Utah Constitutional Revision Commission
Members Present:
Mr. Gayle McKeachnie, Chair Mr. Alan L. Sullivan, Vice Chair Rep. Afton B. Bradshaw
Sen. Mike Dmitrich
Justice Christine Durham
Rep. Byron L. Harward
Mr. Dallin W. Jensen Rep. David M. Jones
Mr. W. Craig Jones
Mr. Morris Linton
Sen. Howard C. Nielson Mr. Richard V. Strong
Dr. Jean Bickmore White
Prof. Kevin Worthen
Members Excused:
Ms. Diana Allison
Members Absent:
Sen. Lane Beattie
Staff Present:
Ms. Lisa Watts Baskin,
Executive Director
Mr. Jerry Howe,
Research Analyst
Ms. Junie Anderson,
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.
1. Call to Order - Chair McKeachnie called the meeting to order at 9:03 a.m.
MOTION: Rep. Harward moved to approve the minutes of the July 11-12, 1997 meeting with the following amendment after Mr. Strong's comment on page 16: "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."
Other technical amendments, including a reference to a statement made by Mr. Wangsgard which had been incorrectly attributed to Mr. Sefakis, were made.
The motion to approve the minutes as amended passed unanimously.
2. Farewell to Ms. Mary Anne Q. Wood
Chair McKeachnie presented Ms. Wood with a plaque and expressed the commission's appreciation for her twelve years of dedicated service. Ms. Wood explained that her service on the commission has been both satisfying and rewarding. She said that she will miss the association with the commission. The commission recessed to bid farewell to Ms. Wood.
3. Charter Provisions in Other State Constitutions
Ms. Baskin briefed the commission on charter city provisions in other states, noting that the provisions might give this commission some guidance as they study charter cities. Three handouts were distributed titled, "Constitutional Powers and Limitations of Charter Cities," "S.J.R. 2_Special Service Districts," and "Powers of Cities as Articulated in Other States' Constitutions."
Ms. Baskin emphasized that, more often than not, the various state constitutions provide that charter cities' authority is not denied by general law or is not inconsistent with the constitution, which indicates the standard by which the charter city ordinances will be upheld. She said that some states provide for fiscal home rule while other states do not have a fiscal home rule provision. She explained that Vice Chair Sullivan has suggested that the procedures for charters be eliminated and, instead, provide language enumerating city powers and authority to adopt charters. The Utah Association of Counties, she stated, requested that counties also be given authority to create county charters. If so granted, she said, it would be important to articulate which charter would preempt the other if a city charter and a county charter conflict.
Rep. Harward asked if, according to the language in the model, the city charter supercedes statute or whether or not a city charter subject to statute?
Ms. Baskin responded that city charters are subject to state statute. She referred to Wadsworth vs. Santaquin City, 28 P.2d 161 (Utah 1933), that interpreted Article XI, Section 5 to mean that the powers enumerated for charters are equally available to cities operating under a legislative enactment when the legislature has conferred those powers by statute. She then referred to Rich vs. Salt Lake City Corporation, 437 P.2d 69 (Utah 1968), which indicated that Salt Lake City did not have the authority to operate a transportation system because it is a legislative and not a charter city. And then, under Logan vs. Utah Power and Light, 796 P.2d 697 (Utah 1990) she indicated that Article XI, Section 5(b) confers the power to provide electrical services, but not the right to provide electrical services. The case distinguishes between a power to provide a service and the right to provide a service, she said. Since 1990, she stated, the
distinction between powers and rights has not been reemphasized.
Chair McKeachnie asked whether the commission would like to leave the charter city
provision in the constitution, and if so, should it be clarified as to whether it applies only to
charter cities or to all cities? He reminded the commission that a preliminary decision had been
made to provide for charter cities in the constitution.
Vice Chair Sullivan said that he understood Tooele, which is the only existing charter city in Utah, liked its charter city status although, in his view, the rationale for charter cities
evaporated after the Hutchinson case was decided by the Utah Supreme Court. The opportunity allowing for charter cities probably should be left open, he said, but a provision dealing with
powers of legislative cities is more important because non-charter cities constitute a much larger
number of the cities in Utah. It is not clear whether the constitution enumerates powers, he said,
and there is still the question of whether that should be done or not.
Rep. Harward stated that if the constitution were not changed, cities would have
enumerated powers as indicated in Logan vs. Utah Power and Light. He suggested that the court's analysis of that case would not make sense if the constitution only applied to charter
cities, because Logan is not a charter city.
Justice Durham suggested that the case may have turned out that way if attorneys' briefs did not underscore that Logan was not a charter city.
Mr. Jensen concurred with Mr. Sullivan that the commission is spending too much time on the charter city issue when it is an anachronism. With only one charter city, it would be more
productive to discuss what powers the constitution should grant to all the other cities in the state.
Rep. Harward stated if cities perceive charters grant broader city authority with less
limitations than the legislature might impose, then cities will continue to want the opportunity to
create charters, if only for leverage with the Legislature. He proposed that the commission
concentrate on what the language should be in the constitution with regards to legislative cities
generally, and then the question of charter cities should become more clear.
Mr. Strong explained that a 1987 commission proposal was deemed to be weighted too heavily in favor of cities.
Sen. Nielson asked staff to provide copies of that 1987 proposal.
Ms. Baskin stated that there needs to be some language to which the commission can
respond in their discussion of local government issues. She expressed frustration that the
commission gives direction and then, the vision is later changed.
Chair McKeachnie asked the commission how it would like to proceed.
Mr. Linton noted that he would like to see the commission list some principles that would
be relied upon to guide discussions and decision making. He explained that what the constitution
currently provides for local government may be irrelevant at this point in time, and that the
constitution may also be silent on issues it ought to contain. Nonetheless, the commission should
focus, he said, on what the constitution should say about cities in general so that the constitution
will be clear on the role local governments are to play.
Rep. Harward suggested that the commission consider this study agenda:
1.
Decide what the relationship between cities and the Legislature should be - Dillon's Rule or State v. Hutchinson.
2.
Equal taxation - Decide whether it is appropriate for counties to only be able to impose taxes on the whole county? Does there need to be a separate entity (special district) to
address localized problems?
3.
Debt limits - Should debt limits exist, and if so, how should they be structured? Is it good government to allow debt limit provisions to be circumvented so easily?
4.
Dillon's Rule for counties - What should the scope of the authority of counties be on their own decisions?
5.
After the relationship among the Legislature, and cities and counties, and between cities and counties has been decided, then any remaining needs could be filled by independent
or dependent special districts.
He emphasized that these concepts should be addressed each one in turn and then many
of the questions the commission is now fielding will be better understood.
Mr. Jensen agreed with this approach, but expressed concern with addressing those issues
as a package. He suggested discussing the issues one at a time.
MOTION: Vice Chair Sullivan moved that staff prepare two alternatives to be discussed at the next meeting relating to powers of cities. The first alternative would be a
constitutional codification of the rule in the Hutchinson case, a modified Dillon's rule, and the second would be in line with the model constitution which states that
cities can do whatever the Legislature does not prohibit them from doing and
listing no prohibitions.
The motion passed unanimously.
MOTION: Rep. Jones moved that staff prepare a list of potential problems and issues to be addressed relative to each alternative.
The motion passed unanimously.
4.
Discussion of policy and proposed changes, "Resolution Amending Local Government Provisions," DRAFT 1998FL-0025
Handouts titled, "Consideration of Proposed Resolution Affecting Special Districts," and
"DRAFT, Resolution Amending Local Government Provisions" were distributed. The
committee discussed the proposed changes.
Rep. Harward acknowledged that the Legislature cannot place all the special districts
under county management because of the uniform and equal rate of taxation issue so a separate
unit of government has to be created to tax the property within the a county at different rates. He
suggested that it may make some sense to give counties authority to tax at different rates,
provided certain protections prevent taxation without representation, without having to create a
special district. He questioned the purpose of creating a special unit of government in order to
give equal taxation.
Chair McKeachnie questioned whether there is a proliferation of local district
governance, and even if there were, he asked if that was problematic? Special districts tend to
provide better service than general government because they have a single mission, he said. The
problem, he explained, is that no one is balancing the overall picture. Some oversight should
exist for all of these independent units, he said.
Vice Chair Sullivan said that a constitutional problem is that the only special district
provision is in Article XIV, Debt Limits. He indicated that the state has gone too far to adopt a
proposal that would eliminate special districts so he suggested inserting a simple statement in
Article XI, not Article XIV, that authorizes the Legislature by general law to provide for the
creation of special districts. He would not insert a provision stating that special districts have to
be presided over by county officials or a commission, and there may be some limitations that
need to be placed on special districts.
Mr. Brent Gardner, Utah Association of Counties, expressed concern for the lack of accountability and the frustrations of tax payers regarding all the separate entities that have
taxing authority.
Justice Durham asked whether the Legislature could fix all the description,
accountability, and awareness problems right now, without any constitutional changes so that it
would be known where the special districts are located and what their purpose is? She also
suggested that limitations could be applied directly to the special districts.
Rep. Harward said that he was willing to take suggestions for draft legislation that would
require special districts to register with the state. He explained that he currently has a bill request
on this issue.
Ms. Baskin noted that in the working draft there is a section provided for special districts
in Article XI that is also retained under debt limits. She also noted that taking that out and not
having anything about special districts under debt limitations would not be advisable.
Vice Chair Sullivan suggested that the portion regarding debt limitation for special
districts be under Article XIV, but the creation of special districts be in Article XI. He also
suggested that the reasons for creating special districts need not be enumerated because there are
too many. Furthermore, he said, the Legislature does not need limitations on the way it can
organize special districts, unless there is a really good reason to do so.
Chair McKeachnie said the word "special" should not be used with districts in the
constitution. He suggested taking the word "special" out of the constitution in regards to special
districts.
Mr. Michael Mazuran stated that special districts only came into being during the past two years. Before that, he said, they were not called special districts. He suggested "local
districts" or some other name that would convey a different message to the public.
Mr. Fred Finlinson, Callister, Nebeker & McCullough, suggested that the commission identify the responsibilities of each of the entities as provided for in the statutory scheme that the
Legislature has established. He distributed a handout titled, "DRAFT, "Resolution Amending
Local Government Provisions." He said that the commission's attempt to define local
government will depend on whether or not the commission can recognize what currently exists
and if it should be changed. He suggested that if the commission gets involved in the battle of
trying to solve differences between cities and counties, any proposal may not pass the rules
committee. It would be very beneficial, he said, if the commission could identify what cities are
and what they should be able to do. Furthermore, he stated that the handouts were a reaction by
independent special districts detailing the problems they foresaw if the draft were to be passed.
He noted that the commission's discussion has shown that it is not ready to adopt this draft. Mr.
Finlinson also expressed comfort with the continuing discussion.
Mr. Jan T. Furner, Executive Director, Utah Association of Special Districts, distributed a handout titled, "Consideration of Proposed Resolution Affecting Special Districts."
Mr. Furner agreed with Mr. Sullivan that a general statement that the Legislature has the power
to create special districts would be helpful. He apologized that there are so many types of
districts, but stated that they were created to provide specific purposes. He expressed
appreciation that the commission is reviewing special districts and said that a brief statement in
Article XI, would be sufficient to clarify some of the issues being raised.
Chair McKeachnie stated that the commission needs to decide whether they want to
spend time on the equal and uniform issue as a part of the local government review.
Rep. Harward questioned whether or not the creation of special districts was to avoid debt
limits? Would it be better to remove or expand the debt limits which would reduce the
motivation to create special districts, he asked. He said that if debt limits make sense, and if it is
determined that there should be special districts, then it makes sense that special districts should
also be subject to debt limits.
Mr. Blaine Carlton, Ballard, Spahr, Andrews & Ingersoll, said that he is unaware of any governmental entity that has had a serious problem with debt limitations, or of any special
district that was created for the purpose of avoiding debt limitations. He commented that most
districts never issue general obligation debt, so as a result, never have a debt limitation issue. He
noted that special districts issue revenue bonds, which are not considered debt.
Rep. Harward presented the illustration of both a jail and a road being built by a special
district. The payment for the jail or road is made by the county through lease agreements to the
special district which has purchased the jail or road by issuing revenue bonds. Because the
payment goes to a special district, the county payment does not count against its debt limit,
although if the county were to attempt to pay for the jail or road directly, by issuing the bond
itself, the cost of the jail or road would count against its debt limit.
Mr. Carlton responded that would be the financing mechanism given to cities, counties,
and school districts, not to special districts, called a building authority and is not a governmental
agency.
Rep. Harward asked if the services were to be provided by the county, would there be a
lower debt limit than if the services were provided by a special service district?
Mr. Carlton said that if one added up the authorized debt levels at the various units of
local government, they would clearly be in excess of the debt limit assigned to the county in the
constitution. Initially, when school districts were created, it was to avoid the limitation of debt
from the cities and counties, he explained. Today, the cost of the revenue bonds are almost equal
to the rate of the general obligation bond, when you look at the full cost of issuance, he said.
Mr. Carlton agreed that the building authority concept is a way for a county, city, or
school district to acquire an asset without going through a bond election. Water and sewer
improvements, he said, are typically funded with revenue bonds, which are not considered debt
and do not require a vote. In his opinion, revenue bonds are not issued to avoid debt limitations.
Rep. Harward commented that it is an amazing way to get around vote provisions of the
constitution, which are part of the debt limitations. He said that either the limitation should be
questioned or the way to avoid it should be eliminated.
Mr. Carlton stated that the proposed language addresses changing the governance of
special districts back to the cities or counties that created them. That could have some very
negative consequences for the special districts in terms of federal taxation because federal tax
law determines how, and to what extent local government entities can issue tax exempt debt to
finance capital improvements.
Ms. Baskin referred to the transcripts distributed in the mailing, noting that bonded
indebtedness was addressed by the Legislature when Article XIV, Section 8 was debated and
passed. She recommended that the commission read the transcript for Legislative intent.
Mr. Bob H. Rees commented that Municipal Building Authorities are, by statute,
dependent special districts and can be organized as a non-profit organization.
Mr. Carlton responded that it makes no sense that the Legislature qualified them in that
way when they are clearly just a financial vehicle for counties and cities.
Rep. Harward asked how the creating city or county could tax the property in that district
at a different rate than properties in other areas of the county?
Mr. Carlton responded that it is not the tax that is different but the assessment.
Rep. Harward said that an increased assessment intended to produce higher taxes is the
same as increasing taxes. It is distinction without a difference, he said.
Rep. Harward was dismayed by the debt limit provision. He would like to know, in an
example county, what the taxable value is and what the maximum amount of debt is. He
requested a comparison of the sum of the debt limitations of the special districts vs. the county or
city and if one could know how much debt actually exists. He noted that it may be an impossible
task, since there is not a firm accounting of what special districts exist.
MOTION: Rep. Harward moved that the appropriate legislative office prepare a financial report to present to the commission showing what the constitution states
pertaining to all cities and special districts within an example county, what the
debt limits are and how they apply.
The motion passed unanimously.
5. Other business - Ms. Baskin explained that the commission will have a joint meeting
with the subcommittee of the Political Subdivision Interim Committee on September 12.
The commission mentioned that it would like to know how the subcommittee would like
to handle some of the policy issues concerning special districts.
MOTION: Vice Chair Sullivan moved that language relating to special districts (or whatever is deemed best to call them) be drafted in the local government article. This
language would include Legislative authority to create special districts, in the
same ways currently allowed, by statute or by initiative, without a list of purposes
for which they can be created. The draft would provide for a series of options
relating to specific limitations on the Legislature's authority to create special
districts and a specific list of debt limitations in Article XIV.
The motion passed unanimously.
6. Adjourn
MOTION: Chair McKeachnie moved to adjourn the meeting at 11:45 a.m. The motion passed unanimously.
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