Eligibility Of Counties To Receive State Fuel Tax Revenues Under The Rural Arterial Program

TAXATION—ROADS AND STREETS—HIGHWAYS—COUNTIES—Eligibility Of Counties To Receive State Fuel Tax Revenues Under The Rural Arterial Program

Counties lose eligibility to participate in the rural arterial program if the county chooses to divert revenues from the county road levy to pay for (1) civil or criminal traffic prosecutions, (2) court costs of adjudication, (3) indigent defense, (4) incarceration, and/or (5) coroner activities.

March 13, 2017

Dear Director. Weber:

            By letter previously acknowledged, you have requested our opinion on the following paraphrased question:

May any county retain its eligibility to participate in the rural arterial program under the limitations imposed by RCW 36.79.140 and article II, section 40 of the Washington Constitution if the county chooses to divert county road levy property tax for general government purposes, under  RCW 36.33.220, to fund (1) civil or criminal traffic prosecutions, (2) court costs of adjudication (3) indigent defense (4) incarceration, and/or (5) coroner activities?

BRIEF ANSWER

            No. Incarceration and coroner activities are not road purposes under article II, section 40. Costs related to prosecution, adjudication, and indigent defense of traffic offenses present a closer question, but it is most likely that these would also not be considered road purposes under the Washington Constitution and RCW 36.79.140.

BACKGROUND

            In 1983, the legislature enacted the rural arterial program to improve county roads in rural areas. Laws of 1983, 1st Ex. Sess., ch. 49. The legislature also created a rural arterial trust account within the motor vehicle fund. Laws of 1983, 1st Ex. Sess., ch. 49, § 2. The rural arterial trust account is funded with a specified portion of fuel tax revenues. See RCW 46.68.090(2)(j). The legislature entrusted oversight and administration of the rural arterial trust account to the County Road Administration Board. See, e.g., RCW 36.79.040-.050 (requiring Board to

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apportion funds to five regions); RCW 36.79.060 (requiring Board to adopt rules and design standards); RCW 36.79.070 (allowing Board to contract with Department of Transportation to administer program).

            At regular intervals, the Board prepares a recommended budget for expenditures from the trust account. RCW 36.79.130-140. By statute, only those counties that use funds for specified purposes are permitted to receive funds from the trust account:

Only those counties that during the preceding twelve months have spent all revenues collected for road purposes only for such purposes . . . including traffic law enforcement, as are allowed to the state by [a]rticle II, section 40 of the state Constitution or RCW 36.82.070(2) are eligible to receive funds from the rural arterial trust account . . . .

RCW 36.79.140.

            There are three exceptions to the “road purposes” requirement for rural arterial funds eligibility. First, “[c]ounties with a population of less than eight thousand are exempt from this eligibility restriction[.]” RCW 36.79.140. Second, counties may expend revenues collected for road purposes on other governmental services after the voters authorize such expenditures under RCW 84.55.050. RCW 36.79.140. Third, the restriction does not apply to moneys diverted from the road district levy under RCW 39.89, which pertains to community revitalization financing. RCW 36.79.140. Your question does not turn on these exceptions because they do not encompass the five activities you ask about.

            A separate statute permits counties to establish a “county road fund.” RCW 36.82.010. RCW 36.82.040 authorizes a county property tax to raise revenue related to county roads for deposit into this county road fund. In addition, funds accruing to the credit of a county from the state’s motor vehicle fund are to be paid to the county treasurer and deposited in the county road fund. RCW 36.82.050. As a result, a county road fund may have both property tax revenues collected by the county itself, as well as fuel tax revenues distributed to the county by the state.

            Other statutes lay out the permissible purposes for the county road fund. In general, the permissible uses of the fund include the “construction, alteration, repair, improvement, or maintenance of county roads and bridges[.]” RCW 36.82.070(1). Another statute permits the legislative authority of a county to expend county road property tax revenues “for any service to be provided in the unincorporated area of the county . . . .” RCW 36.33.220. That statute also permits county road property tax revenues diverted under RCW 39.89 to be expended for county revitalization purposes as described in that chapter. RCW 36.33.220.

            At issue in this opinion is whether counties’ use of funds is consistent with rural arterial program eligibility. According to your letter, at least one county has used money from its county road fund to pay for (1) civil or criminal traffic prosecutions, (2) court costs of adjudication, (3) indigent defense, (4) incarceration, and (5) coroner activities.

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            To our knowledge, until recently, no administrative rule or policy from the Board specifically interpreted the term “traffic law enforcement” in RCW 36.79.140. Concurrent with your opinion request, you provided a memorandum from the Thurston County Prosecuting Attorney to the Thurston County Sheriff dated from 1987. The memo asserted that the Board had acknowledged by phone conversation that the issue of how broadly traffic law enforcement could be interpreted was “difficult and unresolved.” The memo advised the Sheriff to adopt a “conservative” approach until resolution by the Board or legislature. The memo asserted that “the costs of prosecution could be funded with diverted road funds, but great care should be taken to assure that the proper use of such funds can be proven.” The memo also concluded that the more indirect certain uses of funds were from traffic law enforcement, the greater the need “for clear accounting justification” would grow.

            We understand that the Board has now issued an administrative rule, WAC 136-25-030, defining 13 traffic enforcement activities “that can be funded by county road levy funds” consistent with maintaining rural arterial trust account eligibility. The activities that are the subject of this memo, including court related expenses, incarceration, and coroner activities, are not specifically mentioned as permissible activities under the administrative rule.

ANALYSIS

            Because your question references multiple statutes with different requirements, we first clarify the scope of this opinion. We understand your overarching question to be related to whether certain counties qualify for rural arterial program funds based on certain activities they are engaging in with funds from a county road fund. This requires harmonizing the statutes relating to the rural arterial program with those relating to the county road fund.

            The goal of statutory interpretation is to discern and carry out legislative intent. Bennett v. Seattle Mental Health, 166 Wn. App. 477, 483, 269 P.3d 1079 (2012). Understanding legislative intent requires looking at the language of the entire statute, related statutes, and the context of the statutory scheme. Dep’t of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1, 11-12, 43 P.3d 4 (2002). A word or phrase is not read in isolation. State v. Roggenkamp, 153 Wn.2d 614, 623, 106 P.3d 196 (2005). Where possible, a court interprets statutes to avoid conflicts and “achieve a harmonious statutory scheme.” American Legion Post 149 v. Dep’t of Health, 164 Wn.2d 570, 585, 192 P.3d 306 (2008).

            RCW 36.79.140 sets forth the eligibility for counties to receive rural arterial program funds from the state. To be eligible, counties for the preceding 12 months must have “spent all revenues collected for road purposes only for such purposes[.]” Included within this definition of road purposes is “traffic law enforcement.” This statute expressly references article II, section 40 of the Washington Constitution to define the scope of permissible road purposes and traffic law enforcement.

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            The question of whether the expenditures at issue defeat eligibility turns on the definition of “traffic law enforcement” in RCW 36.79.140. And because RCW 36.79.140 expressly incorporates the limitations of article II, section 40, your inquiry requires an interpretation of that constitutional provision. Interpretation of the constitution is the role of the courts. Brownlee v. Clark, 87 Wn.2d 478, 482, 553 P.2d 1344 (1976). Because the definition of “traffic law enforcement” is modified by the scope of article II, section 40, a review of Washington Supreme Court decisions is necessary to determine the limitations of the term “traffic law enforcement.” While the court has not addressed this exact issue, a body of law surrounding this constitutional provision provides some guidance on permissible and impermissible uses of highway funds.

            In interpreting the term “traffic law enforcement,” we begin with the plain meaning of the phrase. Campbell & Gwinn, L.L.C., 146 Wn.2d at 11-12. Dictionaries can be useful in ascertaining plain meaning. See American Continental Ins. Co. v. Steen, 151 Wn.2d 512, 518, 91 P.3d 864 (2004). One dictionary definition of “enforcement” is the compelling of the fulfillment of a law or order. Webster’s Third New International Dictionary 751 (2002). When viewed in isolation, the phrase “traffic law enforcement” could logically be interpreted broadly enough to encompass court proceedings prosecuting offenders of traffic laws, or possibly even the incarceration of those convicted of committing such crimes.

            The phrase “traffic law enforcement” is then qualified by the clause “as are allowed to the state by [a]rticle II, section 40[.]” RCW 36.79.140. This requires review of the limitations of article II, section 40 to determine whether certain activities, regardless of whether they meet the definition of traffic law enforcement, standing alone, would be permissible under article II, section 40.

            Section 40 includes the following highway purposes[1]:

            (a)        The necessary operating, engineering and legal expenses connected with the administration of public highways, county roads and city streets;

            (b)       The construction, reconstruction, maintenance, repair, and betterment of public highways, county roads, bridges and city streets; including the cost and expense of (1) acquisition of rights-of-way, (2) installing, maintaining and operating traffic signs and signal lights, (3) policing by the state of public highways, (4) operation of movable span bridges, (5) operation of ferries which are a part of any public highway, county road, or city street;

            (c)        The payment or refunding of any obligation of the State of Washington, or any political subdivision thereof, for which any of the revenues

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described in section 1 may have been legally pledged prior to the effective date of this act;

            (d)       Refunds authorized by law for taxes paid on motor vehicle fuels;

            (e)        The cost of collection of any revenues described in this section[.]

Const. art. II, § 40.

            The enumerated purpose within the text of article II, section 40 that is most similar to “traffic law enforcement” is “policing by the state of public highways.” Const. art. II, § 40(b)(3). It therefore seems that when the legislature used the term “traffic law enforcement,” it did so with “policing” in mind. Prosecution, incarceration, and coroner activities seem to extend beyond “policing.” Rather, they occur as a result or consequence of policing activities. However, because the legislature in RCW 36.79.140 used the term “traffic law enforcement” rather than “policing,” it may not have intended a parallel meaning.

            Keeping the text of article II, section 40 in mind, it is important to review some of the guiding principles from our Supreme Court in construing that constitutional provision. To determine whether an expenditure of restricted funds is consistent with article II, section 40, the court looks to the “connection between the expenditure and the contemplated highway use.” Freeman v. Gregoire, 171 Wn.2d 316, 329, 256 P.3d 264 (2011) (Freeman I). In other words, the court will determine how attenuated the expenditure is from the various permissible highway purposes.

            The use does not necessarily have to directly benefit the public highways. Both “direct” and “indirect” benefits to the public highways are permissible. See id. at 331. But at a certain point, an expenditure becomes no longer even an indirect benefit to the public highways. For example, the City of Seattle argued that the payment of a tort judgment resulting from a car accident caused by a government vehicle was a cost and expense of the operation of bridges. The court rejected the argument, concluding that payment of a tort judgment would not “contribute toward the safety, administration, or operation of our highway system,” but rather would decrease funds reserved for such purposes. Automobile Club of Wash. v. City of Seattle, 55 Wn.2d 161, 168-69, 346 P.2d 695 (1959).

            Shortly thereafter, the court interpreted the constitutional requirement that funds be used “exclusively for highway purposes.” The court held that an expenditure for the relocation of utilities on a highway right-of-way, necessitated by a federal highway project, was not exclusively for highway purposes. State Highway Comm’n v. Pac. Nw. Bell Tel. Co., 59 Wn.2d 216, 221-22, 367 P.2d 605 (1961).

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            Another case clarifies the statement in Automobile Club that indirect benefits to the highway system are permissible under article II, section 40. The Supreme Court rejected the argument that funding to create a public transportation plan was a highway purpose. State ex rel. O’Connell v. Slavin, 75 Wn.2d 554, 561, 452 P.2d 943 (1969). The court held that only those purposes mentioned in article II, section 40 itself are permissible, all of which contribute toward the safety, administration, or operation of the highway system. Id. Even though “taking traffic off the highway benefits the highway in one sense,” that was not the sense that the creators of the initiative intended. Id. Rather, they wanted funding to secure the building and maintenance of more and better highways. Id.

            Some of the later cases, however, show the breadth of permissible expenditures under article II, section 40. The court upheld expenditures for park and ride facilities, distinguishing them from the funding of public transportation. State Highway Comm’n v. O’Brien, 83 Wn.2d 878, 523 P.2d 190 (1974). These expenditures were upheld because they were “directly related to a more efficient and safer operation of the system[.]” Id. at 883.

            An appropriation to determine the value of lanes on Interstate 90 to allow for potential transfer to Sound Transit was a necessary preliminary step in using highway lands and was a permissible indirect benefit to public highways. Freeman I, 171 Wn.2d at 331. The expenditure was for the “administration of highway lands.” Id. at 331; see also Const. art. II, § 40(a).

            In a follow-up case, the court also held that the lease of those two lanes did not violate the Washington Constitution. Article II, section 40 does not actually protect highways. Freeman v. State, 178 Wn.2d 387, 395, 309 P.3d 437 (2013) (Freeman II). Rather, it “protects certain taxes and revenues from uses other than highway purposes.” Id. And the State received consideration for the transfer of the lanes, which it was statutorily permitted to transfer. Id. at 397, 412.

            Though the case law shows a degree of unpredictability, some general principles can be drawn. A court will look to the connection between the expenditure and the highway use. The closer the expenditure to a legally permissible highway use, the more likely it is to be sustained. The valuation of highway lanes and creation of a park and ride were permissible. Payment of a tort judgment, funding of public transportation, and the movement of utilities on a right of way were not. A court will also look to whether the expenditures are benefiting the highways. Expenditures that are viewed as depleting funds in furtherance of nonhighway purposes will be viewed skeptically, even if those expenditures are incidentally related to the operation of highways. But the costs of efficiently administering or using the highways are permissible, such as in the valuing of highway lanes that may be transferred to light rail use or the construction of a park and ride. The analysis essentially comes down to the degree of relationship between the expenditure and a valid highway purpose, as well as the benefit to the highway system.

            In applying these principles to the specific activities you have asked about, we address the activities in two groups. These correspond to the degree of relation or attenuation from highway or road purposes. We begin with coroner costs, which are presumably related to

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roadway deaths, and incarceration for traffic offenses. Coroner costs are quite attenuated from road or highway purposes. Though deaths on roads and highways undoubtedly necessitate the services of the coroner, and could be argued to be a cost of the operation of the highways, this seems comparable to the prohibited payment for a tort judgment in Automobile Club, 55 Wn.2d at 168-69. Both a tort judgment and the hiring of a coroner unfortunately result from the existence of roads and highways. Nevertheless, those expenses do not benefit the roads themselves. It may be true that information garnered from a coroner is helpful for improving the safety of roads, but this still seems an attenuated connection from the sort of highway purpose for which the court looks. Nor can the coroner be interpreted to be a cost of “traffic law enforcement” in the ordinary sense of that phrase.

            Similarly, the cost of incarceration would appear too attenuated from road or highway purposes to be permissible under article II, section 40. Though these costs could perhaps fit within the common meaning of enforcement of the traffic laws, the cost of punishment or rehabilitation of traffic offenders is unlikely to be the type of expense the voters intended when enacting article II, section 40. Incarcerating traffic offenders may indirectly benefit the highways, but the connection between administration and operation of the highways and the costs of incarceration is simply too remote. Though there may be an argument that this is an indirect and therefore permissible benefit to the highways due to incarceration of traffic offenders, it is more likely a court would rule that this cost is for a nonhighway related purpose.

            The costs of prosecuting, defending, and adjudicating traffic offenders provide a somewhat closer question. These expenses could be deemed within the plain meaning of “traffic law enforcement” as the cost of prosecuting offenders is a means of enforcing traffic laws. While not policing itself, prosecution and other court costs are more similar to policing than incarceration or coroner expenses. But like incarceration, court costs are not directly related to road or highway purposes. Nor are they legal expenses connected with the administration of the roads in the way that, for example, valuing freeway lanes was connected to administration. See Freeman I, 171 Wn.2d at 331. These costs occur after the actual highway interaction between police and a motorist, and are a consequence or result of those policing efforts. They are removed physically and temporally from the actual highway offense.

            Courts in at least two other states have addressed similar issues and approved some comparable expenditures. The Supreme Court of New Hampshire determined that the funding of the detective bureau for its enforcement of traffic laws, including the apprehension and prosecution of violators, from highway trust funds, was permissible. Opinion of the Justices, 117 N.H. 300, 302-03, 371 A.2d 1189 (1977). Such funding could occur “in the proportion that its traffic control activities bears to the total work of the bureau[.]” Id. at 302. And West Virginia’s highest court approved expenditures for traffic court, although it disallowed fees for police barracks. Contractors Ass’n of West Virginia v. State Dep’t of Pub. Safety, 189 W.Va. 685, 693‑94, 434 S.E.2d 357 (1993).

            Our courts, however, have not always followed other states in their interpretation of restricted highway funds. See Automobile Club, 55 Wn.2d at 167-68 (declining to follow cases

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from other jurisdictions). Though there is some doubt about how a court would rule, we conclude that the most likely outcome is that a Washington court would find expenditures for the prosecution, defense, or court administration related to traffic offenses are not for highway purposes. First, these activities are not enumerated in the Washington constitutional provision. See State ex rel. O’Connell, 75 Wn.2d at 561. The closest permitted activity in article II, section 40’s text is “policing by the state of public highways.” Const. art. II, § 40(b)(3). But court costs are not policing; prosecution and related expenses may result from such policing, but are more properly considered a part of the justice system. Second, the connection between court costs and highway purposes is attenuated in time and geography. The prosecution for highway offenses occurs after the original traffic stop, and in a different location. Third, though these costs could be said to indirectly benefit the highways by punishing violators or encouraging compliance, it is unlikely that these are the kind of expenses that those who enacted article II, section 40 had in mind. For example, the 1944 Voter’s Pamphlet for the passage of this constitutional amendment referred to spending fuel taxes to pay for “[s]everal hundred miles of good, paved, safe highway[.]”

            Counterarguments exist, however. Prosecution of traffic offenses is within a plain meaning of “traffic law enforcement.” It does provide a benefit to the highways by encouraging compliance with traffic laws and deterring violations. And our Supreme Court, unlike some other courts, permits some activities that provide indirect, rather than direct, benefits to the highways. Therefore, we cannot predict with certainty how a court would rule on this issue, though we think it more likely than not that a court would find such expenses not to be road purposes. The result could turn on particular facts, including the details of how exactly the funding was used and how good the accounting is that demonstrates the specific uses of the funds.

            We considered, but rejected a potential alternative analysis. There are circumstances in which state law clearly allows counties to use revenue from the county road tax for purposes other than county roads. You mention RCW 36.33.220, which allows the use of county road funds for services to be provided in the unincorporated part of the county, and allows for community revitalization projects under RCW 39.89. It might therefore be argued that so long as the county is using county road tax revenues for legally authorized purposes the county remains eligible to receive state funds under the rural arterial program. Reading all the statutes at issue together, we do not believe that a county can qualify for rural arterial program funds merely by complying with the statutes related to the county road fund. Rather, the county must also comply with the eligibility requirements in RCW 36.79.140 if it wants to retain rural arterial program eligibility. That is the reading that best harmonizes the separate statutes. That is, while a county  may, in its discretion, use county road tax funds for other legally-permissible purposes, under RCW 36.79.140 it loses its eligibility for state funds if it does so. A county cannot divert road funds to other purposes and then replenish them with state fuel tax revenues under RCW 36.79.140.

            To illustrate, RCW 36.33.220 permits use of county road funds for services to be provided in the unincorporated part of the county. But to remain eligible for rural arterial program funds, expenditures from county road funds must comply with RCW 36.79.140 as

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well. That statute requires expenditures to be for road purposes or traffic law enforcement, or else must be within one of the three exceptions in RCW 36.79.140. There is no exception in RCW 36.79.140 for non-road related expenditures in the unincorporated part of the county. This means that although such expenditures might be a permissible use of county road fund moneys, a decision to so use county road funds would eliminate eligibility for rural arterial program funds.

            On the other hand, both RCW 36.79.140 and RCW 36.33.220 permit expenditures consistent with RCW 39.89, which pertains to certain community revitalization programs. Such expenditures are an express exception to the requirements in RCW 36.79.140 that a county spend road fund moneys on road or traffic enforcement purposes. A decision to spend money from the road fund in this manner would not jeopardize eligibility for rural arterial program funds. In sum, when the lesgislature wanted to permit non-road related uses of county road funds without destroying eligibility for the rural arterial program, it expressly said so in RCW 36.79.140. See Jepson v. Dep’t of Labor & Indus., 89 Wn.2d 394, 404, 573 P.2d 10 (1977) (“Where a statute provides for a stated exception, no other exceptions will be assumed by implication.”).

            Your question does not refer to the Board’s new administrative rule on this issue, and we do not address the rule in detail. However, a few general remarks may be helpful. Agencies do not have the authority to promulgate rules that amend or change legislative enactments, but may “fill in the gaps” in legislation to effectuate a statutory scheme. Pierce County v. State, 144 Wn. App. 783, 836, 185 P.3d 594 (2008). The Board has been delegated rulemaking authority through RCW 36.79.060, and providing some guidance on the definition of “traffic law enforcement” is likely appropriate. However, some caution must be urged that interpretation of the scope of article II, section 40 is ultimately for the court, not the legislature or an administrative agency. See State ex rel. O’Connell, 75 Wn.2d at 562-63 (explaining that legislature’s declaration of purpose could not transform legislation into a constitutionally permissible highway purpose).

            The activities that you asked about are likely not “traffic law enforcement” under RCW 36.79.140, as defined by reference to article II, section 40 of the Washington Constitution. Though counterarguments exist, the activities are probably too attenuated to be permissible under article II, section 40.

            We trust that the foregoing will be useful to you.

ROBERT W. FERGUSON

   Attorney General

JOSHUA WEISSMAN

   Assistant Attorney General

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