to which only it shall be applied. This court interprets constitutional provisions to " give effect to the manifest purpose for which it was adopted." Westerman v. Cary, 125 Wn.2d 277, 288, 892 P. 2d 1067 ( 1994). This court looks first to the plain language of the text and gives the plain language its common and ordinary 7 The State art. VII, § 5 below, tax. argues art. that applies VII, § 5 art. VII, § 5 does, not apply to the legislation the Estate challenges because exclusively to property taxes and not estate taxes. However, as discussed does not apply because the Estate is not challenging the imposition of an estate Therefore, we do not address whether that provision would apply to the imposition of an estate tax. 5 No. 46641 -4 -II meaning. cert. Wash. Water Jet Workers Ass' n v. Yarbrough, 151 Wn.2d 470, 477, 90 P. 3d 42 ( 2004), . denied, 543 U. S. 1120 ( 2005). Here, the plain language of art. VII, § 5 clearly demonstrates that it applies only to legislation establishing taxes; it does not apply to legislation authorizing legislative spending. Art. VII, § 5 contains that any tax be levied to " state distinctly the two pursuant restrictions on the legislature' to law. Art. VII, § 5. object of the same to which s ability to tax. First, it requires Second, it requires every law imposing a tax only it shall be applied." Art. VII, § 5. Here, the Estate does not challenge a law imposing a tax, it is challenging' a law that transfers tax money. The plain money. language of art. Accordingly, art. VII, § 5 does not restrict the legislature' s plenary power to transfer VII, § 5 is inapplicable. The cases the Estate cites to support its argument that the amendments to former RCW 83. 100. 230 5. violated art. In Sheehan v. VII, § 5 do not contradict the plain language interpretation of art. VII, § Cent. Puget Sound Reg' l TransitAuth., 155 Wn.2d 790, 123 P. 3d 88 ( 2005), the plaintiffs directly challenged the motor vehicle excise tax. The Sheehan court articulated that the issue was whether the taxes imposed were unconstitutional, not whether the legislature validly authorized spending the tax money. Id. at 796. Burbank Irr. Dist. No. 4 v. Douglass, 143 Wash. 385, 396, 255 P. 360 ( 1927), does to some extent, address the diversion of funds from a money payable out of a special account. However, the case does not address art. VII, § 5. Instead, it addresses whether the county was properly paying warrants pursuant to the requirements of the 0 No. 46641 -4 -II irrigation Id. at 395- 96. code. 8 Similarly, State ex rel. State Bd.for Vocational Educ. v. Yelle, 199 Wash. 312, 91 P. 2d 573 ( 1939) addressed appropriations from the common school fund required by art. IX of Id. at 315- 16. the Washington Constitution. cause of action challenging legislative transfers The Estate' s reliance on Sheldon under art. Purdy, v. It does not establish a constitutional VII, § 5. Id. 17 Wash. 135, 49 P. 228 ( 1897), is also misplaced. Sheldon was an action in which the plaintiff asked the court for a writ of mandamus ordering the county treasurer to pay coupons due upon bonds issued by the school district. Id. The money that the plaintiffs alleged the school district had used to pay the coupons was money from the " common school fund" created by art. IX the of constitution. Id. at 138- 39. The court held that, to the extent that . the law required the County treasurer to divert money from the created " common school constitutionally However, Sheldon does fund," the law would be unconstitutional. Id. at 141- 42. not create a cause of action under art. VII, § 5 for a taxpayer to challenge the use of money authorized by the legislature in a statutorily created fund. The Estate has not cited any case since Sheldon was decided in 1897 for the proposition that art. VII, § 5 restricts the legislature' s plenary authority to spend or supports a cause of action challenging the legislature' s transfer of funds between accounts. " Where no authorities are cited in support of a proposition, the court is not required to search out authorities, but may assume that counsel, after diligent search, has found 122, 126, 372 P. 2d 193 ( 1962). Thus, 8 The " real question" in the case was DeHeer v. Seattle Post-Intelligencer, 60 Wn.2d none." regardless of whether art. framed as: " VII, § 5 applies to estate taxes or shall warrants for operating expenses be paid in the order of their registration, regardless of the year in which they were issued, or shall such warrants when issued constitute a first claim on Dist. No. 4, 143 Wash. at 390.' 7 the expense fund for that year?" Burbank Irr. No. 46641 -4 -II whether it applies exclusively to property taxes, the Estate is not challenging the imposition of an estate tax, and it has not provided any authority supporting the contention that art. VII, § 5 applies to amendments authorizing the transfer of funds between accounts. 2. Constitutionality Under Art. II, § 19 The Estate also alleges that the amendments to former RCW 83. 100. 230 violate art. II, § 19 of the Washington Constitution. We disagree. Art. II, § expressed 19 states that " No bill shall embrace more than one subject, and that shall be in the title." Two specific rules are embodied in art. II, § 19: ( 1) the subject in title rule and ( 2) the single subject rule. Subject in Title Rule a. Under the adequately subject expressed in title requirement of art. II, § 19, the subject of the bill must be in its title. Wash. State Grange v. Locke, 153 Wn.2d 475, 497, 105 P. 3d 9 2005). The purpose of this requirement is to guarantee notice of the subject matter of the bill. Id. at 491. " nor must 587 v. To be constitutionally adequate, a title need not be ` an index to the contents [ of the bill], it provide details of the measure. "' Id. at 497 (quoting Amalgamated Transit Union Local State, 142 Wn.2d 183, 217, 11 P. 3d 762, 27 P. 3d 608 ( 2000)). provide sufficient notice to inform voters and legislators of the The title of the bill need only subject matter of the bill. Id. " The title satisfies the subject in title requirement ` if it gives notice that would lead to an inquiry into the body of the act, or indicate to an inquiring mind the scope and purpose of the law."" Young Men' s Christian Assn v. State, 62 Wn.2d 504, 506, 383 P. 2d 497 ( 1963)). 8 Id. ( quoting No. 46641 -4 -II While the Estate challenges the amendments to former RCW 83. 100. 230 as violating art. II, § 19, the Estate fails to meaningfully distinguish between its allegation that the bills in question violated the subject in title rule and its allegation that the bills violated the single subject rule. However, to the extent that the Estate attempts to argue that the bills violate the subject in title rule, the Estate is mistaken. Here; the title the of APPROPRIATIONS AN ACT bills Relating OPERATING read, " to fiscal matters; BUDGET— SUPPLEMENTAL amending RCW .. 83. 100. 230" and SUPPLEMENTAL OPERATING BUDGET AN ACT Relating to fiscal matters; amending RCW 83. 100. 230." LAWS of 2008, ch. 329 pmbl.; LAWS of 2010, 1st Spec. Sess., ch. 37. Thus, the title of the bills specifically reference amending former RCW 83. 100. 230. The specific reference to former RCW 83. 100. 230 in both bills provides notice to an inquiring mind that some change related to the funds in the education legacy trust account is being made in the bills. Therefore, the subject in title bill requirement b. in art. II, § 19 is met. Single Subject Rule Art. II, § 19 serves the purpose of preventing " the practice of combining two bills, neither of which would pass on its own, but when the proponents of the measures combine their interests both can be and preventing " the attachment of an unpopular bill to a popular one on an enacted," unrelated subject in Grange, 153 Wn. 2d order at 491. to guarantee the passage of the unpopular provision." Wash. State The Estate' s primary complaint is that, by inserting an amendment to former RCW 83. 100. 230 in appropriations bills, the legislature made a substantive change in the E No. 46641 -4 -II law through an administrative appropriations bill.. This argument goes toward whether the bills violate the single subject rule, not whether the bills violate the subject in title rule. Although the Estate provides examples of circumstances in which the courts have declared bills amending substantive law in an appropriations bill as unconstitutional, the Estate fails to apply our Supreme Court' s criteria to determine whether a section of a bill is amending substantive law. Applying such criteria demonstrates that the amendment to former RCW 83. 100. 230 is not a substantive change in the law. Our Supreme Court has provided three non-exclusive factors to consider when determining whether a section of a bill is truly substantive in nature: We decline to adopt a categorical definition of " substantive law," but where the policy set forth in the budget has been treated in a separate substantive bill, its duration extends beyond the two-year time period of the budget, or the policy defines rights or eligibility for services, such factors may certainly indicate substantive law is present. Wash. State Legislature v. State, 139 Wn.2d 129, 147, 985 P. 2d 353 ( 1999). Here, not a single criteria articulated by our Supreme Court applies to the amendments to former RCW 83. 100.230. First, former RCW 83. 100.230 was originally the product of the Revenue and Taxation bill. LAWS amended of 2005, 514, § 1101. Since its creation in 2005, former RCW 83. 100. 230 has been four times: LAWS of 2008, LAWS of 2012, to ch. ch. 10, § 7; and LAWS former RCW 83. 100. 230 have 329, § 924; LAWS of 2010, 1st Spec. Sess., ch. of come 2015, 3rd Spec. Sess., in budgeting or ch. ch. 37, § 953; 4, § 977. All the amendments funding bills. Former RCW 83. 100. 230 has never been treated in a separate substantive bill. Second, both the 2008 and 2010 amendments to former RCW 83. 100. 230 were limited to the biennium for which the operating budget was being created. Therefore, the amendments did not last past the two year time period of the budget 10 No. 46641 -4 -II Third, the amendments to former RCW 83. 100. 230 do not define any rights or biennium. eligibility for services, and former RCW 83. 100.230 has never defined any rights or eligibility for services. The Estate relies on Flanders v. Morris, 88 Wn.2d 183, 558 P. 2d 769 ( 1977), to support its challenge. Like the legislation in Washington State Legislature, the provision at issue in Flanders involved age requirements for public assistance. Id. at 186. In Flanders, the court specifically noted that there had been two prior attempts to introduce age requirements for public assistance; however, when presented in separate substantive bills, the bills failed to pass both times. Id. at 187. The Flanders court recognized that the legislature had used an appropriations bill to pass a law that could not pass on its own merits, which was exactly what art. II, § 19 was meant to prevent. fr% A Here, there is nothing before this court that indicates the amendments to former RCW 83. 100.230 had been introduced in separate bills prior to the legislature passing the amended bill. . Accordingly, outside the Estate' s bald assertions, there is no evidence establishing that the legislature abused an appropriations bill in the same manner as the court disapproved of in Flanders.landers.- Finally, the Estate relies on Washington Toll Bridge Authority v. Yelle, 54 Wn.2d 545, 342 P. 2d 588 ( 1959). the The funding court of In Washington Toll Bridge Authority, the court held that a provision regarding bonds included in determined that the general and continuing an appropriations bill provisions violated art. nature," rather than violated art. II, § 19. 54. Wn.2d at 550. II, § 19 because the provision was of a being temporary in nature. Id. at 551. Moreover, the provision restricted the power of the Toll Bridge Authority, while at the same time vesting new 11 No. 46641 -4 -II powers in the State Highway Commission. Id. at 551- 53. Here, the amendments to former RCW 83. 100. 230 are not " general and continuing." Id. at 551. They are limited to the specific fiscal biennium for which the appropriations were passed. And, the amendments do not restrict current powers in an agency, nor do they create or vest new powers. In sum, the Estate fails to show; based on the Supreme Court' s explicit criteria, that the amendments to former RCW 83. 100. 230 constitute a substantive change in the law. And, the cases to which the Estate cites do not provide any support for the contention that the 2008 and 2010 amendments to former RCW 83. 100. 230 should be considered substantive. Instead, the cases on which the Estate relies apply the same criteria for determining whether a provision is a substantive change in the law as were set out in Washington State Legislature, 139 Wn.2d 129. Because the amendments to former RCW 83. 100. 230 do not meet any of the criteria, there is no basis for concluding that they were substantive changes to the law improperly inserted into the amendments. CONCLUSION We hold that art: II, § 19 art. VII, § 5 does not apply, and the requisite criteria to show a violation of has not been shown. Consequently, the Estate fails to show a constitutional limitation exists on the legislature' s power to enact the challenged amendments. Because it is unable to show the legislation authorizing the transfer of funds to the state general fund was unconstitutional, the Estate cannot claim the subsequent transfer of money to the state general fund was unconstitutional. 12 No. 46641 -4 -II We affirm. A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record in accordance with RCW 2. 06.040, it is so ordered. Lee, J. We concur: 1 axa, P.J. T Giick, J M i, - 13

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