PORT DISTRICT DEBT LIMITS

PORT DISTRICT DEBT LIMITS

Warrants issued in anticipation of Revenues of a port district are not debts within contemplation of the constitutional debt limit.

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                                                                 January 30, 1950

Honorable Lawrence Hubble
Chief Examiner
Division of Municipal Corporations
Legislative Building
Olympia, Washington                                                                                                              Cite as:  AGO 49-51 No. 211

Dear Sir:

            You have requested our opinion on the following question:

            "May the Port Commissioners issue interest bearing warrants without a three fifths majority vote of the electors, in anticipation of tax revenues, as set forth in Rem. Rev. Stat. 9692, 1943 Supp. wherein the port's bonded indebtedness is in excess of 1% of the assessed valuation?"

            Our conclusion is that interest bearing warrants for amounts not in excess of the annual budget may be issued by a port district in anticipation of revenue despite the fact that the debt limit has been reached or exceeded.

                                                                     ANALYSIS

            We understand that the Port of Olympia is in financial trouble due to the recent earthquake and shipping strike, the former necessitating unforeseen repairs and the latter causing loss of anticipated revenues.  Port districts are authorized and controlled by chapter 92, Laws of 1911 (Rem. Rev. Stat. 9688 et seq.).  Section 4 of the act, as amended in 1943 (Rem.  [[Orig. Op. Page 2]] 1943 Supp. 9692), limits the indebtedness of port districts in the absence of a popular vote to 1% of the assessed value of the taxable property in the district.  The Port of Olympia now has a general bonded indebtedness in excess of that figure.  Section 12, chapter 92, Laws of 1911 (Rem. Rev. Stat. 9699) provides:

            "Any port commission is hereby authorized, prior to the receipt of taxes raised by levy, to borrow money or issue the warrants of the district in anticipation of the revenues to be derived by such district and such warrants shall be redeemed from the first money available from such taxes when collected."

            It will be noted that this section expressly permits the issuance of warrants in anticipation of the receipt of revenues.  Section 4, chapter 92, Laws of 1911, as last amended by section 2, chapter 166, Laws of 1943 (Rem. 1943 Supp. 9692) providing for the manner of levying taxes for port districts, provides:

            "* * * Provided, That such levy shall be made and taxes collected in the manner now or hereafter provided by law for the levy and collection of taxes in school districts of the first class * * *"

            In the case ofPacific Savings and Loan v. Pierce County, 27 Wn. (2d) 347, our Supreme Court refuted a contention that port districts were not required to prepare detailed budgets, saying:

            "A review of the statutes concerning the levy of taxes by port districts, and their constant reference to the levy and collection of taxes by school districts, and their restated adoption of the plan outlined in the school law, can lead to but one conclusion, and that is that it was the definite intention of the legislature that the whole plan of preparing the budget and certifying it to the board of county commissioners, as outlined in the school district act, was to be implicitly followed by the officers of port districts.  * * *"

             [[Orig. Op. Page 3]]

            Thus, port districts are required to budget their expenses and to relate their expenditures directly to their revenues.  Section 12 of the Port District Act above quoted permits port districts to borrow money prior to the receipt of taxes but with respect to the issuance of warrants it uses the language "in anticipation of the revenues to be derived by such district."  This language does not by its terms limit the warrants to anticipation of tax revenues.  We believe, however, that it is implicit in this section that the warrants to be issued must be within the limitations of the budget, since the budget adopted by the Port District constitutes its determination of anticipated revenues.

            The issuance of warrants does not in itself create a debt.

            "A city warrant is nothing more than a device for liquidating an existing municipal indebtedness or a certificate of indebtedness, which is neither intended to nor does create any new debt.  2 Dillon, Municipal Corporations (5th ed.) § 851; McQuillin, Municipal Corporations § 2241."  Washington-Oregon Corp. v. Chehalis, 76 Wash. 442, 451, 136 Pac. 681.

            The constitutional debt limit relates to the creation of the indebtedness rather than to the issuance of the warrants.  If the port is validly indebted there is no reason why it may not issue warrants to evidence such debts.  We are not here concerned with funding the debts by general obligation bonds, but only with warrants.  They may be issued notwithstanding that the constitutional debt limit has been reached and no vote of the people is required.

Very truly yours,

SMITH TROY
Attorney General

LYLE L. IVERSEN
Assistant Attorney General