May 24, 2012
WASHINGTON, D.C. ASSOCIATION OF REALTORS, INC., ET AL., APPELLANTS,
DISTRICT OF COLUMBIA, APPELLEE.
Appeal from the Superior Court of the District of Columbia Civil Division CAB-3775-09 (Hon. Alfred S. Irving, Jr., Trial Judge)
The opinion of the court was delivered by: Glickman, Associate Judge:
Argued May 3, 2012
Before GLICKMAN, FISHER, and BECKWITH, Associate Judges.
Appellants -- the Washington, D.C. Association of Realtors, Inc., the Greater Capital Area Association of Realtors, Inc., and the Greater Washington Commercial Association of Realtors, Inc. -- contend that the Council of the District of Columbia violated the Home Rule Act when it directed the transfer of monies from the Real Estate Guarantee and Education Fund to the District of Columbia's General Fund for the purpose of balancing the District's budget for Fiscal Year 2009. Appellants further assert that the diversion of funds contravened the Real Estate Licensure Act of 1982, the legislation that created the Real Estate Fund. In an effort to undo the transfer and to void subsequent special assessments levied to replenish the Real Estate Fund, appellants sued the District in Superior Court, seeking declaratory and injunctive relief. The Superior Court rejected appellants' arguments, upheld the lawfulness of the Council's actions, and granted summary judgment to the District. Because we agree that the Council acted within its legislative authority under the Home Rule Act and in accordance with law, we affirm the judgment of the Superior Court.
I. Factual and Statutory Background
In November 2008, facing unexpected revenue shortfalls and needing to meet its statutory obligation to present a balanced budget to Congress,*fn1 the Council commenced a series of remedial measures. The Council adopted the Fiscal Year 2009 Balanced Budget Support Emergency Declaration Resolution of 2008, which declared the existence of a fiscal emergency and outlined the steps that would be taken to meet it.*fn2 Next, the Council enacted the Fiscal Year 2009 Balanced Budget Support Emergency Amendment Act of 2008.*fn3 This Act (hereinafter referred to as the "December 2008 Act") directed the Chief Financial Officer to transfer the available balances in a total of 69 designated "O-type," or special, funds*fn4 to the District's General Fund,*fn5 "[n]otwithstanding any other provision of law limiting the use of O-type funds for special purposes."*fn6 Pursuant to this directive, a total of $48 million was transferred to the General Fund, including $3,252,618 from the Real Estate Guarantee and Education Fund (hereinafter, the "Real Estate Fund").
As the December 2008 Act was passed as emergency legislation, it was effective only for 90 days from its enactment.*fn7 However, the Council also enacted the Fiscal Year 2009 Balanced Budget Temporary Amendment Act of 2008*fn8 through the non-emergency legislative process.*fn9 This Act confirmed the transfers of special fund balances to the General Fund.*fn10 (The Act took effect on March 21, 2009, nineteen days after the December 2008 Act expired, but the interim period was covered by additional emergency legislation.*fn11
The Real Estate Fund, the only special fund at stake in the present litigation, was established by the District of Columbia Real Estate Licensure Act of 1982 for the purpose of "compensat[ing] victims of unlawful real estate practices."*fn12 To achieve that goal, the Licensure Act requires all licensed real estate brokers, salespersons, and property managers to pay a fee (in an amount to be established by the Mayor) for deposit into the Real Estate Fund.*fn13 Whenever the balance in the Fund falls below a predetermined minimum, the Mayor is required to assess each licensee an amount, not to exceed $50 during any license year, to replenish it.*fn14 In order to fulfill that obligation after the transfer of over $3.2 million from the Real Estate Fund to the General Fund, the Mayor directed the Board of Real Estate*fn15 to collect a supplemental $50 fee from each licensee in January 2009.
That directive triggered the instant litigation. Appellants are three associations of realtors that do business in the greater Washington, D.C., area, including licensed brokers, salespersons, and property managers who were subject to the supplemental assessment. On their behalf, appellants filed suit in Superior Court in May 2009, asking the court to declare the December 2008 Act violative of the Home Rule Act and the Real Estate Licensure Act; to enjoin the District from transferring monies from the Real Estate Fund to the General Fund and require the District to replace the monies already withdrawn for that purpose; and to enjoin further special assessments to replenish the Real Estate Fund and require the District to refund the special assessments already paid. The trial court granted the District's motion for summary judgment. Concluding that the Home Rule Act did not prohibit the Council from directing the transfer of monies in the Real Estate Fund and other special funds to the District's General Fund, the court refused to "second guess" such a legislative budgetary decision "absent clear authority showing the means employed to be invalid." The court further held that nothing in the Real Estate Licensure Act prohibited the funds transfer.*fn16
II. Legal Analysis
Whether the Council had the authority to direct the transfer of monies from the Real Estate Fund and other special funds to the General Fund is purely a legal question -- primarily one of statutory interpretation. There are no genuine issues of material fact, and the dispute was ripe for resolution on motion for summary judgment. Accordingly, our review of the trial court's legal determination in favor of the District is de novo.*fn17
In passing the District of Columbia Home Rule Act,*fn18
Congress declared its intent, inter alia, to "grant to the
inhabitants of the District of Columbia powers of local
self-government . . . and, to the greatest extent possible, consistent
with the constitutional mandate [of Article I], relieve Congress of
the burden of legislating upon essentially local District
matters."*fn19 In furtherance of this goal, Congress
directed that the legislative power of the District, which it vested
in the Council, "shall extend to all rightful subjects of legislation
within the District consistent with the Constitution of the United
States and the provisions of [the Home Rule] Act . . . ."*fn20
In view of this broad delegation of authority and the policy
of the Home Rule Act, we have held that limitations on the Council's
legislative authority will be construed narrowly.*fn21
The Home Rule Act operates much like a state constitution, and it specifies that the Council has no authority to pass any act contrary to its provisions.*fn22 Appellants claim that the Council transgressed this limitation. They argue that § 450 of the Home Rule Act bars the Council from moving monies from special funds to the District's General Fund. We do not agree.
In § 450, Congress established the General Fund of the District and provided for special funds as well. The section reads as follows:
The General Fund of the District shall be composed of those District revenues which on the effective date of this title [i.e., January 2, 1975*fn23 ] are paid into the Treasury of the United States and credited either to the General Fund of the District or its miscellaneous receipts, but shall not include any revenues which are applied by law to any special fund existing on the date of enactment of this title [i.e., December 24, 1973*fn24 ]. The Council may from time to time establish such additional special funds as may be necessary for the efficient operation of the government of the District. All money received by any agency, officer, or employee of the District in its or his official capacity shall belong to the District government and shall be paid promptly to the Mayor for deposit in the appropriate fund, except that all money received by the District of Columbia Courts shall be deposited in the Treasury of the United States or the Crime Victims Fund.*fn25
Appellants argue that § 450 distinguishes special funds from the General Fund, does not authorize the Council to commingle monies in special funds with the General Fund, and implicitly contemplates that special funds will be kept separate indefinitely unless Congress itself decides otherwise or the Home Rule Charter is amended. Thus, appellants assert, by stating that the General Fund "shall not include any revenues which are applied by law to any special fund existing" when the Home Rule Act was enacted, the first sentence of § 450 explicitly prohibits the Council from ever transferring monies from those special funds to the General Fund. And while the second sentence of § 450 empowers the Council to create additional special funds (such as the Real Estate Fund), the third sentence makes clear that monies received by the District must be deposited in "the appropriate fund" -- a requirement appellants say would be meaningless if the Council were at liberty to remove such monies properly deposited in a special fund in order to augment the General Fund.
In our view, appellants misread § 450. On its face, that provision says nothing to inhibit the Council from legislating a transfer of monies out of a special fund and into the General Fund. And no such prohibition is implied. Contrary to appellants' reading, the first sentence of § 450 merely defined how the initial balance of the newly established General Fund of the District of Columbia was to be constituted and made clear that pre-existing special funds, created to serve particular local needs, were not being terminated or discontinued by virtue of the transition to Home Rule. The sentence does not purport to restrict the Council's subsequent authority over those funds. And § 450's third sentence merely directs that, as government revenues are received, they be allocated appropriately among the District's several funds. The sentence cannot fairly be read as a restriction on the Council's ability to reallocate by legislation the balances in special funds over which it has authority.
The second sentence of § 450 expressly authorizes the Council to "establish such additional special funds as may be necessary for the efficient operation of the government of the District." The sentence speaks to the establishment of special funds, and not to the Council's subsequent control and deployment of them. But it is a general rule of statutory construction that "[w]here a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication."*fn26 Continuing authority to control the fate of special funds is a logical incident of the power to create them, if they are to serve the efficient operation and changing needs of the government. The only thing "special" about special funds is that they are created because of their usefulness in serving particular governmental purposes. As we have said in the past, the allocation of the District's financial resources is a "core legislative function."*fn27 If the Council determines that a special fund has outlived its usefulness, that monies in a special fund are no longer needed for the fulfillment of the fund's purpose, or that other public needs for those monies take precedence, a rebalancing and reallocation of the funds makes sense and is undeniably a "rightful subject" of legislation. There is nothing novel or unprecedented about this interpretation of § 450. It is in keeping with the widely recognized principle that a state legislature may, by statute, divert special funds set aside for particular purposes to a different purpose so long as doing so would not contravene a specific constitutional provision controlling the fund or breach a contractual obligation.*fn28
For the foregoing reasons, we conclude that the December 2008 Act (and the subsequent legislation) directing the Chief Financial Officer to transfer available balances from the Real Estate Fund and other special funds to the General Fund in order to meet the District's financial emergency did not violate any prohibition in § 450 of the Home Rule Act. The legislation was within the Council's authority to enact.
Appellant's remaining contention, that the Real Estate Licensure Act precluded the Council from transferring monies in the Real Estate Fund to the General Fund, is similarly unavailing. To begin with, nothing in the Licensure Act can be read to inhibit the Council from effecting such a transfer. While D.C. Code § 42-1707 (j) requires "[a]ll sums paid pursuant to [the Act] [to] be deposited with the D.C. Treasurer and . . . credited to the [Real Estate] Fund," it does not purport to bar the Council from redirecting monies in the Fund as the need arises. More importantly, even if the Licensure Act were construed to contain such a provision, it could not prevent the Council from doing what it did in this case. The Licensure Act was enacted by the Council, and the Council was free to repeal, amend, or override it. It is well established that "one legislature cannot bind a future legislature."*fn29 If the December 2008 Act conflicts with the previously enacted Licensing Act, then "the later [statute] supersedes the earlier."*fn30
We hold that the Council had the legislative authority to enact the laws directing the transfer of monies from the Real Estate Fund to the District's General Fund. The December 2008 Act did not violate the Home Rule Act, and it was not precluded by the Real Estate Licensure Act. Accordingly, we affirm the trial court's grant of summary judgment to the District on appellants' complaint for declaratory and injunctive relief.