AGO 06-4.

Case Date:April 05, 2006
Maine Attorney General Opinions 2006. AGO 06-4. STATE OF MAINE OFFICE OF THE ATTORNEY GENERAL6 STATE HOUSE STATION AUGUSTA, MAINE 04333-0006 April 5, 200606-4Hon. John RichardsonSpeaker of the House Maine House of Representatives 2 State House Station Augusta, Maine 04333-0002 RE: Constitutionality of Initiated Bill 1, L.D. 2075, An Act to Create the Taxpayer Bill of RightsDear Speaker Richardson:: In your letter of March 29, 2006, you have asked for an opinion concerning the constitutionality of Initiated Bill 1, L.D. 2075, An Act to Create the Taxpayer Bill of Rights (known as the "TABOR initiative"), including in particular the constitutionality of proposed Title 5 M.R.S.A. § 2043, which requires a 2/3 vote of each House of the Legislature as well as approval of a majority of voters at a statewide election before any measure to increase state revenue may become law. You questioned whether the TABOR initiative is constitutional under Article IX, section 9, or any other provision of the Maine. Constitution. In accordance with your request, and given the time constraints posed by the Legislature's imminent adjournment, we have focused on the provisions in the bill relating to state revenue, which present the most significant constitutional issues. Because the same procedures set forth in proposed section 2043 apply to legislative enactments that would either raise revenue or spend available revenue in excess of expenditure limits in the initiated bill, we believe that other constitutional defects we have identified in section 2043 affect both, and thus have addressed the expenditure provisions ofthe initiative to that extent. We have not analyzed and thus do not address the revenue and expenditures limits applicable to units of local government. Based on the analysis described below, we believe that a court would likely conclude that the procedural limitations in the TABOR initiative requiring a 2/3 vote of each House of the Legislature as well as statewide voter approval for enactment of any measure to increase state revenue violate several provisions of the Maine Constitution. First, the supermajority and voter approval requirements result in a surrender of the Legislature's power of taxation, in violation of Article IX, section 9. Second, the provisions that subject emergency enactments to voter approval and narrow the definition of emergency unconstitutionally limit the Legislature's authority under Article IV, part 3, section 16. Third, by subjecting every legislative act that either increases revenue or exceeds expenditure caps to voter approval at a statewide referendum, the TABOR initiative attempts to bind future legislatures and would effectively create a referendum process that is inconsistent with the requirements of Article IV, part 3, sections 16-22 of the Maine Constitution. Finally, the supermajority requirements that apply to legislative acts exceeding either the revenue or expenditure caps are inconsistent with the Legislature's constitutional power to enact non-emergency measures by simple majority and are therefore unenforceable under Maine's Constitution. Background We begin by summarizing the provisions in L.D. 2075 that are primarily 'at issue. L.D. 2075 proposes to enact a new chapter 167 in Title 5, entitled "The Taxpayers' Bill of Rights." It defines an "increase in revenue" to include any tax levy that causes a net gain in state revenue,1 including a new tax or fee; an increase in the rate or the base of any existing tax or fee; repeal or reduction of any tax exemption, credit or refund; extension of any tax or fee increase that is expiring; and any reduction in benefits or eligibility under certain tax reimbursement programs without corresponding increases to offset those reductions. 5 M.R.S.A. § 2041(2)(A)-(D).2 Proposed section 2043 sets forth the procedural requirements that must be met before any such increase in revenue may become law. First, the measure "must be approved by a vote of 2/3 of all the members of each House of the Legislature;" and, second, it "must be approved by a majority of the voters" at the next general election, or at any regular or special election before the general election if the Legislature determines the increase should take effect sooner. § 2043 (l)(A)&(B) and § 2043(3). Voter approval of a revenue increase is not required if annual state revenue "is less than annual payments on general obligation bonds, required payments related to pensions and final court judgments." § 2043(2)(A). The TABOR initiative also specifies a formula for limiting state expenditures and provides that any revenue exceeding those expenditure limits may be spent only if approved according to the procedure for revenue increases set forth in proposed section 2043 (i.e., the 2/3 legislative vote and voter approval requirements). § 2044(1), (3) & (4). The procedure for enacting emergency tax measures is slightly different. An emergency tax "must be approved for a specified time period by a 2/3 majority of the members of each House of the Legislature" and must then be submitted for approval by the voters at the next statewide election. § 2049(1). If the voters do not approve it, the emergency tax "expires 30 days following the election." § 2049(2). Under this bill, "emergency" does not include "economic conditions" or "revenue shortfalls." § 2043(2). Finally, the TABOR initiative provides that any change in the rate of excise tax on motor fuels and distillates resulting from the adjustment made pursuant to the statutory formula in 36 M.R.S.A. § 3321(1) "may only take effect if approved by a majority of the voters at a regular or special election." L.D. 2075, § 9, proposing 36 M.R.S.A. § 3221(5). Analysis and Discussion I.
Surrender or Suspension of the Legislature's Power of Taxation (Me. Const., art. IX, § 9)
Article IX, section 9 of the Maine Constitution contains a simple, emphatic statement:
The Legislature shall never, in any manner, suspend or surrender the power of taxation.
Several other states have similar constitutional provisions, but the strong wording of the prohibition in Maine's Constitution makes it "unusual." Boston Milk Producers, Inc. v. Halperin, 446 A.2d 33, 40 (Me. 1982). Section 9 was adopted by the people of Maine, effective on January 5, 1876, and its original purpose "was to curb a legislative practice of including in charters of railroads and canal companies clauses purporting to create certain permanent immunities from taxation." Id. However, the Law Court held in Boston Milk Producers that its application is not limited to that original purpose:
[T]he language of the prohibition is broad enough to include a surrender or suspension of the taxing power having some effect other than creation of a permanent tax immunity. The words "never" and "in any manner" create a strong and sweeping prohibition.
446 A.2d at 40 (emphasis added). Under the Constitution of the State of Maine, ensuring that the flow of revenue into the State Treasury is sufficient for the essential needs of the State and its citizenry "is solely a legislative function." Morris v. Goss, 147 Me. 89, 103-104, 83 A.2d 556, 564 (1951). Indeed, the Law. Court has emphasized that " [t] axation is a sovereign right," and that "[t]his right is so vital and so essential to the existence of government that the suspension or surrender of the power of taxation...

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