EFFECT OF LEGISLATIVE REDUCTION ON TERMS AND SALARIES OF STATE LIQUOR BOARD MEMBERS

OFFICES AND OFFICERS ‑- STATE ‑- TERM OF OFFICE ‑- EFFECT OF LEGISLATIVE REDUCTION ON TERMS AND SALARIES OF STATE LIQUOR BOARD MEMBERS 

Legislative reduction of the terms of office of current members of the Washington State Liquor Control Board does not infringe upon a right of the members to a continuation of salary for the balance of the terms for which they were originally appointed.

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                                                                February 10, 1986 

Honorable Booth Gardner
Governor
Legislative Building
Olympia, Washington 98504

Cite as:  AGO 1986 No. 4                                                                                                                  

 Dear Governor Gardner:

             By recent letter you have requested an opinion on a question which we paraphrase as follows:

             Would legislation reducing the terms of office of current members of the Washington State Liquor Control Board (hereafter referred to as the "liquor board") infringe upon a right of the members to a continuation of salary (and benefits) for the balance of the terms for which they were originally appointed?

             We answer your question in the negative as set forth in our analysis.

                                                                      ANALYSIS

                                                Statutory Background And Issues Raised

            The liquor board statutorily consists of three members appointed by the Governor.  RCW 66.08.012.  Pursuant to existing statutory provisions each member is (1) appointed for a term of nine years subject to removal for inefficiency, malfeasance or misfeasance in office; (2) entitled to an annual salary fixed by the Governor; and, (3) required to subscribe to an oath of office and enter into a surety bond.  RCW 66.08.012 and 66.08.014.

              [[Orig. Op. Page 2]]

            As a state agency the liquor board is continuing in nature and its police powers respecting liquor or alcoholic beverages are broad and independently exercised subject to audit by the State Auditor.  See, RCW 66.08.050(10).  Its statutory regulatory powers range from regulating the manufacture, purchase, sale and consumption of liquor or alcoholic beverages to the seizure, confiscation and destruction of alcoholic beverages which do not conform to law.  RCW 66.08.030.  These regulatory and other powers of the liquor board constitute an exercise of the police power of the state for the protection of the welfare, health, peace, morals, and safety of the public.  RCW 66.08.010.

             It follows from the statutory scheme wee have outlined above that liquor board members are unquestionably public officers.  See,State ex rel. Brown v. Blew, 20 Wn.2d 47, 145 P.2d 554 (1944); and United States v. Hartwell, 6 Wall 385, 18 L.Ed. 830 (1868). Their status as public officers of the state in turn broaches two constitutionally premised questions, to wit:  (1) Do liquor board members have a statutorily created contract right to a full nine years of salary (and related benefits) protected against state impairment by Article I, § 10 of the United States Constitution and Article I, § 23 of the Washington State Constitution? and (2) if not, would a reduction in the statutory terms of current board members, nevertheless, diminish their compensation in violation of Article II, § 25 of the Washington State Constitution?

                                                         Impairment of Contract Issue

            As indicated by the first question above, both the federal and the state constitutions contain contract clauses which generally prohibit the passage of laws impairing existing contractual obligations.  U.S. Const. Art. I, § 10; and, Wash. Const. Art. I, § 23.  These contract clauses are substantially the same and have substantially the same effect.  Ruano v. Spellman, 81 Wn.2d 820, 505 P.2d 447 (1973).

             A statute may create a vested property right of a contractual nature protected by the contract clauses to the same extent as a written contract executed by two individuals.  The circumstances and language of the particular statute in question, however, must establish a legislative intent to create a contractual right enforceable against the state.  State Employees v. State, 101 Wn.2d 536, 539, 682 P.2d 869 (1984).  As a general rule, the statutory establishment of a public office together with the terms and compensation of those appointed to the office does not result in the establishment of a protected contractual right to the term and  [[Orig. Op. Page 3]] related compensation.  The prevailing law in this respect is summarized at 63A Am.Jur.2d Public Officers and Employees § 35 (1984), as follows:

             ". . . There is no constitutional bar against the mere shortening of the term of an existing statutory office by legislation aimed at the office rather than at its incumbent.  Absent any express constitutional limitation, a legislative body has full and unquestionable power to abolish an office of its creation or to modify the terms of the office, in the public interest, even though the effect may be to curtail an incumbent's unexpired term. . . ."

             Our State Supreme Court, although not passing directly on the issue at hand, also has recognized the general rule that an office holder has no proprietary rights in the public office he or she holds.1/

             The rationale underlying the general exception of statutorily established public offices and related terms of office from the contract clauses is essentially that public offices represent the exercise of a sovereign power for the common good, and not for the profit, honor, or private interest of any one person, family, or class of persons.  63A Am.Jur.2dPublic Officers and Employees § 2.  Government must necessarily retain the flexibility to create and change or discontinue its agents as the United States Supreme Court recognized early on:

             ". . . [I]n every perfect or competent government, there must exist a general power to enact and to repeal laws; and to create, and change or discontinue, the agents designated for the execution of those laws.  Such a power is indispensable for the preservation of the body politic, and for the safety of the individuals of the community . . ."  Butler v. Pennsylvania, 51 U.S. 402, 13 L.Ed 472, 478, 10 How. 402 (1850).

              [[Orig. Op. Page 4]]

            Accordingly, the contract clauses serve to bind the state only when the state descends from the "plane of its sovereignty"2/ respecting the establishment of public offices together with related terms and compensation and, in addition, manifests an intent to contract with office holders.  See,Lanza v. Wagner, 229 N.Y.S.2d 380, 183 N.E.2d 670 (1962), app. dism. (for want of a substantial federal question) 371 U.S. 74, 9 L.Ed.2d 163, 83 S.Ct. 177 (1962) (there is no constitutional inhibition against the mere shortening of the term of an existing statutory office by legislation aimed at the office rather than its incumbent in the absence of a legislative intent to contract);Hall v. Wisconsin, 103 U.S. 5, 26 L.Ed. 302 (1880) (conversely, the execution of a written contract expressly required by a statute creating a survey "commission" resulted in a protected contractual relationship); andAnderson v. Brand, 303 U.S. 95, 82 L.Ed. 685, 58 S.Ct 443 (1938) (similarly, repeated references in a teacher tenure statute to the right established as one of "contract" or "indefinite contract" resulted in a protected contractual relationship).

             We find no basis within the statutory scheme initially outlined for concluding that the legislature descended from the state's sovereign plane when it created the liquor board.  There are no significant statutory characteristics evidencing a legislative intent to contractually bind the state to allow board members to serve and/or accrue salary and benefits for a full nine years.  The statutory fixing of terms and compensation are typical of the creation of a public office to which no contractual rights attach in favor of the office holder.  Nor does the provision respecting the removal of liquor board members for inefficiency, malfeasance or misfeasance give rise to some form of contractual right to serve a full nine years during "good behavior."  McCarthy v. Sheriff of Suffolk County, 366 Mass. 779, 322 N.E.2d 758 (1975).  Such a statutory limitation upon removal restricts the appointing authority and not the legislature.3/

              [[Orig. Op. Page 5]]        Reduction in Compensation Issue

             We now turn to the second question respecting Article II, § 25 of the State Constitution.  As previously indicated this constitutional provision provides that the compensation of a public officer shall not be "diminished during his term of office."

             Obviously, the total potential compensation of a current liquor board member would be less in the event the member's term of office were shortened from nine years to eight years for example.  Nevertheless we do not believe the compensation of liquor board members would be unconstitutionally diminished in such a case.

             We have previously opined that a reduction in the terms of office of city officers does not run afoul of any constitutional prohibitions against decreasing salaries during an official's term of office.  AGO 1980 No. 13 (copy enclosed).  See also AGO 63-64 No. 106 (copy also enclosed).  The length of a term of office and the annual salary or compensation provided for service during the term are severable considerations for purposes of the various state constitutional provisions prohibiting decreases in compensation during an incumbent's term of office.4/ So long as the compensation of an incumbent public or state officer is not reduced during whatever the balance of his or her statutory term may be as determined by the legislature, no violation of Const. Art. II, § 25 occurs.

                                                                       Conclusion

            Members of the Washington State Liquor Control Board hold a public office created for the purpose of exercising the sovereign power of the state and not for the purpose of creating entitlements  [[Orig. Op. Page 6]] on the part of those appointed to the office.  As board members they have no vested proprietary interest in the duration of the statutory term of office for which they were appointed.  Accordingly, the mere shortening of their existing statutory offices by legislation aimed at the offices rather than the incumbents5/ would not run afoul of federal and/or state constitutional provisions prohibiting either the state's impairment of contracts or reduction of the compensation of public officers during their term of office.

             We trust that the foregoing will be of assistance to you.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General 

ROBERT E. PATTERSON
Assistant Attorney General