October 24, 1990
JAY HESSEY, APPELLANT
DISTRICT OF COLUMBIA BOARD OF ELECTIONS AND ETHICS, ET AL., APPELLEES. GOTTLIEB SIMON, APPELLANT V. DISTRICT OF COLUMBIA BOARD OF ELECTIONS AND ETHICS, ET AL., APPELLEES
Appeals from the Superior Court of the District of Columbia Hon. Emmet G. Sullivan and Hon. Curtis E. von Kann, Trial Judges
Rehearing Denied April 1, 1991. Rehearing En Banc Granted April 1, 1991. Vacated by Order of the Court April 1, 1991,
Rogers, Chief Judge, and Belson and Farrell, Associate Judges. Opinion for the court by Associate Judge Farrell. Concurring Opinion by Chief Judge Rogers.
The opinion of the court was delivered by: Farrell
In these consolidated expedited appeals, we reverse decisions of the Superior Court affirming the District of Columbia Board of Elections and Ethics' rejection of proposed housing initiatives that, in essence, would impose fees or tax surcharges on commercial real estate developers and mandate their deposit in trust funds devoted to specified housing development purposes. The Board of Elections and Ethics (the Board) concluded that the proposed measures contained provisions that amounted to "laws appropriating funds," which cannot be the subject of an initiative under D.C. Code § 1-281(a) (1987). *fn1 Appellants challenged this decision in Superior Court, D.C. Code § 1-1320(b)(3), (b) and in each case the court granted summary judgment in the Board's favor. We conclude, to the contrary, that the proposals are not attempts "to launch the appropriations process" within the meaning of Convention Center Referendum Comm. v. District of Columbia Bd. of Elections & Ethics, 441 A.2d 889 (D.C. 1981) (en banc) (Convention Center), and our subsequent decisions, and hence there is no reason to withhold the initiatives from the vote of the electorate. *fn2
Both initiatives *fn3 contain provisions to establish "link-age" between large commercial developments in the District of Columbia and the funding of programs for development of low and moderate income housing. In No. 90-680, the proposed measure, entitled the "Affordable Housing Act" initiative, would require developers who apply for building permits for commercial office developments of 50,000 square feet or more to agree to construct or rehabilitate housing for low or moderate income facilities or else contribute money to a fund for that purpose. The amount of housing to be built, or the contribution to be made in the alternative, would be determined by formulas set forth in the initiative. The funds contributed by the developer would be set aside in a housing trust fund established by the initiative, and monies in the fund would be used exclusively to increase the supply of housing affordable to low and moderate income families.
In No. 90-809, the proposed initiative would amend D.C. Code § 47-813 (1990) (establishing classes of property for taxation purposes) to impose a ten percent surcharge on commercial (Class 4) properties exceeding 50,000 square feet, and require that an amount equal to the revenues generated by the surcharge be deposited in the Housing Production Trust Fund established by the Council of the District of Columbia in 1988. D.C. Code §§ 45-3101 to -3104 (1990). That fund may be used for housing production purposes set forth in D.C. Code § 45-3102(b) or determined by the Department of Housing and Community Development to be consistent with those purposes.
In declining to place either initiative before the electorate, the Board did not conclude that the levy of fees as such from commercial developers (in the form either of an optional contribution in lieu of construction or of a tax surcharge) disqualified the measure as a proper subject of initiative. Instead it focused on the restrictions on use of the revenues imposed by the initiatives. In No. 90-680 the Board concluded:
We believe that by restricting the monies in the respective funds to a specific purpose, the discretion of the Council and the Mayor are nullified, and therefore these measures are an attempt to launch the appropriation process contrary to the holding in Convention Center. Simply put, these monies could not be used for other bona fide governmental functions, such as filling pot holes or funding recreational centers, which the Council and the Mayor, in their discretion, may deem to be in the best fiscal and budgetary interests of the District of Columbia.
We believe that creating a set aside of funds and limiting the use of those funds to a restrictive and limited purpose is not only an attempt to appropriate funds, but is tantamount to the conceptual self-actuating result that the Court in [District of Columbia Bd. of Elections & Ethics v.] Jones, 481 A.2d 456 (D.C. 1984), held was an unlawful appropriation of funds. If these initiatives merely created a fund without directing or limiting the spending of the monies, they might not constitute an unlawful appropriation.
In No. 90-809, the Board adopted its reasoning in No. 90-680, equating the proposal to raise revenues and place them in the existing Housing Production Trust Fund with the proposal to create a new fund with specified purposes, and characterizing both as "an attempt to launch the appropriation process by nullifying the Council's discretion." Unpersuaded by the argument that neither measure would require the Council to attempt (through the budget process) to spend any of the money raised, the Board stated: "To claim that the Council does not have to spend the monies at all begs the question. The pivotal fact is that if and when the Council elected to expend the monies generated by these measures, it would be limited under the express terms of this initiative, to appropriate funds for housing purposes only."
We conclude that the Board erred in both aspects of its reasoning: these proposed initiatives are not "an attempt to launch the appropriations process" within the meaning of Convention Center, and they are not "tantamount to the conceptual self-actuating result" that Jones held was an unlawful appropriation of funds. Neither initiative purports to require the Council to submit a budget request to Congress to appropriate any of the money that would be generated. All either does is impose limits on the use the Council may make of the funds in the event it seeks and obtains budgetary authority to spend them. Our decisions in Convention Center and succeeding cases demonstrate, in short, that these are not "laws appropriating funds" barred from the initiative process by D.C. Code § 1-281.
"Absent express or implied limitation, the power of the electorate to act by initiative is coextensive with the power of the legislature to adopt legislative measures. Convention Center, 441 A.2d at 897. While in view of "the significance and technicality of financial decisions, many states have excluded such matters from the initiative right" by statute or judicial interpretation, "the initiative right should be liberally construed," and only limitations expressed in the law or "'clearly and compellingly' implied" will serve to invalidate a proposed initiative. Id. at 912-13 (quoting the "well-considered Opinion" of the Texas Supreme Court in Glass v. Smith, 150 Tex. 632, 244 S.W.2d 645 (1951)).
Convention Center was the first case that required this court to interpret the "laws appropriating funds" exception to the initiative right. The basic issue was whether a proposed initiative barring construction and operation of a convention center in the District of Columbia violated the exception. In ultimately holding that it did, the plurality *fn4 began its analysis by noting that the phrase "laws appropriating funds" is ambiguous, in part because technically the Council of the District of Columbia does not enact "laws" but rather -- among other things -- "budget acts," which are one step in a complex appropriations process leading to ultimate passage of the annual D.C. Appropriations Act by Congress. Id. at 911. *fn5 The plurality therefore looked to the legislative history for aid in construing the phrase. That history revealed that the Council, in providing for the right of initiative, had "distinguished sharply between the power to authorize a substantive program, which the initiative right would confer on citizens, and the power to authorize expenditures, which the amendment explicitly reserved to the Council and Congress" Id. at 912. In light of this distinction between "substantive authorizations funding acts," id. at 913, the plurality concluded that
the "laws appropriating funds" exception prevents the electorate from using the initiative to (1) adopt a budget request act *fn6, or make some other affirmative effort to appropriate funds, or to (2) block the expenditure of funds requested or appropriated as of the effective date of the initiative act.
Id. at 913-14. On the other hand, since "wholly prospective initiatives . . . would not undermine the exercise powers of the Council and Congress to manage the financial affairs of the District," the plurality concluded that the exception
does not preclude initiatives (1) to establish substantive authorization for a new project, (2) to repeal existing substantive authorization for a program (without rescinding its current funding) or (3) to prohibit future budget requests.
Id. at 914. It noted that in the Council's clear contemplation that the electorate could use the initiative to repeal legislation . . . strongly indicates that its fiscal concerns were present-, not future-oriented." Id. Turning to the Dixon Amendment, (supra) note 1, the plurality found this law to be "congruent with" the exception in not "proscribing initiatives with a prospective fiscal effect only." Id. at 915. Because, however, the measure proposed in Convention Center "would interdict the expenditure of currently appropriated funds," the plurality held that it was beyond the scope of the initiative power. Id. *fn7
The plurality opinion in Convention Center, while it nullified a measure that sought to curb the spending of funds already appropriated, thus recognized that the electorate can use the initiative to authorize new programs and to restrict, or altogether prohibit, particular future budget requests. The opinion also recognized that the electors can initiate a tax or other revenue measure to fund new or existing programs. See id. at 912, quoting Council Chairman Dixon ("the electorate can initiate a tax if they want to. . . . They can initiate any measure they want to initiate but they cannot initiate the spending of that money"). Measures of this kind are not laws appropriating funds because they do not attempt to "launch the appropriations process," id., either affirmatively or by blocking the spending of funds already requested by the Council or appropriated by Congress.
Contrary to the Board's holding, we think that implicit in the electorate's power to restrict or prohibit future budget requests affirmed by the plurality in Convention Center -- is the authority to place limitations on the use of funds in the event the Council seeks budgetary authority to spend them. So long as an initiative is not an "affirmative effort to appropriate funds" akin to a budget request act, Convention Center implies that there is no impediment to a measure restricting the use of funds provided the Council requests and Congress authorizes their expenditure.
Intervenor-appellees argue, however, that there is a substantial difference between an initiative that prohibits future budget requests on a matter -- such as whether to fund construction of a convention center -- while otherwise leaving the Council full discretion on how to spend revenues, and a measure that earmarks particular funds for particular purposes and leaves the Council no choice in how to spend them. We are not persuaded that the difference is significant. In either case the Council's discretion in fiscal matters is restricted. Indeed, while appellees hypothesize a situation in which the electors could attempt to allocate all revenues to specific uses, thus effectively usurping the Council's budgetary role, one can as easily imagine the imposition of wholesale prohibitions on the Council's future spending authority, amounting in the same way to a command to spend revenues on particular uses but no others. Needless to say, neither such extreme hypothetical is before us.
In Jones, supra, and District of Columbia Bd. of Elections & Ethics v. District of Columbia, supra note 4, both majority decisions, the court built upon the foundation of the plurality opinion in Convention Center in defining "laws appropriating funds." Specifically, Jones provided an example of the functional equivalent of a budget request act adopted by the electorate -- an "affirmative effort to appropriate funds." In that case the Board had refused to place on the ballot an initiative permitting the voters to decide whether the District of Columbia Unemployment Compensation Act should be amended to restore unemployment benefits reduced by previous legislation. We sustained the Board's decision because of the unique funding structure of the unemployment compensation program -- in which amounts expended are determined by statutorily established benefit levels -- and the interlocking local and federal nature of the program. *fn8 Under that scheme, the District of Columbia government would be forced to borrow from the U.S. Treasury and make additional appropriations requests of Congress to fund the restored benefits called for by the initiative. Id. at 460. More precisely, as we later said in Board of Elections (quoting with approval the Board's summary there of Jones):
It was the self-actuating and automatic aspects of the proposed initiative . . . provisions which would permit . . . expenditures and then force the District government . . . to make interest payments [on loans] and seek additional appropriations which this Court held to constitute an impermissible "affirmative effort to appropriate funds."
Board of Elections, 520 A.2d at 673-74 (emphasis added).
In Board of Elections, we rejected a claim that an initiative establishing the right of overnight shelter for persons in the District of Columbia was a law appropriating funds, reasoning that, "unlike the unemployment compensation initiative [in Jones], the shelter initiative contains no self-actuating funding mechanisms." Id. at 675. We reiterated the Conclusion of Convention Center that "the Council did not exclude a matter from the initiative right because of its prospective fiscal impact." Id. at 674. And we upheld the initiative even though it created what could be "denominated loosely an entitlement program" and provided for a judicial cause of action by an aggrieved person in the event the District government failed in its obligation. We relied substantially on Bengzon v. Secretary of Justice, 299 U.S. 410 (1937), in which the Supreme Court had held that a statute entitling Justices of the peace to severance payments was an authorization act (a "substantive authorization" in Convention Center's words) and not an appropriations act, because the measure left "the specific matter of appropriation to be dealt with by later enactment." Id. at 413. See Board of Elections, 520 A.2d at 675-76.
The Board recognized that the initiatives in this case would not compel the Council, by way of a budget request act, to seek an appropriation of money from the respective trust funds, but concluded that this "begs the question" because the measures would limit the Council's discretion regarding use of the money. Intervenor-appellees likewise argue that the prohibition on laws appropriating funds must refer to how the funds are spent -- an effort to earmark funds -- and not just whether they are to be spent. *fn9 We have seen, however, that under Convention Center it is not restrictions on the future use of funds that the exception bars, but efforts to launch the budgetary process itself and so obtain authority to spend funds. As Council Chairman Dixon stated in the language quoted above, "The electorate . . . can initiate any measure they want to initiate but they cannot initiate the spending of that money." By contrast, if intervenors were correct that an initiative which seeks merely to "direct" or "steer" revenues, if appropriated, to specific uses is invalid, then the initiative in Board of Elections, supra, could not have survived scrutiny because it plainly sought to direct governmental funds toward the provision of overnight shelter. Nor is it significant, as appellees argue, that the initiatives here would provide the source of funds and earmark them for housing; the overnight shelter initiative in effect told the District, "raise the funds from whatever source and commit them to the provision of shelter, otherwise face court judgments." We upheld the measure only because between the conception (the shelter program) and the creation (funding it) fell the shadow of the general inability of courts "to compel the appropriation of funds." 520 A.2d at 675. In the present case, the proposed measures do not even purport to compel the Council to seek an appropriation of funds.
We hold, therefore, that neither measure in question here would enact a law appropriating funds. The prohibition on citizen initiatives to fund programs bars attempts to launch the appropriations process, as defined in Convention Center and succeeding cases, not initiatives that purport to earmark revenues for specific purposes while leaving to those charged with the fiscal management of the District "the specific matter of appropriations to be dealt with by later enactment." Bengzon v. Secretary of Justice, 299 U.S. at 413. *fn10
The judgments of the Superior Court are Reversed.
ROGERS, Chief Judge, Concurring: I write separately for the purpose of stating my understanding of the court's interpretation of the "laws appropriating funds" limitation on the initiative power. D.C. Code § 1-281(a) (1981). In view of our decisions in District of Columbia Bd. of Elections & Ethics v. Jones, 481 A.2d 456 (D.C 1984) (Jones), and on the shelter initiative in District of Columbia Bd. of Elections & Ethics v. District of Columbia, 520 A.2d 671 (D.C. 1986) (Shelter), it is clear that the court has moved away from the plurality Opinion in Convention Center Referendum Comm. v. District of Columbia Bd. of Elections & Ethics, 441 A.2d 889 (D.C. 1981) (en banc) (Convention Center), towards the Dissenting view that, given the broad scope of the right of initiative, which the plurality acknowledged, only budget request acts fall within the prohibition. Id. at 922. Since Convention Center, in our decisions in Jones and Shelter, the focus has been not on whether the initiative "launches" or "directs" the appropriations process, see Convention Center, supra, 411 A.2d at 912, but on whether the initiative is a budget request act or its functional equivalent. Shelter, supra, 520 A.2d at 673-74; Jones, supra, 481 A.2d at 460. In so doing the court has, consistent with the unanimous Conclusion in Convention Center and the legislative history of the right of initiative, construed the initiative right broadly. See Convention Center, supra, 441 A.2d at 912.
The use by the plurality in Convention Center of the phrases "launching the appropriations process," 441 A.2d at 914, which is relied on by the Board here, and "attempting to fund an authorized program," id., which the trial court relied on for the Simon initiative, lost their force as limitations on the right of initiative after the court held that the shelter initiative was not a "law appropriating funds." The shelter initiative created both a substantive entitlement to specific city services and a right to seek a court judgment directing provision of those services. Shelter, supra, 520 A.2d at 674. If that initiative did not thereby "launch the appropriations process," or "attempt to fund an authorized program," by directing the use of District of Columbia revenues, I am at a loss to understand what would.
In Jones, on the other hand, the concern was not whether the initiative "launched" the appropriations process, but the automatic and self-actuating aspects of the proposed initiative. 481 A.2d at 458. Since, upon enactment, the initiative would have required the District government to borrow from the United States Treasury and thereafter to make additional budget appropriations requests of Congress to pay for the increased worker's benefits, the court viewed the initiative to be the functional equivalent of a budget request act inasmuch as it directed the expenditure of funds.
Mr. Hessey's initiative and Mr. Simon's initiative, unlike the shelter initiative, identify a source of funding for the purposes they seek to accomplish, and, unlike the initiative in Jones, leave to the appropriations process involving decisions by the Mayor, the Council of the District of Columbia and the Congress -- the decision of whether any of such funds as may be raised shall ever be spent. While this does steer any newly raised funds in a particular direction, and thereby limits the discretion of the Mayor and the Council to spend the funds, the initiatives cannot properly be viewed, in light of our decisions, as budget request acts or their functional equivalent. *fn1
Consequently, if the "laws appropriating funds" limitation on the right of initiative is to mean more than a budget request act or its functional equivalent, this court sitting en banc must so decide or the Council of the District of Columbia must redefine the limits on the initiative right.