TAXATION ‑- PROPERTY ‑- HOSPITALS ‑- TUBERCULOSIS ‑- ASCERTAINMENT OF ACTUAL VALUE OF TAXABLE PROPERTY

TAXATION ‑- PROPERTY ‑- HOSPITALS ‑- TUBERCULOSIS ‑- ASCERTAINMENT OF ACTUAL VALUE OF TAXABLE PROPERTY

The actual value of the taxable property in the county or district, for purposes of the tax to be levied for tuberculosis hospital facilities under §§ 11, 18 and 21 of chapter 277, Laws of 1971, 1st Ex. Sess., is in each instance to be ascertained by means of multiplying the appropriate county assessor's determination of assessed valuation of each tax parcel by two.

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                                                                October 27, 1971

Legislative Budget Committee
Legislative Building
Olympia, Washington 98504

                                                                                                                 Cite as:  AGO 1971 No. 32

Attention:  !ttMr. Gerald L. Sorte
Legislative Auditor
Gentlemen:

            This is written in response to your recent request for an opinion of this office regarding the procedures to be followed in determining "the actual value of the taxable property" for the purposes of:

            (1) The property tax provided for in § 11, chapter 277, Laws of 1971, 1st Ex. Sess., to fund the operations of the eastern Washington tuberculosis hospital district which was established by § 6 of that act;

            (2) The property tax provided for in § 18, chapter 277, supra, for the purpose of funding certain tuberculosis facilities which are operated by the state department of social and health services; and

            (3) The property tax levy provided for in § 21, chapter 277, supra, to fund the local tuberculosis control activities of certain counties.

             [[Orig. Op. Page 2]]

            In our opinion, the actual value of the taxable property is to be ascertained in the same manner in each of these three instances; namely, by means of multiplying the appropriate county assessor's determination of assessed valuation of each tax parcel by two.

                                                                    ANALYSIS

            In so far as is material to your request, chapter 277, Laws of 1971, 1st Ex. Sess., does three things.  First, by § 6, it establishes an eastern Washington tuberculosis hospital district comprised of nineteen named counties1/ located east of the crest of the Cascade Mountains and provides, in § 11, for the funding of this district's operations as follows:

            ". . . In order to carry on work effectively in these fields there shall be levied for tuberculosis hospital district purposes in the district annually a tax in a sum equal to the amount which would be raised bya levy of one‑eighth of a mill against the actual value of the taxable property in the district, or the equivalent thereof, such levy to be made by the board of county commissioners in each county constituting the district, the receipts therefrom to be forwarded by the treasurers of such county to the treasurer of the headquarters district county, who shall be treasurer for the district. . . ."  (Emphasis supplied.)

            Secondly, the act vests in the state department of social and health services the responsibility for administration and control of tuberculosis hospitals other than those operated by the aforesaid eastern district, and provides by § 18 for the funding of these facilities as follows:

            "In order to maintain adequate tuberculosis hospital facilities for the residents of the state of Washington and to assure their  [[Orig. Op. Page 3]] proper care pursuant to sections 15 through 25 of this 1971 amendatory act, the legislative authority of Clallam, Jefferson, Kitsap, Mason, Grays Harbor, Thurston, Pacific, Lewis, Wahkiakum, Cowlitz, Clark, Skamania, Klickitat, Pierce, King, Snohomish, Skagit, Whatcom, San Juan and Island counties shall levy annually a tax in the sum equal to the amount which would be raised bya levy of one‑sixteenth mill against the actual value of the taxable property in the county.  Upon collection such sum shall be paid to the state to be used for the cost of maintaining and operating tuberculosis hospital facilities operated pursuant to sections 15 through 25 of this 1971 amendatory act. . . ."  (Emphasis supplied.)

            And thirdly, the act by § 21 thereof amends the preexisting provisions of RCW 70.32.010, relating to local tuberculosis control activities by counties, to provide as follows:

            "Tuberculosis is a communicable disease and tuberculosis control, case finding, prevention and follow up of known cases of tuberculosis represents the basic step in the conquest of this major health problem.  In order to carry on such work effectively, the legislative authority of each county enumerated in section 18 of this 1971 amendatory act shall budget and shall levy annually a tax in a sum equal to the amount which would be raised by a levy of one‑sixteenth of a mill againstthe actual value of the taxable property in any county enumerated in section 18 of this 1971 amendatory act, to be used for the control of tuberculosis, including case finding, prevention and follow up of known cases of tuberculosis: . . ."  (Emphasis supplied.)

            It will, of course, be seen that the pertinent language of each of these three sections is identical, in that each provides for a tax levy measured on the basis of a designated fraction of "the actual value of the taxable property" in the district or county.  In your letter you have suggested,  [[Orig. Op. Page 4]] however, that because the revenues obtained under § 18 are to be paid by the levying counties to the state in order to fund a state activity, a different method of ascertaining "actual value" might be utilized in connection with this section than is used for the purposes of §§ 11 and 21.  The basic issue raised by your request is whether or not this suggested interpretation of § 18 is correct.  In our opinion, it is not.

            We base this conclusion upon the following two factors: (1) The absence of any expression of legislative intent that "actual value" be ascertained differently for the purposes of § 18 than for §§ 11 and 21; and (2) the fundamental rule of statutory construction that where a statute is open to two constructions, one of which will render it constitutional and the other unconstitutional or open to grave doubt in this respect, the former and not the latter is to be adopted.  See,Soundview Pulp Co. v. Taylor, 21 Wn.2d 261, 150 P.2d 839 (1944), and cases cited therein.

            The constitutional provision which would cast doubt upon the validity of § 18,supra, if construed in the manner you have suggested, is Article XI, § 12 of our state constitution which provides:

            "The legislature shall have no power to impose taxes upon counties, cities, towns or other municipal corporations, or upon the inhabitants or property thereof, for county, city, town, or other municipal purposes, but may, by general laws, vest in the corporate authorities thereof, the power to assess and collect taxes for such purposes."

            The critical point to be understood with respect to this provision is that the act of ascertaining property values for tax purposes has been determined by the Washington court to be a part of the function of imposing taxes.  See,State ex rel. State Tax Comm. v. Redd, 166 Wash. 132, 6 P.2d 619 (1932).  Therefore, as held in that case, the valuation process for local property taxes must be performed at the local level and cannot, instead, be delegated to some state agency such as our present department of revenue.  Conversely, however, the court has also held that in the case of a property tax levied by the state for a state purpose,  [[Orig. Op. Page 5]] the valuation function may, constitutionally, be performed by the state.  See,State ex rel. Showalter v. Cook, 175 Wash. 364, 27 P.2d 1075 (1933).

            These two cases are aptly summarized in an opening paragraph of the court's opinion in a third case,Clark v. Seiber, 48 Wn.2d 783, 296 P.2d 680 (1956), as follows:

            "Two different assessed valuations have heretofore been recognized in this state as the basis for the imposition of ad valorem taxes, one for the levy of state taxes and the other for local taxes.  The assessed valuation which must be used for local taxes, i.e., for levies made by local authorities for local purposes, is fixed by the county assessor and county board of equalization.  State ex rel. State Tax Comm. v. Redd (1932), 166 Wash. 132, 6 P.2d 619.  The other is that used for state tax levies and is arrived at by the state board of equalization, which equalizes the figures certified to it by the assessors of the various counties to the end that the valuation in each county will conform to the determination of the constitution that it be 'fifty per centum of the true and fair value of such property in money: . . .' Constitution, amendment 17.  (This same standard of course, guides the county assessors in their work.) That this equalized valuation might be used as the basis for the levy of state taxes was determined byState ex rel. Showalter v. Cook (1933), 175 Wash. 364, 27 P.2d 1075.2/

             The specific question which was determined by the court inClark v. Seiber, supra, was the constitutionality of chapter 253, Laws of 1955 (commonly known as the Ryder act) by which the legislature had attempted to invoke the state equalization method of property valuation with regard to the property taxes levied by local school districts.  The court invalidated this enactment on the ground that taxes levied by school districts are local taxes for predominantly local  [[Orig. Op. Page 6]] purposes.  In so doing, it expressly reserved judgment on the question of whether the legislature could, by express enactment, require utilization of the state equalization approach to property valuation for a locally levied property tax which is earmarked for a state purpose ‑ such as the one which appears to be contemplated by § 18 of chapter 277, Laws of 1971, 1st Ex. Sess.,supra.  However, by this very act of reserving judgment on the question the court, by its language, placed a very obvious cloud over the subject.  We quote, in material part, from pp. 785-786, as follows:

            "We shall consider first the appellants' contention that a school district tax is a local tax for a local purpose, and that, as heretofore determined by this court inState ex rel. State Tax Comm. v. Redd, supra, the tax must, under the provisions of Art. XI, § 12, of the state constitution, be levied on the assessed valuation as certified by the county assessor.

            "The respondents seek to avoid the holding of the Redd case that levies for local taxes for local purposes cannot be based upon the valuation as equalized by the state board of equalization by reasoning which can be expressed in the following syllogism based upon the holdings of this court.  Major premise:  Property valuations as equalized by the state board of equalization may be used as the basis for state tax levies.  State ex rel. Showalter v. Cook, supra.  Minor premise:  All taxes levied by or for school districts, although local taxes, are for state purposes.  Newman v. Schlarb (1935), 184 Wash. 147, 50 P.2d 36.  Conclusion:  Property valuations as equalized by the state board of equalization may be used for the levying of taxes by or for school districts.

            "The conclusion is patently a nonsequitur.  From the fact that a state tax can be levied upon property valuations as equalized by the state board of equalization, it does not follow that a local tax for a state purpose may be so levied.

             [[Orig. Op. Page 7]]

            "However, we do not base our conclusion that chapter 253, Laws of 1955, is unconstitutional on any syllogistic weakness.  To put the respondents on the strongest possible ground, we will assume, but not concede, that a local tax levy for a state purpose may be based on the assessed valuation of the property within the district as equalized by our state board of equalization.  Having made that assumption, our position is that there is no support, in fact or in any opinion of this court, for the proposition stated in the minor premise, that all taxes levied by or for school districts are for state purposes."

            As we view it, the most that can be said in terms of the door which was thus left ajar by the court inClark is that a legislative enactment expressly requiring the use of the state equalization method of property valuation for a certain locally levied tax which is, demonstrably, "for a state purpose" would notnecessarily be determined by the court to be violative of Article XI, § 12 of our state constitution, supra.  However, here, in the case of § 18, chapter 277, Laws of 1971, 1st Ex. Sess.,supra, we do not have any such clear expression of legislative intent with regard to what are, clearly, county tax levies rather than state levies.  Instead, as earlier noted, the legislature in this instance used precisely the same language with regard to property valuation in the case of this section of the act as it used in the case of §§ 11 and 21, which also deal with county levies for the funding of tuberculosis facilities.  In short, even if it could have done so, constitutionally, the legislature has manifested no intent to attempt to proceed through the door left ajar in Clark v. Seiber, supra, in so far as the funding of tuberculosis facilities by locally levied property taxes is concerned.

            To summarize our thinking with regard to the determination of property values under § 18 of chapter 277, supra, in the light of the foregoing constitutional aspects of property valuation for tax purposes:  Because of the supreme court's treatment of Article XI, § 12, supra, it seems undeniable that a construction of § 18 which would result in a utilization of the state equalization method of property valuation for the purpose of the county tax to be levied thereunder would raise a serious constitutional question in  [[Orig. Op. Page 8]] regard to the enactment.  Were this approach to property evaluation to have been expressly provided for in the statute, we would have no alternative but to presume its constitutionality, and attempt to defend it within the confines of Clark v. Seiber, and related cases.  However, because, instead, the statute is silent with regard to this issue, and because of the doubt which would be cast upon its constitutional validity were an intent to use state valuations to be read into it by implication, we believe that the interpretation of § 18 which has been suggested in your letter must be rejected.  Accord,Soundview Pulp Co. v. Taylor, supra.