7 FSM Intrm. 344-350

THE SUPREME COURT OF THE

FEDERATED STATES OF MICRONESIA

Cite as Tafunsak v. Kosrae,

7 FSM Intrm. 344 (App. 1995)

[7 FSM Intrm. 344]

TAFUNSAK MUNICIPALITY,

STATE OF KOSRAE and the

GOVERNOR OF KOSRAE,

APPEAL CASE NO. K6-1992

MEMORANDUM OF DECISION

Argued: January 10, 1995

Order Issued: January 18, 1995

Opinion Entered: December 15, 1995

Hon. Andon L. Amaraich, Chief Justice, FSM Supreme Court

Hon. Richard H. Benson, Associate Justice, FSM Supreme Court

Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court

For the Appellant: Nina Eejima

Lelu, Kosrae FM 96944

For the Appellees: Tim Stumpff, Esq.

Assistant Attorney General

Office of the Kosrae Attorney General

Lelu, Kosrae FM 96944

Appeal and Certiorari ) Standard of Review; Civil Procedure ) Summary Judgment

An appellate court applies the same standard in reviewing a trial court's grant of a summary judgment motion as that initially employed by the trial court under Rule 56(c) ) summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Thus, review is de novo. The facts must be viewed in the light most favorable to the party against whom judgment was entered. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 (App. 1995).

Constitutional Law ) Kosrae ) Interpretation

In analyzing constitutional provisions a court must initially look to the actual words of the

[7 FSM Intrm. 345]

constitution. The court should also consider all provisions of the constitution because other sections may touch on the same subject area, thus giving the questionable provision added meaning. If those words are clear and permit only one possible result, the court should go no further. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 (App. 1995).

Constitutional Law ) Kosrae ) Interpretation

If the language of a Kosrae constitutional provision or section is susceptible to more than one meaning, the court should look to the legislative history, including the Constitutional Committee Notes and the Journals, if available, to clarify the definition of the ambiguous term. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 (App. 1995).

Constitutional Law ) Interpretation

The primary source available to courts when engaging in constitutional interpretation are the words of the constitution itself, and, if those are capable of more than one meaning, then the legislative history. Assuming that these two sources, taken together, are dispositive of the issue in question, a court may not look to any other source. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 (App. 1995).

Constitutional Law ) Interpretation

Courts are to interpret constitutions so as to give effect to each provision, because interpretations which strip constitutional clauses of substance and effect run against the norms of constitutional interpretation and are greatly disfavored. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 & n.4 (App. 1995).

Constitutional Law ) Kosrae

The Kosrae Constitution empowers the state government to collect both tax and non-tax revenue, but that only the tax revenue must be shared with the municipality in which the funds are collected. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 347 (App. 1995).

Constitutional Law ) Kosrae ) Interpretation

The party that raises the issue has the burden of proof as to the unconstitutionality of a statute. This burden is high and heavy, and that party must negative every reasonable, conceivable basis which would support the constitutionality of the statute, because statutes are presumed to be constitutional. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 348 (App. 1995).

Constitutional Law ) Kosrae

Under the Kosrae Constitution tax revenue must be shared with the municipalities, and what constitutes non-tax, public money revenue need not be shared. A fee paid for use of airport facilities is non-tax public money. This follows a pattern widely recognized elsewhere of a distinction between taxes and user fees. Tafunsak v. Kosrae, 7 FSM Intrm. 344, 348-49 (App. 1995).

On July 16, 1992, the Kosrae State Court held that the defendants, the State of Kosrae and the Governor of the State of Kosrae (hereinafter jointly referred to as, "Kosrae"), were entitled to summary judgment against plaintiff Tafunsak Municipality ("Tafunsak"). Tafunsak had challenged the constitutionality of certain portions of the Kosrae State Code, which provide for a non-tax "Airport

[7 FSM Intrm. 346]

Utilization Fee" to be collected from all departing air passengers. Tafunsak contended that the Airport Utilization Fee is a tax and that article IX, section 2 of the Kosrae Constitution requires the state to share all state tax revenue with the municipality in which the tax is collected. Tafunsak concluded that since the airport departure fee1 legislation does not require Kosrae to share the revenue from the fee, the statutory scheme is unconstitutional and must be struck down. The Kosrae State Court ruled that the fee was not a tax for revenue sharing purposes and granted summary judgment in favor of Kosrae. On January 18, 1995 we issued an order affirming the decision of the trial court. We now explain our reasoning.

In 1989, Title 9 of the Kosrae State Code was amended to provide for the collection of an "Airport Utilization Fee" from each passenger departing Kosrae International Airport.2 That legislation also declared that the fee was not a state tax for purposes of revenue sharing. K.C. § 9.1101.3 The Kosrae Constitution provides that "[n]ot less than fifty percent of the revenues from State Taxes shall be paid into the treasury of the municipality where collected." Kos. Const. art. IX, § 2.

In October 1991, Tafunsak, the municipality in which the Kosrae International Airport is located, petitioned the Kosrae State Court for a declaratory judgment that the airport utilization fee is a state tax within the meaning of the constitutional revenue sharing provision, as well as a writ of mandamus compelling the payment to Tafunsak of at least fifty percent of the utilization fees collected by the airport. The court instead granted summary judgment against Tafunsak. It held that the fee was not a state tax, and that the state was not constitutionally required to share the revenue flowing from that fee.

[7 FSM Intrm. 347]

Standard of Review

We apply the same standard in reviewing a trial court's grant of a summary judgment motion as that initially employed by the trial court under Rule 56(c). That is, summary judgment is proper when it appears "that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." FSM Civ. R. 56(c). Thus, our review is de novo. Lew v. Kona Hosp., 754 F.2d 1420, 1423 (9th Cir. 1985); cf. Adams v. Etscheit, 6 FSM Intrm. 580 (App. 1994) (standard applied without comment). The facts must be viewed in the light most favorable to the party against whom judgment was entered. Adams, 6 FSM Intrm. at 582.

A. Constitutional Interpretation

In this appeal we must interpret the Kosrae Constitution to determine whether the Airport Utilization Fee statutory scheme is constitutional. The court in FSM v. Tipen, 1 FSM Intrm. 79 (Pon. 1982), adopted a method for analyzing constitutional provisions. Initially, a court must look to the actual words of the constitution. Id. at 82; see also Seymour v. Kosrae, 3 FSM Intrm. 537, 540 (Kos. S. Ct. Tr. 1988). "[T]he court should also consider all provisions of the Constitution because other sections may touch on the same subject area, thus giving the questionable provision added meaning." Seymour, 3 FSM Intrm. at 540. If those words are "clear and permit only one possible result, the court should go no further." Tipen, 1 FSM Intrm. at 82. Only where the words of the constitution are not conclusive does it become necessary to consult sources other than the constitution itself. We have followed this method in Tammow v. FSM, 2 FSM Intrm. 53, 57 (App. 1985) and subsequent cases. The Kosrae State Court has stated that "[i]f the language of a [Kosrae constitutional] provision or section is susceptible to more than one meaning, the court should look to the legislative history, including the Constitutional Committee Notes and the Journals, if available, to clarify the definition of the ambiguous term." Seymour, 3 FSM Intrm. at 540; see also Tipen, 1 FSM Intrm. at 83 ("After careful consideration of the words themselves, the next step is to review the Journal of the Constitutional Convention about the provision, and to learn what the framers had in mind when they adopted the provision."). Thus, the primary source available to courts when engaging in constitutional interpretation are the words of the constitution itself, and, if those are capable of more than one meaning, then the legislative history. Assuming that these two sources, taken together, are dispositive of the issue in question, a court may not look to any other source.

In the present case, Tafunsak contends that Kosrae's failure to share the revenue collected from passengers departing Kosrae International Airport violates the Kosrae Constitution. The Kosrae Constitution requires the state to share the proceeds of state taxes with the municipalities in which the taxes are collected. Kos. Const. art. IX, § 2. A second constitutional provision also "touch[es] on the same subject area." That provision provides that, "[p]ublic money received by the State Government may be apportioned among municipalities by law." Id. art. IX, § 4. Thus, reading these two sections together in order to give meaning to both provisions, cf. Carlos v. FSM, 4 FSM Intrm. 17, 29 (App. 1989) (courts are to interpret the FSM Constitution so as to "give effect to each provision"),4 the Kosrae Constitution empowers the state government to collect both tax and non-tax revenue, but that only the "tax" revenue must be shared with the municipality in which the funds are collected.

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B. Appellant's Burden

The 1989 statutory amendments provided for the collection of the airport utilization fee, K.C. § 9.2102, and provided that such fees were not state taxes requiring a sharing with the municipalities, K.C. § 9.1101. The Kosrae Code further provided for an Airport Trust Fund, and that all fees and charges generated by the airport operation were to be spent for the "maintenance, development and operation" of the airport. K.C. § 10.205(1)(c). Tafunsak contends that the provision designating the airport utilization fee as non-tax revenue is unconstitutional.

Because it raises the issue, Tafunsak has the burden of proof as to the unconstitutionality of the statute. Siba v. Sigrah, 4 FSM Intrm. 329, 335 (Kos. S. Ct. Tr. 1990). This burden is "high" and "heavy." 16 Am. Jur. 2d Constitutional Law § 251 (1979). Tafunsak must negative every reasonable, conceivable basis which would support the constitutionality of the statute, because statutes are presumed to be constitutional. Siba, 4 FSM Intrm. at 335.

C. Constitutional Legislative History

The Kosrae Constitution creates a distinction between tax and non-tax sources of revenue, but it provides no guidance for differentiating between the two in order to determine what constitutes "tax" revenue that must be shared with the municipalities, and what constitutes non-tax, "public money" revenue that need not be shared. The Constitutional Convention journals do offer such guidance.

"Public money . . . include[s] tax revenues, fees, fines, and reimbursements from state government services, and all grants, subsidies or contributions in the form of money for expenditure by or for the state government from external sources . . . ." SCREP No. 1-83-8, J. of Kos. Con. Con. 470 (Comm. on Finance & Taxation). Tafunsak maintains that the airport charge is a "tax," while Kosrae insists that it is a "fee." However, we need not determine whether this charge is a fee or a tax, because the constitutional framers have already resolved that issue.

A tax is a contribution, charge or burden placed upon a person by legislation to make an involuntary payment to the government. It is imposed to support the government in return for advantages and protection the government affords to the tax payer and his property. Taxes raise revenue and also serve regulatory purposes. . . . The State has wide discretion in selecting and classifying subjects of taxation.

Voluntary payments to the government in the form of business license fees, medical fees, utility charges, fees for the use of seaport or airport facilities are means used by the government to raise revenues other than through taxation.

SCREP No. 1-83-16, J. of Kos. Con. Con. at 509-10 (Comm. on Finance & Taxation) (emphasis added). Thus, the framers expressly determined that a fee for the "use of . . . airport facilities" was not a tax for the purposes of the revenue-sharing provision of the Kosrae Constitution. Accordingly, the question is whether the airport departure fee is collected for the "use of . . . airport facilities."

Tafunsak, however, argues that the framers' comments also required the trial court to determine whether the airport departure charge is "voluntary" and whether the charge is a "means used by the government to raise revenues other than through taxation," before it could determine that the charge is a non-tax fee. This simply misconstrues the framers' statements. The plain words of the Standing Committee Report of the Committee on Finance and Taxation state that if a fee was collected for the "use of . . . airport facilities" then that fee is, by definition of the framers, a "[v]oluntary payment[] . . . used by the government to raise revenues other than through taxation." The framers' definition is

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conclusive; we cannot substitute our own. Only if we were to determine that the charge is not collected for the use of airport facilities would it be necessary to inquire into whether the charge was "voluntary."

According to Tafunsak, summary judgment is not proper because Kosrae has not demonstrated that the "revenues generated from the airport departure fee are used for a public purpose," and thus has not shown that the fee is paid for the "use of airport facilities." Tafunsak argues that this is a genuine issue of material fact, precluding summary judgment.

This argument is unpersuasive. The test in the standing committee reports is whether the fee is paid for the use of airport facilities, not whether the funds, once collected, are used for a public purpose.5 The framers did not comment on the expenditure of the revenue generated by an airport use fee. Moreover, the statute itself offers conclusive proof that the airport departure fee is collected for the "use of . . . airport facilities." Each passenger who departs from the Kosrae International Airport must pay the Airport Utilization Fee prior to departure. In other words, only if a person wishes to depart Kosrae and wishes to use the airport in order to do so, must that passenger pay the required fee.

D. Statutory Plan

The statutory designation of the Airport Utilization Fee as non-tax revenue is thus in harmony with the Kosrae Constitution. Furthermore, the statutory plan that Kosrae has adopted follows a pattern widely recognized elsewhere of a distinction between taxes and user fees. The purpose of a tax is to provide revenues for the government to promote the general welfare of the citizens of the state whereas a use fee is compensation for the use of government property. 71 Am. Jur. 2d State and Local Taxation §§ 1, 2, 11, 12 (1973). See also Philadelphia & R.R.R. v. Pennsylvania, 82 U.S. (15 Wall.) 232, 278, 21 L. Ed. 146, 162 (1873) ("Tolls and freights are compensation for services rendered, or facilities furnished to a passenger or transporter. . . . A tax is a demand of sovereignty; a toll is a demand of proprietorship."). See generally A.M. Swarthout, Annotation, Tolls as Taxes Within Constitutional Provisions Respecting Taxes, 167 A.L.R. 1356 (1947). The fee at issue is paid only by departing passengers ) those who have used the facility owned by Kosrae. The fee is used for airport maintenance, and is paid into the Airport Trust Fund, and does not become part of the Revenue Fund. K.C. § 10.205(1)(c).

The Kosrae Constitution provides that at least 50 per cent of the tax revenue be shared with the municipality where collected. Kos. Const. art. IX, § 2. It also provides for revenue from both tax and non-tax sources that may or may not be subject to sharing. Id. art. IX, § 4. Thus, this pattern and the non-tax revenue designation of the airport utilization fee are also in harmony with generally accepted authorities elsewhere which distinguish user fees and taxes.

[7 FSM Intrm. 350]

The appellant's primary argument as to the word "voluntary" in a standing committee report is unavailing. Tafunsak makes no other attack on the code provision. It has failed to carry its burden to show that the code provision is repugnant to the Constitution. We accordingly concluded that, under the Kosrae Constitution, the Airport Utilization Fee is not a tax for revenue sharing purposes. We therefore affirmed the trial court.

1. Although the challenged statute refers to an "Airport Utilization Fee," Tafunsak consistently refers to the charge as an "airport departure fee." As the labels that the parties attach to the charge cannot change its actual nature, we will view the two labels as identical, and will use them interchangeably throughout this opinion.

Airport Utilization Fee. Each passenger departing from the Kosrae International Airport to any destination outside Kosrae State pays an Airport Utilization Fee of $5.00. The fee is paid by or on behalf of each passenger and is collected by the Director upon the passenger's departure from the State at the Kosrae International Airport Terminal. A passenger does not have the right to depart from Kosrae International Airport until the Airport Utilization Fee is received by the Director. The Director may provide, by regulation, procedures for the efficient collection and handling of Airport Utilization Fee monies, including the imposition of fines not to exceed $50.00 for the failure or refusal of any passenger to pay the Airport Utilization Fee.

Although section 9.2102 has since been amended, those changes have no bearing on the issues in this case and need not be addressed in this opinion.

3. K.C. § 9.1101 states that "[f]or purposes of computing a municipal revenue share `State taxes' means taxes collected by the Government pursuant to Part I of this title." K.C. § 9.2102 appears in Part III of Title 9.

4. See Tammow v. FSM, 2 FSM Intrm. 53, 57 (App. 1985) ("Interpretations which strip constitutional clauses of substance and effect run against the norms of constitutional interpretation and are greatly disfavored."); FSM v. George, 2 FSM Intrm. 88, 94 (Kos. 1985) (same).

5. Tafunsak's argument is unpersuasive for another reason. K.C. § 10.205(1)(c) requires that "all monies from taxes, duties, fees, licenses, rents and other charges arising out of the operation of the Kosrae Airport, including all airport buildings and facilities . . . are spent at the discretion of the Department of Public Works for maintenance, development and operation of the Kosrae Airport." Since Tafunsak has not challenged Kosrae's compliance with this provision, it acts as conclusive proof that the Airport Utilization Fee proceeds are being spent for airport "maintenance, development and operation." Thus, even if the drafters' language could be construed as requiring that the proceeds of the fee be used for airport facilities, K.C. § 10.205(1)(c) resolves this issue in favor of Kosrae.