Sprague v. Fisher , 184 Or. 1 ( 1948 )

IN BANC. Suit by Charles A. Sprague, as a taxpayer, to restrain the Tax Commission from applying in the state tax levy for the fiscal year 1948-1949, any revenue or receipts or estimated revenue or receipts of taxes collected under the so-called Property Tax Relief Acts, for any purpose other than to reduce or to offset taxes which otherwise would be levied on property. From a decree dismissing the suit, the plaintiff appeals.

AFFIRMED. This is a test case brought by the plaintiff, as a citizen and taxpayer, in which he seeks to restrain the Tax Commission from an alleged improper diversion of funds derived from collections under the provisions of the Personal Income Tax Law of 1929, (O.C.L.A., § 110-1601) as amended, which is cited as the Property Tax Relief Act of 1929, and under the Excise Tax of 1929, (O.C.L.A., § 110-1501) as amended. Upon the filing of the complaint and answer, the plaintiff and defendants each moved for judgment on the pleadings in accordance with their respective prayers. The case is here upon appeal from a decree of the Circuit Court dismissing the suit.

The Personal Income Tax Law, cited as the Property Tax Relief Act of 1929 as amended, and the Corporation Excise Tax of 1929 as amended, each impose taxes on incomes. Both statutes have been referred to as the "Property Tax Relief Acts" because they provide for the application of certain revenues derived therefrom to the reduction of taxes which would otherwise be levied on property. Without summarizing the pleadings separately, we shall set forth as facts the undenied allegations of the respective parties. The estimated balance as of June 30, 1948, of receipts from the taxes imposed by said Property Tax Relief Acts, plus estimated receipts from those sources during the fiscal year 1948-1949, all of which are to be considered in preparing the state tax levy for the fiscal year 1948-1949, total about $81,000,000.

Article XI, section 11 of the Oregon Constitution was adopted by vote of the people in 1916. As amended in 1932 it provides in part as follows:

"Unless specifically authorized by a majority of the legal voters voting upon the question neither the state nor any county, municipality, district or body to which the power to levy a tax shall have been delegated shall in any year so exercise that power as to raise a greater amount of revenue for purposes other than the payment of bonded indebtedness or interest thereon than the total amount levied by it in any one of the three years immediately preceding for purposes other than the payment of bonded indebtedness or interest thereon plus 6 per centum thereof; provided * * *"

The items of expense to which the state will be subject for the fiscal year 1948-1949, which will be taken into consideration by the Commission in preparing the state tax levy for such fiscal year, total approximately $38,200,000 divided as follows:

(1) General expenses inside 6% limitation ____________________________ $19,000,000

(2) Levies authorized by vote of people outside 6% limitation __________ 19,200,000

If the state tax levy for 1948-1949 should be prepared in accordance with the plaintiff's contentions and on the basis which the plaintiff asserts has been heretofore employed by the Commission, the situation could be summarized as follows:

(a) State expenses for Inside 6% Outside 6% which levy is to be Limitation Limitation made ______________ $19,000,000 $19,200,000 (b) Miscellaneous receipts __________ 6,000,000 ___________ ___________ $13,000,000 $19,200,000 (c) Revenue from property tax relief acts to be applied "inside" and "outside" limitation 7,137,671.51 19,200,000

(d) Balance for which a tax cannot be levied without authorization by the people but which, if so authorized, would be offset by application of revenues from property tax relief acts 5,862,328.49 ___________ _____________ ___________

In addition to the foregoing expenses, Oregon Laws, 1947, chapters 466 and 439, also provide for a distribution (which will be about $3,200,000) to the state and county school fund for local property tax relief.

The various figures in the summary, as submitted by the plaintiff, require the following explanations: O.C.L.A., § 110-533, as amended by Oregon Laws 1941, chapter 440, imposes upon the State Tax Commission the duty in July of each year to ascertain by computation and estimate, the total amount of revenue necessary for the current fiscal year, and to apportion such total revenue among the several counties. O.C.L.A., § 110-534 as also amended by Oregon Laws 1941, chapter 440, provides as follows:

"The state tax commission shall proceed as follows:

"1. Prepare a tabulated statement, consisting of all the items of expense, given separately, to which the state will be subject under existing laws for the fiscal year next after that year or period for which the last preceding apportionment of state revenues was computed and declared; also all items of deficiency, including interest on unpaid warrants left over from the previous year, the payment of which has been authorized by law; and also when such apportionment is made on the assessment of an even year, the estimated expense of one biennial session of the legislative assembly; and also when such apportionment is made on the assessment of an even year, such additional amount or amounts as the governor may deem necessary to meet the expenses of the state for the fiscal year.

"2. From the sum total of the aforesaid items shall be deducted any surplus or estimated surplus remaining in the state treasury from all funds, however derived, if not applied by law to some special purpose.

"3. The remainder so obtained shall be the total amount of revenue to be raised for state purposes for the current fiscal year, and such remainder shall be apportioned among the several counties in the manner hereinafter provided.

"4. The total amount of revenue to be raised for state purposes for the current fiscal year, ascertained and determined as above provided, shall be apportioned among and charged to the several counties in that proportion which the total value of all the taxable property in each county bears to the total value of all the taxable property of the state as equalized and certified to the secretary of state by the said state tax commission.

"5. Immediately after the said commission has completed the ascertainment of the total amount of revenue necessary to be collected for state purposes, as aforesaid, and apportioned the same among the several counties as heretofore provided, a certificate thereof shall be signed by the chairman and secretary of the commission, authenticated by the official seal of the commission, and shall be delivered to the secretary of state, and a similar certificate shall be filed in the office of said commissioner. [L. 1941, c. 440, § 19.]" O.C.L.A., § 110-534.

These provisions, so far as they affect the present issue, have remained substantially the same since originally enacted by the Laws of 1885, pages 135-136.

In the above summary the two items under (a) totaling $38,200,000 represent the sum total of the items of expense computed in accordance with the provisions of sub-paragraph (1) of O.C.L.A., § 110-534 as amended, which is set forth, supra. Under (b) in the summary, miscellaneous receipts are set forth as $6,000,000. The authority for deducting miscellaneous receipts is found in sub-paragraph (2) of O.C.L.A., § 110-534 as amended, which requires the deduction from the total of expense items of any surplus or estimated surplus remaining in the state treasury "from all funds, however derived, if not applied by law to some special purpose."

Plaintiff and defendant are in sharp disagreement as to the meaning of sub-paragraph (2), the defendant contending that the present and estimated surplus or "miscellaneous receipts" pursuant to O.C.L.A., § 110-534 remaining in the state treasury from all funds, however derived, and not applied by law to some special purpose, is greatly in excess of the $6,000,000 item set forth in plaintiff's summary and is in fact at least $20,000,000. The items in (c) of the summary are not in controversy. Under the six per cent limitation, the tax base for the fiscal year 1947-1948 as computed in the state tax levy was $6,733,652.37. Adding to that tax base an additional six per centum thereof we reach a total of $7,137,671.51 which is the item shown in paragraph (c) of the summary as the revenue from Property Tax Relief Acts to be applied inside the six per cent limitation. The item $19,200,000 is, as stated in paragraph (c) of the summary, the revenue from Property Tax Relief Acts which is to be applied against state expenses which have been authorized by the people and are outside of the six per cent limitation. Plaintiff refers to the balance of $5,862,328.49 shown in paragraph (d) of the summary as a deficit which he asserts "accrues because the revenues available within the six per cent constitutional limitation plus estimated miscellaneous receipts will be insufficient to meet the requirements of appropriations for which the Commission is required to levy a tax."

Oregon Laws 1947, chapter 477, provides that upon receipt before July 1, 1948 and subsequent consideration of the report of the Budget Director, the Board of Control shall make a determination as to the amount needed to meet necessary requirements and shall certify that amount to the State Tax Commission. Section 2 of that Act is as follows:

"At the time of making the apportionment of required state revenues for the fiscal year beginning July 1, 1948, the state tax commission shall make a finding as to whether or not the revenues available within the six per cent limitation imposed by section 11, article XI, of the constitution of Oregon, plus estimated miscellaneous receipts, are in an amount sufficient to meet the requirements of appropriations for which the commission is required to levy a tax, taking into account the determination and certification by the board of control of the amount needed to meet requirements for expenditures during the remainder of the biennium ending June 30, 1949, and the items referred to in subsection 1 of section 110-534, O.C.L.A., as amended. If the commission finds that said revenues, plus estimated miscellaneous receipts, are insufficient therefor it shall certify to the secretary of state that, to meet said requirements as determined and certified by the board of control, a necessity exists for levying a tax in excess of the said constitutional limitation." Laws 1947, chapter 477, Section 2.

In section 3 of the Act it is provided that upon such certification the Secretary of State shall refer to the people of the State of Oregon the question of whether or not such levy in excess of the constitutional limitation shall be made. Section 4 is as follows:

"If the majority of the legal voters voting upon said question authorize such levy in excess of the limitations imposed by section 11, article XI, of the constitution, said levy shall be offset, as are other state taxes, by funds derived from taxes on or measured by net income." Laws 1947, chapter 477, Section 4.

In reliance upon that statute the plaintiff contends that it will be necessary for the people to authorize a levy outside of the six per cent limitation because the revenues available within the six per cent limitation plus estimated miscellaneous receipts will be insufficient by $5,862,328.49 to meet the requirements of appropriations for which the Commission must levy a tax. Plaintiff therefore seeks a mandatory injunction requiring the Tax Commission to make the finding required by Oregon Laws 1947, chapter 477, section 2, supra. The defendants on the other hand, contend that it will be unnecessary for the people to authorize a levy outside of the six per cent limitation and that therefore it would be improper for the Tax Commission to certify to the necessity for such an election under the provisions of chapter 477 of the Laws of 1947. The Commission challenges as incorrect, item (b) in the above summary which shows miscellaneous receipts at $6,000,000 and asserts that the amount of the present and estimated "surplus" or "miscellaneous" receipts pursuant to the provisions of O.C.L.A., § 110-534 is at least $20,000,000. The Commission arrives at such amount by adding to the receipts from other sources in the amount of about $6,000,000, the balance of receipts from taxes under the Property Relief Acts which will remain after all specific legislative allocations to property tax relief have been satisfied.

The defendant Tax Commission contends that under O.C.L.A., § 110-534 as amended, there are funds which have been derived from the Property Tax Relief Acts which constitute a part of "surplus or estimated surplus not applied by law to some special purpose", as a result of which the surplus which is to be deducted from the sum total of expense items is sufficiently large to entirely eliminate the deficit of $5,862,328.49 and therefore to eliminate the necessity for the calling of any popular election for the purpose of authorizing a levy outside of the six per cent limitation.

The Personal Income Tax Law, known as the Property Tax Relief Act of 1929 as amended by the Laws of 1947, chapter 466, (§ 110-1637) provdies:

"All costs incurred in the administration of this act shall be paid out of the revenue from the tax imposed by this act and the net revenue from the tax, after deduction of said administrative costs, shall become a part of the general fund in the hands of the state treasurer. Such revenue, like that from other sources, shall be taken into account by the tax commission in making the annual levy for state purposes, but shall not affect the base for computing the limitation on such levy imposed by section 11, article XI, Oregon constitution. It is the expressed intention of this act that the net revenue derived from this tax shall be applied first to reduce the state tax levy on property inside the 6 per cent constitutional limitation and then to reduce the state levy on the property outside said constitutional limitation. In the event that the revenue from this tax and the revenue from any other tax on or measured by net income for any fiscal year shall exceed the amount necessary to eliminate the state levy on property otherwise required to be paid into the state treasury by the several counties for such year, the remainder of such revenues shall be accounted in the state levy of taxes and applied as follows:

"(1) To reduce by corresponding amount the property tax otherwise to be apportioned to the several counties for the state elementary school fund, and the state treasurer hereby is directed to transfer such amount to an account in the general fund to be known as the state elementary school fund account. On or before October 15 of each fiscal year the secretary of state shall draw warrants on the state treasurer, payable to the treasurers of the several counties, for not less than one-half of the respective amounts apportioned in the state levy of taxes for payment from said state elementary school fund account; similarly, the secretary of state shall draw warrants on or before April 15 of such fiscal year covering the entire remainder of said account.

"(2) Next, from the remainder of such revenue, if any, the state treasurer shall transfer an amount not in excess of five million dollars ($5,000,000); provided, however, in each of the fiscal years 1945-1946 and 1946-1947 an amount not in excess of eight million dollars ($8,000,000) shall be so transferred to a fund in the state treasury to be known as the state school support fund, for apportionment as provided by law in reduction of property taxes otherwise to be levied for the support of the public elementary and high schools.

"(3) Next, the remainder of such revenues, if any, in an amount not exceeding five million dollars ($5,000,000), the state treasurer shall transfer to an account in the general fund to be known as the property tax reduction account, to be applied in the state levy of taxes for the next ensuing fiscal year for the several purposes and in the order hereinbefore stated; provided, however, that in the event that that certain measure enacted by the forty-third legislative assembly of the state of Oregon, designated and introduced in such assembly as house bill No. 415 and which was referred to the people by said legislative assembly, shall not be approved by the people, then there shall be transferred to such account, in addition to the funds herein provided, in each of the fiscal years 1945-1946 and 1946-1947 the additional sum of five million dollars ($5,000,000).

"In the event that the amount in said property tax reduction account at the close of any fiscal year plus the estimated receipts from this tax and from any other tax on or measured by net income, as accounted in the state levy of taxes for the next ensuing fiscal year, shall exceed by not less than five million dollars ($5,000,000) the total amount required to offset all the aforesaid state taxes otherwise to be levied on property, including the tax for the state elementary school fund and the aforesaid transfer to the state school support fund for such fiscal year, together with the additional sums herein required to be transferred in each of the fiscal years 1945-1946 and 1946-1947 to the property tax reduction account, then the state treasurer shall transfer to a fund in the state treasury to be known as the state and county school fund any excess over the amounts heretofore specified up to an amount aggregating with other moneys in said fund, not more than ten dollars ($10) per capita for all children within the state between the ages of 4 and 20 years, as shown by the last preceding school census compiled and certified by the superintendent of public instruction, for apportionment as provided by law in reduction of property taxes otherwise to be levied for the county school funds of the several counties. In the event that at the end of any fiscal year, the estimated receipts from this tax and any other tax on or measured by net income, required to be accounted for in the state levy of taxes for the ensuing fiscal year, shall exceed the aggregate of the amounts hereinbefore required to be transferred or accounted for, there shall be allowed upon tax returns for tax years beginning in the calendar year during which such excess is determined a discount of 5 per cent for each one million dollars excess or major part thereof; provided that in the case of fractional years, the discount shall be applied to the 12 months succeeding the beginning of the first such fractional year; and further provided, that no discount shall be determined for the calendar year 1947 or the calendar year 1948 or for fiscal years beginning within either of said calendar years."

The allocation to the state and county school fund will amount to about $3,200,000.

A provision in all respects substantially identical to the foregoing statute also appears in the Excise Tax Law, (O.C.L.A., § 110-1523) as amended by the Laws of 1947, chapter 439.

Following the language of the last sentence of the Property Tax Relief Act (Laws of 1947, chapter 466, supra), it may be said that the amount by which, at the end of the fiscal year, the estimated receipts from the taxes on or measured by net income, required to be accounted for in the state levy of taxes for the ensuing fiscal year, "shall exceed the aggregate of the amounts hereinbefore required to be transferred or accounted for", constitutes the surplus or estimated surplus, the use of which is in issue here. The statute provides for a normal absorption of such excess by discounts on income taxes but it will be observed that the excess will not be so absorbed for the present because "no discount shall be determined for the calendar year 1947 or the calendar year 1948 or for fiscal years beginning within either of said calendar years." Laws 1947, chapter 466.

For convenience, and without intending to beg the question at issue, we shall refer to the balance of revenues derived from taxes on net income after each specified application of funds has been made as required by Laws of 1947, chapter 466, as "income tax surplus".

The question at issue is whether such income tax surplus is included in "surplus or estimated surplus remaining in the state treasury from all funds, however derived," and not "applied by law to some special purpose." (Oregon Laws 1941, chapter 440, section 2). The unique circumstance in the controversy is found in the fact that both parties contemplate that the income tax surplus above described shall ultimately be used to pay the general expenses of the government as referred to in Laws of 1941, chapter 440, page 763, sub-paragraph (1). The difference between the parties lies in the fact that the Tax Commission considers that the income tax surplus is not earmarked as solely for use in the reduction of taxes on property, whereas the plaintiff contends that the income tax surplus represents something in the nature of a trust fund, which, however, can be relieved from the trust by means of a device. The proposed device is as follows: Let the Commission make a finding under the provisions of Oregon Laws 1947, chapter 477, supra, to the effect that the revenues available within the six per cent limitation plus estimated miscellaneous receipts are insufficient in amount to meet the requirements of expenditures in accordance with the certificate of the Board of Control. Then, further pursuant to the provisions of that statute, let the Secretary of State refer to the people of the state of Oregon the question whether or not such levy in excess of the constitutional limitation shall be made. Next, let the people, at a special election, vote to impose a tax on property sufficient to meet the alleged deficit of $5,862,328.49, and when and if the people so vote, a tax on property will be levied and the income tax surplus will immediately be employed to offset the tax on property, whereupon the evanescent property tax will never be certified to the counties nor extended on any tax roll against any property. In substance, the contention is that a burden must be imposed upon property so that the burden may be removed and the income tax surplus funds used for general fund purposes.

It was contended before the trial court, but not seriously urged here that the application of income tax surplus to general fund purposes would violate the "spirit" of the six per cent limitation. If the statutes have not applied such surplus "to some special purpose" we see nothing in the six per cent limitation which prohibits the use of that surplus for general fund purposes. The power of the state to levy and collect taxes is not a delegated power. It is an inherent attribute of sovereignty. The power is subject only to such limitations as exist under the federal or state constitutions. Brown v. City ofSilverton, 97 Or. 441, 190 P. 971; Delaney v. Lowery, 25 Cal. 2d 561,154 P.2d 674; In re McKennan's Estate, 25 S.D. 369, 126 N.W. 611.

"* * * The power of taxation being essential to government, and being usually confided in the largest measure to the legislative discretion, constitutional limitations upon its exercise will not be inferred or implied, but must be distinctly and positively expressed, * * *." 61 C.J., page 80.

In Delaney v. Lowery, supra, it was held that constitutional restrictions on the power of the legislature in the field of taxation must be strictly construed against the limitation. In the six per cent amendment we find no provision concerning the use to which funds raised by taxation may be put. The court should be reluctant to hold that the sovereign taxing power of the state can be confined by any unexpressed "spirit of the constitutional limitation."

Again, it is contended that the use of income tax surplus for general fund purposes violates Article IX, section 3 of the Oregon Constitution which provides in part, "every law imposing a tax shall state distinctly the object of the same to which only it shall be applied." If the statute, properly construed, has applied the income tax surplus "by law to some special purpose", that ends the matter, so far as the administrative officials of the state are concerned, for, clearly the legislature may effectively provide that revenues shall be placed in a special fund to be used only for designated purposes, but if the statute has placed the income tax surplus in the general fund, free from any application to special purpose, then we are unable to see how Article IX, section 3 of the Constitution has any application to the pending controversy.

The authorities are in conflict as to the application of provisions similar to Article IX, section 3 of the Oregon Constitution. Some courts have held that the provision applies "only to the ordinary and general taxes for state purposes and such as are imposed generally on all the taxable property in the state." Counsel for the plaintiff construes the quoted portion of Article IX, section 3 as containing two separable provisions; (a), a requirement that every tax act shall state the object of the tax; (b), a prohibition against applying the tax to any other object. It is then argued that the cases cited by the defendants are not in point because they relate only to the first of the two provisions. Many of the cases cited by the defendant do hold that requirement (a) applies only to property taxes, but such decisions are nonetheless relevant under (b). The constitutional requirement is that the act shall state "the object to which only it shall be applied." If the constitutional provision does not require that the statute "shall state distinctly the object" of the tax, then it would appear that prohibition (b) should not be construed to limit the application of funds to an object which need not be stated. Upon this issue, the argument of counsel for the plaintiff appears to beg the question. We quote from plaintiff's brief: "The question here is not whether the legislature was required to state distinctly the object of the property tax relief act. The object was stated." If the object to which only the income tax surplus can be applied has been stated in the statute, and if the defendants threaten to divert that surplus from that object, then the statutory limitation would prevail without the necessity of invoking Article IX, section 3.

The following authorities support the defendant's contention that provisions similar to Article IX, section 3 apply only to general taxes on property: In re Ford, 6 Lans. (N.Y.) 92; Cityof Glendale v. Betty, 45 Ariz. 327, 43 P.2d 206; FarmersUnion Cent. Cooperative Exchange v. Director of Revenue,163 Kan. 266, 181 P.2d 541; In re McKennan's Estate, 25 S.D. 369, 126 N.W. 611; In re McPherson, 104 N.Y. 306, 10 N.E. 685;McGannon v. State, 33 Okla. 145, 124 P. 1063; but see Ex parteMarler, 140 Okla. 194, 282 P. 353; but see State V. Oklahoma Tax Commission, 191 Okla. 155,127 P.2d 1052; Brown v. Commonwealth, 125 Ky. 402,101 S.W. 321; State v. Sheppard, 79 Wash. 328, 140 P. 332; and see Cityof Sheridan v. Litman, 32 Wyo. 14, 228 P. 628.

From Cooley on Taxation we quote:

"* * * Such provisions may nevertheless prevent some abuses, and considerable importance has been attached to them. But the purposes of government are so infinite in variety that the specification must for the most part be very general, or the constitution could not be complied with; and it has been held that a statement in a tax law, that the money to be raised is to be paid into the treasury to the credit of the general fund, is a sufficient compliance with the requirement. The same ruling was made where the statement was that the moneys raised should be applicable to the payment of the ordinary and current expenses of the state, and also where an act in taxing a railroad appropriated part of the taxes to the payment of the bonds issued in aid of the road. The provision applies only to annually recurring taxes, and taxes imposed generally upon the entire property of the state, and is not applicable to succession taxes upon legacies, or to local county taxes, or to laws authorizing the citizens of towns to impose taxes for bounties, or to statutes authorizing special local assessments. * * *" Cooley Taxation, Vol. 2. fourth edition, section 500, page 1106.

The same opinion has been expressed by the Attorney General of Oregon:

"It has been suggested that to require funds to be diverted from the purpose or purposes for which the statute providing for same directed that they be applied, is in violation of section 3 of article IX of the Constitution of Oregon, which provides that no tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of same, to which only it shall be applied.

"The constitutions of several states provide that every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied. It is held, however, that this applies only to the ordinary and general taxes for state purposes and such as are imposed generally on all the taxable property in the state." Opinions of the Attorney General 1934-1936, page 751.

Supporting plaintiff's position that such provisions apply to all taxes are the following authorities: Craig County ExciseBoard v. Texas-Empire Pipe Line Co., 195 Okla. 627,159 P.2d 1003; State v. Oklahoma Tax Commission, 191 Okla. 155,127 P.2d 1052; Collins v. Humphrey, 181 Ark. 609, 27 S.W.2d 102;White Eagle Oil Refining Co. v. Gunderson, 48 S.D. 608,205 N.W. 614; In re Opinion of the Judges, 59 S.D. 469, 240 N.W. 600;School Dist. No. 2 v. Jackson-Wilson High School Dist., 49 Wyo. 115, 52 P.2d 673; Unemployment Compensation v. Savage,283 Ky. 301, 140 S.W.2d 1073; State v. Osborne, 193 S.C. 158,7 S.E.2d 526; City of Sheridan v. Litman, 32 Wyo. 14,228 P. 628; State ex rel. Edwards v. Osborne, 195 S.C. 295,11 S.E.2d 260; State v. Crawford Tp., 139 Kan. 553, 32 P.2d 809;Board of Education v. Board of Com'rs., 137 N.C. 310,49 S.E. 353; Rogers v. State, 129 Ohio St. 108, 193 N.E. 754.

The situation in this jurisdiction is not entirely clear. InMiller v. Henry, 62 Or. 4, 124 P. 197 an act was passed directing the county to cancel any claim against the county treasurer on account of money of the county which was lost by reason of failure of the bank. The court said:

"The last contention is that the act is in violation of that section of our fundamental law which requires that ``every law imposing a tax shall state distinctly the object to which it shall be applied.' It is conceived that this clearly applies to taxes levied by law for general State purposes, as for instance, the legislature could not pass a law providing that a general tax of five mills on the dollar should be levied, collected, and paid into the State treasury without specifying the purpose for which the levy was to be made, and this is the holding of the courts. ``The constitutions of several states provide that every law imposing a tax shall state distinctly the object of the same, to which only it shall be applied. It is held, however, that this applies only to the ordinary and general taxes for state purposes, and such as are imposed generally on all the taxable property in the state, and not to local taxes for local purposes.' 37 Cyc. 728; In re Ford, 6 Lans. (N.Y.) 92; Guthrie County v. Conrad, 133 Iowa, 171, (110 N.W. 454); Guest v. Brooklyn, 8 Hun (N.Y.) 97; Southern R. Co. v. Kay, 62 S.C. 28 (39 S.E. 785.)".

Miller v. Henry is cited by Cooley in support of the quoted text, supra. On the other hand, in Astoria v. Kozer, 124, Or. 261, 264 P. 445, a statute provided in substance that all state taxes collected within the city of Astoria should be refunded. The question was whether "all state taxes" included only property taxes or gasoline taxes, inheritance taxes and the like. It was held that the phrase should be construed to mean only property taxes. The court cited constitution Article IX, section 3 and said:

"* * * Motor vehicle and gasoline taxes, being levied to raise money for public roads, cannot be diverted from that purpose. Said Chapter 280 would be unconstitutional under said Article IX, Section 3, if we should construe it to include the taxes raised for highway purposes. * * *"

The reference to Article IX, section 3 was unnecessary to the decision. Its effect was not discussed in the brief nor does the opinion mention Miller v. Henry, supra.

We find it unnecessary to decide whether or not Article IX, section 3 applies to income taxes and the like, or only to property taxes. The question presently before us is not whether the legislature can pass an act diverting funds raised by income taxes from a purpose to which only they are devoted by previous legislation. If that question were here, it would be necessary to determine whether the constitutional provision applies to income taxes. The question here is whether certain income tax surplus funds have been, by statute, devoted to a special purpose only, and if so, whether there is an attempted diversion therefrom. In this case therefore, constitution Article IX, section 3 would apply only if its application should be unnecessary, because, if those funds are applied by law to some special purpose, the statute alone would prohibit diversion therefrom.

Reversing the procedure followed in plaintiff's brief, we will consider first the single question of statutory construction.

The plaintiff asserts that "Any amendment of Property Tax Relief Act diverting the revenues would be void under Or. Const., Art. IV, sec. 20, as outside the title of the act". Article IV, section 20 of the Constitution is as follows:

"Every act shall embrace but one subject, and matters properly connected therewith, which subject shall be expressed in the title. But if any subject shall be embraced in an act which shall not be expressed in the title, such act shall be void only as to so much thereof as shall not be expressed in the title."

The effect of the constitutional provision is to require that the general subject of an act shall be expressed in the title but to permit provisions "properly connected" with the subject to be included in the act though not mentioned in the title. InEastman v. Jennings-McRae Logging Co., 69 Or. 1, 138 P. 216, this court said: "* * * It is the subject of the act, and not ``the matters properly connected therewith,' that shall be expressed in the title." See also Pacific Elevator Co. v.Portland, (1913) 65 Or. 349, 133 P. 72, 46 L.R.A. (N.S.) 363;In re Willow Creek, (1915) 74 Or. 592, 144 P. 505, 146 P. 475;Clayton v. Enterprise Electric Co., (1916) 82 Or. 149,161 P. 411; State v. Eaton, (1926) 119 Or. 613, 250 P. 233; Nickersonv. Mecklem, 169 Or. 270, 126 P.2d 1095.

The title of the 1929 personal income tax law is as follows:

"AN ACT providing for property tax relief by the levying, collecting and paying of taxes on incomes; providing for rules and regulations and prescribing penalties, and making an appropriation for carrying out this act."

Any provision of the act which was germane to the general purpose would not under our decisions, be violative of the constitutional provision. If the 1929 act in the disposition section had expressly provided for the application of proceeds from the income tax to the elimination of specified taxes on property, and had then provided that the excess funds, if any, over and above the specified allocations should be covered into the general fund, we think the provision for the disposition of such surplus, if any, would have been germane to the general purposes of the act. Plaintiff contends that since the purpose of the tax was stated in the title to be property tax relief, "that purpose could not be changed by subsequent amendment of the act". This would seem to imply that the plaintiff considers some of the subsequent amendments which have been made to the 1929 act to be unconstitutional, but such is not the substance of the argument. Plaintiff recognizes the validity of the 1947 amendment and would enforce it according to his construction of its provisions. The question before us is not whether the purpose could be changed by the subsequent legislative amendments of the 1929 act or by future amendments. The question is whether the original act and the amendments properly construed are germane to the general purpose of the act stated in the title. In our opinion the title should not be construed as if it provided that all proceeds from the income tax should be used exclusively for property tax relief. There is nothing in the title which suggests the creation of anything akin to a trust fund applicable to surplus collections from the income tax law. The title indicates a purpose to afford relief from property taxes by imposing an income tax. It refers to property tax relief, not to property tax reduction. It does not indicate how that relief shall be given. So far as the title is concerned, property tax relief could be afforded by rendering it unnecessary to levy a property tax, or it could be afforded by the levying of a property tax and then reducing that tax by the application of income tax revenues. So far as the title is concerned, property tax relief could be accomplished by treating income tax surplus as a part of miscellaneous receipts, thus rendering it unnecessary to levy a property tax, just as well as it could be accomplished by levying the property tax and then offsetting it by income tax proceeds. At the time when the 1929 act was passed there was apparently no expectation that the proceeds from income tax would do any more than reduce the amount of the direct tax levy which the Tax Commission would otherwise apportion to the several counties of the state, and that is all that was in fact accomplished.

Attention has been directed to the fact that the income tax law was referred to the voters and to the understanding which the voters had concerning the purposes of the law. The twenty-five word ballot title of the proposed measure as it appears in the Voters' Pamphlet for the referendum election of November 4, 1930, was as follows:

"INCOME TAX BILL — Purpose: Levying a progressive income tax upon net incomes of natural persons and deducting amount received from such tax from the amount necessary for state purposes."

The general title appearing in the Voters' Pamphlet and on the ballot was as follows:

"INCOME TAX BILL — Purpose: To levy and collect annually a progressive state tax upon net incomes of resident and non-resident natural persons and fiduciaries, from every source within the state and from property taxable therein; making exemptions to single person of $1,500; married person, head of family, or husband and wife together, $2,500; and for each child or dependent under certain conditions, $400; and providing that the estimated amount of income taxes for each year be deducted from the total amount of revenue required for state purposes, and only the balance of such required amount be levied as direct taxes on property."

There is nothing in either statement of the purpose of the act which is suggestive of the creation of any trust fund. The short title clearly expresses the idea that the proceeds of income taxes will be less than the amount necessary for state purposes and that such proceeds shall be deducted therefrom.

The long ballot title indicates the following purpose; that from the amount of revenue required for state purposes, there shall be deducted the estimated amount of income taxes and only the balance of such required amount shall be levied as direct taxes on property. Pursuant to the purpose indicated in the long ballot title, it would appear to have been the legislative intent in 1929 that all revenues from income taxation, together with other miscellaneous receipts, should be deducted "above the line" so that if, in 1929, the revenue from income taxation, together with other miscellaneous receipts had been equal to the amount of revenue required for state purposes, there would have been no balance to be levied as direct taxes on property. If, in 1929, all revenues from income taxation were to be deducted from state expenses, as the long ballot title indicates, it could scarcely be argued that in 1948 it would not be germane to the purpose of the act to provide that surplus income tax revenue may be deducted in like manner from state expense.

Continuing with the matter of the title of the act; if the legislative title expresses a purpose more narrowly than is expressed in the ballot titles which were submitted at the referendum election, then it would appear that the rule announced by this court in State v. Hawks, 110 Or. 497, 222 P. 1071, would apply. In that case the legislative title was held to be defective because it contained no reference to the levy of taxes by counties for market road purposes, but it was further held that the ballot title furnished by the Attorney General, "and which was a part of the measure as the same was submitted to the people remedied that defect."

The funds which we have described as income tax surplus are derived from the personal income tax law of 1929 and from the excise tax of 1929 which is also a tax on or measured by income as both acts have been amended. We are not advised as to what portion of the surplus is derived from the one law or from the other. The surplus presents a single question. Any argument which could be made from the title of the personal income tax law is greatly weakened when we examine the title to the companion acts which were passed in 1929 as a part of a single comprehensive plan of taxation. The title of the excise tax of 1929, the proceeds from which are involved in this controversy, reads in part as follows: "AN ACT to provide for an excise tax (upon corporations, etc.) * * *; to provide for the disposition of proceeds of tax; * * *". No part of the title refers to any purpose of property tax relief. The intangibles law, since declared unconstitutional which was the third of the 1929 acts, is preceded by a title similar to that of the excise tax law. It would certainly be improper to construe the title of the personal income tax law as affecting the excise tax law which has a different title of its own, and which gives no indication as to any limitation in the disposition of funds.

As we have stated, in addition to other relief sought, the prayer of the complaint is for a mandatory injunction requiring defendants to make the finding required by Oregon Laws 1947, chapter 77, section 2, and to certify to the Secretary of State that a necessity exists for levying a tax in excess of the 6 per cent constitutional limitation. Constitution Article XI, section 11, provides that the state shall not in any year so exercise the power of taxation as to raise a greater amount of revenue for purposes other than the payment of bonded indebtedness or interest thereon than the amount of the base plus 6 per cent unless authorized by the voters. As stated, it is the theory of the complaint that it is necessary to hold a popular election to authorize a levy outside of the 6 per cent limitation in order to permit the use of income tax funds to eliminate the deficit of $5,862,328.49, but the levy, if authorized by the people would not raise any revenue. The revenue has already been raised. A valid levy raises no revenue unless certified to the counties, extended on the rolls and collected from property owners. If then, the levy proposed will raise no revenue, it cannot be said that the 6 per cent limitation applies or that a popular election is required. The first preliminary research report prepared by the Director of Research in March, 1946, which was submitted to the Oregon Tax Study Commission, persuasively states that the 6 per cent limitation has no reference to appropriations or expenditures of funds. The issue in the case at bar is solely one concerning the use of revenue already raised and not one involving the raising of revenue. The prayer of the complaint for a mandatory injunction, as set forth, should therefore be denied. It remains to be determined whether the administrative officials may lawfully apply in the state tax levy for the fiscal year 1948-1949 income tax surplus to any purpose other than "to reduce or to offset" taxes which would otherwise be levied on property. In other words, it remains to be determined whether such income tax surplus or estimated surplus is, or is not "applied by law to some special purpose".

The disposition section of the personal income tax law of 1929 reads in part as follows: "The net revenue arising under the operation of this act in excess of $10,000 * * * shall be assigned to the state of Oregon and shall become a part of the general fund in the hands of the state treasurer." The portion which provides that such net revenue become a part of the general fund is repeated in all subsequent amendments. The same provision is to be found also in the disposition sections of the excise tax law as originally adopted and as amended.

It is significant that the first provision in the disposition section is one which places all income tax collections in the general fund as contrasted, for example, with O.C.L.A., § 100-108 which creates a state highway fund and provides that revenues received are allocated or dedicated for highway purposes and may be used only for purposes of the act. Nor did the legislature follow the method employed when it was desired to earmark revenues derived from the taxing of liquor. We quote:

"* * * there hereby is appropriated the sum of twenty-two million dollars ($22,000,000) from all the net proceeds of revenues * * * from the * * * taxing * * * of liquor, which otherwise would be appropriated to the state government * * *, notwithstanding the general provisions of any other act providing for the distribution * * * to the state government * * * Said funds shall be paid to the state treasurer and credited * * * to a fund separate and distinct from the general fund, to be * * * available for public assistance purposes." Oregon Laws 1947, chapter 444.

The procedure is also in sharp contrast to many statutory provisions which place moneys in the general fund but which provide that when paid into the general fund they shall constitute a special fund. See for illustration, O.C.L.A., § 45-105, which provides that the moneys received by the State Board of Aeronautics shall go into the general fund, but "shall constitute and be considered as, and hereby are made, an appropriation, known as the ``state aeronautics fund'".

It would be natural to assume that moneys placed in a general fund would remain available for general state purposes, except to the extent that the statute may expressly earmark, appropriate or allocate portions of them to special purposes. If we were to assume that Article IX, section 3 of the Constitution applies to income taxes, that provision would be satisfied by words allocating the proceeds to the general fund. The People v. TheSupervisors of Orange County, 17 N.Y. 235; The People v. TheHome Insurance Company, 92 N.Y. 328; City of Sheridan v.Litman, supra; State v. Sheppard, supra; State v. Thompson,25 S.D. 148, 125 N.W. 567.

We understand that it is conceded, and properly so, by both parties, that money which has been placed in the general fund may be allocated to a special purpose, and if that has been done, the administrative officials would be bound thereby, but, as we have pointed out, the legislative methods for accomplishing such allocations are well known, if not standardized.

The next portion of the personal income tax of 1929 is as follows:

"* * * The proceeds of this tax, like that from other miscellaneous sources, shall be taken account of by the tax commission in making the annual levy for state purposes." Laws, 1929, section 37.

In the summary reproduced, supra, from the plaintiff's complaint, we find "miscellaneous receipts" listed at $6,000,000, which sum is deducted from state expense of $19,000,000. The same phrase appears in chapter 477 of the Laws of 1947. The provision of the 1929 act that the proceeds from the income taxes shall be taken account of "like that from other miscellaneous sources" would seem to imply that income tax collections shall be treated like miscellaneous receipts. This phraseology remained unchanged until the 1943 amendment. The disposition sections of the 1943, 1945 and 1947 acts merely eliminate the word "miscellaneous" and provide that "Such revenue, like that from other sources, shall be taken into account by the tax commission * * *". It would be in harmony with the procedure provided in 1929 if, under the 1947 act, surplus from income tax collections were included as a part of miscellaneous receipts along with the $6,000,000 item in plaintiff's summary, supra. The disposition section of the income tax law next contains the provision on which plaintiff strongly relies: "* * * It is the expressed intention of this act that the revenue derived from the tax shall reduce by corresponding amount the direct tax levy which the tax commission would otherwise apportion to the several counties of the state. * * *" Laws of 1929, chapter 448. This language clearly implies that the revenue derived from the income taxes would be less than the amount of the direct tax levy which the Tax Commission would otherwise apportion to the several counties of the state, because such levy was to be reduced by the corresponding amount of the proceeds from the income taxes. It is important to note that as the proceeds from income taxes greatly increased in amount, the provision that the revenue derived from income taxes should reduce "by corresponding amount" was eliminated, and in place of the language deleted, the 1943, 1945 and 1947 acts employed the following language:

"* * * It is the expressed intention of this act that the net revenue derived from this tax shall be applied first to reduce the state tax levy on property inside the 6 per cent constitutional limitation and then to reduce the state levy on property outside said constitutional limitation. * * *"

From 1943 on, therefore, there was no requirement that property tax levies should be reduced by an amount corresponding to the amount of the proceeds from income taxes.

To summarize: When the estimated income tax revenues were comparatively small, it was stated to be the expressed intention that such revenue should reduce by corresponding amount the direct tax levy which the Commission would otherwise apportion to the several counties of the state. Since 1947 it has been the expressed intention to apply income tax revenue, first, to the costs incurred in administration of the act, and then to apply them to various specified purposes, which purposes, however, do not exhaust the income tax proceeds which went into the general fund.

It is not clear that the legislature in fact ever intended, even in 1929, to provide that income tax proceeds should be allocated exclusively to reducing a direct state tax levy. It would have been a simple and common procedure to have provided that the proceeds from income taxes shall be put in a trust fund for property tax reduction only, or that all such funds be "transferred" from the general to a special fund. Instead, conscious of an impending referendum, the legislature stated in good faith an expressed intention, not, however, for the purpose of tying up the fund as tightly as would have been done if the usual legislative language had been used. Although it was stated as the expressed intention that revenue derived from income taxation shall reduce by corresponding amount the direct tax levy which the Tax Commission would otherwise apportion to the several counties of the state, nevertheless the formula contained in the same section of the 1929 act states exactly how the state income tax proceeds were to be accounted for and applied. The law provided that:

"* * * the commission shall estimate the total amount of revenue to be raised under the several millage taxes in force and the amount necessary for miscellaneous state purposes as enumerated under section 4215, Oregon Laws [now sec. 110-534, O.C.L.A.]; and shall deduct therefrom any surplus or estimated surplus remaining in the state treasury from all funds, however derived, and also the estimated net proceeds of this tax for the next ensuing calendar year. Only the remainder left after subtracting said surplus and the estimated receipts of this tax shall be apportioned among the several counties as provided for by law. * * *" Laws, 1929, chapter 448, sec. 37.

Thus the act employes the language which appears in O.C.L.A., § 110-534, and provides that, from the amount required to be raised, there shall be deducted "any surplus or estimated surplus remaining in the state treasury from all funds, however derived," and also the estimated net proceeds from the income taxes for the next ensuing calendar year. This mandate seems to us to be in harmony with the idea that, in 1929, the income tax proceeds should be added to miscellaneous receipts and be deducted "above the line" before determining what the deficit to be raised by property tax levy should be. The act provides that: "Only the remainder left after subtracting said surplus and the estimated receipts of this tax shall be apportioned among the several counties as provided for by law." If there was no remainder there could be no property tax.

Of course, there is a different situation under the 1947 act, for it contemplates a substantial increase in income tax revenue and specifically allocates many millions thereof to particular tax reduction purposes. But there seems no reason expressed in the statute why the untransferred surplus in 1947 should not be deducted along with other miscellaneous receipts (the $6,000,000 item) above the line, so that no deficit of $5,800,000 would appear and no tax levy be required.

We next consider the history of the provision in the 1929 act, which is as follows: "The proceeds of this tax, like that from other miscellaneous sources, shall be taken account of by the tax commission in making the annual levy for state purposes." In these words, we find no hint of any intention to treat any of the proceeds of the income tax as a special fund or to do anything more than to take account of the amount of the proceeds in making the state property tax levy. The formula for taking "account" follows in the same section and has already received our attention. Unlike the 1947 statute, the 1929 act mentions no specific property tax which is to be reduced by application of income tax revenues, except by the general provision that the income tax revenues shall reduce the direct tax levy which the Tax Commission would otherwise apportion to the several counties of the state. The act does not say that income tax revenues shall reduce property taxes which the Commission shall have levied, but rather that those revenues shall reduce the direct tax levy which the Commission would otherwise apportion, in other words, the levy which would be apportioned but for the application of income tax revenues.

Assuming the facts to be as they in fact were, that the income tax revenues would be less than the amount of the direct tax levy which would otherwise be apportioned to the several counties, the intent of the 1929 act is clear. They were not dealing with any possible surplus over and above intended property tax reduction, and the property tax relief was accomplished by deducting surplus and estimated receipts produced by the income taxes from the total expenses. (O.C.L.A., § 110-534, as amended by laws 1941, chapter 440.)

The factor which has resulted in confusion and ambiguity in the tax system for many years has been the anxiety of the legislature to avoid losing the tax base and the uncertainty as to what circumstances might result in its loss. Consequently, since the time when the income tax revenues have been sufficient to eliminate state property taxes, it has been thought necessary to continue to levy such taxes in order to avoid losing the tax base, notwithstanding the fact to which we have referred, that the six per cent limitation applies only to the raising of revenue and not to the use of revenue already raised. The March, 1946, report to the Oregon Tax Study Commission states as one of the accepted interpretations, "in spite of conflicts in official interpretations", the following:

"A taxing district does not lose a ``tax base'. When no levy has been made for a period of three years, the limitation does not apply and, for purposes of levying a tax, the taxing district assumes the status of a new district."

The Attorney General has rendered an opinion to substantially the same effect. Opinions of the Attorney General, 1936-1938, page 660. We think this interpretation is sound. The Constitution prohibits the levy without vote of the people in any year so as to raise a greater amount than the total amount levied in any one of the three preceding years. Clearly, the provision applies to property taxes and contemplates that there should have been a levy which raised an amount of revenue in some one of the previous three years. Any other construction would be the equivalent of a rule that, if no tax has been levied and no amount raised for three years, then no taxing body can levy a tax or raise any revenue thereafter. The tax levying body would thereby be penalized for its self-restraint in refraining from levying any property tax for three years. Such was not the intent of the people in adopting the six per cent amendment.

The foregoing considerations lead to a conclusion that, although the state has not levied a property tax for three years, it was not necessary under the 1947 Laws, chapter 477, to take steps leading to a popular election to raise money in excess of the six per cent limitation, merely to maintain the tax base, nor is such an election necessary to raise funds, since no funds would be raised thereby.

The 1929 act would impose an income tax and would give property tax relief, but it would not deal with any problem of disposition of surplus, because no surplus was contemplated. The 1947 law rests in a different context of fact.

As the revenues and estimated revenues from income taxation increased, the legislature was confronted with the problem which had not arisen in the early years of income taxation, namely, the disposition of surplus after specific transfers to property tax reduction accounts had been made. By Oregon Laws, 1943, chapter 441, it was provided that:

"* * * In the event that the revenue from this tax and the revenue from any other tax on or measured by net income for any fiscal year shall exceed the amount necessary to eliminate the state levy on property otherwise required to be paid into the state treasury by the several counties for such year, the remainder of such revenues shall be accounted in the state levy of taxes and applied as follows: * * *".

It was then provided that such excess should be applied to reduce the property tax otherwise to be apportioned to the several counties for the state elementary school fund, and after that the remainder should be transferred in an amount not exceeding $5,000,000 to the state school support fund. Next, the remainder was to be transferred to an account to be known as the property tax reduction account, to be applied in the state levy of taxes for the next ensuing fiscal year for the purposes above stated. It was then provided that:

"In the event that the amount in said property tax reduction account at the close of any fiscal year plus the estimated receipts from this tax and from any other tax on or measured by net income, as accounted in the state levy of taxes for the next ensuing fiscal year, shall exceed by not less than five million dollars ($5,000,000) the total amount required to offset all the aforesaid state taxes otherwise to be levied on property, * * *" a discount would

be allowed the income taxpayer of five per cent for each $1,000,000, or major part thereof, in excess of $5,000,000. Thus in fact, the legislature provided for the elimination of any substantial surplus over the amount specifically allocated to property tax reduction. The amendment of 1945 followed a similar policy. It defined the specific purposes to which, in order of priority, income tax revenues were to be applied and again provided for a discount to income taxpayers from any surplus. The 1947 act (Laws, 1947, chapter 466) again set forth the specific property tax reduction purposes to which income tax revenues should be applied and provided for income tax discount, as follows:

"* * * In the event that at the end of any fiscal year, the estimated receipts from this tax and any other tax on or measured by net income, required to be accounted for in the state levy of taxes for the ensuing fiscal year, shall exceed the aggregate of the amounts hereinbefore required to be transferred or accounted for, there shall be allowed upon tax returns for tax years beginning in the calendar year during which such excess is determined a discount of 5 per cent for each one million dollars excess or major part thereof; * * *".

But, as a final proviso, the act then specified that "no discount shall be determined for the calendar year 1947 or the calendar year 1948 or for fiscal years beginning within either of said calendar years."

From the plaintiff's brief we read:

"By the so-called ``Walker plan', the 1943 legislature provided for a discount in individual income taxes to take care of any balance on hand (in excess of a certain ``cushion') after applications to specific property tax relief items had been made."

Thus it appears to be conceded that, under the 1943 law and until the elimination of the discount by the 1947 law, the legislature arranged to take care of the balance by seeing to it that there should be none, or at least, substantially none. The 1943 and 1945 acts recognized that the estimated income tax revenues may exceed the aggregate of the amount "required to be transferred or accounted for" and disposed of that excess by the income tax discount. When the discount was eliminated for 1947 and 1948, that excess remained. It was still an excess not "required to be transferred or accounted for". If not required to be transferred or accounted for, it remained where it had been put, to wit, in the general fund. If the 1947 law remains unchanged, the income tax discount will again apply in the fiscal year 1949-1950 and the surplus will again be substantially eliminated. The question before us relates only to the surplus temporarily accumulated by reason of the suspension of the discount.

Another circumstance leads to the conclusion that the 1947 act does not allocate the income tax surplus to property tax reduction. The 1947 act demonstrates how revenues in the general fund may be allocated to specific purposes, i.e., how moneys in the general fund may be "applied by law to some special purpose". That act provides that after certain applications of income tax revenues have been made, the portion for the state elementary school fund shall be transferred from the general fund, where it was originally placed, to "an account in the general fund to be known as the state elementary school fund account". Similar language provides for money to be transferred to a fund in the state treasury to be known as the state school support fund. Again, the $5,000,000 cushion is to be transferred "to an account in the general fund to be known as the property tax reduction account". In this very act, the legislature knew, and practiced, the legislative art of allocating moneys in the general fund to a special fund therein by means of a "transfer", but the legislature provided for no transfer of the income tax surplus to any special fund. It, therefore, remained in the general fund.

The next provision of importance in the 1947 act relates to the so-called $5,000,000 cushion, the property tax reduction account. The act refers to (1) "the total amount required to offset all the aforesaid state taxes otherwise to be levied on property", together with (2) "the additional sums herein required to be transferred in each of the fiscal years 1945-1946 and 1946-1947 to the property tax reduction account", and provides that, if the property tax reduction account at the close of any fiscal year, plus the estimated receipts from income taxes, shall exceed by not less than $5,000,000 the total of items (1) and (2), then a sum which the complaint states to be about $3,200,000 shall betransferred "to a fund in the state treasury to be known as the state and county school fund".

We think that the legislature clearly expressed the idea that the $5,000,000 cushion in the property tax reduction account constituted a sufficient reserve, or cushion, to be applied in the state levy of taxes for the next ensuing fiscal year, and we think further that the transfer of that specific amount over and above the amounts allocated to the reduction of named property taxes negatives the idea that the income tax surplus should also constitute a part of the cushion. If it was the intent of the legislature that the cushion should not be limited to $5,000,000, but should include the entire surplus from income taxation, it would have provided that there shall be transferred to the property tax reduction account the $5,000,000 mentioned in paragraph 3, section 1, chapter 466, Laws 1947, and the surplus, if any, after the required transfer to the state and county school fund, as provided in the succeeding paragraph.

We will next comment on certain matters presented in plaintiff's brief on appeal. Attention is there called to the fact that the people repealed the income tax of 1923 and rejected the proposed income tax of 1927, and that, though both measures provided for property tax relief, no reference thereto was made in the respective titles, "which is about all the average voter reads". The brief continues, "The conclusion is inescapable that the voters have not been willing to add ``just another tax' for general governmental purposes". Throughout the argument, counsel puts emphasis on the proposition that the title is the thing which limits the application of income tax revenue to the reduction of property taxes. Comparatively little space is given to the construction, sentence by sentence, of the body of the various acts. Even assuming that we are wrong in our conclusion as to the effect of the title to the 1929 personal income tax law, there is reason to believe that the surplus from the excise tax of 1929 would take care of the so-called deficit, even if the surplus from the personal income tax were held to be limited by the title to property tax reduction. We have already observed that there is no reference to property tax reduction in the title to the excise tax act of 1929. Throughout this opinion, we have referred to provisions of the disposition sections of the personal income tax act and its amendments, but this has been only for convenience. The same provisions appear in the disposition sections of the excise tax act. But plaintiff could prevail only if it should be made to appear that neither the surplus from the personal income tax nor from the excise tax can be treated as remaining in the general fund and available for general purposes. The adopted construction and scope of the disposition sections of the excise tax law are not controlled by anything in the title.

The general theme of plaintiff's brief is that special purpose funds cannot be diverted by administrative officials, and large portions of the argument are based on the assumption that the income tax surplus is a special purpose fund. This contention we reject. The surplus is the only part of "the remainder of such revenues", referred to in the first paragraph of the disposition section of the 1947 income tax law, which the treasurer is not directed to "transfer" to a special account or fund. It, therefore, remains where it was placed in the general fund.

We are aware of the ambiguities in the act and its amendments and the conflicting interpretations between attorneys general of the state, the legislature and the Tax Commission. Both sides recognize that it is impossible to harmonize all of the facts and so-called practical constructions. The financial statement published in Oregon Laws, 1947, includes an item entitled, "Property tax reduction account, state income taxes . . . $38,800,000.00", which appears under the heading, "Receipts from following sources credited to General Fund and appropriated for specific purposes." An inference might be drawn from this that the official who prepared the statement believed that all revenues from income taxes were so appropriated, but this statement is not such a practical construction as is entitled to much weight.

Plaintiff frankly states: "We do not contend that the character of property tax relief funds is to be determined by the way they are listed in the Financial Statement." Plaintiff's brief emphasizes the fact that the volume of income tax funds has varied and may greatly vary in the future, and that no one can justifiably assume that the income tax collections will be sufficient in the future to meet the specific applications now required. We agree. If income tax revenues in the future are insufficient to meet the required specific applications, there will be no surplus and no question for decision.

Counsel eloquently pleads the cause of the overburdened taxpayer, but we think that the plea should be directed to the legislature or to the people and not to the court. So long as the legislature has power to control the rates under income and excise tax laws, the fate of the taxpayer is in the hands of the legislature, whatever the opinions of this court may be on the subject.

Counsel asserts that defendants claim to have found a "loophole" which "permits the threatened diversion", (again assuming that defendants are attempting a diversion). They refer to a contention of defendants that a surplus is "left dangling in the air" and they add, "This contention, whether well or ill founded, reflects a disposition to take advantage of any mistake in legislative draftsmanship * * *". We have been shown no evidence that the creation of surplus by suspending the discount under the Walker Plan was the result of any mistake in legislative draftsmanship and we are still required to seek the legislative intent in the words of the statute. Counsel for the plaintiff significantly point out that the 1939 act, in effect until the 1943 amendment, left a "dangling surplus", but that the Commission made no attempt to divert it to general purposes. The counsel also point out that the 1943 and 1945 acts did not leave the surplus dangling; "income taxes were reduced to use up the surplus." Counsel then makes this notable concession: "By temporarily suspending the discount under the 1947 act, the surplus was again left without specified application."

What we have already said demonstrates that at the times when the Tax Commission was expressing the view that income tax revenues were limited exclusively to property tax reduction, there was as yet no serious problem concerning income tax surplus. When a substantial surplus did become imminent it was "taken care of" by the Walker Plan. Only upon suspension of the Walker Plan has an issue of major importance involving large sums of money been directly presented. It is for this reason that we are of the opinion that the decision in this case should not be controlled by the so-called practical construction which was announced under circumstances materially differing from those which have arisen since the suspension of the income tax discount.

Perhaps the most serious argument presented by plaintiff is based on Laws 1947, chapter 477, supra. When that act was passed there was reason for legislative uncertainty as to the legal status of the income tax surplus. If that surplus was a special purpose fund devoted only to the reduction of property taxes first levied, and if it was necessary to levy a property tax in order to maintain the tax base for future years, or if, as some appear to have assumed, the six per cent amendment applies to the levy of a tax which is never to be certified to the counties and from which no revenue is to be raised, then it is not difficult to understand why the legislature passed chapter 477. Under that act the Tax Commission is directed to make a finding as to whether or not revenues available within the six per cent limitation, plus estimated miscellaneous receipts, are sufficient to meet necessary expenses. If found insufficient, the Commission is to certify to the necessity of a tax levy in excess of the six per cent constitutional limitation. While the legislative opinion, as to the effect of constitutional limitation, is entitled to consideration, the legislature is not authorized to determine the effect of a constitutional provision since that duty rests upon the judicial department of the state. In view of the considerations above presented, we conclude that chapter 477 does not require the Tax Commission to certify to the necessity of a popular election because the income tax surplus has not been applied by law to some special purpose and is therefore properly included in estimated miscellaneous receipts in harmony with the formula presented in the original act of 1929. In declining to make such certification, the Tax Commission does not violate chapter 477, assuming that act to be constitutional.

Upon consideration of the practical realities of the matter it becomes clear that if an election were held under the provisions of chapter 477, and if the people voted in the affirmative, not one dollar of income tax revenue would actually be applied for property tax reduction or property tax relief. No property taxpayer would pay one cent less on property taxes than he would have paid if the election had not been held. A taxpayer would get little "relief" from a procedure which imposed a new burden on property merely for the purpose of removing it. The submission of the issue to popular vote would amount to nothing more than an order by the Secretary of State, based on a certificate of the Tax Commission, calling an election to authorize the use of income tax proceeds for the general purposes of the government. Such is the issue which would in fact be submitted to the people, who would be told that the property tax, if authorized, would never be collected. Chapter 477 provides that under the conditions specified, the Commission "shall certify to the secretary of state that, to meet said requirements as determined and certified by the board of control, a necessity exists for levying a tax in excess of the said constitutional limitation." Only upon receipt of such a certificate is the Secretary of State authorized to call an election. This court cannot, by mandamus, direct the Commission to make a certificate that certain action is necessary under a constitutional provision unless the Constitution is applicable to the issue, and this, as we have said, is a judicial question. We therefore cannot require, nor can we authorize the Tax Commission to certify that a necessity exists for levying a tax in excess of the six per cent constitutional limitation when, as we have said, the question relates to the disposition of funds already raised, and when, as we have also held, the six per cent provision is a limitation upon the power to raise a greater amount of revenue than the amount of the base plus six per cent, and does not purport to control the expenditure of revenues already raised.

Section 4 of chapter 477 relates to the situation which arises if and when an election has been called and held to authorize a property tax levy in excess of the limitation imposed by Article XI, section 11 of the Constitution, and provides that in such case the levy so made shall be offset by income tax revenues. Since no election is required, the provision for offsetting the levy becomes inapplicable. Chapter 477 of the Laws of 1947 does add confusion worse confounded to the whole situation, but in view of the circumstances surrounding its enactment, we think the construction of the disposition sections of the income and excise tax laws which we have adopted should not be changed by reference to another act, chapter 477, which would have been necessary and proper if the legal assumptions underlying it had been correct. The decree of the Circuit Court is affirmed.

It was essential to the orderly functioning of the fiscal system of the state that the ambiguities in statutes and practice should be clarified. This was a friendly suit, brought in the public interest by the former governor of Oregon. Neither party will recover costs or disbursements.

KELLY, J., dissents.