Oregon Advisory Opinions May 19, 1982: OAG 82-32 (May 19, 1982)

OAG 82-32.

ORS 334.350 to 334.400 establish special tax equalization procedures applicable only to school districts in Grant, Harney, Wallowa and Wheeler Counties. Basically a school district in such a county prepares an operating budget, which may be approved or disapproved and amended by the educational service district (ESD). ORS 334.360, 334.380. The ESD may not reduce the districts' budgeted expenditures below the amount necessary for the "basic education program" determined under ORS 327.075. ORS 334.380. The ESD then levies an amount county-wide which is sufficient to fund the budgets of all school districts in the county, subject to the limitations of Or Const Art XI, sec 11. ORS 334.410 then authorizes the individual districts to levy additional taxes for bond payments (subsection (1)), for supplementary budget items approved by voters outside the limitations of Art XI, sec 11, (subsection (3)), and for:

"Payment of capital expenditures and current expenditures not provided for in the budget of the district by the education service district board. . . ." ORS 334.410(2).

These three authorizations to levy are stated as exceptions to the first sentence of ORS 334.410, which provides:

"All power to levy taxes otherwise by law vested in any school district within an education service district to which ORS 334.350 to 334.400 apply, or otherwise vested in the board of any such school district, is transferred to the education service district." (Emphasis added.)

The question before us is whether the authority to levy granted by ORS 334.410(2) allows a

school district to establish its own tax base, to levy taxes for capital and current expenditures not included in the ESD-approved budget and not levied by the ESD.

ORS 334.360 states when and under what conditions a component school district prepares a budget. ORS 334.360(2) provides as follows:

"No tax levy based on such budget shall be made by the school district other than the tax levy outside the constitutional limitation for the particular purposes specified in ORS 334.410."

Read alone, ORS 334.410 appears to authorize a levy for capital and operating expenditures not provided for in the district budget as approved by the ESD, whether within a district tax base or authorized by the voters outside of it (subsection (2)); and a levy for supplemental budget items authorized by voters outside of the tax base. (The subsection (2) levy would presumably be for items included in the district's original budget, but removed from it by the ESD.) There thus appears to be a conflict between ORS 334.360(2) and 334.410.

The true legislative intent can be discerned, however, by resorting to the history of these statutes. They were enacted in basically their present form, with the same apparent conflict, by Or Laws 1957, ch 678, secs 15 and 16. Subsequent amendments have not been relevant. However, this procedure for budgeting and tax levying was not new in 1957, but Or Laws 1957, ch 678, secs 15 and 16 were a redrafting and reenactment of provisions originally adopted by Or Laws 1945, ch 345. Chapter 345, sec 13 provided in part:

This was the precursor and exact counterpart, in substance, of present ORS 334.360(2). The word "aforesaid" was a reference to ch 345, sec 12 which was the precursor and later-amended counterpart of ORS 334.410. Section 12 read as enacted, in significant part:

"All [school district] powers and duties to levy taxes . . . hereby are transferred to, vested in and imposed on the rural school board of such county; provided, however, that each such school district . . . shall retain and exercise the power to levy a tax each year for payment of principal and interest of the bonded indebtedness or [warrant indebtedness]. . . and also to levy a tax for payment of capital expenditures specifically authorized by the legal voters . . . as outside the limitation of section 11, article XI, Oregon Constitution."

The authorization to levy for payment of bonded and warrant indebtedness is that now contained in ORS 334.410(1). The authorization to levy for capital expenditures is part of that now contained in subsection (2), subject to the "voter approval outside tax limitation" requirement now set forth not in subsection (2) but in subsection (3).

This authorization to levy, but only outside the tax limitation, was broadened by Or Laws 1947, ch 591, sec 9, which amended the above language beginning "and also" to read:

Finally, Or Laws 1949, ch 543 added the words "and including any supplementary budget items." Capital expenditures, current expenditures outside the rural school board approval budget (but within the original school district budget) and supplementary budget items were all permissible levy items, all subject to the requirement of voter approval outside the limitation of Art XI, sec 11.

Oregon Laws 1945, ch 345, sec 13 was also twice amended, but it still read after the 1947 and 1949 amendments in significant part:

"No tax levy based on such budget shall be made by the school district . . . other than the tax levy outside the aforesaid constitution [sic] limitation for the particular purposes specified in section 12 of this act."

No intent to change the substance of the law relating to school districts in those counties where rural school districts, the precursors of ESDs, were established, can be discerned in Or Laws 1957, ch 678, which divided the substantive provisions of Or Laws 1945, sec 12 into subsections, using virtually the same words. The fact that the "voter approval outside tax limitation" language was physically separated from the ORS 334.410(2) authorization to which it was originally attached indicated no intention to make it inapplicable. The specific and unequivocal language now contained in ORS 334.360(2) prohibiting any tax levy by the district except a voter-approved tax levy outside the constitutional tax limitation was reenacted.

We accordingly conclude that ORS 334.410(2) does not authorize such a school district to establish a tax base and levy within it.(fn1) It is deprived of that power by the first sentence of ORS 334.410. It may levy for the purposes specified in ORS 334.410(2) only as approved by the voters for a particular year outside the limitation of Or Const Art XI, sec 11.