Opinion of the Justices

460 A.2d 1341, 1982 Me. LEXIS 833
Supreme Judicial Court of Maine·Decided December 14, 1982·Published·Cited by 22 cases

Opinion

[1342] To the Honorable Justices of the Supreme Judicial Court:

By virtue of the authority conferred upon the Governor by the Constitution of Maine, Article VI, Section 3, and believing that the questions contained herein are important questions of law and that it is a solemn occasion,

I, Joseph E. Brennan, Governor of Maine, submit the following statement of facts and questions of law and respectfully ask the opinion of the Justices of the Supreme Judicial Court thereon:

STATEMENT OF FACTS

On December 22, 1981, 1,343 petitions, containing 39,214 valid signatures were delivered to the Secretary of State to initiate legislation entitled “AN ACT to Adjust Annually Individual Income Tax Laws to Eliminate Inflation-Induced Increases in Individual State Income Taxes.” The Secretary of State reviewed the petitions, deter[1343] mined the initiative petitions to be valid, and transmitted the initiated bill on January 4,1982, to the 110th Maine Legislature. Because the 110th Maine Legislature failed to enact the measure, I proclaimed on April 22, 1982, that the measure would be submitted to the voters in a referendum election on November 2, 1982.

The question submitted to the voters, the form of which is attached as “Appendix A” * hereto, was “[s]hall ‘AN ACT to Adjust Annually Individual Income Tax Laws to Eliminate Inflation-Induced Increases in Individual State Income Taxes,’ become law?” Pursuant to 1 M.R.S.A. § 353 (Supp.1982), the official explanation provided by the Secretary of State and approved by the Attorney General described the measure in the following terms:

This initiated bill would adjust the individual income tax for inflation, so taxpayers are not put into higher tax brackets as a sole result of the effects of national inflation.
Under the bill, the dollar amounts of the personal exemption and the standard deduction, as well as the dollar bracket amounts in the tax rate schedules, will be multiplied annually by the ‘inflation factor,’ a formula which measures inflation, and is based on the federal Consumer Price Index. In this manner, the personal exemption, the standard deduction and the dollar bracket amounts in the tax rate schedules would be increased in times of inflation. If approved, this bill would be retroactive to the tax year beginning January 1, 1981.
A “YES” vote approves the annual adjustment of the State income tax for inflation.
A “NO” vote disapproves this adjustment.

On November 22, 1982, the Secretary of State canvassed and determined the results of the referendum election relative to the tax indexing measure. A copy of this certification of the Secretary of the State is attached hereto as “Appendix B.” * Pursuant to Article IV, Part 3, Section 19 of the Maine Constitution, I must make a public proclamation of these results of this election on or before December 2,1982. Pursuant to the same constitutional provision, the measure will then become effective thirty days after such proclamation, unless the measure entails expenditures in an amount in excess of available and unappropriated state funds, in which case it will become effective forty-five days after the Legislature next convenes in regular session.

Serious legal questions have arisen with regard to the interpretation of the tax indexing measure and to whether its implementation would be unconstitutional. Specifically, Section 5 of the Act provides that “[tjhis chapter shall take effect for tax years beginning on or after January 1, 1981.” This provision, if interpreted to render the measure retroactive for the tax years beginning January 1, 1981, will require the State to locate and refund to Maine taxpayers approximately $32 million. According to the Affidavit of Rodney L. Scribner, Commissioner of the Department of Finance and Administration, which is attached hereto as “Appendix C,” * the State currently does not have available and unappropriated funds to fund the retroactive portion of the tax indexing measure.

This situation raises several immediate problems which I believe warrant the attention of the Court. First, pursuant to 5 M.R.S.A. § 1661 et seq. (1979 & Supp.1982), I am in the process of developing a budget proposal governing the operations of State government which I must submit to the Legislature when it convenes. Second, failure to address the issues raised by the tax indexing measure, expeditiously and completely, may affect the State’s credit rating. Third, in light of these problems, it may be necessary for the Legislature to pass further legislation relative to the tax indexing measure, and, to do so, it must know precisely what its options are.

Therefore, I respectfully request answers to the following questions:

[1344] QUESTIONS OF LAW

1. Does “AN ACT to Adjust Annually Individual Income Tax Laws to Eliminate Inflation-Induced Increases in Individual Income Taxes” (the “Act”), by its terms, apply retroactively to tax years beginning 1981, and thereby require the State of Maine to pay Maine taxpayers tax refunds?

2. Does Section 5 of the Act, which states that the Act shall take effect for tax years beginning “on or after” January 1, 1981, make the Act inapplicable to tax years prior to the date that the measure becomes law, or, in the alternative, require further implementing legislation to specify the year in which the Act is first to become effective?

3. If the Act applies retroactively, are municipalities and other governmental entities in Maine which have received revenue sharing or other funds from the State of Maine for tax years to which the Act applies, now obligated to refund to the State of Maine a proportional share of the tax refunds, based on the retroactive tax rate adjustments to be made by the State Tax Assessor?

4. If, by its terms, the Act applies retroactively, does Article IV, Part 3, Section 19 of the Maine Constitution, which renders the Act “inoperative” until 45 days after the Legislature next convenes in regular session, bar the retroactive application of the Act?

5. Does Article IX, Section 9 of the Maine Constitution render the Act unconstitutional in that the Act indexes individual income taxes to an external standard in the form of the Consumer Price Index?

6. If the Act is constitutional, does the Legislature have the power to amend, repeal, or repeal and replace the Act?

7. If the Act is constitutional, does the Legislature have the power to amend, repeal, or repeal and replace the Act subject to the approval of the voters in another public referendum?

8.If the Act is not repealed or repealed and replaced by the Legislature, will it, pursuant to Article IV, Part 3, Section 19 of the Maine Constitution, take effect forty-five days after the Legislature next convenes?

Respectfully submitted,

/s/ Joseph E. Brennan JOSEPH E. BRENNAN Governor

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ANSWERS OF THE JUSTICES

To His Excellency, Joseph E. Brennan, Governor of Maine:

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