Idaho Attorney General Opinions 2012. AGO 12-01. April, 2012ATTORNEY GENERAL OPINION 12-1The Honorable Brent Hill President Pro Tempore Idaho State Senate Statehouse Boise, Idaho 83720Dear Pro Tern Hill: You requested an Attorney General Opinion regarding article III, section 14 of the Idaho Constitution (Origination Clause). The section requires that "bills for raising revenue shall originate in the house of representatives." This responds to your request. This opinion relies significantly on an earlier opinion (1999-2) authored by Ted Spangler. QUESTION PRESENTED Is the initiation of fee legislation by the Idaho Senate defensible under article III, section 14 of the Idaho Constitution? CONCLUSION Article III, section 14 of the Idaho Constitution requires all revenue raising bills to originate in the Idaho House of Representatives. Application of this provision has generally been to legislation involving an increase or decrease involving a tax or taxing measure. It has not been traditionally applied to legislation involving fees. A challenge to a fee measure would be a case of first impression for Idaho Courts. Based upon case law from other jurisdictions, a reasonable legal defense can be advanced to support the origination of fee legislation in either chamber of the legislature. As reflected in greater detail below, this defense is likely to become factually specific and require a determination as to whether the fee is truly a fee, or a tax disguised as a fee. If there is doubt as to whether the legislation creates a fee or a tax, it is recommended that such legislation originate in the House. ANALYSIS A. Reasons for Caution in the Analysis The cautious approach to the initiation of fee legislation noted above is based on a number of considerations. The first cause for a conservative approach is reflected in Justice Harlan's statement concerning the Origination Clause of the federal constitution. "What bills belong to that class [of bills raising revenue] is a question of such magnitude and importance that it is the part of wisdom not to attempt, by any general statement, to cover every possible phase of the subject." Twin City Nat'l Bank v. Nebecker, 167 U.S. 196, 202, 17 S. Ct. 766, 769, 42 L. Ed. 134 (1897). The next consideration counseling a conservative approach to the question is that if the Idaho Supreme Court rejects the interpretation that "revenue bills" are only those that levy taxes, the cost to the state could be high. Any controversy heard in a court will involve the payment of money to the state. To justify litigation, the amounts in question are likely to be high. If the law was initiated in the senate, and this is found unlawful, then the law is void. This means that those who paid money under that law will be due refunds. If the case is a class action, the resulting refunds could be large. See, e.g., Ware v. Idaho State Tax Commission, 98 Idaho 477, 483, 567 P.2d 423, 429 (1977) (Grocery credit case upholding a refund of only $90.00 established that a class of an additional 27,980 plaintiffs might also be entitled to relief). Third, the leading case on Idaho's Origination Clause is Dumas v. Bryan, 35 Idaho 557, 207 P. 720 (1922). This case is 90 years old and subject to conflicting interpretations. A fourth consideration suggesting caution where fee legislation is initiated is whether the fee enacted is a fee or a tax. Simply labeling a tax a fee will not protect it on judicial review. See, e.g., V-1 Oil Co. v. Idaho Petroleum Clean Water Trust Fund, 128 Idaho 890, 920 P.2d 909 (1996) (One cent per gallon petroleum transfer fee used to fund the clean water trust fund held a tax, not a fee). If it is really a tax, not a fee, then the common rule is that initiation in the senate is fatal and the statute is void. The exception to this rule is if the revenue-raising portion of the enactment is merely incidental to the main purpose of the statute. If it is, then origination of the bill in the senate is permitted. Dumas, however, may indicate that Idaho does not recognize this general exception. This is discussed below. The fifth point counseling caution in where fee bills originate is simply that all these uncertainties are avoided if fee bills originate in the house. This removes any possibility of violating the Origination Clause. B. The General Rule The general rule is that origination clauses apply only to bills to levy taxes in the strict sense of the word. At the federal level, this rule was laid down in United States v. Mayo, 1 Gall. 396, 26 F. Cas. 1230 (1813). Holding that laws creating fines and forfeitures are not "revenue laws" under the Origination Clause, Circuit Justice Story wrote:
The true meaning of 'revenue laws' in this clause is, such laws as are made for the direct and avowed purpose for creating and securing revenue or public funds for the service of the government. No...
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