This is an appeal from a declaratory judgment issued by the district court, holding constitutional legislation (I.C. § 67-4917A to -4917C) authorizing an auditorium district to impose a sales tax on receipts derived from the furnishing of hotel and motel rooms. We affirm.
I.C. Title 67, Chapter 49, authorizes establishment and administration of auditorium
In 1978, the legislature enacted I.C. §§ 67-4917A to -4917C,
The district court, the Honorable J. Ray Durtschi, rejected defendants-appellants' argument that State v. Nelson, 36 Idaho 713, 213 P. 358 (1923), precluded the legislature from delegating to the auditorium district the authority to impose a tax, as in the instant case. Defendants contended the legislature could delegate only the power to tax real property. The district court held, however, that Nelson forbids only a delegation of unrestricted and unguided taxing power. On appeal, defendants-appellants' principal focus is again on the language of State v. Nelson, supra. An amicus curiae brief was filed by the State of Idaho, supporting the constitutionality and validity of the legislation.
The Idaho Constitution is a limitation upon, and not a grant of, legislative authority, and the legislature has plenary
Defendants-appellants argue that Idaho Const. art. 7, § 6 prohibits a legislative delegation of the power to impose a sales tax to an auditorium district. Idaho Const. art. 7, § 6 states:
A literal reading of that constitutional language, "the legislature ... may by law invest in [a municipal corporation] the power to assess and collect taxes ..." would appear to militate against the contentions of defendants-appellants here. However, that language was otherwise interpreted by the Court in State v. Nelson, 36 Idaho 713, 213 P. 358 (1923), which interpretation has been a source of continuing litigation thereafter. See, e.g., Ada County v. Wright, 60 Idaho 394, 92 P.2d 134 (1939); Leonardson v. Moon, 92 Idaho 796, 451 P.2d 542 (1969); First American Title Co. of Idaho, Inc. v. Clark, 99 Idaho 10, 576 P.2d 581 (1978).
In Nelson, the legislature had provided that a municipal corporation might "raise revenue by levying and collecting a license tax on any occupation or business within the limits of the municipality ..." The City of Rexburg enacted an ordinance imposing an occupational license tax for revenue raising purposes, and Nelson, a physician, was prosecuted for non-payment of that tax.
The Nelson Court held the statute, and therefore the ordinance, invalid, on the basis of Idaho Const. art. 7, § 6. That Court noted that the functions of the legislature were to be exercised by it alone; except as authorized by the constitution, the legislature could not delegate its lawmaking powers to another authority. The Court held that the scope of the term "taxes," the imposition of which could be delegated under art. 7, § 6 of our constitution, was only ad valorem taxes.
Thus, a focus upon only that aspect of the decision of the Nelson Court, if it were to be followed today without any analysis of the remainder of the Nelson decision, would require us to hold in favor of defendants-appellants and to rule that the legislation authorizing the tax in question is invalid and unconstitutional. However, we agree with the conclusion of the trial court here that the crux of Nelson is its limitation upon the legislature's power to delegate its taxing authority. We deem that the concern of the Nelson Court, in view of the statute involved, was the lack of standards, guidelines, restrictions or qualifications of any sort placed in the delegating legislation. The Nelson court stressed that lack of legislative guidance, 36 Idaho at 719-720, 213 P. at 360:
And again at 36 Idaho, p. 723, 213 P. at 361:
We note further the opinion of the trial court here, analyzing the language of Idaho Const. art. 7, § 6, in light of other pertinent constitutional provisions, i.e., art. 7, § 2, and art. 7, § 5, which sections respectively provide:
The trial court's well-reasoned analysis stated:
We agree with the analysis of the trial court which, in essence, held that the defendants-appellants' interpretation of art. 7, § 6 and of Nelson, supra, as allowing municipalities to levy only property taxes, was unduly narrow and, to that extent, erroneous. To the extent that Nelson holds that the legislature may delegate taxing authority to municipal corporations only as to property taxes, it is overruled.
However, we emphasize that certain constitutional standards must be met in any delegation of legislative authority to a lesser entity of government. See Idaho Const. art. 3, § 1; Idaho Savings and Loan Assoc. v. Roden, 82 Idaho 128, 350 P.2d 225 (1960); Boise Redevelopment Agency v. Yick Kong Corp., 94 Idaho 876, 499 P.2d 575 (1972). Those constitutional standards are met by the adequate safeguards built into the statute at issue here. I.C. §§ 67-4917A to 67-4917C specifically define the incidence of the tax, set forth applicable exemptions, set 5% of the maximum amount which may be imposed, and delineate administration and collection of the tax through incorporation of the Idaho Sales Tax Act.
We note the analysis of the amicus curiae State, which points out the inconsistency with which Nelson has been applied and the lack of any predictability of this Court's interpretation of the term "municipal corporation" in art. 7, § 6. It is arguable that this Court has interpreted the term "municipal corporation" of art. 7, § 6, dependent upon its desire to validate or invalidate a tax which might be considered invalid under Nelson. It appears that the application of art. 7, § 6 then becomes an exercise in defining "municipal corporation," with results that are at best uneven and at worst chaotic.
For example, the Court has held a highway district formed pursuant to I.C. Title 40, Chapter 16, to be a municipal corporation within the meaning of that term under art. 7, § 6 (Idaho County v. Fenn Hwy. Dist., 43 Idaho 233, 253 P. 377 (1926)), but has also held a good road district under Title 40, Chapter 15 not to be a municipal corporation (In re Rogers, Randall & Pitzen, 56 Idaho 521, 57 P.2d 342 (1936); Strickfaden v. Green Creek Hwy. Dist., 42 Idaho 738, 248 P. 456 (1926)). It has also been held that the term "municipal corporation" in art. 7, § 6 does not include public health districts (District Bd. of Health of P.H. Dist. No. 5 v. Chancey, 94 Idaho 944, 500 P.2d 845 (1972)); or school districts (Fenton v. Bd. of County Commrs., 20 Idaho 392, 119 P. 41 (1911); Employment Security Agency v. Joint Class "A" Dist., 88 Idaho 384, 400 P.2d 377 (1965)).
Thus, defendants-appellants must necessarily urge that public health districts and school districts may impose taxes such as sales or income taxes without violating Idaho Const. art. 7, § 6, but counties and cities may not do so. We further note the statutes which authorize certain functions to be performed by special districts, which functions, on the other hand, may not be carried out by cities or counties, under the interpretation of Idaho Const. art. 7, § 6 urged by defendants-appellants. See, e.g., I.C. § 31-1401, et seq. (fire districts); I.C. § 39-1301, et seq. (hospital districts); I.C. § 33-2701, et seq. (library districts); I.C. § 22-4301, et seq. (weather modification districts). It would be incongruous to hold that such districts, as taxing authorities, are free to impose license and per capita taxes under their authorizing legislation, but that cities and counties which perform the same functions are not free to impose
The decision of the district court is affirmed. No costs or attorney's fees on appeal.
DONALDSON, C.J., and BAKES, BISTLINE and HUNTLEY, JJ., concur.