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11/22/91 JAY HESSEY v. DISTRICT COLUMBIA BOARD

November 22, 1991

JAY HESSEY, APPELLANT
v.
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)

Before Rogers, Chief Judge, and Ferren, Terry, Steadman, Schwelb, Farrell, and Wagner, Associate Judges, and Belson,* Senior Judge

The opinion of the court was delivered by: Rogers

On Rehearing En Banc

Rogers, Chief Judge: Before the en banc court for the first time in a decade is the question of the scope of the right of initiative. *fn1 D.C. Code § 1-281 (a) (1987 Repl.). The issue arises in one context of two proposed initiatives that would impose fees or tax surcharges to be deposited in trust funds devoted to low and moderate income housing purposes. The question before the court is whether these initiatives fall within the prohibition of "laws appropriating funds" contained in D.C. Code § 1-281 (a) (1987 Repl.) or other limitation on the initiative right. The fundamental underlying question, however, is who is to be in charge of the District government's local financial management, the District's elected officials or the electorate by initiative. The answer necessarily requires consideration of the unique role of the Mayor and Council of the District of Columbia in the budget and financial management of the District government.

Part I of this opinion describes the proposed initiatives and four approaches for determining whether the proposed measures are proper subjects for initiatives. Part II describes the District government's budget process and financial management responsibilities. Part III reviews the creation of the initiative right and limitations on that right. Part IV examines the proposed initiatives in light of the interpretation that is most consistent with the District government's unique fiscal status.

We conclude that the right of initiative does not extend to initiatives, such as the ones here, which would allocate District government revenues. While the initiative right to authorize is broad, the limitation inheres in the unique budget process and the financial management scheme of the District government. Accordingly, we affirm the judgments of the trial court declining to order the District of Columbia Board of Elections and Ethics to accept these measures for inclusion on the ballot.

I.

Each initiative contains linkage provisions between large commercial developments and funding low and moderate income housing programs. The "Affordable Housing Act" initiative, Appeal No. 90-680, would require developers of office buildings of 50,000 square feet or more to construct or rehabilitate housing for lower or moderate income families or to contribute funds for that purpose. The collected funds would be deposited in a trust fund created by the initiative, to be used exclusively for the construction of low income housing.

The "Housing Now! Act of 1990" initiative, Appeal No. 90-809, would amend D.C. Code § 47-813 (1990) to impose a surcharge on commercial properties of 50,000 or more square feet. The initiative would require an amount equal to the surcharge to be deposited in the Housing Production Trust Fund, an existing special fund established by the Council, D.C. Code §§ 45-3101 to -3104 (1990).

The Board of Elections, acting pursuant to D.C. Code § 1-1320 (b)(1) (1987), refused to accept the proposed initiatives for filing. The Board found that the Affordable Housing Initiative, by restricting the monies in the fund to a specific purpose, nullified the discretion of the Council and the Mayor, and that the initiative, therefore, was an attempt to "launch the appropriations process contrary to the holding in Convention Center II, supra note 1." Adopting the same reasoning, the Board found that the Housing Now! Act of 1990 initiative would limit the discretion of the Council to spend the monies for purposes unrelated to housing (even though by the terms of the Housing Production Trust Fund the Council could choose among nine distinct housing categories, see D.C. Code § 45-3102).

In separate actions filed pursuant to D.C. Code § 1-1320 (b) (1987), the proponents of the initiatives sought to have the Superior Court of the District of Columbia direct the Board to accept the measures and place them on the ballot as initiatives. Summary judgment was granted in both cases for the Board of Elections and intervenors James Durham, Kenneth Price, the Apartment and Office Building Association of Metropolitan Washington, and the Washington, D.C. Association of Realtors.

On appeal it is argued, on the one hand, by appellant that the measures are proper subjects for initiatives since they are not Budget Request Acts and do not affect the authority of the Council of the District of Columbia to allocate revenues among authorized programs and activities in the process of enacting a Budget Request Act for approval by Congress. Rather, the argument continues, the proposed initiatives simply authorize the collection of new revenues and only limit the Council's revenue allocation role to the extent that the initiatives would require the Council, if it wanted to use the new revenues, to use them for the particular purpose or program specified by the initiatives. In other words, no revenues from the new tax surcharge and fees could be spent for these programs (absent Congressional action) unless first allocated by the Council in a Budget Request Act.

Taking a contrary view, intervenors and the Board argue that any restriction on the Council's power to allocate revenues interferes with responsible financial management and runs afoul of the "laws appropriating funds" limitation. This Conclusion is required, intervenors argue, in order to assure that the legislature, and only the legislature -- whether Congress or the Council -- retains "control over the allocation of initiative-generated revenues among competing needs." Therefore, this view concludes that in addition to the prior holdings of the court on the nature of limitations on the right of initiative:

An initiative which attempts to impose, by the terms of the initiated law, a legal constraint (either by mandate or by prohibition) on the Council's authority to allocate revenues among competing programs or other uses in the normal budget process, or which attempts itself to exercise that authority, is prohibited. [ *fn2

Accordingly, the court is presented with a question of statutory interpretation, see Convention Center II, supra note 1, 441 A.2d at 911, in which the precise issue is whether a citizen initiative can have any revenue allocation role, either in the Budget Request Act process or by placing restrictions on the use by the Council of available revenues through deposits in special funds. This is a question of first impression. How one answers the question depends on how the initiative right in D.C. Code § 1-281 (a) (1987 Repl.) is construed. That section defines an initiative as:

the process by which the electors of the District of Columbia may propose laws (except laws appropriating funds) and present such proposed laws direct to the registered qualified electors for their approval or disapproval.

If an initiative is adopted by a majority of the registered, qualified electors voting, then the initiative, upon certification of the vote by the District of Columbia Board of Elections and Ethics, becomes an act of the Council subject to the congressional review period of D.C. Code § 1-233 (c). D.C. Code § 1-285.

An amendment to the Charter, such as the right of initiative, cannot be viewed in a vacuum, but must be construed in light of the statutory scheme established by the Charter in the District of Columbia Self-Government and Governmental Reorganization Act, Pub. L. No. 93-198, 87 Stat. 774 (1973), (codified as amended in scattered sections of the D.C. Code) (Self-Government Act). Id.; Peoples Drug Stores v. District of Columbia, 470 A.2d 751, 754 (D.C. 1983) (en banc). Since amendments to the Charter required Congressional approval when the initiative right was approved by Congress, 1 D.C. Code 184 (1991 Repl.), the court must consider Congressional intent in approving the amendment. Because the Charter amendment is in the form of an act passed by the Council, and because the Charter Amendment on the right of initiative included authority for the Council to adopt implementing legislation, the court must address the intent of the Council. Given this framework, several interpretations of the initiative right emerge.

One interpretation is that the initiative right extends to anything other than a Budget Request Act. Convention Center II, supra note 1, 441 A.2d at 925 (Gallagher, J., Dissenting). This interpretation takes a very broad view of the initiative right, and has the merit of simplicity and ease of application.

A second interpretation focuses on whether an initiative forces the Council to allocate funds as a result of the enactment of the initiative. Under this by-pass interpretation, if there is nothing for the Council to do other than allocate revenues to carry out the initiative, the measure runs afoul of the "laws appropriating funds" limitation. But if there remains, after the initiative becomes effective, the requirement of an allocation of revenues at the discretion of the Council, the measure would be a proper subject for initiative. This by-pass of the regular budget process approach, urged by appellants, is followed by the Alaska Supreme Court in McAlpine v. ...


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