Utah Constitutional Revision Commission
July 12, 1997 - 9:00 a.m. - Logan, Utah
REVISED
Members Present:
Mr. Gayle McKeachnie, Chair Mr. Alan L. Sullivan, Vice Chair Ms. Diana Allison Rep. Afton B. Bradshaw Sen. Lane Beattie
Rep. Byron L. Harward
Sen. Howard C. Nielson
Mr. Dallin W. Jensen Mr. W. Craig Jones Mr. Morris Linton Mr. Richard V. Strong
Dr. Jean Bickmore White
Prof. Kevin Worthen
Members Absent:
Justice Christine Durham
Sen. Mike Dmitrich
Rep. David M. Jones
Staff Present:
Ms. Lisa Watts Baskin,
Executive Director
Mr. Jerry Howe,
Research Analyst
Ms. Wendy Bangerter,
Secretary
Note: A list of others present and a copy of materials distributed in the meeting are on file in the Office of Legislative Research and General Counsel.
Call to Order - Chair McKeachnie called the meeting to order on Friday, July 11, 1997 at 2:10 p.m.
Welcome New Members
Chair McKeachnie welcomed Sen. Nielson and Prof. Worthen as new members of the commission. Each expressed appreciation to the commission, explained their interest in the Utah Constitution, and committed their services to its study.
Special Districts
Mr. Eckhard Bauer, CPA, Office of the State Auditor, explained the auditing procedures required by law for special districts. He emphasized that there is no law that requires notice to the state that a special district has been created, even though special districts are required to disclose their budgets and financial statements to the State Auditor. This means
the Auditor does not know whether all special districts are in compliance with the reporting
requirements, he said.
Overall, he said, budgets and financial statements help special districts to be more accountable.
For example:
.
Budgets are formally
adopted and indicate whether taxes have been raised;
.
Budgets are required to be balanced;
.
Special districts with revenue less than $50,000 per year undergo a simple review. They fill out a form prepared by the State Auditor concerning the districts fund
balances but these districts do not provide a financial statement or an audit.
.
Special district's that have revenues between $50,000 and $150,000 per year undergo a compilation review, which is a financial statement, but they are not audited.
.
Special districts with revenue in excess of $150,000 receive an annual audit.
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The Auditor reviews each special districts report by checking its budget, financial statement, or audit for correct accounting, compliance with state law, and determines
whether the general fund is within the required parameters; and
.
Special districts are notified by letter concerning the Auditor's findings.
Mr. Bauer explained that special districts can have two forms of bonds: general obligation bonds and revenue bonds. General obligation bonds are debt that is paid by taxes
collected by the district, usually property tax, but that revenue bonds are debt that is paid from
fees charged by the district for its services. Revenue bonds, he said, are generally not subject
to debt limits like general obligation bonds.
Furthermore, he explained that when a district is found to be in noncompliance, the
auditor is permitted to withhold funds. As one can imagine, this is a powerful tool which is not
necessary to use often. However, when a district operates with revenue bonds, (fees for
service rather than a property tax), he said that the Auditor's influence is diminished because
there are no funds to withhold since the district collects the fee itself whereas property taxes
are collected by the county and then later appropriated to the district. Notwithstanding, Mr.
Bauer emphasized that special districts almost without exception try to comply with the
established reporting requirements. When noncompliance has been an issue, he said, it is more
often because they need help with accounting not because they willfully neglect the law.
Mr. Bauer explained the three common funds of special districts.
.
The General Fund. This fund is used for the day-to-day maintenance and operations of special districts. The general fund is limited to the amount of the current year's
property tax, 50% of revenues if revenues are less than $100,000, or 25% of revenues
if revenues are above $100,000.
.
Enterprise Fund. This fund is used to deposit fees from services which are later transferred to the general fund or capital projects fund. This fund is not limited.
.
Capital Projects Fund. This fund is used to save large sums of money for capital projects. Monies budgeted from the general fund or enterprise funds can be deposited
into a capital projects fund. This fund is not limited.
Responding to questions, Mr. Bauer explained:
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Special districts have autonomy over the funds they spend. In its review, the auditor does not suggest how money should be spent.
.
If a special district goes inactive, they would simply stop sending the auditor reports. No district to Mr. Bauer's knowledge has gone inactive.
.
Dependent special districts are not subject to the same reporting requirements as independent special districts. The auditor does not review dependent special district
financial statements or audits.
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Without an accurate number of special districts, it is hard to determine whether they are growing at an alarming rate. Mr. Bauer did not think the number of special districts
had doubled in five years.
.
The auditor has created a telephone hotline to field complaints about special districts. Legal questions are referred to a county attorney, although complaints have sometimes
been forwarded to the attorney general, but the auditor does not have the ability to
enforce the law, he said.
Ms. Baskin asked why a small special district would
not want to dissolve and let volunteers come and accomplish the needed service? Mr. Bauer responded that this issue
would be between the creating entity and the district itself.
Chair McKeachnie stated that the role of the commission is to determine if the
constitution serves special districts as it should. The districts themselves, he stated, are good
advocates for their individual purposes. The state constitution authorizes cities, counties and
towns to establish special districts and the state has no control over when they are created or
how long they exist. He asked Mr. Bauer if there are any changes or recommendations his
office would have, and if he knew of any other state offices that are concerned about special
districts? Mr. Bauer stated they have no formal way to find out where, or how many special
districts exists. Mr. Bauer expressed hope that the special districts out there voluntarily comply
with the law.
Rep. Harward suggested that, like a corporation, a special district should have to file annual papers with the state before it is legally authorized to conduct its business. Mr. Bauer
agreed that such a requirement would allow accurate reporting of special districts. Presently,
he said, nothing of the sort is required and he does not know how many districts are in
compliance. Rep. Harward said that residents deserve a government responsive to their
complaints.
Duplication of services between counties, cities, and special districts
Mr. Marc T. Wangsgard, Attorney for approximately two-thousand homeowners who are seeking to withdraw from the White City Water Improvement District. Mr. Wangsgard
introduced Nick Sefakis, general manager of the Salt Lake City Metropolitan Water District.
Mr. Wangsgard explained that Salt Lake County created the White City Water Improvement
District through a property owner petition. The district, he said, is independent, and that once
its governing board was in place there has been no oversight from the county commission.
The district, he noted, includes both incorporated and unincorporated area so neither the city
nor the county provide oversight. The district, he said, competes directly with the Salt Lake
City Metropolitan Water District, its services are more expensive, and the people within the
the White City Water Improvement District cannot get out. He said they are essentially held
hostage to higher rates.
Mr. Wangsgard explained that he is not seeking a remedy from the commission.
Instead, he explained that his purpose was to explain the trouble competing governments can
bring upon residents. The White City Improvement District and the Sandy City controversy,
he said, is in stark contrast to the theme of the last commission meeting, which was that
special districts are some of the most accountable governments in the state, only existing to
provide services that a city or county cannot or will not provide. He explained that his clients
have a different view because 1) they are trapped in a district that charges more for a service
that they could get cheaper elsewhere, 2) the board of directors is not accountable to their
needs, 3) they fear multiple taxation because the district has taxing authority, and 4) they
cannot get out of the district.
Mr. Wangsgard directed the committee's attention to a map of the White City Water
Improvement Service area which illustrated an unusual set of boundaries. He explained that
Sandy City operates 29 wells with lines that course through the White City Water District area
but that many of the actual connections to the homes are not provided by Sandy City. He said
this problem developed because of divergent interests. Some residents wanted the White City
Water because they were in an unincorporated area and this could stave off annexation.
Originally, he said, the White City Water was provided by private investors.
In 1993 the White City Water was put up for sale and a special district was created to
buy and operate the water delivery system.
There was a public hearing, those in attendance were primarily from the unincorporated areas. (Minutes of the meeting are included in Mr.
Wangsgard's handout)
Mr. Wangsgard explained the major problem was that Sandy City
residents are a minority, so election results are controlled by the county (unincorporated)
residents.
In October of 1994, a bond election was held and the district proposed to incur general
obligation debt. Sandy City began a petition drive to withdraw from the district because they
feared double taxation. The petition was organized by dividing up the incorporated areas to
gather signatures. The state statute requires fifty percent of the citizens to sign the petition to
withdraw from a district, which must be submitted to the district court prior to the time water
service begins. Most of the neighborhoods did not meet the legal criteria because they did not
own property, which resulted in small geographical areas meeting the criteria to withdraw
while the non-property owners did not meet the requirements. This harmed those who wanted
out but were left behind because rates were raised. The bonds were purchased, the water
company was purchased, and service began--locking the door to those who wanted out, he
said.
Incidently, he explained, although the district decided to charge a fee rather than tax,
which would have resulted in double taxation, there is still a legitimate concern that double
taxation could occur. Sandy City residents are already taxed by the Metropolitan Water
District, the Central Utah Water Conservancy District, and by Sandy City. After the petitions
were filed, the water district sued Sandy City, claiming interference with their service. A
legislative solution was sought that would provide a way for those who want out of the district
to leave.
The legislation provided:
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a referendum process so people could choose which water service they belonged to;
.
people who chose to withdraw from White City, Sandy City would handle the withdrawal action; and
.
Sandy City would then have to retire the outstanding bonds for those who switched.
This proposed legislation did not pass out of committee. In the future, he noted, they
will attempt to find some way to equitably divide facilities in the street so both the city and the
unincorporated areas can use them.
Rep. Harward noted that this is an example where a municipal service is provided to a
non-municipal area to prevent it from becoming municipal. He expressed concern that a
special district has been allowed to encroach upon a city's boundaries and meddle with
municipal services.
Mr. Nick Sefakis explained that the Metropolitan Water District was created during the drought of 1935 to develop a long-range water plan and supply. He explained that the
appointment process is different from a conservancy district because the city council appoints
the directors to the board for six-year terms, which make them more accountable. In 1990,
ninety-five percent of the people in Sandy City voted in a referendum to join the Metropolitan
Water Conservancy District because it has:
.
a large water supply
.
the ability to deliver that water supply to the residents
.
the ability to tax residents of both Salt Lake City and Sandy City at different rates (resulting in approximately $800,000 from Sandy and $2.8 million from
Salt Lake)
Mr. Sefakis said that it seems odd that a city is prevented from serving its residents;
especially when the city has the ability and desire to deliver the service, the service is one the
residents want to receive from the city, and can provided by the city for less money. If
residents want to withdraw from a special district, he said, they should have that option.
Pres. Beattie asked if Sandy City took over the whole district, would their water rates remain lower than White City rates? Mr. Sefakis said that their rates would remain lower
because their water is purchased wholesale.
Ms. Baskin noted areas where people are paying taxes to the Metropolitan Water
District, but receiving water from the White City Water Improvement District, thus paying for
services they do not receive.
Rep. Harward questioned how one district could charge different rates for the same
service, an apparent violation of Article XIII, Sec. 2. Mr. Sefakis stated that Sandy City
residents pay a different tax rate than Salt Lake City residents because the Salt Lake County
Auditor has identified a fixed evaluation of property which varies the rate.
Chair McKeachnie thanked Mr. Wangsgard for his presentation. He then recognized Sen. Hillyard for his service to the Constitutional Revision Commission, the maximum amount
of time allowed by law, he added, which is twelve years. He expressed the commission's
admiration and gratitude for these many years of service. A plaque of appreciation was
presented to the senator and he stated that he regarded it an honor to serve and that it has been
rewarding to see the work of the commission improve the state.
The committee recessed.
Mr. Charles Batten, Editor of Innovative Government, distributed preliminary copies
of his book and
introduced three students who completed research for the book. From this project, Mr. Batten learned that privatization is not a matter of political philosophy, but a
matter of economic survival.
Matthew Checketts, USU student researcher, stated that in his studies, he found 150 volunteer tutors donating time to help others with their education. He also studied a soccer
program in Hyde Park. If the city were to pay for the soccer program, which used 5,244
volunteer hours, it would cost $26,000. Because of volunteers, he said, the city only pays for
basic liability insurance.
Volunteers are responsible for a huge savings; they are also very effective workers because they have a higher motivation level, he said.
Laura Huggins, USU student researcher, explained that she looked to ways other than privatization to encourage innovative government. Methods she studied included encouraging
citizens and government employees to become more entrepreneurial, enacting user fees when it
is favorable, promoting performance-based budgeting, and utilizing roll-over budgets. She
developed steps to encourage entrepreneurs with incentives so their ideas could be used to
improve the community.
Roman Pikula, USU student researcher, reviewed his study of the Economic Development Office of Logan and its relationship with the Chamber of Commerce. He stated
that Logan has developed a plan that aims to unite public and private leadership in order to
initiate business development and retention programs that maintain and expand the city's
economic base.
Pres. Beattie reported on an example of privatization in the Texas prison system and
noted some benefits that are being realized through privatization.
Special Districts in Utah
Mr. Jerry Howe explained that special districts have been justified because of three constitutional provisions. The first, he said, was Article XIII, Section 2, "Uniform and Equal
Rate of Taxation." This provision prevents a county or municipality from charging different
tax rates to individuals within the same taxing boundaries so it is difficult for a county to
provide a service to a limited geographical area without taxing the entire county. He said, that
people within the county who do not receive a service, strongly object to paying for it. The
same is true for cities he said. This example has been used as an argument to allow special
"taxing" districts within the county or city to tax only the residents who will benefit or use the
service provided by the district.
Article XIV, Sections 3 and 4, provide debt limits for counties, cities, towns, and
school districts. Traditionally, when a county or city approaches its debt limit it still receives
political pressure to provide services. This pressure can be relieved by the creation of a special
district because services can be provided without having to account for the expenditures under
the debt limit provisions. This has worked as an incentive to create special districts, he said.
Mr. Howe also explained that federal money has been available to special districts
when it has not been available to counties and cities. This fact has obviously helped special
districts become more palatable, he said. Furthermore, arguments concerning specialized
managers have been advanced to justify special districts. A city, he explained, with all of its
responsibilities has less time to devote to certain services. A special district has the opportunity
to focus on the one service. This allows specialized management if the service is provided by a
special district. Although, this argument has been advanced, he said that some counties and
cities do not feel that they could not provide the service.
Finally, he said, an argument has been advanced that elected officials are too election
oriented. This sometimes prevents long-term planning for projects that may be politically
unpopular but are nonetheless vital to good government. Special districts with their appointed
boards are insulated from the political arena which make them more able to make long term
decisions. This argument can be turned against appointed boards of special districts as well, he
said, as you have heard from individuals charging that special districts are not accountable to
the public.
An understanding of why special districts have been created will help the commission
evaluate the role special districts ought to play in local governance, he added. As the
commission has noted, the term "special district" has been used in the constitution and statutes
over a long period of time. One report, he said, indicated that the first special district in
America was a prison in 1790. In Utah, the first special district seems to have been a library in
1898. From that first special district until 1990, all the special districts created in the state
were authorized by statute in the part of the code that seemed applicable.
Eventually this lead to inconsistent creation procedures, some required a petition and other an election, governing
body provisions were varied, some were appointed, others elected, and there seems to have
been no rhyme nor reason to the differences in these special district statutes.
Mr. Howe explained that in 1990 the legislature recognized this problem and
authorized a recodification of all special districts into Title 17A. At that time special districts
were categorized into two catagories: dependent special districts and independent special
districts.
Independent special districts were considered to be a separate political and corporate entity, having independent taxing authority, while a dependent special district was not a
separate entity but was rather a sub-unit of the county or city that created it. As such,
dependent special districts do not have individual taxing authority.
It was also explained that t
he Political Subdivision Interim Committee is attempting to
understand the different statutory provisions relating to the creation, dissolution, and governing
bodies of all special districts. A handout detailing some of the differences in the code among
independent special districts was distributed.
Mr. Sullivan noted that the Utah Transit Authority is considered an independent special district even though it is politically accountable
because its board is appointed by local governing bodies.
Mr. Howe said that some independent special districts are governed by the creating
entity, although it is still a separate political and corporate entity. Mr. Howe noted that many
inconsistencies exist in statute concerning special districts.
For example, he noted the definition of a special district in 17A-1-101. "Special
District" means any one of the of the special taxing districts authorized by this title. It is
interesting, he said, that special service districts are authorized by this title but that the
definition of a special service district in 17A-2-1301 is: "Service District" means a special
service district established in the manner provided by this part under Article XIV, Section 8 of
the Constitution of Utah.
Is a special service district a "special district" as defined in 17A-1-101 or is it a special
service district as explained in Article XIV, Section 8. If one concludes that special service
districts are only authorized by the constitution notwithstanding the statute, then one must
reconcile why the language of the constitution uses in its title "special service district" but in
its body uses the term "special district." The whole ordeal, he said, is rather sloppy.
Chair McKeachnie asked roughly how many special districts exist in the state. Mr.
Howe said the auditor has identified about 400, recognizing that some districts may not be
reporting so the number of special districts may be larger but not smaller. He noted, however,
that only independent special districts are included in this number. If one wants to know how
many total special districts exist in Utah, both dependent and independent, that number, he
surmised, is likely to be more than 500.
Mr. Howe then provided property tax figures from the state tax commission indicating
the percentage of property taxes received by counties, municipalities, school districts, and
special districts. In 1995, $1,700,134,000 in property tax was collected. Special districts
received nearly eleven percent, municipalities thirteen percent, counties twenty-five percent,
and school districts fifty-two percent. Over time, he said, the numbers indicate that while the
percentage of property taxes received by counties, municipalities, and school districts all
followed similar patterns, the special district percentage has been on a steady increase since
1955. He also noted that these graphs and trends only account for the percentage of property
taxes, not other sources of funding such as revenue bonds, and service fees. At times, he said,
it is difficult to determine the distinction between a fee and a tax. It is possible, he said, that a
special district could obtain a significant portion of its budget through fees.
Mr. Linton stated that the commission should not try to define the policy of the
constitution by looking at the existing confusion, but that it ought to attempt to establish the
proper principles and have the statutes clearly follow them. He also read Article XIV, Section
8, "The Legislature by general statute may authorize ... any county, city, or town to establish
special districts within all or any party of the county, city, or town to be governed by the governing authority of the county, city, or town ..." He questioned whether this language authorizes only dependent special districts, not independent special districts, such as special
service districts, which are supposedly independent.
Mr. Howe noted that special service districts also have authority in statute to create
other 'dependent districts."
Rep. Harward said that if the Legislature has the authority to create a special district
without relying on Article XIV, Sec. 8, then the provision is of little value.
Chair McKeachnie adjourned the meeting at 5:20 p.m.
Chair McKeachnie called the meeting to order at 9:10 a.m. and asked Dr. White to report on a visit to Montana to celebrate 25 years since a Constitutional Convention revised the Montana Constitution.
Dr. White explained that there were many workshops held in 1972 by the Montana delegation. During the convention, she said, there was a feeling of comradery and caring, especially for the chair of the convention. She discussed how the Montana Convention was started, and that how, even today, people feel it was a stroke of luck that the vote to hold a convention passed. She noted there were many who were interested in Utah's process of reviewing our state's constitution. Their questions and interests were primarily on how the commission has been received by the Legislature.
Ms. Baskin stated that Utah and Florida have the only two on-going Constitutional Revision Commissions. She noted that others marvel at Utah's cooperative efforts, where all three branches of government and citizens come together for the common good.
Special Districts
Mr. Bob Rees confirmed Mr. Howe's earlier statements that independent special districts are authorized to create dependent special districts. Namely, special service districts and county improvement districts, both independent special districts, are authorized to create dependent special districts.
Rep. Harward explained that very strict constitutional provisions for cities and counties have created a niche for special districts. If the state becomes uncomfortable with special district accountability, or their proliferation, he suggested that an amendment to those provisions would cause the need for special districts to evaporate.
Chair McKeachnie invited Paul Ashton to rebut the testimony of Marc Wangsgard concerning the White City Water Improvement District.
Mr. Ashton, attorney for the White City Water Company, distributed copies of his comments as he explained the litigation involving the White City Water Improvement District and Sandy City. He explained that in 1950 Mr. Kenneth White built a community with its own water company.
In 1991, Sandy offered to purchase White City Water, subject to approval of the Public Service Commission, he said. The deal from Sandy would have adjusted the water rates paid by White City because they did not pay taxes for the water delivery system. Subsequent to thel, White City conditioned the sale of the company upon allowing the Public Service Commission to represent the unincorporated area's taxation, to which Sandy City declined, he said.
At this time a special improvement district was created to purchase White City Water. Sandy City was not concerned, he said, because they assumed the bond election would fail. The bond election passed, however, and the water company was purchased, improvements were made, and now Sandy City is doing everything in its power to dissolve the district. He said the district's rates are similar to Sandy City when taxes of Sandy residents are factored into the rate. He emphasized that special districts exist to provide services that people are happy to pay for.
Constitutional Legislative History and Case Law
Ms. Baskin, explained the legislative history, reviewing the joint resolutions regarding special districts. She referred to a transcript of legislative debates concerning special districts. Ms. Baskin clarified that a special service district has been called a "separate independent corporate entity," relying on Lehi City v. Meiling, 48 P.2d 530 (1935). For purposes of discussion, she highlighted the constitutional provisions regarding or impacted by special districts:
. Article VI, Section 29, Ripper Clause, poses the questions: what is a special commission and what does it mean to perform any municipal functions or interfere with those functions?
. Article XIV, Sections 3 and 4, Debt Limits are established for some special districts and not others. She questioned the meaning of "subdivision thereof" in Section 3 and "other municipal corporation" in Section 4.
. Article XIII, Section 2, Uniform and Equal Rate of Taxation, may be seen as an impairment to the financing for the special needs of certain areas.
. Article VI, Section 1, Power Vested in Senate, House, and People, provides the legislature with the authority to create any number of special districts.
. Article XIV, Section 8, Special Service Districts, specifically grants authority to the legislature to create certain special districts.
Mr. Worthen stated that the constitution imposes some limits on the Legislature's creation of special service districts. He stated that 1) there is unfettered authority in the Legislature to create a special district; and 2) it would make sense to have authority and limitation language relating to the creation of special districts in Article XI. He stated that if there is going to be a different type of municipal government called special service districts, then those entities must be subject to some laws. We cannot avoid constitutional provisions by naming a municipal government a special service district, he said.
S.J.R.2, Special Service Districts, passed in the 1974 Second Special Session in June. She stated it was sponsored by Sens. Ferry, Bunnell, and Pettersson and allowed counties, cities and towns to establish special districts by for specific purposes. It also allowed counties, cities, or towns to levy taxes within the districts for named purposes and provided for special district to issue bonds.
In summarizing the debates, she said, the legislators determined this was needed because the Utah Supreme Court had ruled that the only special districts permissible in Utah were water and sewer, and that the others were unconstitutional, under the Ripper Clause. This decision created a financial and service dilemma due to the construction of a power plant in Emory County. Sen Rees, she explained, stated during the 1974 Special Session that the proposal was to define a special service district, different from a special improvement district. A special service district is handled by the county commissioners, he explained. She said that proliferation of special service districts was also debated on the floor, as was the circumvention of debt limits, powers of delegation from the county to a board of directors, appointment versus election of board members, qualified voters, the proliferation of special districts, and the impact of bonded indebtedness, which defined special districts. Sen. Rees also noted further needs beyond water and sewer, she said.
H.J.R. 26, Special Service Districts Resolution, sponsored by Rep. Joseph Moody in the 1989 General Session provided for counties, cities, and towns to establish special districts for health care services and repealed the grandfather clause. Sen. Carey Peterson, she stated, addressed the issue of rural counties that do not have the private providers for elderly health care services.
S.J.R. 26, Special District Resolution, 1990 General Session, recommended that special districts adopt personnel and procurement policies and the Utah Association of Special Districts provide policies and report to the Special District Review Committee by June 1990.
S.J.R. 21, Special Service Districts Resolution, 1990 General Session, provided for the repeal and withdrawal of the 1989 amendments in H.J.R. 26. The major change inserted business promotion and development for special districts. It passed in the Senate but failed in the House and failed again after reconsideration. The Senate debate explained that a revenue stream would be created to enhance the business district and environment. The House debate focused on the merchants voluntarily organizing to create revenue sources for the enhancement of the business community. She quoted Rep. Ockey as distinguishing improvement districts from special districts. We are talking specifically about special purpose service districts, which can only exist for the purposes enumerated in this section of the constitution and which are given further authority by statute. He said they were not trying to change the constitution for every special district we have under state law; it only pertains to a minor part of them. Most of them exist under other statutes, and operate independently of this section of the constitution.
Ms. Baskin then explained some of the cases that lead up to the 1974 legislative action:
Lehi City vs. Meiling, 48 P.2d 530 (1935) 1935, held that under Article VI, Section 28, Lehi City's Metropolitan Water District was not a special association, private corporation or association and is subject to a vote of the people. However, Article XIV, Sections 3 and 4, prohibit excess debt for a "subdivision" of the state. The courts determined this water service was a statewide function, not a municipal function.
Backman v. Salt Lake County, 375 P.2d 756 (1962), held unconstitutional the Civic Auditorium and Sports Arena Act which provided for a commission to operate an auditorium in counties of more than 250,000 population. She quoted Justice Henriod who viewed this district as a special commission in violation of the Ripper Clause.
Carter v. Beaver County Service Area No. One, 399 P.2d 440 (1965), held unconsitutional a County Service Area Act, which authorized the performance of an unlimited number of activities because it interfered with a municipal function. The
court declared that the Ripper Clause would be violated if a hospital were built in the
district and the bonded indebtedness was invalid because it evaded debt limits.
Mr. Bob Rees stated that the cities have authority over the health, safety, and welfare
issues of its residents. For example, he said, a city can establish a department to handle certain
administrative functions, but it cannot delegate its legislative authority to someone else.
Branch v. Salt Lake County Service Area No. Two, 460 P.2d 814 (1969), held constitutional a County Service Area Act as amended in 1967. It provided for the
creation of the Cottonwood Recreational Facility which services were not provided on a
county-wide basis. Under Article XIV, Section 3 and 4, the court stated that the service
area was not a municipal corporation, according to Lehi City v. Meiling, and was not subject to constitutional debt limits. Justices Callister and Henriod dissented, stating the
test was whether county service areas provided local or state services.
Freeman v. Stewart, 273 P.2d 174 (1954), the court held that the Ripper Clause should not be construed as strictly as some may want.
Ms. Baskin then posed the question, "What does ArticleXIV, Section 8 mean? She stated that a constitutional enactment is interpreted according to the intent and purpose at the
time it was enacted. However, legislative history based on floor debates is not enough to
determine its intent. What was the practical and the statutory construction? She noted that
Article XIV, Section 8 was voted on, but the title states special service district and the body
special district.
Rep. Harward stated that the words special service district were not present in the
heading at the time the Legislature voted on the bill, but that the publisher added them in an
effort to summarize. He posed the question, of whether the commission is going to try to
determine the appropriate organization of government regarding these kinds of services or is
the commission going to try to keep the status quo? He generated this list of question for the
commission to consider:
.
What city powers should remain in control of the city, which the Legislature should be prohibited from interfering with?
.
Is equal taxation the appropriate mechanism, or should this be amended?
.
If debt limits are in the constitution, should they be adhered to or eliminated?
.
Is taxation without representation an issue?
.
Should counties be permitted to create a service district that includes part of a city?
Chair McKeachnie stated that the commission ought to determine a philosophical
approach.
Mr. Linton stated that the commission ought to consider whether the constitution needs
to grant authority that is already inherent with the Legislature.
Mr. Jensen stated that the focus needs to be on Article XIV, Section 8 for redefinition, and clarification, but there is a question where to draw those distinctions.
Mr. Jones stated that the uniform and equal tax rate seems critical.
Pres. Beattie stated that had the Legislature been more strict constitutionally, many of
the special districts that now exist would have needed to be annexed in order to receive the
services. He emphasized that budgets are in jeopardy and special districts need some critical
oversight.
Sen. Nielson suggested that the commission start from scratch, defining special district authority, and amending all special district provision into one section of the constitution. He
stated that sometimes, in its zeal to help, the Legislature gets involved where it should not.
Dr. White spoke in favor of studying, in a broad context, what subdivisions of the state
are needed and for what purposes. She said that she is not in favor of destroying existing
districts that are performing useful functions, but that there needs to be a general mention of
them in the constitution which allows the Legislature oversight, yet affords a workable
framework.
Professor Worthen spoke in favor of eliminating the term "service" from the special district title. He stated he is hesitant to pull everything apart not knowing what comes with it.
Assurance that there is a firm and common understanding of terms is needed, he said. It
would be irresponsible to not fully study the issues.
Rep. Harward stated that if the commission does not address this issue, no one will. A
philosophical approach on how local government should be structured, is needed and however
special districts come out in that debate is fine, but the debate should take place, he said. He
suggested that the commission continue its study of the structure of local government,
recommend amendments were needed, and move forward.
Mr. Sullivan spoke in favor of studying special districts under Article XI and clarifying
the meaning of special districts and their breadth in Article XIV, Section 8.
Ms. Allison said that the commission should focus on the big picture and not worry about titles. She said that she is uncomfortable with the lack of accountability that special
districts operate under.
Rep. Bradshaw stated that terms need redefinition. She expressed concern for the
accountability of special districts and the need to address that issue.
Mr. McKeachnie posed the question whether there really is a problem, and the concern
that if the problem cannot be defined, it may not be solvable. He stated that all issues need to
be weighed and it should not be assumed that the present situation is all bad.
Ms. Baskin responded that there are concerns that the statutes need work, terms need to
be clarified, accountability measures need to be addressed, the question of how much money
special districts spend needs to be answered. Is it really the intent of the state to exempt all
special districts from the provisions that apply to cities and counties, she asked.
Mr. Strong stated that the commission needs to be aware of the competing interests. He noted that the Political Subdivision Interim Committee is studying special districts and
their proliferation. He suggested coordinating with that committee.
Vice Chair Alan Sullivan requested staff to prepare draft language for the next meeting that would revise Article XI, Cities and Towns, without new definitions but that would also
provide for the creation of special districts or special service districts, whatever we wanted to call
them, that would be inclusive of all special districts, with indications of what limitations there are
on their creation, whether they are elected or appointed and by whom, and what limitations there
ought to be on their operations, debt limitations, just to see what it would look like.
Rep. Harward agreed.
Mr. Minson stated he would like to be a part of the study process. He stated that
special districts are in fact accountable to their constituency.
Mr. McKeachnie invited Mr. Minson to submit in writing whatever suggestions or
recommendations he has before August 1, 1997. He noted the commission's consensus to
continue studying this issue.
Ms. Baskin informed the commission that the Political Subdivision Interim Committee
has expressed a desire to meet with the commission in a joint meeting.
Mr. McKeachnie suggested that Lisa and Jerry make their respective presentations to
the Political Subdivision Interim committee and then schedule a joint meeting.
Chair McKeachnie adjourned the meeting at 12:20 p.m.
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