
    SCOTT County Auditor, v. SALT LAKE COUNTY et al.
    No. 3632.
    Decided March 30, 1921.
    (196 Pac. 1022.)
    1. Counties — Wokd “Taxes” in Constitutional Debt Limitation Provision Means Revenue. In Const, art. 14, § 3, providing that, unless authorized by a vote of the electors, no debt in excess of the “taxes” for the current year shall be created by any county, the word “taxes” means all revenue, including that which is uncollected.
    
    2. Counties — Debts oe One Yeab May Be Paid Out oe Next Year’s Taxes. Const, art. 14, § 3, limiting current indebtedness of counties, goes only to the question of the amount, and not of the time of payment, and, if the amount of indebtedness is limited to the revenue of the current year, the Constitution does not prohibit the payment of a debt incurred in one year out of the next year’s taxes.
    
    3. Counties — Act Embowering County Commissioners to Bob-row Money eor Current Expenses Held Constitutional. Comp. Laws 1917, § 1364, as amended in 1921, empowering commissioners, for the purpose of meeting current county expenses and .the expense? incurred in the building and maintaining in the county of state roads, to borrow money and issue therefor negotiable notes or bonds, does not violate Const, art. 14, § 3.
    4. Constitutional Law — Constitution Sole Restriction on Legislature. What the Constitution does not prohibit the Legislature may do.
    5. Constitutional Law — Unconstitutionality oe Statute Must Be Clear. Before an act of the Legislature can be held -unconstitutional, its invalidity must be clear and free from doubt.
    Application by M. L. Scott, Auditor of Salt Lake County, for writ of prohibition against Salt Lake County and others.
    PERMANENT WRIT OE PROHIBITION DENIED.
    
      
      Morgan é Hwffaher, of Salt Lake City, for plaintiff.
    
      A. E. Moreton, Co. Atty., and Geo. G. Armstrong, Asst. Co. Atty., both of Salt Lake City, for defendants.
    
      
      
        Muir v. Murray Oity, 55 Utah 368, 186 Pac. 433; Dictcinson v. - Balt Latee Oity, 57 Utah 530, 195 Pac. 1110.
    
    
      
      
        Muir v. Murray Oity, 55 Utah 368, 186 Pac. 433.
    
   WEBER, J.

M. L. Scott, county auditor of Salt Lake county, brings this proceeding to permanently prohibit Salt Lake county and its board of county commissioners from making, issuing, and delivering its promissory notes in the sum of $345,000 in renewal of notes given by Salt Lake county during the year 1920 to the' Continental National Bank of Salt Lake City for money borrowed during 1920 by the county to pay lawful debts. It is also sought to prohibit the county commissioners from levying a tax for the purpose of paying the promissory notes when due.

Plaintiff has furnished a financial statement of the county for 1920 which shows that the expenses for that year exceeded the revenue, and that the county exceeded its constitutional debt limit during 1920. In their answer defendants allege that after the said financial statement was issued by the county auditor a further and more complete examination was made of the records and boobs of the county, and, instead of exceeding the revenue for 1920, there was an unex-pended revenue at the end of that year of $51,917.53. Defendants furnish a verified statement that comprises the entire revenue for Salt Lake county for 1920, including an item of $65,951.82 still uncollected. To this answer the plaintiff has interposed a general demurrer.

Plaintiff contends that, as shown by the answer: (1) The county has exceeded its debt limit for 1920; (2) that the debts incurred by the county must be paid by the revenues for the year during which the debts were incurred or contracted; (3) that an act of the Legislature of 1921 hereinafter set out is unconstitutional.

Section 3 of article 14 of the state Constitution reads as follows:

“No debt in excess of the taxes for the current year shall be created by any county or subdivision thereof, or by any school district therein, or by any city, town or village, or any subdivision thereof in this state; unless the proposition to create such debt, shall have been submitted to a vote of such qualified electors as shall have paid a property tax therein, in the year preceding such election, and a majority of those voting thereon shall have voted in favor of oncurring such debt.”

That tbe word “taxes” in the above-quoted provision of the Constitution means all revenue, including that which is uncollected, is no longer a debatable question in this state. In Muir v. Murray City, 55 Utah, 368, 186 Pac. 433, it is said:

“Notwithstanding the section of the Constitution above quoted uses the word ‘taxes’ instead of the word ‘revenue,’ we are inclined to the view that the word ‘revenue’ conveys the meaning intended. It is hardly possible to conceive that the members of the constitutional convention intended anything other than that the city, in creating an indebtedness without submitting it to the electorate, should keep within the revenue of the current year. Many reasons exist in favor of such an interpretation, and, so far as we can see, there are none against it.”

In Dickinson v. Salt Lake City, 57 Utah, 530, 195 Pac. 1110, it is said:

“Taxes levied and collected in any fiscal year should be (and usually are all) used in paying the running expenses of such fiscal year. As no taxes are due until the third Monday in September, there must, of necessity, be a period of some 8% months of the fiscal year when none of the general taxes of that year are available for use in paying the running expenses of the municipality. Either, therefore, the city officers must see to it that sufficient funds are carried over from the preceding year to pay the running expenses of the city for the first 8% months or the city must borrow the necessary money to pay such expenses or attempt to run the city without funds. In other words, debts in some form must be incurred on the anticipated revenues to be later collected. In our judgment, the opinion of this court in the recent case of Muir v. Murray City (Utah), 55 Utah 368, 186 Pac. 433, is decisive of the question presented. True, in that case it does not appear from the opinion that the indetbedness was in-but it does appear from the record on appeal that the indebtedness was incurred in the month of March. The city was held liable, as it did not appear that the debt was in excess of the revenues of that year. Bearing on that particular question, this court said: “The contention of the city that it had no power to create the debt in question on the ground that it exceeded the limit fixed by the constitutional provision quoted should not prevail in the absence of proof that the debt was in excess of the potential revenues of the current year from whatever source the revenue was legitimately obtainable. Having failed to make such proof, its contention in this regard is without merit.’ The statute seems to give the commissioners power to issue evidence of such indebtedness by the issuance of bonds or such other evidence as may best meet the needs of the city. So long as the proposed indebtedness is within the potential revenues of the city for the current year, we are unable to see any reason or lack of authority on the part of the city commissioners to create such indebtedness.”

The undisputed facts being that Salt Lake County’s debts and expenditures for 1920 did not exceed the potential or possible revenue, which includes all uncollected taxes for that year, plaintiff’s first reason in support of its demurrer must fail.

That no debt in one year may be paid out of the next year’s taxes has also been decided adversely to plaintiff’s contention. Referring to section 3 of article 14 of the state Constitution, it is said in Muir v. Murray City, supra:

“But the inhibition only goes to the question of excess amount and not to the time of payment. If the amount of the indebtedness is limited to the revenue of the current year, we know of no constitutional objection to providing for payment after the year expires.”

"Pay as you go” is a good business principle, but when taxes do not become due before the third Monday of September and are not delinquent till November 30th, with the fiscal year ending December 31st, it is obvious that plaintiff’s claim that each year’s debts should be paid out of that year’s taxes during the year is an illusive dream. ' Thus a county’s total levy of taxes and its other sources of revenue may amount to $2,000,000 for a particular year. During that year its expenditures and debts contracted may amount to the full $2,000,000 of potential, possible, or expectant revenue. If only $1,800,000 be collected, and there remains an indebtedness of $200,000, the indebtedness may be provided for in levying the next year’s taxes.

The Legislature of 1921 amended Comp. Laws Utah 1917, § 1364, to read as follows:

“No county shall, in any manner, give or lend its credit to or in aid of any person or corporation, or appropriate money in aid of any enterprise. No county shall, incur any indebtedness, or liability, in any manner or for any purpose, exceeding in any one year the taxes for the current year, without the consent of a majority of such qualified electors thereof as shall have paid a property tax therein in the year preceding such election, voting at an election to be held for that purpose, nor upless, before or at the time of incurring such indebtedness provision shall be made for the collection of an annual tax sufficient to pay the interest on such indebtedness as it falls due and also to constitute a sinking fund for the payment of the principal thereof within twenty years of the time of contracting the same. For the purpose of meeting the current expenses of the county and for the purpose of meeting the expenses incurred in the building and maintaining in said county of state roads built under and by authority of the provisions of sections 2852, 2853, 2856 and 2857, the board of county commissioners may borrow money, not in excess of ninety per cent, of the taxes for the current year, issuing therefor negotiable notes or bonds of the county bearing interest at the lowest rate obtainable not exceeding eight per cent, per annum. In the event that such notes or bonds are issued prior to the annual tax levy for the year in which said indebtedness is contracted, the amount so issued for current expenses shall not exceed séventy-five per cent, of the tax revenues of the preceding year, and the proceeds shall be applied only in payment of current and necessary expenses and there shall be included in said annual levy a tax, sufficient to pay the same at maturity. In the event that the revenues in any one year are insufficient through delinquency or uncollecta-bility of taxes, or other cause, to pay when due all the lawful debts of the county which have been or may hereafter be contracted, the board of county commissioners is authorized and directed to levy and collect in the next succeeding year a sufficient tax to pay all of said lawfully contracted indebtedness, and may borrow as provided in this section in anticipation of such tax to pay any such lawfully contracted indebtedness; provided, that no such loan or loans shall be for a longer period than until the 31st of December next following the date of said loan or loans; provided that no loan or loans made as herein provided on or after the 1st day of January, 1923, shall bear interest at the rate in excess of seven per cent, per annum, and provided, further, that the promissory note or notes executed to raise funds for current expenses shall be paid out of the taxes levied for such current expenses and promissory notes executed for the purpose of raising funds to pay for the building and maintenance of roads, as herein provided, shall be paid only from the moneys derived for the purposes of said road building whether said moneys be from state road fund for use in said county provided for by subsection A, section 6, chapter 81, Laws of Utah, 1915 (section 2856), from the special road tax, or from the appropriation by the county from the general county fund for state roads in the said county.”

It is insisted by plaintiff that tbe above act is in violation of section 3, art. 14, of tbe Constitution. Certainly tbat section contains no words tbat expressly inbibit tbe legislative act above set out. Nor does it contain any language from whicb sucb prohibition must be necessarily implied. We are unable to perceive anything in that or any other provision of tbe Constitution to which this act of the Legislature is repugnant. What the Constitution does not prohibit the Legislature may do. Before an act of the Legislature can be held unconstitutional it must be clear and free from doubt that it contravenes some provision of the Constitution. In our opinion section 1364, as amended by the Legislature this year, is in accord and harmony and not in conflict with or repugnant to the state Constitution.

Plaintiff’s demurrer to the answer of the defendant is overruled. A permanent writ of prohibition is denied.

CORFMAN, C. J., and GIDEON, THURMAN, and FRICK, JJ., concur.  