HOSPITAL DISTRICTS ‑- TAXES ‑- GENERAL OBLIGATION BONDS

HOSPITAL DISTRICTS ‑- TAXES ‑- GENERAL OBLIGATION BONDS.

The governing body of a hospital district can refund outstanding general obligation bonds for capital purposes only, and provide for an annual levy in excess of the forty mill limit for the payment thereof, subject to the limitation that the annual levy authorized for the bonds being refunded cannot be exceeded.

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                                                                 February 3, 1953 

Honorable Wilbur G. Hallauer
State Representative
First District
House of Representatives
Olympia, Washington                                                                                                              Cite as:  AGO 51-53 No. 476

 Dear Sir:

            We acknowledge receipt of your letter of January 21, 1953, in which you inquire whether the governing body of the Brewster Hospital District can authorize annual levies in excess of the forty mill limitation to finance the amortization and interest on its outstanding general obligation bonds, and whether there are any limitations on such annual levies for the purposes indicated.

            Our conclusion may be summarized as follows:

             The governing body of a hospital district can refund outstanding general obligation bonds for capital purposes only, and provide for an annual levy in excess of the forty mill limit for the payment thereof, subject to the limitation that the annual levy authorized for the bonds being refunded cannot be exceeded.

                                                                    ANALYSIS

             Your question is directed to the language contained in the last paragraph of RCW 84.52.056, which is identical to that of a portion of paragraph (b) of the Seventeenth Amendment to the state constitution.  This statute can grant no greater authority  [[Orig. Op. Page 2]] than that which is conferred by the constitutional provision.  Since the statutory language in question corresponds to that of the constitutional amendment, we are referring to them synonymously.

             The first portion of paragraph (b) of the Seventeenth Amendment to the state constitution has been carried into the statute (RCW 84.52.056) and provides that any issue of general obligation bonds for capital purposes must, in the first instance, be approved by three‑fifths of the electors voting thereon when the levy to pay such bonds will exceed the forty mill limit.  The proviso in the last paragraph is, by its express terms, applicable only to the refunding of general obligation bonds for capital purposes.

             The Seventeenth Amendment provides in part as follows:

             "* * * Such aggregate limitation [forty mills] or any specific limitation imposed by law in conformity therewith may be exceeded only

             "* * *

             "(b) By any taxing district otherwise authorized by law to issue general obligation bonds for capital purposes, for the sole purpose of making the required payments of principal and interest on general obligation bonds issued solely for capital purposes, other than the replacement of equipment, when authorized so to do by majority of at least three‑fifths of the electors thereof voting on the proposition to issue such bonds and to pay the principal and interest thereon by an annual tax levy in excess of the limitation herein provided during the term of such bonds, * * *Provided, That any such taxing district shall have the right by vote of its governing body to refund any general obligation of said district issued for capital purposes only, and to provide for the interest thereon and amortization thereof by annual levies in excess of the tax limitation provided for herein, * * *" (Emphasis supplied).

              [[Orig. Op. Page 3]]

            The constitutional amendment (as well as the statute) must be read in its entirety in order to determine the meaning of the last paragraph quoted above.  Since it was the intent of those who adopted the constitutional amendment to require approval by a vote of the people in order to authorize an original bond issue, it is our opinion that the last proviso must have been intended to confer upon the taxing district the power to refund those bonds only within the limits of the authority which the taxing district could have exercised at the time of the original issue.  Necessarily, then the taxing district could under the quoted proviso refund general obligation bonds issued for capital purposes without the vote of the people, but the annual levy could not exceed the excess millage which had been authorized by the electors for the repayment of the bonds refunded.

            It has occurred to us that there may be some doubt regarding the authority of a public hospital district to refund an outstanding bond issue in any event.  We note that RCW 39.52.010, which is the only statute to which our attention has been directed, specifically conferring authority to issue "refunding bonds" applies only to counties, cities and towns.  However, in the absence of any statutory limitation, we believe that the language of the Seventeenth Amendment is broad enough to authorize the refunding of outstanding obligation bonds forcapital purposes only by any taxing district which is authorized by law to issue such bonds in the first instance.  Since public hospital districts are authorized to originally issue such bonds, we believe that they are, therefore, authorized to refund such bonds.

             It is our opinion that the governing body of a hospital district can authorize the refunding of outstanding general obligation bonds for capital purposes only, and provide for an annual levy in excess of the forty mill limitation for the payment thereof, subject to the limitation that the annual levy authorized for the bonds which are to be refunded cannot be exceeded.

 Very truly yours,
DON EASTVOLD
Attorney General 

RALPH M. DAVIS
Assistant Attorney General