CHISM v. JEFFERSON COUNTY

SEE, Justice (concurring specially).

The matters raised by the Chism plaintiffs on application for rehearing were fully addressed on original submission; therefore, I concur to deny the application for a rehearing.

This Court invites applications for rehearing because we are the court of last resort in virtually every case that comes before us. Rule 40(b), Ala. R.App. P., therefore states in relevant part: "The application for rehearing must state with particularity the points of law or the facts the applicant believes the court overlooked or misapprehended." The operative words are "overlooked" and "misapprehended." We grant application for a rehearing in a rather narrow range of cases. A rehearing is not an opportunity to raise new issues not addressed on original application. See Town of Pike Road v. City of Montgomery, [Ms. 1050151, Sept. 1, 2006] ___ So.2d ___, ___ (Ala. 2006) (opinion on application for rehearing) ("As a general rule, the Court does not consider matters raised for the first time in an application for rehearing." (citing Morgan Keegan Co. v. Cunningham, 918 So.2d 897, 908 (Ala. 2005))); Riscorp, Inc. v. Norman, 915 So.2d 1142, 1155 (Ala. 2005) (opinion on application for rehearing) ("`The well-settled rule of this Court precludes consideration of arguments made for the first time on rehearing.'" (quoting Water Works Sewer Bd. of Selma v. Randolph, 833 So.2d 604, 608 (Ala. 2002))); and Kirkland v. Kirkland, 281 Ala. 42, 49, 198 So.2d 771, 777 (1967) ("We cannot sanction the practice of bringing up new questions for the first time in application for rehearing."). Nor is an application for rehearing an invitation to reargue the issues already thoroughly considered on original application. See Willis v. Atlanta Cos. Co., 801 So.2d 837, 838 (Ala. 2001) (overruling an application for rehearing when it was "simply an earnest reiteration of the appellant's original brief") (Johnstone, J., concurring specially). Instead, this Court invites an application for a rehearing so that we may be informed of a fact or a point of law that we have "overlooked" or one that we have "misapprehended."

The dissent to the denial of the application for a rehearing does not support any fact or point of law the applicants suggest this Court originally overlooked or misapprehended. Instead, it simply further elaborates on the position taken in the dissenting opinion on original consideration.

This case is one in which justice delayed is unquestionably justice denied. If Jefferson County cannot certify on or before October 20, 2006, that no litigation is pending challenging the validity of the education warrants, an "extraordinary mandatory redemption" of the warrants will occur; if, however, by October 20, 2006, Jefferson County can certify that no such litigation is pending, the proceeds of the education warrants remaining in the grant fund will be paid in the form of grants to 11 local school boards within Jefferson County, to be used by those boards for the construction or capital improvement of schools or to retire preexisting debt incurred by the boards for capital-improvement projects. Thus, if we have not finally resolved this matter by October 20, we have effectively decided this case against the appellees, who have prevailed as a matter of law both in the trial court and in this Court.

I believe the careful reader will see that the dissent to the denial of the application for rehearing incorrectly apprehends the main opinion; therefore, I do not believe it is necessary to engage with the dissent in a series of revisions and counter-revisions to our respective writings that will, at best, serve only to delay, and, at worst, to so delay as to eviscerate the relief granted by this Court.

BOLIN, Justice (dissenting).

I believe the revenue from the education taxes must be distributed to local school boards based on their respective annual Foundation Program costs and that that revenue cannot be diverted as debt service on the interest-bearing tax-anticipation warrants issued by Jefferson County pursuant to ordinance no. 1769. Accordingly, I must respectfully dissent.

Section 40-12-4, Ala. Code 1975, provides counties the authority to tax; it states, in pertinent part:

"(a) In order to provide funds for public school purposes, the governing body of each of the several counties in this state is hereby authorized by ordinance to levy and provide for the assessment and collection of franchise, excise and privilege license taxes with respect to privileges or receipts from privileges exercised in such county, which shall be in addition to any and all other county taxes heretofore or hereafter authorized by law in such county. Such governing body may, in its discretion, submit the question of levying any such tax to a vote of the qualified electors of the county. If such governing body submits the question to the voters, then the governing body shall also provide for holding and canvassing the returns of the election and for giving notice thereof. All the proceeds from any tax levied pursuant to this section less the cost of collection thereof shall be used exclusively for public school purposes, including specifically and without limitation capital improvements and the payment of debt service on obligations issued therefor.

"(b) Notwithstanding anything to the contrary herein, said governing body shall not levy any tax hereunder measured by gross receipts, except a sales or use tax which parallels, except for the rate of tax, that imposed by the state under this title. Any such sales or use tax on any automotive vehicle, truck trailer, trailer, semitrailer, or travel trailer required to be registered or licensed with the probate judge, where not collected by a licensed Alabama dealer at time of sale, shall be collected and fees paid in accordance with the provisions of Sections 40-23-104 and 40-23-107, respectively. No such governing body shall levy any tax upon the privilege of engaging in any business or profession unless such tax is levied uniformly and at the same rate against every person engaged in the pursuit of any business or profession within the county; except, that any tax levied here-under upon the privilege of engaging in any business or profession may be measured by the number of employees of such business or the number of persons engaged in the pursuit of such profession. In all counties having more than one local board of education, revenues collected under the provisions of this section shall be distributed within such county on the same basis of the total calculated costs for the Foundation Program for those local boards of education within the county."

(Emphasis added.)

Section 40-12-4(a) provides that "the proceeds from any tax levied" pursuant to that Code section "less the cost of collection thereof shall be used exclusively for public-school purposes. The legislature's subtracting "the cost of collection" from "any tax levied" indicates that the legislature clearly anticipated reimbursing the county for the ongoing, annual costs each county incurred in collecting and distributing the tax revenue. If the legislature had desired to provide for a scheme such as the one used by Jefferson County here, the legislature could have easily stated that the costs of the issuance of bonds or warrants could alternatively be subtracted; if it had done so there would be little doubt that the issuance of these warrants would have been embraced within the legislative intent. However, the legislature does not expressly refer to the issuance of bonds or warrants for the support of public schools by the governing body of the county, nor does it refer to the fees and costs that would be incurred in connection with the county's issuance of such bonds or warrants. In addition, § 40-12-4(b) provides that " revenues collected under the provisions of this section shall be distributed" on a proportionate basis pursuant to the Foundation Program formula. The distribution of "revenues collected" from the levy of the tax under this section is quite different from the distribution of the proceeds of tax-anticipation warrants.

"In discussing statutory construction this Court has stated:

"`[When a court] is called upon to construe a statute, the fundamental rule is that the court has a duty to ascertain and effectuate legislative intent expressed in the statute, which may be gleaned from the language used, the reason and necessity for the act, and the purposes sought to be obtained.'

" Ex parte Holladay, 466 So.2d 956, 960 (Ala. 1985). In IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So.2d 344, 346 (Ala. 1992), this Court further stated with regard to statutory construction:

"`Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says. If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect.'"

Section 40-12-4(b) requires that, in counties having more than one local school board, the tax revenues collected pursuant to the authority conferred by § 40-12-4(a) must be distributed on the same basis as are the Foundation Program costs. The Foundation Program Fund is established by § 16-13-230 et seq., Ala. Code 1975 — the Foundation Program Act. The Act provides that various state and county funds are "apportioned and paid to local boards of education," and the respective boards then determine how to spend the funds based on the needs of that school system. § 16-13-231(a). The funds are distributed to the local school boards based on the student population of the local school system, as determined by the number of pupils in average daily membership during the first 40 scholastic days of the preceding school year. § 16-13-231(b)(2) c. The State superintendent of education makes the annual apportionment of funds to the local boards. § 16-4-5.

Accordingly, the taxes collected must be distributed to the various local school boards in proportion to their respective annual Foundation Program shares, to be used by those school boards for the particular educational needs of their systems. Such needs may well include a local board's incurring debt for school construction to be paid by a pledge of the board's portion of the tax revenues collected. Such needs may also include the use of the tax revenues to retire or amortize preexisting debt of that board that had been used for school construction. It could also be used for additional teacher units, pay supplements, or anything else the local school board deems proper, rather than the county governing board unilaterally deciding what would be the best use of the tax revenues collected. Tying the distribution of these tax revenues to, in essence, student population provides each school district with the revenues for its proportional needs, based upon the ebb and flow of its annual student population. That intent as expressed in § 40-12-4(b) matches the purpose of the Foundation Program Fund as expressed in § 16-13-231(a)(2), which states that the Fund shall be used principally "to assist in the promotion of educational opportunities for all children in the public schools." (Emphasis added.)

Pursuant to ordinance no. 1769, the moneys collected from Jefferson County's tax-anticipation warrants will be paid by grants to those school systems in existence when that ordinance was passed and based on student population as it existed in 2003. The ordinance makes no provision for any local school system created after the effective date of the ordinance and throughout the term of the levy of the tax necessary to refund, the indebtedness on the education warrants. Therefore, there is great potential that taxpaying citizens of a newly created system will have children attending school in a system that receives no benefit from the indebtedness created pursuant to this ordinance, although those citizens are paying sales tax on every purchase they make, which then pays for school construction in other districts. Such a result from the distribution of these sales-tax revenues based solely on a 2003 student-population count would be exceedingly unfair and inconsistent with the needs-based, annual census of the student population of a school district and completely inconsistent with the legislative intent expressed in § 40-12-4(b), which links distribution of the sales-tax proceeds to the Foundation Program, predicated entirely on ever-changing annual student censuses. I am sure that the number of school systems and of students educated within each system in 1988 bears little relation to the number of school systems and of students in Jefferson County in 2003; the same can certainly be said prospectively for the potential number of school systems and of students educated in Jefferson County 15 years after the 2003 "distribution" determination date provided for in ordinance no. 1769.

This harsh inequity and lack of equal protection for all students and all existent and future school systems would not result if both subsection (a) and (b) of § 40-12-4 were read in pari materia, as Ex parte Jackson and McCausland require. Section 40-12-4(a) authorizes the county governing body to levy a tax as Jefferson County did in this matter. The Chism plaintiffs do not dispute that Jefferson County has the authority to levy the education taxes, and they do not argue here that Jefferson County was without authority to levy the taxes. The only limitation in § 40-12-44(a) is that the proceeds "shall be used exclusively for public school purposes, including specifically and without limitation capital improvements and the payment of debt service on obligations issued therefor." The phrase "public school purposes" on its face appears all-encompassing as it pertains to the use and expenditure of the proceeds. The question therefore arises — which governmental entity has the responsibility for public education? Is it the county governing body or the county and/or local school board or boards? Clearly, public education is not the responsibility of the county commission. Providing additional funding for public education, however, is a legislative prerogative, whether at the state level, or, as here, delegated to the county. What is nowhere expressly delegated to the county governing body is the discretion to determine the proper expenditure of funding for public-school purposes. This is the role of the local school board entirely, and that role is not abrogated simply because the county governing body is the party levying and collecting taxes authorized by § 40-12-4.

The majority states that "re is at least doubtful whether the reference in § 40-12-4(b) to the Foundation Program Fund limits the provision in § 40-12-4(a) allowing § 40-12-4 taxes to be used to service debt." 954 So.2d at 1067. Construing subsections (a) and (b) of § 40-12-4 in pari materia, however, compels the interpretation that the particular debt to be serviced is a debt of the local school board, and this interpretation would remove any such doubt.

A reasonable interpretation of the limitation in § 40-12-4(a) that the tax proceeds be used for "public school purposes" as modified by the phrase "including specifically and without limitation capital improvements and the payment of debt service on obligations issued therefor" is that the legislature was providing, so that there would be no question, that such revenues could be used by the school boards for the cost of building schools, or, alternatively, for paying the existing debt of the school board for those schools that had already been built. This interpretation would allow the arm of government charged with educating our children to make this decision — not the arm of government charged with noneducation responsibilities. The decision whether to build or to pay for more buildings, as opposed to the decision whether to hire more teachers, or to supplement teacher pay, should be decided by the local school board. The majority's interpretation of § 40-12-4 allows the county governing board to make this education decision.

Even though the two subsections of § 40-12-1 must be read together, this Court has previously decided which of the two subsections prevails in the event of a conflict between the two. In Brown v. Board of Education of Montgomery County, 863 So.2d 73 (Ala. 2003), this Court held that an occupational tax imposed by an ordinance adopted by the Montgomery County Commission was invalid. The Montgomery County Commission had passed an ordinance imposing a 1.5 percent tax on "Employee Compensation" and "Owner Compensation" received by individuals who work in Montgomery County. The Board of Education of Montgomery County filed an action seeking to validate the tax and $100 million in revenue warrants funded by the tax. The proceeds from the occupation tax were pledged to the Board "`for public school purposes, including, without limitation, the payment of the principal of, premium, if any, and interest on the Warrants.'" 863 So.2d at 75. This Court held that the tax violated § 40-12-1. Although § 40-12-4(a) authorizes taxes for certain school purposes, this Court determined that § 40-12-4(b) "trumped" any contrary language in § 40-12-4(a). Specifically, this Court stated:

"By beginning with the phrase `[n]otwithstanding anything to the contrary herein,' § 40-12-4(b) expressly trumps any contrary language in § 40-12-4(a) because we interpret `herein' as referring to anything else in § 40-12-4. Hence, anything in § 40-12-4(b) that is inconsistent with the levy of an occupational tax supersedes any reference in § 40-12-4(a) that could be read as encompassing such a tax."

Therefore, § 40-12-4(b) and its language concerning "counties having more than one local board of education" limits and "trumps" the provision of § 40-12-4(a); the further provision of § 40-12-4(b) concerning the Foundation Program (which is based on annual calculations, not one annual calculation) illustrates that a one-time, 2003 snapshot Foundation Program formula distribution for purposes dictated and decided by the county governing body is completely contrary to the expressed legislative intent of the entirety of § 40-12-4.

If we assume that a hypothetical county governing body desired to levy a sales tax pursuant to § 40-12-4 for the purpose of providing funding for the construction of a school building or to retire school-board debt, and if the school board or boards affected resolved that such a plan was a desired expenditure, a consideration of the potential scenarios arising from this hypothetical further buttresses the above statutory interpretation. Consider first an example of a county having only one school system — a county board of education. Should that county governing body levy a § 40-12-4 tax, the proceeds from the tax would be paid to that single county board of education. The county board could then either use the revenues to service or to retire existing school-construction debt, or it could incur new debt and pledge the revenues as a source of payment for that debt, as its desires or needs may dictate. Thereafter, should a new school system in that county come into existence, only two possibilities could exist. If there was a county school building taken in by the area of the new system, then § 16-8-20 et seq., Ala. Code 1975, would provide for the building transfer and any transactions necessary concerning any existing indebtedness on the building, together with "providing the same or equivalent school facilities for the children in that part of the territory in the school district or districts not annexed or made a part of such city." Thus the new system would be obligated to pay for any indebtedness on that school, as well as negotiating with the county board to provide for students who previously attended that school but who did not live in the area of the new municipal system. However, § 40-12-1(b) would then apply to the new system, as the hypothetical county would now have more than one local school board, and the following year the new system would begin receiving its pro rata distribution of tax revenues as determined by the Foundation Program formula. These revenues could then be used to pay the negotiated (or arbitrated pursuant to § 16-8-21) consideration for the former county school building now located in the new school system. Considering the other possible example, i.e., if there were no county school building located in the area of the new municipal system, the new system would not owe the county board anything, but would then begin to receive its § 40-12-4(b) Foundation Program formula revenues, which it, the local school board, could use for its own school construction.

Again, when § 40-12-4(a) and (b) are construed together, a similar result would apply in counties, such as Jefferson County, already having more than one system. The county governing body could levy a sales tax for school purposes, as provided in subsection (a). The revenues would be distributed to each system according to its share, as determined by the Foundation Program formula, as provided in subsection (b). Each system could then exercise its proper discretion to determine how the revenues should be spent for school purposes. As stated above, should the particular system want to pay down or refund existing debt, it could do so. Should the particular system wish to issue new debt for construction and pledge its share of the revenues to pay for that debt, it could do so. Should the particular system decide to use the revenues for other school purposes, it could do so, and it would be the appropriate authority to make that decision.

The majority opinion asserts that the Chism plaintiffs conceded that Jefferson County's scheme would have been permissible under § 40-12-4(a) if Jefferson County had only had one board of education. Assuming that the Chism plaintiffs conceded this example, a party cannot agree to an erroneous principle of law or statutory interpretation. Yet based upon this alleged concession the majority concludes that § 40-12-4(a) and (b) would be contradictory under the Chism plaintiffs' argument and violative of the presumption that the legislature does not intend to contradict in one paragraph what it declared in another. There is no contradiction here. Rather, there is only a tortuous construction of an act, which will allow a county commission not only to lawfully levy a tax, but to go further and without authority assess school-system needs and respond to those needs. Under the above illustration the Jefferson County Board of Education should be the recipient of the tax revenues and would itself then be the issuer of the education warrants, pursuant to § 16-13-70, with the accompanying pledge of the sales tax levied. The scheme implemented by Jefferson County is akin to the action of the Alabama legislature this Court struck down as unconstitutional in McInnish v. Riley, 925 So.2d 174 (Ala. 2005), because one branch of government was both appropriating funds and spending funds.

I also write to point out that when ad valorem property taxes are used for school funding, the property owners of the taxing district incur the full cost of the funding, which is tied to the assessed value of their real property. In contrast, however, sales taxes are paid by whoever shops in the taxing district. As stated earlier, the consumers who live in newly created school districts and who make purchases during the term of this tax will be paying tax revenues to Jefferson County to retire indebtedness for which they will receive no benefit whatsoever, as the expenditures of the warrant proceeds will already have been made on an out-of-date 2003 student-population count, completely ignoring future needs of new school systems and the students they must educate. This could have the potential of deterring citizens in municipalities that currently have no school system, or in communities that incorporate in the future and might desire their own school systems, from creating their own municipal systems because of their inability to participate in this already completed billion-dollar construction program. Such a result would reward systems and citizens in already developed portions of Jefferson County and school systems with declining enrollments, while prospectively penalizing currently undeveloped, future growth areas of Jefferson County. Put another way, ad valorem taxes for school funding always stay attached to the real property upon which they are levied, and the proceeds derived from ad valorem taxes are fixed based on the millage levied when the tax was created. By their very nature such ad valorem taxes are distributed irrespective of the number of students who reside on such real property and attend school in the school district where the real property is located. These taxes are certainly a static and stable funding basis. However, sales taxes that are to be distributed according to the Foundation Program formula necessarily will fluctuate based on the growth of the county and the economy, so it was entirely logical that the legislature would provide that such a variable source; of funding would follow the trail of where most of the students are located, and hence, most of the student needs. For the funding basis countenanced by the majority to remain consistent throughout the period this sales tax would be collected, there would have to be no new school systems created, and each school system would either have to grow or decline on the same pro rata basis. History tells us that it is inconceivable that that would happen in the largest county, and largest metropolitan area, in the State of Alabama.

PARKER, J., concurs.

PARKER, Justice (dissenting).

To protect the people from profligate politicians, the Alabama Constitution strictly limits the debt burden of a county, as well as of a municipality and the State. The text of the constitutional debt limit for counties is clear and comprehensive; it allows no exceptions. Nevertheless, Jefferson County has issued debt warrants that, in the name of education for the children, not only violate the text and intent of the Constitution, but also burden with excess debt the future of the very children the County purports to serve.

That Jefferson County's debt scheme — even accompanied by its targeted tax hike — violates the Alabama Constitution is supported by the historic context, by the plain language of the text of § 224, Ala. Const. 1901, itself, and by dozens of decisions of this Court over nearly 100 years. Regrettably, the majority opinion in this case disregards the weight of authority against Jefferson County in favor of a single, inapplicable precedent of this Court.

I. The historic context of § 224, Ala. Const. 1901, shows that its basic purpose is to protect the people from excessive taxes resulting from too much county debt.

To most fully and faithfully interpret a text, one must consider its context when written. I apply this principle below to § 224, Ala. Const. 1901, the constitutional provision primarily at issue in this case.

A. Alabama's written constitution, like other American constitutions, was drafted primarily to protect the people from the state.

In America, constitutions were efforts by the colonists and, later, the citizens of the states to protect their God-given lives, liberty, and property by binding civil government with chains in the form of written limitations. These "important structural protections," which were "built into the very warp and woof of the Constitution," were "designed to safeguard freedom." Ronald D. Rotunda, The Implications of the New Commerce Clause Jurisprudence: An Evolutionary or Revolutionary Court?, 55 Ark. L.Rev. 795, 797 (2003). As United States Supreme Court Justice William O. Douglas explained,

"The institutions of our society are founded on the belief that there is an authority higher than the authority of the State; that there is a moral law which the State is powerless to alter; that the individual possesses rights, conferred by the Creator, which [civil] government must respect."

"An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation."

The preamble to the Alabama Constitution of 1901 echoes the Constitution of the United States in expressing one of its purposes as to "secure the blessings of liberty to ourselves and our posterity." Just like the Constitution of the United States and earlier colonial and state constitutions, the Alabama Constitution of 1901 specifies strict structural limits to the state's authority as one way to protect the people from the abuses of the state.

One such structural limit is a written enumeration of fundamental rights on which the state may not infringe because of their God-given, rather than man-conferred, nature. As the very first section of the Alabama Constitution of 1901 states, all men "are endowed by their Creator with certain inalienable rights . . . among [which] are life, liberty and the pursuit of happiness." Art. I, § 1, Ala. Const.1901.

Another structural limit to the state's authority designed to protect the people is a strict separation of powers among state governmental branches:

"In the government of this state, except in the instances of this Constitution hereinafter expressly directed or permitted, the legislative department shall never exercise the executive and judicial powers, or either of them; the executive shall never exercise the legislative and judicial powers, or either of them; the judicial shall never exercise the legislative and executive powers, or either of them. . . ."

Art. III, § 43, Ala. Const.1901.

Yet another structural limit is the express constitutional limitation on civil government administration, such as § 224, Ala. Const. 1901, which states in part that "[n]o county shall become indebted in an amount . . . greater than five percentum of the assessed value of the property [in the county]." This provision is before us today, due to Jefferson County's efforts to evade its constitutional limits through an elaborate debt-and-tax scheme.

B. The debates over the ratification of § 224 show that it was designed primarily to protect the rights of the people, not to bestow privileges on Alabama counties.

The record of the debates over the ratification of § 224 reveals that the delegates to the Constitutional Convention of 1901 chose to limit county government indebtedness to a maximum of 3.5 percent (later increased to 5 percent by Amendment No. 342) of the county's assessed property value, because they recognized that (1) debt issued for public works, together with (2) taxes levied to pay for that debt, hurts rather than helps the people, as the following dialogue between one delegate, Mr. Weakley, and a fellow unnamed delegate demonstrates:

"MR. WEAKLEY: . . . I was going to say that the reason counties should create debts are very few. They are to build court houses and jails, and bridges, and roads —

"A DELEGATE: And poor houses?

"MR. WEAKLEY: And poor houses. And I will state further, that at the present rate we are contracting debts, we will have to build a few more poor houses in this country before very long."

2 Official Proceedings of the Constitutional Convention of 1901, p. 1451. Mr. Weakley recognized the close connection between government debt, taxes, and the poor house when he stated:

"It is recognized everywhere, as I said in the beginning, [a debt limit is] more important than the tax limit, because if the debt is not created the tax will not have to be levied to pay it."

2 Official Proceedings, p. 1451.

In a related matter, another delegate, a Mr. Sanford, spoke against the burden imposed on citizens when governments undertake overly ambitious public works:

"Men have houses in Montgomery for which they can never pay owing to the debts on them for pavements and side-walks and tessellated streets, and Belgian blocks, and there is starving inside of their houses. And they call that benefiting the property! Every tile takes that much bread from the mouth of some man who works day after day for his daily bread. Why, only the other day a citizen said to me `Colonel, if they carry out their project of paving the streets as they are doing now, I will have to sell my house and move away because I will be unable to pay the cost of the benefits.' You take away the shelter of the poor man who works day after day for his daily bread and that of his family, and you take away all the hopes of his life. When he has made a little money and put in a homestead you come along and say `we will pave these streets with Belgian blocks and tessellated streets,' and for what? Simply in order that some gentleman from Boston may walk the streets and say what a beautiful town Montgomery is. That don't feed the poor man."

2 Official Proceedings, p. 1531.

In fact, the drafters of the Alabama Constitution seemed to regard the strict written limits on county debt exemplified by § 224 as the flip side of the coin of strict written limits on civil government taxation, as a comment by a Mr. Harrison, another delegate, indicates:

"[W]e should come in with the strong arm of the fundamental law of the land and say thus far you shall go and no further. We have fixed the limit of taxation, and now we fix the limit beyond which you shall not incur any debts."

2 Official Proceedings, p. 1455.

C. This Court's precedents confirm that § 224 was designed primarily to protect the rights of the people rather than the spending privileges of Alabama counties.

The testimony of the Official Proceedings excerpted above — that constitutional debt limits, like constitutional tax limits, were designed primarily to protect the people — has been recognized by this Court since shortly after the Alabama Constitution of 1901 was ratified. This Court has long

"understood and interpreted [that] the obvious intent of section 224 is to restrain counties from obtaining money either upon the general credit of the county, or by pledge or transfer of its revenue or assets, thereby creating a debt and imposing additional burdens upon the citizens, which, whether directly or indirectly, involve increased taxation."

Given the clear historic context, the strong historic record, and the overwhelming weight of this Court's precedents, I conclude that the primary purpose of § 224 was and is to protect the people from the burden of excessive county government debt and concurrent or resulting taxes. Unfortunately, the majority opinion ignores the weight of authority against it in concluding that § 224 was designed not so much to protect the people's freedom to conduct their business as to protect the government's ability to conduct its business: "[T]he drafters' purpose in including a debt limit in the Alabama Constitution was . . . to assure that the counties were able to pay the interests on their debts, . . . given the limits on their ability to tax." 954 So.2d at 1083 (footnote omitted). To be sure, maintaining a county's ability to keep up with interest payments was one purpose of § 224, but it was not the primary purpose. The primary purpose of the constitutional debt limit for Alabama counties was to protect the liberty of the people, who ultimately would have to pay that debt.

II. This Court should interpret § 224 according to the Court's long-standing plain-meaning rule of construction.

Constitutions, in order to effectively protect the rights of the people, must be accessible to them, or at least to the average educated citizen. Consistent with this purpose, "[a] constitution, properly conceived, deals with basic principles and policies, and omits specific applications," Eliasberg Bros. Mercantile Co. v. Grimes, 204 Ala. 492, 498, 86 So. 56, 58 (1920).

Thus, proper interpretation of a constitutional text must begin with the ordinary usage of the words of the text, which we call its "plain meaning." As this Court has explained with respect to statutory interpretation:

"`Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says. If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect.'"

Thus, to properly interpret § 224, Ala. Const. 1901, this Court must examine the language of § 224. Where plain language is used, this Court "`is bound to interpret that language to mean exactly what it says.'" Nielsen, 714 So.2d at 296 (quoting IMED, 602 So.2d at 346). If, and only if, the language of § 224 is found to be ambiguous may this Court take other factors into consideration to interpret the constitutional provision.

Given this Court's long-standing and proper practice of deferring to the plain meaning of the text of a constitutional provision whenever possible, one would expect the majority in this case to begin its interpretation of § 224 with a discussion of the plain meaning of the text. One would next expect the majority to find either that the plain meaning of the language of the text is unambiguous and apply it directly to Jefferson County's debt-and-tax scheme or to find that part or all of the text of § 224 is ambiguous and thus go beyond the text to resolve that ambiguity.

Unfortunately, the majority opinion in this case does not follow the plain-meaning rule in interpreting § 224 of the Alabama Constitution. This is a particularly telling omission, given that the majority opinion devotes several pages to applying the very same rule in historic context to a mere statute at issue in this case. See 954 So.2d at 1067-71. Surely a constitutional provision is more important than a county tax-authorizing statute. Yet a plain reading of the majority opinion would lead one to conclude precisely the opposite.

But the failing of the majority opinion in this case is even more fundamental than its inversion of the respective places of a constitutional provision and a statute. Worse than that is the innovation of the majority opinion of following the plain-meaning rule closely when a challenge to the text threatens the power of the civil government but disregarding the plain-meaning rule when, as in this case, its application would tend to limit the power of the civil government. In so doing, the majority opinion subverts not only the constitutional text, but also the very purpose of the Alabama Constitution: to shield the people from the abuse of the State. This is why, as the majority opinion acknowledges, I "make much of" this Court's obligation to apply the plain-meaning rule to the constitutional text.

Although the majority opinion criticizes my application of the plain meaning rule to this case, it declines to apply the rule itself. Furthermore, it does so without first finding ambiguity in the constitutional text or without otherwise explaining why the plain meaning of the text need not govern in this case. Consequently, I see no reason not to conclude that the plain-meaning rule must govern the interpretation of § 224.

III. Under the plain-meaning rule of construction, Jefferson County's warrants constitute debt subject to the limits of § 224.

Section 224 of the Alabama Constitution 1901, as amended by Amendment No. 342, states:

"No county shall become indebted in an amount including present indebtedness, greater than five percentum of the assessed value of the property therein. Nothing herein contained shall prevent any county from issuing bonds, or other obligations, to fund or refund any indebtedness now existing or authorized by existing laws to be created."

(Emphasis added.)

On its face, § 224 prohibits a county from being "indebted" in an amount greater than five percent of the assessed value of the property in the county. Because nothing in the context requires a specialized or narrow interpretation of the term, the plain meaning of the word "indebted" (and "debt," an appurtenant term) controls, unless the word is ambiguous, and that plain meaning must be considered in determining whether the warrants issued by Jefferson County fall under the limits of § 224.

Noah Webster defined "indebted" as: "Being in debt; having incurred a debt; held or obliged to pay." American Dictionary of the English Language (Foundation for American Christian Education 1995) (1828). Webster defined "debt" as: "That which is due from one person to another, whether money, goods, or services." Id. Another, more modern dictionary defines "indebted" as "owing money," Merriam-Webster's Collegiate Dictionary 632 (11th ed.2003). It defines "debt" as: "2: something owed: obligationunable to pay off his ""; and "3: a state of owingdeeply in "[.]" Id. at 320. Thus the common understanding and usage of the words "indebted" and "debt" indicates an obligation, especially a financial obligation.

These ordinary usages of the terms "indebted" and "debt" have been recognized by courts across the country as applying to constitutional debt limits for civil government. For example, "`[I]ndebted' means brought into debt, being under obligation[.]" Words and Phrases, "Indebted; Indebtedness" (1959) (citing State v. Board of Trs. of Missoula County High Sch., 91 Mont. 300, 7 P.2d 543 (1932)). Furthermore, "Under constitutional provision[s] that no county shall become indebted in an amount including present indebtedness greater [than the imposed limitation] of the assessed value of the property therein, a `debt' is an obligation to pay resulting from a law imposed duty or from contract express or implied authorized by law[.]" Words and Phrases, "Debt" (1959) (citing Wharton v. Knight, 241 Ala. 218, 2 So.2d 310 (1941)). Thus, the undisputed plain meaning of the words "indebted" and "debt" is an obligation by a party to pay.

In this case, the question is whether Jefferson County is the party obligated to pay the debt warrants or, as the majority opinion states, "whether Jefferson County has assumed additional debt." 954 So.2d at 1077. If so, the debt warrants must be chargeable to Jefferson County's constitutional debt limit.

As I see it, the party in this case is Jefferson County, which has obligated itself to pay the debt service on the warrants (and consequently has become "indebted") by assigning the proceeds of its targeted tax hike to pay for the debt warrants. The majority opinion attempts to avoid this conclusion by treating a limited obligation of Jefferson County as no obligation at all. According to the majority opinion, the "warrants are not a debt of Jefferson County" if (1) Jefferson County is not obligated to pay them out of "the general revenues that are available to it," and (2) if the revenue from the warrants "is not available to Jefferson County for general government purposes." 954 So.2d at 1077. In short, according to the majority opinion, Jefferson County is able to evade the constitutional debt limit by, in effect, accounting for the warrant debt "off the books."

Jefferson County's use of such accounting sleight of hand in an attempt to evade the constitutional debt limitation of § 224 violates the plain-meaning rule. The majority opinion has not shown anything in the text of § 224 that even suggests that the source of the money that will be used to pay the warrants, i.e., whether that source is from general funds or from special funds, is material. Furthermore, the majority opinion has not found the text of § 224 to be ambiguous. Consequently, the plain-meaning rule precludes this Court from redefining the Constitution to permit the extra debt from one county-funding source and to deny it from another.

The majority further attempts to avoid the logical consequence of proper application of the plain-meaning rule in this case by suggesting that the Court cannot interpret "indebtedness" in its ordinary sense because "then [counties] could [not] enter into many of the long-term contracts of employment or contracts for gasoline, electricity, or other goods and services necessary for a [county's] efficient, effective, and economic functioning." 954 So.2d at 1076 n. 23. This argument, however, is a red herring. Nothing in my opinion or in the text of § 224 suggests that counties may not enter into contracts for these purposes or that debt in general is precluded.

The plain meaning of § 224 is that it prohibits only debt that exceeds the overall debt limit, not contractual spending obligations arising out of the ordinary operations of local government. Long-term contracts of this type were not unknown to the drafters of § 224, and this Court has held since shortly after the ratification of § 224 that such contracts do not exceed the debt limit so long as their payment does not lead to an annual deficit. "[T]he inhibition against creating any new debt was never intended to prevent the county from contracting liabilities for current expenses in anticipation of its annual revenue, and which were to be paid from the revenue." State ex rel. Terrell-Hedges Co. v. Moody, 202 Ala. 444, 447, 80 So. 828, 831 (1919) (quoting Brown v. Gay-Padgett Hardware Co., 188 Ala. 423, 428, 66 So. 161, 162 (1914), quoting in turn Butts County v. Jackson Banking Co., 129 Ga. 801, 810, 60 S.E. 149, 153 (1908)). See also State ex rel Hyland v. Baumhauer, 244 Ala. 1, 12 So.2d 326 (1942) (citing Abrasley v. Jefferson County, 241, Ala. 660, 4 So.2d 153 (1941), and Brown v. Gay-Padgett Hardware Co., supra).

It seems to me that the argument in the majority opinion here is ultimately no more than a public-policy argument that this Court must go along with Jefferson County's debt-and-tax scheme to evade the constitutional debt limit or else County functions will grind to a halt. Such a scenario is highly unlikely. But even if it were possible, it is not the place of this Court to decide that a political desire for a certain level of county government functioning, however conceived, overrides the plain-language constitutional debt limits: "In the decision of questions arising under these constitutional debt limits, considerations of policy have no place." James M. Gray, Limitations of the Taxing Power Including Limitations upon Public Indebtedness § 2055, p. 1051 (1906), quoted in Hagan, 160 Ala. at 551, 49 So. at 419.

Thus, if political considerations are put aside and the plain-meaning rule of interpretation is applied, the question of whether, in issuing the debt warrants and levying the targeted taxes at issue in this case, Jefferson County becomes indebted under § 224 must be answered in the affirmative. Moreover, because Jefferson County has become indebted in this manner, it has exceeded the debt limit permitted under § 224, and the decision of the lower court is due to be reversed. IV. This Court's precedents support the plain-meaning interpretation of § 224 that the debt created by Jefferson County's issuance of the warrants is subject to the constitutional debt limit.

The basic holding of Hagan — that existing or future obligations that are funded by specially levied taxes are debt subject to § 224 — has been confirmed repeatedly and applied to a variety of circumstances. See, e.g., Gunter v. Hackworth, 182 Ala. 205, 62 So. 101, 102-03 (1913) (warrants issued by a county to repair county buildings and supported by specially levied taxes to fund the warrants were subject constitutional debt limit); Southern Ry. v. Jackson County, 189 Ala. 436, 66 So. 570 (1914) (debt incurred for the construction of a courthouse was subject to the constitutional debt limit because a special tax funded the debt); First Nat'l Bank of Abbeville v. Terry, Briggs Co., 203 Ala. 401, 83 So. 170 (1919) (a special tax to fund construction was valid to the extent that the debt limit was not exceeded); Rollings v. Marshall County, 263 Ala. 317, 82 So.2d 428 (1955) (a special gasoline tax was authorized only if the debt limit was not exceeded); Comity Bd. of Educ. of Coffee County v. City of Elba, 273 Ala. 151, 135 So.2d 812 (1961) (a repayment contract by the city and the county board of education was void because of the debt limit); and Taxpayers Citizens of Town of Georgiana v. Town of Georgiana, 265 Ala. 654, 93 So.2d 493 (1956) (issued warrants payable by a special tax caused the city to exceed its constitutional debt limit). See also Brown v. Gay-Padgett Hardware Co., 188 Ala. 423, 66 So. 161 (1914); O'Rear v. Sartain, 193 Ala. 275, 69 So. 554 (1915); Moody v. Gunter, 203 Ala. 655, 84 So. 831 (1919); Lawrence County v. Ayers, 229 Ala. 541, 158 So. 740 (1935); Littlejohn v. Littlejohn, 195 Ala. 614, 71 So. 448 (1916); Hall v. Blan, 227 Ala. 64, 148 So. 601 (1933); and Harman v. Alabama College, 235 Ala. 148, 177 So. 747 (1937).

Related to the plain-meaning rule as applied to debt-limit cases is the principle, reflected in precedents cited above, that "[t]he court should look to substance rather than mere form." This preference for substance over form is in the context of "a strict observance of th[e] constitutional debt limitation." Taxpayers Citizens of Shelby County v. Shelby County, 246 Ala. 192, 196, 20 So.2d 36, 39 (1944). That is why in prior cases this Court has consistently looked past ingenious methods or forms designed to evade the plain-language requirements of § 224. V. This Court's precedents for the past 100 years support the proposition that the warrants issued by Jefferson County are county debt in substance as well as form and are subject to the limits of § 224.

For almost 100 years, the rule for determining whether a warrant issue is within a constitutional debt limit has been as follows:

"If the fund from which the obligations are to be paid is to be created by the levy of a tax under the general power of taxation vested in the municipality, although the contract stipulates that no general indebtedness for the stipulated amount shall be created against the city, and that the only obligation undertaken by the city is to levy, anticipate, and pledge the tax agreed to be imposed, indebtedness is created, and the contract is void if the existing indebtedness of the municipality has been reached."

1 Dillon, Municipal Corporations § 198, p. 370 (5th ed.1911), cited in Town of Georgiana, 265 Ala. at 658, 93 So.2d at 497. Moreover, this Court has held:

"The Constitution has also made a limitation on the amount of indebtedness which a county (§ 224) or a city (§ 225) may create.

"This has been construed to apply not only to an obligation to which the county or city pledges its full faith and credit, called a general obligation, but also when the county or city pledges existing property or revenue from existing sources to be derived in the future. . . . The full faith and credit of the county or city is not thereby pledged, but a part of it is pledged."

In Hagan, the county incurred a contractual debt (similar in effect to a warrant) to fund the building of a new court-house, and a special property tax was levied to pay for the debt. That debt was held to be subject to the constitutional limit. In Town of Georgiana, the town issued warrants to fund the construction of a public hospital, and a special tax was levied to pay for the warrants. The hospital warrants were held to be subject to the constitutional debt limit. In the present case, Jefferson County issued debt warrants to fund the county school system and special taxes were levied to pay for the debt warrants. Thus, the debt warrants issued by Jefferson County should be subject to § 224, under the consistent holdings of Hagan, Town of Georgiana, and their progeny.

VI. The majority's reliance on Acker is misplaced; Acker was wrongly decided and does not apply.

The majority opinion ignores nearly 100 years of consistent precedent striking down debt increases much like the debt issued by Jefferson County to seize on the single anomalous holding in Taxpayers Citizens of Shelby County v. Acker, 641 So.2d 259 (Ala. 1994), as the basis for its decision to uphold Jefferson County's debt hike. Ironically, although Acker was wrongly decided, as explained below, even if it were correct, the holding does not properly apply to the facts of this case.

A. Acker was wrongly decided and should be overturned.

At issue in Acker was Shelby County resolution no. 93-12-2715 (later amended and superseded by resolution no. 94-02-1210), which authorized the issuance of "`limited obligation refunding warrants.'" 641 So.2d at 260. Shelby County sought to issue these new warrants to refinance existing warrants, two series of which were revenue warrants, at lower interest rates. To finance these "limited obligation refunding warrants," Shelby County levied a special license tax "on persons engaged in the business of selling at retail in the County any tangible personal property or engaged in the business of conducting places of amusement or entertainment in the county, generally measured by the gross receipts of such business." 641 So.2d at 260.

The Acker Court recognized that "the [Shelby County] warrants are limited obligations of the County," 641 So.2d at 262, and did not dispute that taxpayers were under an increased burden as a result of the warrants. Thus, given the essential similarity of the particulars of Acker to those of prior constitutional debt-limit cases involving obligations and burdens imposed on the taxpayer, the Court should have applied its prior precedents to strike down the debt challenged in Acker.

Instead of striking down the Shelby County warrants, however, a bare majority of the Acker Court, over a strong dissent, held that if warrants are payable only by special taxes and the issuance of the warrants will not increase, and may actually reduce, taxes, then the warrants are not debt subject to the limitation of § 224. In effect, the Acker Court held that the plain meaning of § 224 — an absolute prohibition on county debt over a specified level — could be ignored so long as the intent of the constitutional provision, limiting the overall taxpayer burden, was honored:

"The purpose of this provision [§ 224] is to curb excessive indebtedness by counties and thus protect the taxpayers against excessive and unnecessary burdens. [Taxpayers Citizens of the Town of Georgiana v.] Town of Georgiano, [ 265 Ala. 654, 93 So.2d 493 (1956)] (applying related provision of § 225 relating to municipalities). This provision is intended to limit the burden imposed upon taxpayers by new obligations and to stabilize the economic position of the county. Norton v. Lusk, 248 Ala. 110, 26 So.2d 849 (1946). It is directed against indebtedness and is not directed to purposes for which indebtedness is incurred. Wharton v. Knight, 241 Ala. 218, 2 So.2d 310 (1941). While courts must be careful to see that the indebtedness limitation is strictly observed, they should remember that the limitation is aimed at actual, rather than theoretical, indebtedness, and they should look to substance rather than mere form. Taxpayers Citizens of Shelby County v. Shelby County, 246 Ala. 192, 20 So.2d 36 (1944)."

Such a holding is contrary to the Alabama Constitution and to this Court's long-applied principles of construction. Acker was wrongly decided, and it should be overruled. Although this Court has been reluctant to overrule prior decisions because of the need for stability in the law, we have held that there are circumstances under which we "should not hesitate" to depart from precedent:

"But where, as here, it is apparent that a holding which has been in the books only a comparatively short time and is clearly wrong, and upset a rule of long standing, we feel that this court should not hesitate to depart therefrom."

B. Even if the holding in Acker were correct, it does not apply to the facts of this case.

But even if the holding in Acker did not conflict with the Alabama Constitution, it would still be improper to apply the Acker precedent to the facts of the case before us. This is so because, unlike the Shelby County warrants at issue in Acker, Jefferson County's debt-and-tax scheme does not, and will not under any circumstances presented to this Court, reduce the overall tax or debt burden of the people. Consequently, even under the authority cited by the majority opinion, the decision of the lower court in this case is due to be reversed.

VII. Conclusion

Although advanced in the name of "education" and promoted "for the children," Jefferson County's debt-and-tax scheme is contrary to the best interest of the very children it seeks to help because it burdens their future with debt beyond the protective limits established by the framers of the Alabama Constitution. Whether one considers the plain meaning of the text of the Constitution, the discussion of the delegates at the time of its ratification, the larger historic context, or 100 years of this Court's precedents — every applicable authority supports the conclusion that Jefferson County's debt scheme is unconstitutional and thus void.

SEE, Justice.

APPLICATION OVERRULED; OPINION OF AUGUST 16, 2006, MODIFIED.

LYONS, HARWOOD, WOODALL, STUART, and SMITH, JJ., concur.

BOLIN and PARKER, JJ., dissent.

NABERS, C.J., recuses himself.

PARKER, Justice (dissenting).

In seeking rehearing, the Chism plaintiffs argue that the majority opinion on original submission "ignores the plain meaning of 1901 Alabama Constitution, Section 224 . . . and misinterprets [this Court's precedents], produc[ing] an exemption that virtually swallows the constitutional debt limit" for counties. The Chism plaintiffs point out that the new approach sanctioned by the majority opinion, if sustained, "will allow counties and municipalities to evade debt limitations by the simple expedient of paying obligations from new special purpose taxes. . . ."

The Chism plaintiffs are correct. The majority opinion does effectively eviscerate the constitutional debt limitation of § 224. As a result, a county that wishes to increase its debt for any reason and to any degree will no longer find the constitutional restriction a limitation, provided only that the county is careful to create a new, targeted tax for each new debt. This is the logical and unavoidable consequence of the reasoning of the majority opinion.

The majority opinion has arrived at the point of effectively neutering a provision of the Alabama Constitution by fundamentally misapprehending Dillon on Municipal Corporations and the special-funds doctrine and misapplying Edmonson v. State Industrial Development Authority, 279 Ala. 206, 184 So.2d 115 (1966). I explain below and respectfully dissent from the denial of the application for rehearing.

A. Constitutional debt limitations are designed to protect the people from burdensome or ruinous taxation.

Section 224, Ala. Const. 1901, creates a debt limit for counties similar to the debt limit for municipalities created by § 225, Ala. Const.1901. Because counties, like municipalities, are creations of the legislature, this Court has cited Dillon on Municipal Corporations in addressing the powers and authority of counties since before the adoption of the 1901 Constitution. See, e.g., Southern Ry. v. St. Clair County, 124 Ala. 491, 27 So. 23 (1899).

Judge Dillon says that "[t]he purpose of these constitutional [debt limitation] provisions is effectually to protect persons and property in municipalities from the abuse of the corporate credit and the consequent burdensome, if not ruinous, taxation." 1 John F. Dillon, Commentaries on the Law of Municipal Corporations § 191, at 342 (5th ed.1911) (footnote omitted; second emphasis added).

"While it is true that in terms `the limit provided by the Constitution is upon the power to contract indebtedness and not upon the power of taxation,' it is also true that taxation is the sting of indebtedness, and that the constitutional debt limit is provided because becoming indebted involves the exercise of the power of taxation if the municipal faith and credit are to be kept good."

1 Dillon on Municipal Corporations § 198, at 372 (footnote omitted; emphasis added).

Yokley states in his treatise on municipalities:

"It has been stated that the purpose of debt limitation statutes is to protect the taxpayer from confiscatory taxation. Enlarging on this principle, it might be stated that the purpose of debt limitation sections in constitutions [is] . . . to curb the improvident creation of debts by cities and counties, thereby protecting the taxpayers against excessive and unnecessary burdens, and to secure the credit of cities and counties to the end that they may borrow money, within the limits prescribed, on advantageous terms."

3 E.C. Yokley, Municipal Corporations § 579, at 505 (1958) (footnote omitted; emphasis added). Thus, according to the standard treatises on the subject, constitutional debt limits are ultimately designed to protect the people from what otherwise would often be ruinous levels of taxation.

B. The majority opinion mistakenly applies Dillon's provision for funding ordinary current expenses to the special-funds doctrine.

Because a county or municipality's tax revenues and its expenditures do not correspond exactly each month, Dillon recognizes that compensating for this by anticipating revenues does not implicate the constitutional debt restrictions. Although the majority opinion quotes from Dillon's discussion on this topic, in § 194, it omits some of the relevant language; so I quote more fully (and indicate material quoted by the majority in bold typeface) below:

"§ 194. Anticipation of Revenues. — When a city has become indebted to the limit permitted by the Constitution, the municipal officers are confronted with the difficulty of providing for ordinary current expenses before the receipt of the revenues of the current year. To enable a city to meet these expenses, the rule has been recognized that the municipality may, to a certain extent, anticipate its revenues, and the liabilities thus incurred in anticipation of these revenues are not debts within the meaning of the Constitution. But in order to take these liabilities out of the operation of the Constitution, the tax anticipated must have been actually levied or at least leviable for the current year at the time when the obligation is incurred, and it has been declared in certain cases that the' legal effect of the contract or obligation must be that the creditor agrees to look only to the revenues so anticipated for payment. In other words, the contract or agreement must be in effect an assignment of taxes actually levied without recourse against the assignor. And the fact that the revenue so anticipated and pledged to the payment of these obligations is wrongfully diverted to other uses does not bring the debts thereby created within the constitutional provision. But the rule that current revenues may be anticipated must not be so far relaxed as to impair the force of the constitutional provision, or nullify its spint. The only revenues which can be anticipated in this manner are those accruing from the collection of taxes already levied or at least leviable for the current year. Any anticipation of the revenues in excess of the amount covered by the annual levy is illegal. Hence a statute which authorizes the municipality to levy a specified tax yearly for a period of ten years and empowers the local authorities to make the levy for the whole period, and to draw anticipation warrants against the aggregate amount to be produced by the tax based on the assessment of the previous year, is an attempt to authorize the municipality to become indebted beyond the constitutional limit and is invalid. But these anticipations are to be carefully distinguished from the anticipation and pledge of revenues to be created under a special assessment to pay for the particular improvement out of which the debt arises. The qualifications upon the anticipation of revenues apply only to revenues to be raised by taxation for the general purposes of the municipality, and not to special assessments, the proceeds Of which are specifically devoted to the improvement in connection with which the indebtedness is created. As shown elsewhere, obligations charged and chargeable solely under legislative authority upon and payable exclusively from a special fund to be created by the levy of a special assessment or other special fund do not come within the constitutional prohibition."

1 Dillon on Municipal Corporations § 194, at 354-55 (footnotes omitted; second emphasis and bold typeface added).

In this section on "Anticipation of Revenues," Dillon expressly deals with "ordinary current expenses." He makes it clear that the revenues that may be anticipated for the payment of ordinary current expenses are limited:

"The only revenues which can be anticipated in this manner are those accruing from the collection of taxes already levied or at least leviable for the current year. Any anticipation of the revenues in excess of the amount covered by the annual levy is illegal."

1 Dillon on Municipal Corporations § 194, at 355 (footnotes omitted). Dillon further cautions that " the rule that current revenues may be anticipated must not be so far relaxed as to impair the force of the constitutional provision, or nullify its spirit." 1 Dillon on Municipal Corporations § 194, at 355 (emphasis added). Yet that is the precise result of the majority opinion in this case — it "produc[es] an exemption that virtually swallows the constitutional debt limit."

It is a mistake to apply § 194 of Dillon on Municipal Corporations, addressing "ordinary current expenses," to the special-funds doctrine, discussed infra. The error of this application of § 194 may be seen by reviewing the internal footnotes omitted from the majority's excerpt from Dillon on Municipal Corporations. Here is the quoted text with its footnotes:

"The qualifications upon the anticipation of revenues apply only to revenues to be raised by taxation for the general purposes of the municipality, and not to special assessments, the proceeds of which are specifically devoted to the improvement in connection with which the indebtedness is created. ⁶ As shown elsewhere, ⁷ obligations charged and chargeable solely under legislative authority upon and payable exclusively from a special fund to be created by the levy of a special assessment or other special fund do not come within the constitutional prohibition.

^"7 Post, § 198."

Footnote 6 cites capital-improvement cases involving a municipality's construction of roads ( Comm'rs of Highways v. Jackson, 165 Ill. 17, 45 N.E. 1000 (1897), and State v. Superior Court of Whatcom County, 42 Wash. 521, 85 P. 256 (1906)) and a utilities plant ( Windsor v. Des Moines, 110 Iowa 175, 81 N.W. 476 (1900)). In Windsor, the Iowa Supreme Court held invalid the payment plan for the construction of a municipal electric plant because it was to be paid for by a special tax levy instead of from the revenues produced by the plant. In Whatcom County, "the city [was] to pay for property taken by special assessments made upon property benefited. . . ." 42 Wash, at 526, 85 P. at 258. Footnote 7 refers to Dillon on Municipal Corporations § 198, which is entitled "Obligations Payable only from a Special Fund." An examination of Dillon on Municipal Corporations § 198, infra, shows the misapplication by the majority opinion of the quotation from Dillon on Municipal Corporations § 194.

C. Dillon on Municipal Corporations § 194. applies only to ordinary current expenses, which are not at issue in this case.

The "ordinary current expenses" referred to in Dillon on Municipal Corporations § 194 are defined in § 195:

"The current expenses which may be lawfully incurred without violating the Constitution have been held to include salaries to the sheriff, register, and clerk of a county; salary due an alderman; services for jurors in the superior court, witness fees in criminal proceedings, sheriff's expenses in serving criminal process, and expenses incurred at the general State election, as being necessary expenses made mandatory in the Constitution, and provided for by the legislature of the State, and imposed upon the county; salaries of policemen, marshal, and city treasurer; the rent of suitable offices for the officers of a city; labor and material furnished in the building of a city jail; services in guarding quarantine patients, publishing notices and printing ballots of election, feeding impounded stock, boarding city prisoners; insurance on city buildings; services in making assessment rolls; postage and stationery for officers, city printing, the necessary expenses of the city clerk, the fee of an architect employed by the city to prepare plans and specifications of a city hall and market house, the expense of an investigation of county books, the expense of light, water, labor, and the like; but the building of a sewer system is not to be regarded as a current expense, nor is the building of a garbage crematory and the purchase of a site therefor, and the erection of a city hall, or a building for the use of the city officers, is an extraordinary expense, and not an ordinary and necessary expense such as is properly payable from current revenues."

1 Dillon on Municipal Corporations § 195, at 357-58 (some emphasis original; some emphasis added). As the last emphasized text makes clear, capital improvements such as the construction of state school facilities are not current expenses. Therefore, the text quoted by the majority opinion from § 194 does not support its holding.

D. The special-funds doctrine also does not provide support for the majority opinion.

Dillon discusses the special-funds doctrine and its limitations in § 198:

"§ 198. Obligations Payable only from a Special Fund. — In the case of streets, sewers, and other local improvements, which are payable from the proceeds of special assessments upon the property benefited thereby, a contract which provides that the contractor shall be paid from such assessments, that he shall have no right, of recourse against the municipality or its property, or its general power of taxation, and that the only duty of the municipality shall be to levy, collect, and pay over the special assessments, does not create any indebtedness on the part of the municipality within the meaning of the constitutional limitation, although the city is a party to the contract, although the money is payable through its general treasury, and although it issues certificates, warrants, or bonds payable out of such special fund for the payment of the cost of the improvement. Under such a contract no judgment in personam against the city for non-payment of the cost is justified, no charge can be enforced against its general assets, nor can a resort be had to general taxation for the purpose of satisfying the claim. When the rights of the contractor are so limited, there is no debt within the debt-limit provision of the Constitution."

1 Dillon on Municipal Corporations § 198, at 368 (footnote omitted). The special fund is created by "collecting from the parties benefited the amount of the special assessment." 1 Dillon on Municipal Corporations § 198, at 369.

"This `special fund' exception to a constitutional limitation on municipal debt is normally applied in situations where a city's indebtedness is for the purpose of building or buying revenue-producing property, and only the revenue produced from that particular property is used to repay the indebtedness."

56 Am.Jur.2d Municipal Corporations, Counties, and Other Political Subdivisions § 598, at 612 (2000) (footnotes omitted).

"Generally, debts secured by special assessments, as authorized by statute, do not constitute debt under a constitution debt limitation as they are incurred for special improvements, financed by a special tax on properties they benefit and do not burden any property of the municipality other than the revenues from the special assessment tax pledged as repayment."

56 Am.Jur.2d Municipal Corporations, Counties, and Other Political Subdivisions § 599, at 613 (footnote omitted).

Earlier decisions of this Court have been in accord with this application of the purposes and limitations of the special-funds doctrine:

"Under these authorities and others, however, the county or city does not pledge its faith or credit when the indebtedness incurred to purchase or develop new property or facilities is made repayable solely out of the income to be derived from such property or facilities. We have said that such an obligation by a county or city does not create a debt within the meaning of §§ 224 or 225. Those provisions of the Constitution were intended to limit the burden imposed upon taxpayers by new obligations, and to stabilize the economic position of the institution.

"But whether a given status or obligation is a debt under the Constitution so restricting the institution has relation to the purpose to be accomplished. It may not be a debt such as is contractable as an absolute obligation to pay, pledging the faith and credit of the State, or the institution, yet nevertheless could be a debt in a sense that it is an obligation due from the institution to the payee to see that the transaction is executed according to agreement. `Debt' is defined as: `That which is due from one person to another, whether money, goods, or services; that which one person is bound to pay to another or to perform for his benefit; thing owed; an obligation or a liability.' Webster's New International Dictionary, Second Edition."

E. A special fund cannot be funded from general taxes.

A capital improvement that benefits all is to be paid for out of the general taxing power of the municipality, in contrast to a local improvement, which is to be paid for by special assessment against just those benefited:

"But where the improvement is one which affects the welfare of the city at large and is not properly payable from a local assessment, different considerations arise. The city then is acting for the whole body of the people, and all the citizens receive the benefit of the improvement. A tax made for the improvement must, in justice, be laid upon the whole taxpayers of the body corporate, and if the improvement is to be paid for by taxation, recourse must be had to the general exercise of the power of taxation of the municipality."

1 Dillon on Municipal Corporations § 198, at 369. But when the general taxing authority is resorted to, it creates debt within the meaning of the constitutional limitation:

"If the fund from which the obligations are to be paid is to be created by the levy of a tax under the general power of taxation vested in the municipality, although the contract stipulates that no general indebtedness for the stipulated amount shall be created against the city, and that the only obligation undertaken by the city is to levy, anticipate, and pledge the tax agreed to be imposed, indebtedness is created, and the contract is void if the existing indebtedness of the municipality has reached the constitutional limit."

1 Dillon on Municipal Corporations § 198, at 370 (footnote omitted). See Windsor, supra.

Other authorities agree:

"The weight of authority, and it seems to the writer of reason, supports the view of the Circuit Court of Appeals, that a municipality indebted to the limit cannot evade the constitution and incur further debt by creating a `special fund' to pay the debt, when such special fund has its source in general taxation of the community."

James M. Gray, Limitations of the Taxing Power, Including Limitations Upon Public Indebtedness § 2107, at 1083 (1906) (footnoted omitted).

"(b) Exceptions to debt limitation requirements; special fund doctrine. — As a general proposition, constitutional provisions on debt limitation are not violated by the issuance of bonds of a revenue character or other obligations which are payable solely from a special fund, provided the governmental body is not liable to maintain the special fund out of its general funds, or by tax levies, should the special fund prove insufficient."

Yokley, § 579, at 505-06 (footnote omitted).

"If an obligation is payable out of a special fund only, and the municipality is not otherwise liable, it is generally held that there is no indebtedness. In other words, if the municipality is not liable to maintain the special fund out of its general funds, or by tax levies, should the special fund prove insufficient, the obligations are not considered an indebtedness within the constitutional limitations."

15 Eugene McQuillin, The Law of Municipal Corporations § 41:30, at 500-01 (3d ed.2005) (footnotes omitted).

"Where municipalities have been indebted in excess of their debt limit, or very close to the boundary line, attempts to evade the debt-limit provision by providing for a special levy of taxes or a levy for a period of years to pay the liability sought to be created have generally been unsuccessful."

15 McQuillin, § 41:34, at 523 (footnote omitted).

"Thus, an ordinance for the levy of a tax of one percent for a certain number of years to pay water bonds to be issued, creates a debt so as to be invalid where the municipality is already indebted beyond the constitutional limit, notwithstanding the bonds were to be payable solely out of a special tax levy, and the net revenue of the waterworks."

15 McQuillin, § 41:34, at 525 (footnote omitted).

"Although a municipal corporation has exceeded the debt limit, it nay generally contract a debt payable out of a special fund or payable out of the proceeds of a special assessment; but an obligation payable out of a fund which is the product of a tax levy or out of a fund which must be replenished by funds raised by taxation is generally held a debt within the limitation."

64A C.J.S. Municipal Corporations § 1590, at 129 (1999).

"Some authorities have held that any obligation paid or contracted to be paid out of a fund which is the product of a tax levy is a debt within the purpose of the constitutional limitation; and under this view a municipality which has reached the constitutional limit of indebtedness cannot create a debt to be paid directly or indirectly, in whole or in part, from funds raised by taxation, or from a fund which must be replenished by funds raised by taxation. An indebtedness or liability is incurred when by the terms of the transaction a municipality is obligated directly or indirectly to feed the special fund from general or other revenues in addition to those arising solely from the specific improvement contemplated."

64A C.J.S. Municipal Corporations § 1590, at 129-30 (footnotes omitted). Because Jefferson County does resort to its general taxing authority, it is properly subject to the constitutional debt limitation.

F. The misapplication of Edmonson to the special-funds exception.

The majority opinion relies on Edmonson v. State Industrial Development Authority, 279 Ala. 206, 184 So.2d 115 (1966), as follows:

"In Edmonson v. State Industrial Development Authority, 279 Ala. 206, 184 So.2d 115 (1966), this Court identified seven characteristics of statutory funding mechanisms it had previously upheld as not creating or incurring a `debt' under the constitutional debt limit applicable to the State:

"`(1) Each [of the statutes] provides that the bonds authorized to be issued thereunder shall not be general obligations of the issuing body but shall be payable solely out of the funds appropriated and pledged under the provisions of the applicable act;

"`(2) Each [of the statutes] provides that the bonds authorized to be issued thereunder shall not constitute or create an obligation or debt of the State of Alabama;

"`(3) Each [of the statutes] appropriates and pledges for the accomplishment of the purposes thereof so much as may be necessary of receipts of an excise tax of the State of Alabama;

"`(4) In none of the statutes was there any representation or agreement of any kind that there would ever be any receipts from the tax pledged or that the receipts, if any, would be sufficient to service the bonds;

"`(5) In none of the statutes was there either a pledge of the faith and credit of the State or an agreement to pay the appropriation from any other funds if those appropriated should be insufficient to service the bonds;

"`(6) Each of the statutes authorized the use of proceeds of the bonds issued thereunder for a purpose of state-wide interest;

"`(7) Each of the statutes appropriated and pledged for the servicing of the bonds the receipts of a special tax which had not theretofore been paid into the general fund of the State.'

" 279 Ala. at 211, 184 So.2d at 119-20. The issue in this case is whether the fact that the special tax pledged is a new revenue source not otherwise available for general purposes exempts the education warrants from being charged against Jefferson County's constitutional debt limit. We noted in Opinion of the Justices No. 346, 665 So.2d 1357 (Ala. 1995), that, pursuant to Edmonson, it is critical to a finding that warrants do not constitute debt chargeable against the State's debt limit that they be serviced by a new revenue source that would not otherwise be available for the general fund. In Opinion of the Justices No. 346, the Justices expressed their opinion that a proposed bond issue by the Alabama Incentives Financing Authority would be included in the State's constitutional debt limit `because it does not create a new revenue source to retire the bonds . . . but attempts to divert funds that heretofore have been, and, by constitutional provision, must be paid into the General Fund.' 665 So.2d at 1362. In so concluding, the Justices noted: `[C]ritical to the Edmonson holding is the fact that the bonds were to be retired by a new revenue source, one that had not theretofore been payable to the General Fund.' 665 So.2d at 1362."

"We now consider whether the appropriation and pledge in the act for servicing the bonds creates a new debt under Section 213, as amended. We hold that they do not under the authority of Rogers v. Garlington, 234 Ala. 13, 173 So. 372 [(1937)]; Opinion of the Justices [No. 174], 275 Ala. 254, 154 So.2d 12 [(1963)]; Opinion of the Justices [No. 169], 270 Ala. 147, 116 So.2d 588 [(1959)]. In Rogers v. Garlington, supra, there was an appropriation and pledge of the state gasoline tax to pay bonds of the Alabama Bridge Authority; in the opinion in [Opinion of the Justices No. 174] 275 Ala. 254, 154 So.2d 12 [(1963)], the appropriation and pledge were for bonds issued by the Alabama Trade School and Junior College Authority; and in the opinion [in Opinion of the Justices No. 169], 270 Ala. 147, 116 So.2d 588 [(1959)], the pledge and appropriation were for bonds issued by the Alabama Education Authority. In each of the statutes under consideration there, and Act No. 662 here, there were striking and substantial similarities. . . ."

By taking the Edmonson principle of a "new revenue" source, expressed as "the receipts of a special tax which had not theretofore been paid into the general fund of the State," applicable to a public corporation that has no constitutionally imposed debt limit, and applying it to counties which are subject to constitutional debt limits, the majority opinion has gotten off track. In fact, even the out-of-state authority cited by the majority opinion also applies only to public corporations. Although previous decisions by this Court have referred to the "new revenue" principle (see, e.g., Opinion of the Justices No. 346, 665 So.2d 1357, 1362-63 (Ala. 1995); Eagerton v. Second Econ. Dev. Coop. Dist. of Lowndes County, 909 So.2d 783, 792 (Ala. 2005)), the majority opinion in this case now expands it beyond its proper limitation to public corporations. The result is not only an end-run around the constitutional debt limitation of § 224 but also, as the Chism plaintiffs point out, a complete end to any effective constitutional restrictions on county debt as required by § 224.

Accordingly, I respectfully dissent from the recommendation to overrule the application for rehearing.