Baltimore County Coalition Against Unfair Taxes v. Baltimore County

MURPHY, Chief Judge. This case involves the referendum provisions of § 309(a) of the Baltimore County Charter and whether a county ordinance, imposing a tax on non-reusable sealed beverage containers, was referable to county voters at the November 1990 General Election. I. Section 309(a) of the Charter reserves to the people of Baltimore County “the power known as ‘The Referendum,’ by petition to have submitted to the registered voters of the county, to approve or reject at the polls, any enacted law or ordinance or part of any such law or ordinance of the county council.” Under this provision of the Charter, if a referendum petition is properly executed and filed, the referred law will not take effect until thirty days after its approval by the voters at the next ensuing General Election. ¹⁸⁸ These further provisions, which limit the scope of the referendum right, next appear in § 309(a): “No law making any appropriation for maintaining the county government, or for maintaining or aiding any public institution, not exceeding the next previous appropriation for the same purpose, shall be subject to rejection or repeal under this section. The increase in any such appropriation for maintaining the county government or for maintaining or aiding any public institution shall take effect only as in the case of other laws, and such increase, or any part thereof, specified in the petition may be referred to a vote of the people of the county upon petition as above provided.” The Baltimore County beverage container tax ordinance (Bill No. 47-89) was enacted on June 9, 1989 and codified as Baltimore County Code (1978, 1988-89 Cum.Supp.), Article VIII, §§ 11-68 through 11-72.

According to its title, the ordinance was “[f]or the purpose of levying and imposing a two-tier tax on non-reusable sealed beverage containers.” Section 11-68 of the ordinance provided that the tax was imposed “upon every distributor who supplies to a dealer in the County nonreusable beverage containers containing beverages as defined [in § 11-69].” The tax imposed was two cents on containers of not more than sixteen fluid ounces and four cents upon containers having a greater capacity. The ordinance required distributors to collect the tax beginning December 1, 1989. Following passage of the tax ordinance, a petition to refer the law to the county voters under § 309 of the Charter was initiated by a number of entities and individuals (the petitioners). By opinion dated June 9, 1989, the County Solicitor advised the County that the tax ordinance was excluded from referendum under § 309 of the Charter because it was a law making an appropriation for maintaining the county government.

Notwithstanding the County Solicitor’s opinion, the petitioners circulated a referendum petition entitled “Petition Regarding a New Beverage Container Tax.” The petition recited that the tax ordinance provided ¹⁸⁹ “additional tax revenues as part of increased General Fund appropriations included in the 1990 Annual Budget and Appropriation Ordinance of Baltimore County for, among other things, solid waste disposal and the implementation of the tax, such Act levying and imposing a two-tier tax on non-reusable sealed beverage containers as a part of the General Fund.” The referendum petition thereafter set forth the entire text of the ordinance. The petition was executed and filed within the time prescribed by § 309(a) of the Charter and contained the requisite number of signatures to refer the law to the county voters at the November, 1990 General Election. Based on the County Solicitor’s opinion that the ordinance was nonreferable, and thus was not suspended by the filing of the referendum petitions, the County announced its intention to enforce the provisions of the law and to collect the tax. Thereafter, on October 3, 1989, the petitioners sued for declaratory and injunctive relief in the Circuit Court for Baltimore County.

They sought a declaration that the tax ordinance, being the subject of a valid referendum petition filed in full compliance with § 309 of the Charter, was without effect, inoperative, and unenforceable unless and until approved by the voters. The petitioners also sought an injunction against enforcement of the ordinance and the collection of the tax pending the result of the vote on the referred law. Upon the County’s motion to dismiss the petitioners’ complaint, Judge John F. Fader, II, after an extensive hearing, issued a declaratory judgment on November 11, 1989. He declared that § 309(a) of the Charter “provides that increases in appropriations for maintaining county government are subject to the referendum process”; that § 309 “exempts from the referendum process new or initial appropriations for maintaining county government”; that the ordinance was “a new or initial appropriation bill for maintaining Baltimore County Government,” rather than an “increase” in an appropriation; and that consequently the ¹⁹⁰ ordinance was not subject to referendum under § 309 of the Charter.

Underlying Judge Fader’s declaratory judgment was his expressed belief that “§ 309 has used the word ‘increase’ in its sense that it means something in addition to something that has occurred before, and that the initiative, at least initially, belongs to the government to determine how the people’s wherewithal shall be taxed. After that initial decision by government as to what should be taxed and how it should be taxed, the people have reserved for themselves in § 309 the power to set to referendum any increase in that initial determination.” Upon petitioners’ appeal to the Court of Special Appeals, we granted certiorari prior to argument in that court and advanced the case on the docket to promptly resolve the important issue raised in the case. By per curiam order dated December 1,1989, a majority of the Court concurring, we affirmed only that part of the circuit court’s judgment which declared “[t]hat Bill 47-89 is ... not subject to referendum under the provisions of Charter Sec. 309.” We now give our reasons for that determination.

II

As authorized by Article XI-A of the Constitution of Maryland (the Home Rule Amendment), the Charter Board of Baltimore County was established in 1954 to prepare a Charter for the county. The voters of the county adopted the Charter in 1956. Included within it were the referendum provisions of § 309(a), as to which the Reporter to the Charter Board stated that it “reproduces almost verbatim various provisions of Article XVI of the State Constitution entitled ‘The Referendum,’ provisions which apply to laws enacted by the General Assembly.” The Reporter further stated that “[t]he only minor departure from the constitutional pattern is the provisions relating to the form of affidavit of the person securing the signatures.” See Proposed Home Rule Charter For Baltimore County, Maryland with Reporter’s Notes and Index, April 9, 1955, p. 100. ¹⁹¹ Article XVI of the State Constitution, in § 1(a), reserves to the people the power “to have submitted to the registered voters of the State, to approve or reject at the polls, any Act, or part of any Act of the General Assembly.” Section 2 of Article XVI limits the right of referendum in pertinent part as follows: “No law making any appropriation for maintaining the State Government, or for maintaining or aiding any public institution, not exceeding the next previous appropriation for the same purpose, shall be subject to rejection or repeal under this Section. The increase in any such appropriation for maintaining or aiding any public institution shall only take effect as in the case of other laws, and such increase or any part thereof specified in the petition, may be referred to a vote of the people upon petition.” As interpreted by our cases, Article XVI, § 2 excepts from the right of referendum a “law making any appropriation for maintaining the State Government”; it authorizes a referendum petition to a law making an appropriation “for maintaining or aiding any public institution,” only to the extent of the increase over the next previous appropriation for the same purpose.

See Kelly v. Marylanders for Sports Sanity, 810 Md. 437 , 454, 530 A.2d 245 (1987). As we said in Kelly, 310 Md. at 475 , 530 A.2d 245 , the language in Article XVI “ ‘not exceeding the next previous appropriation for the same purpose/ refers to laws for maintaining or aiding any public institution, but not to laws making any appropriation for maintaining the State government.” Notwithstanding the Charter Board Reporter’s view that the referendum provision of § 309(a) of the Charter was almost a verbatim reproduction of the referendum provision set forth in Article XVI of the Maryland Constitution, § 309 contains more than a minor departure from the verbiage of Article XVI. As already observed, § 309(a) first excepts from the right of referendum a county law making “any appropriation” for maintaining the county government, “or for maintaining or aiding any public institution, not exceed ¹⁹² ing the next previous appropriation for the same purpose.” By its further provisions, § 309(a) qualifies the exception by stating that “[t]he increase in any such appropriation for maintaining the county government or for maintaining or aiding any public institution ... or any part thereof, specified in a petition,” may be referred to a vote of the people of the county. (Emphasis supplied.) Article XVI of the State Constitution thus limits the right of referendum as to “any appropriation” to an “increase” over the prior year’s appropriation only for maintaining or aiding any public institution; it does not permit a referendum as to any increase in an appropriation for maintaining the state government.

Section 309(a) of the Charter, on the other hand, purports to permit a referendum petition as to the “increase, or any part thereof,” contained in “any appropriation” whether for (1) maintaining the county government, or (2) for maintaining or aiding any public institution which exceeds the prior year’s appropriation for that institution.

III

The petitioners maintain that nothing in § 309(a) supports the trial court’s judgment that new or initial appropriations for maintaining the county government are exempt from referendum. The container tax ordinance, they claim, is a law which increases an appropriation for maintaining the county government within the contemplation of § 309(a). In particular, they argue that § 309(a) permits a referendum of a tax ordinance which generates an increase in revenues to maintain the county government. Although the petitioners recognize that, in a literal sense, a revenue raising tax measure does not qualify, by itself, as an “appropriation,” they point out that under our decisions interpreting the referendum provisions of Article XVI of the Maryland Constitution, an appropriation of public funds is made by a legislative enactment whose primary object is to authorize the withdrawal from the treasury of a certain sum of money for a specified public object or purpose. ¹⁹³ While they acknowledge that the container tax law does not itself authorize or require withdrawal or expenditure of money, and that the revenues collected under the ordinance are not dedicated to a specific use, object, or purpose, the petitioners emphasize that the ordinance provides a new source of revenue as an “enhancement” of the county’s General Fund.

They also recognize that an appropriation for maintaining the government is usually found in a budget bill or a supplementary budget bill and not in a law imposing a new tax. Thus, the petitioners reason that if the container tax ordinance is to be regarded as a law making an appropriation for maintaining the county government, it is so classifiable only because of its linkage to the county budget bill as a revenue producing component of the county’s General Fund. In this, the petitioners place reliance upon certain of our cases interpreting the referendum provisions of Article XVI, which, they say, hold that revenue raising and budget measures are in pari materia and must be construed together as though they constituted one act. As a result, the petitioners argue that a measure providing revenue in support of an enacted budget constitutes a law making an “appropriation” under § 309 of the Charter.

The petitioners contend that the drafters of the Baltimore County Charter were well aware of the essential unity of a revenue ordinance and the budget bill and intended to treat a revenue measure as an integral part of the budget bill; and, consequently, the former must be regarded as a law making an appropriation for maintaining the county government. The petitioners therefore urge that the container tax ordinance is the equivalent of a law making an appropriation for maintaining the county government. They say that § 309(a) excludes from referendum only those laws making an “appropriation” for maintaining the county government which do not exceed the next previous appropriation for the same purpose. In other words, according to the petitioners, the tax ordinance is inextricably linked to the budget; that the ordinance causes an increase in the annual appropria ¹⁹⁴ tion for maintaining the county government beyond that in the previous year’s budget; and that, as to such increase, the tax ordinance is referable in its entirety to the county voters.

This is so, the petitioners suggest, because the wording of § 309(a) is different from that contained in Article XVI of the State Constitution, signifying an intentional departure from the provisions of Article XVI. They conclude that the electorate in Baltimore County may petition to referendum a tax measure which yields increased revenue for maintaining the county government by disbursements through the county budget bill.

IV

The record discloses that the container tax law was enacted by the County Council on May 30,1989 and that the annual budget ordinance for the fiscal year ending June 30, 1990 was enacted at approximately the same time. The budget bill contained the appropriations necessary for maintaining the county government for that budget year and was mainly funded by revenues paid into the county’s General Fund. The container tax was intended to provide an enhancement of $2,125,000 to the General Fund for FY 1990. This revenue source was was one of a number of sources of revenue calculated to provide a balanced budget while providing the necessary monies to operate the county government.

In his annual Budget Message to the County Council for FY 1990, the County Executive indicated his support for the container tax ordinance, and the revenue produced thereby, which he said would “help offset the ever-increasing costs of solid waste disposal and the cost of a planned recycling effort.” In an affidavit received in evidence, the county’s Deputy Director of the Budget stated that none of the monies raised by the container tax were earmarked for a separate or special purpose; but that all county tax revenues under the Charter are deposited into the county’s General Fund, which constitutes the primary source from which appropriations are made to defray county expendí ¹⁹⁵ tures for operating the county government. In this regard, the Deputy Director stated that the container tax “constitutes a financial resource which will combine with numerous other sources of revenue so as to generate monies required to balance the budget.” He also said that the County Executive’s Budget Message with respect to solid waste disposal and a recycling program was “merely justification for that levy; by no means does it set aside those funds for their contribution to a special, or fund other than the general fund.” Specifically, the Deputy Director emphasized that “revenue sources required to balance the budget are not connected or related to any dedicated appropriation for solid waste or a planned recycling effort ...; [and] there is no direct causal linkage in the budget between the beverage container tax and the amount of appropriation for refuse collection and disposal.” Otherwise stated, the Deputy Director said that the amounts of “revenue needed to balance the budget are simply unrelated to the purpose of any one or more appropriation, but are based upon the total of estimated budget costs ... [and therefore] the container tax has nothing to do with any appropriated project cost, but instead is based solely on the ‘bottom-line’ estimated expenditures the County will have in FY 1990 with respect to providing service required by law.” Under Article VII of the Charter entitled “Budgetary and Fiscal Procedures,” the County budget consists of “the current expense budget, the capital budget and capital program and the budget message, which shall be combined as one document”; it represents “a complete financial plan for the county reflecting all receipts and disbursements from all sources, including all revenues, all expenditures, and the surplus or deficit in all general and all special funds of the county government.” § 703. Section 704 requires that all estimated revenues be detailed as to source, and estimated expenditures as to program or project. Under various other provisions of Article VII of the Charter, it is provided that all disbursements of county revenues must be made pursuant to the annual budget ordinance, by budget ¹⁹⁶ appropriation transfers, or by supplementary or emergency appropriation measures.

V. The County embraces Judge Fader’s determination that the container tax ordinance constitutes a new appropriation, rather than an increase in an appropriation, and for that reason is not referable under § 309(a). The County points to the common dictionary meaning of the word “increase” as an addition or enlargement — “something that is added to the original stock by augmentation or growth.” It contrasts this definition with the common meaning of the word “new” as meaning “novel or unfamiliar.” Upon this premise, the County maintains that Judge Fader correctly distinguished between a new and an increased appropriation, properly excepting the former from the referendum right under § 309(a) but not the latter. According to the County, the appropriation process is separated into two steps, i.e., the County Council must first raise the requisite revenues and, second, it must make disbursements through the budget bill. Revenue producing measures and revenue disbursing measures, it points out, must be embodied in separate bills.

Section 710(c) of the Charter prohibits the County from appropriating and spending money without simultaneously providing the means to fund such appropriations. Moreover, the County explains that the Charter requires that the proceeds of the tax ordinance be deposited in the general fund and then transferred to legislative objectives in the budget bill or in the amendments thereto. The County does not suggest that a revenue raising measure, considered in pari materia with the budget bill, is not to be classified as an appropriation for purposes of § 309(a). It takes this position without regard to whether the tax ordinance dedicates or earmarks the revenue which it produces for a special or particular purpose, or whether there is a direct linkage between the budget bill and the tax ¹⁹⁷ ordinance.

The County acknowledges