Oregon Advisory Opinions March 02, 1965: OAG 65-35 (March 2, 1965)
Collection: Oregon Attorney General Opinions
Docket: OAG 65-35
Date: March 2, 1965
Advisory Opinion Text
OAG 65-35.
An emergency clause is unconstitutional on a measure affecting taxation or exemption. [House Bill 1001 signed by Governor May 3, 1965; becomes operative as set forth in § 97 of Act. Chapter 285, Oregon Laws 1965.]
State Representative
Your letter of February 23, 1965, requests an opinion on the constitutionality of the emergency clause (§ 98) in Engrossed House Bill 1001, Fifty-third Legislative Assembly, Regular Session.
Section 1, Article IV, Oregon Constitution, reads in part:
"* * * The second power is the referendum, and it may be ordered (except as to laws necessary for the immediate preservation of the public peace, health, or safety) * * *."
Section 1a, Article IX, Oregon Constitution, reads in part:
"* * * The Legislative Assembly shall not declare an emergency in any act regulating taxation or exemption."
House Bill 1001 is a Workmen's Compensation Act and such Acts are generally held to be an exercise of the police power of the states. Schneider, Workmen's Compensation, vol. 1 text, pp. 34-36. Whether an exaction, in a given instance, is for regulation under the police power or revenue under the taxing power is not always clear.
Cooley has been cited with favor by the Oregon Supreme Court in Haugen v. Gleason et al., (1961) 226 Or. 99, 104, 359 P. (2d) 108, as follows:
" ' "The distinction between a demand of money under the police power and one made under the power to tax is not so much one of form as of substance. * * * If the purpose is regulation the imposition ordinarily is an exercise of the police power, while if the purpose is revenue the imposition is an exercise of the taxing power and is a tax. If, therefore, the purpose is evident in any particular instance, there can be no difficulty in classifying the case and referring it to the proper power. * * * Only those cases where regulation is the primary purpose can be specially referred to the police power. If revenue is the primary purpose and regulation is merely incidental the imposition is a tax. * * *" ' Terry v. City of Portland, 204 Or 478, 501, 269 P2d 544,
quoting from 4 Cooley, Taxation (4th ed) 3509, § 1784."
An examination of House Bill 1001 reveals a number of provisions relating to exactions or exemptions with reference to employers, workmen and insurance companies, among those noted are the following:
1. Penalties for violations of the Act, §§ 69e, 93.
2. Two cents per working day payable by all subject workmen, § 70.
3. Contributions by employers to the Industrial Accident Fund, § 71.
4. Insurers offset for employer assessments against premium taxes, § 94g.
5. Assessments against employers for administrative fund, § 69a, for various purposes such as:
a. Costs of administration, § 69a.
b. Pay claims incurred by non-complying employers, § 15.
c. To pay as a class the unpaid losses of other direct insurers, § 67a.
d. Rehabilitation costs (vocational), § 67b.
e. Safety violations, § 69d.
If House Bill 1001 restricted its exactions to those calculated solely to pay the expense of regulation one might conclude that it was an exaction under the police power outside the constitutional restriction with respect to taxation. Penalties reasonably related to the purpose of regulation are likewise not taxes.
Item 3 above refers to the contributions payable to the Industrial Accident Fund by contributing employers. These are not mere expenses of regulation. As to the affected employers they are in lieu of all costs of injuries suffered by workmen in his employ. The Supreme Court held for purposes of the Bankruptcy Act that these exactions were a tax due a state. State Industrial Accident Commission v. Aebi, (1945) 177 Or. 361, 162 P. (2d) 513. Can it be said that the contributions exacted by force of law for payment of claims is only for regulation and is but a phase of the police power? Or is it revenue and thus a tax. While the decision in the Aebi case, supra, is limited to a special purpose, it is enough to raise grave doubts about the legality of appending the emergency clause.
Item 2 above concerns the two cents per working day proposed to be assessed against all workmen. House Bill 1001 converts the existing elective type Workmen's Compensation Law to a basically compulsory law. The real and fictional elections of employer and workman respectively are repealed. I am advised that the two cents per day to be exacted is calculated to produce more than two million dollars per year. This is not relegated to regulation but is placed in a special fund to pay pensions for a defined and limited class of persons not presently included in those being subjected to the two cents per day. In our examination of the guide lines we must conclude that any workman not now subjected to this exaction will conclude that he is being taxed even though the tax cannot normally exceed about $7.30 per year per taxpayer.
Item 4 creates an offset against premium taxes otherwise payable into the General Fund for assessments paid by insurers on behalf of their insured employers. This is clearly a provision "regulating taxation or exemption" bringing House Bill 1001 within the prohibition of § 1a, Article IX, Oregon Constitution.
The bill under discussion, if it becomes law, will vitally affect nearly every citizen of the state. The court will probably resolve any doubt in favor of preserving the right of the people to a plebiscite.
Without further analysis of the impact of all the various exactions provided by House Bill 1001 engrossed, I conclude that the emergency clause is improper. This does not invalidate the remainder of the law, Smith v. Patterson, et al., (1929) 130 Or. 73, 279 P. 271.