MR. JUSTICE WHITE delivered the opinion of the Court.
In Kramer v. Union Free School District, 395 U.S. 621 (1969), this Court held that a State could not restrict the vote in school district elections to owners and lessees of real property and parents of school children because the exclusion of otherwise qualified voters was not shown to be necessary to promote a compelling state interest. This ruling, by its terms applicable to elections of public officials, was extended to elections for the approval of revenue bonds to finance local improvements in Cipriano v. City of Houma, 395 U.S. 701 (1969). Our decision in Cipriano did not, however, reach the question now presented for decision: Does the Federal Constitution permit a State to restrict to real property taxpayers the vote in elections to approve the issuance of general obligation bonds?
This question arises in the following factual setting: On June 10, 1969, the City of Phoenix, Arizona, held an election to authorize the issuance of $60,450,000 in general obligation bonds as well as certain revenue bonds. Under Arizona law, property taxes were to be levied to service this indebtedness, although the city was legally privileged to use other revenues for this purpose.
On June 16, 1969, six days after the election in Phoenix, this Court held in Cipriano v. City of Houma, supra, that restricting the franchise to property taxpayers in elections on revenue bonds violated the Equal Protection Clause of the Fourteenth Amendment. That ruling was applied to the case before the Court in which under local law the authorization of the revenue bonds was not yet final when the challenge to the election was raised in the District Court. On August 1, 1969, appellee Kolodziejski, a Phoenix resident who was otherwise qualified to vote but who owned no real property, filed
In Cipriano v. City of Houma, supra, the denial of the franchise to nonproperty owners in elections on revenue bonds was held to be a denial of the Fourteenth Amendment rights of the nonproperty owners since they, as well as property owners, are substantially affected by the issuance of revenue bonds to finance municipal utilities. It is now argued that the rationale of Cipriano does not render unconstitutional the exclusion of nonproperty
The argument proceeds on two related fronts. First, it is said that the Arizona statutes require that property taxes be levied in an amount sufficient to service the general obligation bonds,
Concededly, the case of elections to approve general obligation bonds was not decided in Cipriano v. City of Houma, supra. But we have concluded that the principles
First, it is unquestioned that all residents of Phoenix, property owners and nonproperty owners alike, have a substantial interest in the public facilities and the services available in the city and will be substantially affected by the ultimate outcome of the bond election at issue in this case. Presumptively, when all citizens are affected in important ways by a governmental decision subject to a referendum, the Constitution does not permit weighted voting or the exclusion of otherwise qualified citizens from the franchise. Arizona nevertheless excludes nonproperty owners from participating in bond elections and vests in the majority of individual property owners voting in the election the power to approve or disapprove facilities that the municipal government has determined should be financed by issuing general obligation bonds. Placing such power in property owners alone can be justified only by some overriding interest of those owners that the State is entitled to recognize.
Second, although Arizona law ostensibly calls for the levy of real property taxes to service general obligation bonds, other revenues are legally available for this purpose. According to the parties' stipulation in this case, it is anticipated with respect to the instant bonds, as has been true in the past, that more than half of the debt service requirements will be satisfied not from real property taxes but from revenues from other local taxes paid by nonproperty owners as well as those who own real
Third, the justification for restricting the franchise to the property owners would seem to be strongest in the case of a municipality which, unlike Phoenix, looks only to property tax revenues for servicing general obligation bonds. But even in such a case the justification would be insufficient. Property taxes may be paid initially by property owners, but a significant part of the ultimate burden of each year's tax on rental property will very likely be borne by the tenant rather than the landlord since, as the parties also stipulated in this case, the landlord will treat the property tax as a business expense and normally will be able to pass all or a large part of this cost on to the tenants in the form of higher rent.
While in theory the expected future income from real property, and hence property values in a municipality, may depend in part on the predicted future levels of property taxes,
We thus conclude that, although owners of real property have interests somewhat different from the interests of nonproperty owners in the issuance of general obligation bonds, there is no basis for concluding that nonproperty owners are substantially less interested in the issuance of these securities than are property owners. That there is no adequate reason to restrict the franchise on the issuance of general obligation bonds to property owners is further evidenced by the fact that only 14
In view of the fact that over the years many general obligation bonds have been issued on the good-faith assumption that restriction of the franchise in bond elections was not prohibited by the Federal Constitution,
MR. JUSTICE BLACK concurs in the judgment and in Part I of the opinion of the Court.
MR. JUSTICE BLACKMUN took no part in the consideration or decision of this case.
MR. JUSTICE STEWART, whom THE CHIEF JUSTICE and MR. JUSTICE HARLAN join, dissenting.
If this case really involved an "election," that is, a choice by popular vote of candidates for public office under a system of representative democracy, then our frame of reference would necessarily have to be Reynolds v. Sims, 377 U.S. 533, and its progeny. For, rightly or wrongly, the Court has said that in cases where public officials with legislative or other governmental power are to be elected by the people, the Constitution requires that the electoral franchise must generally reflect a regime of political suffrage based upon "one man, one vote." Recent examples of that constitutional doctrine are the Court's decisions in Kramer v. Union Free School District, 395 U.S. 621, involving the franchise to vote for the members of a school board; and Hadley v. Junior College District, 397 U.S. 50, involving the apportionment of voting districts for the election of the trustees of a state junior college.
Whether or not one accepts the constitutional doctrine embodied in those decisions, they are of little relevance here. For in this case nobody has claimed that the
In Cipriano v. City of Houma, 395 U.S. 701, the Court held unconstitutional a Louisiana law that permitted only property owners to vote on the question of approving bonds that were to be financed exclusively from the revenues of municipally operated public utilities. I agreed with that decision, because the State had created a wholly irrelevant voting classification. Id., at 707 (BLACK and STEWART, JJ., concurring in the judgment). As the Court there noted:
The case before us bears only a superficial resemblance to Cipriano, for we deal here, not with income-producing utilities that can pay for themselves, but with municipal improvements that must be paid for by the taxpayers. Under Arizona law a city's general bonded indebtedness effectively operates as a lien on all taxable real estate located within the city's borders. During the entire life of the bonds the privately owned real property in the city is burdened by the city's pledge—and statutory obligation—to use its real estate taxing power for the purpose of repaying both interest and principal under the bond obligation.
This is not the invidious discrimination that the Equal Protection Clause condemns, but an entirely rational public policy. I would reverse the judgment, because I cannot hold that the Constitution denies the City of Phoenix the public improvements that its Council and its taxpayers have endorsed.
"A. After the bonds are issued, the governing body or board shall enter upon its minutes a record of the bonds sold, their numbers and dates, and shall annually levy and cause to be collected a tax, at the same time and in the same manner as other taxes are levied and collected upon all taxable property in such political subdivision, sufficient to pay the interest on the bonds when due, and shall likewise annually levy a tax sufficient to redeem the bonds when they mature.
"B. Monies derived from the levy of the tax when collected shall constitute a fund for payment of interest and the bonds. The fund shall be kept separately and shall be known as the `Interest Fund' and `Redemption Fund.'" Ariz. Rev. Stat. Ann. § 35-458 (1956).
In Allison v. City of Phoenix, 44 Ariz. 66, 33 P.2d 927 (1934), the Arizona Supreme Court ruled that the predecessor of this section permitted an issuing municipality to use other funds for debt service if such funds were available. In this case the parties have stipulated that for the 1969-1970 fiscal year $3,244,773 of the city's total general obligation debt service requirement of $5,594,937 was met from sources other than ad valorem property taxes and that this apportionment of debt service burden is typical of recent years.
The extent to which a landlord can pass along an increase in property taxes to his tenants generally depends on how changes in rent levels in the municipality affect the amount of rental property demanded—the less responsive the demand for rental property to changes in rent levels, the larger the proportion of property taxes that will ultimately be borne by tenants. See C. Shoup, Public Finance 385-390 (1969); D. Netzer, Economics of the Property Tax 32-40 (1966); Simon, The Incidence of a Tax on Urban Real Property, in Readings in the Economics of Taxation 416 (published by the American Economic Assn. 1959).
Alaska (Alaska Stat. § 07.30.010 (b) (Supp. 1969)); Colorado (Colo. Const., Art XI, §§ 6, 7, and 8); Florida (Fla. Const., Art. 7, § 12); Idaho (Idaho Code Ann. § 31-1905 (1963), § 33-404 (Supp. 1969), § 50-1026 (1967)); Louisiana (La. Const., Art. 14, § 14 (a)); Michigan (Mich. Const., Art. II, § 6); Montana (Mont. Const., Art. IX, § 2, Art. XIII, § 5; Mont. Rev. Codes Ann. § 11-2310 (1968), § 75-3912 (1962)); New Mexico (N. M. Const., Art. IX, §§ 10, 11, and 12); New York (N. Y. Town Law § 84 (1965); N. Y. Village Law § 4-402 (1966)); Oklahoma (Okla. Const., Art. X, § 27); Rhode Island (R. I. Const., amdt. 29, § 2); Texas (Tex. Const., Art. 6, § 3a); Utah (Utah Const., Art. XIV, § 3).
In Allison v. City of Phoenix, 44 Ariz. 66, 33 P.2d 927 (1934), the Arizona Supreme Court held that if a city has money available from another source "it may from time to time be transferred to the interest and redemption funds created by the statute. . . ." 44 Ariz., at 77, 33 P. 2d, at 931. The court made clear, however, that the predecessor of Ariz. Rev. Stat. Ann. § 35-458 "is mandatory and binding upon all parties mentioned therein, and that they must levy and cause to be collected a tax for the payment of bonds issued under such article, in the manner provided by such section." Id., at 74, 33 P. 2d, at 930. The use of excise taxes to repay general obligation bonds is thus optional, but the imposition of ad valorem taxes for these purposes is mandatory.
Taxes imposed on real property in Arizona become a lien on that property. Ariz. Rev. Stat. Ann. § 42-312.