NATIONAL ASSOCIATION OF BOND LAWYERS

Voice from the Past
Chapter 7

In the bad old days before 1969, fourteen States had laws that allowed only taxpayers to vote in some or all bond elections. They were Alaska, Colorado, Florida, Idaho, Louisiana, Michigan, Montana, New Mexico, New York, Oklahoma, Rhode Island, Texas, and Utah. Two more, Nevada and Wyoming, had two-color ballot systems under which taxpayers voted on ballots of one color and all others on ballots of another color. For an election to carry, a majority of the ballots of each color had to be cast in favor of the bonds.

The usual way to tell whether a potential voter was taxpayer was by reference to the assessment rolls. This gave a ready list of people who should have been taxpayers, and I don't know of any challenges to this method of determination. In Louisiana, each voter cast one vote for or against the bonds, and also voted the amount of his or her taxable property as shown on the assessment roll. Each voter signed his or her ballot and wrote on it the amount of taxable property attributed to him or her -- a clear violation of ballot secrecy, but I couldn't find any U.S. Constitutional requirement for a secret ballot, and this method of voting was prescribed by the Louisiana Constitution. I never did find out how they handled community property -- whether husband and wife each voted half or what. Once I asked Joseph Matter, the senior lawyer who was supervising my work; his answer was to the effect that the local people managed to handle it somehow, and we didn't have to get involved. In any event, the proposition to issue the bonds had to carry in both number of votes and amount of taxable property.

The inclusion of such States as Michigan, Rhode Island and New York in that list, and the exclusion of Mississippi and Alabama, suggest that the requirement that voters be property taxpayers was not motivated so much by racial concerns as by aristocratic ones. In the West, the motivation may have been to counter the possibility that, in seeking to persuade a community to issue railroad aid bonds, a railroad company might temporarily move in a large number of laborers with instructions to vote for the bonds. I recall one Louisiana lawyer telling me that without the taxpayer requirement, fewer bond elections would carry because those with no permanent stake in the community would vote against the bonds; he was mollified when I told him that Mississippi got along well enough without the requirement

It had been a matter of notoriety that the poll tax was being used in Southern States to keep African Americans from voting in elections for public officials. They were not encouraged to pay this tax, as white people were, and were often forcefully prevented from paying the tax and registering to vote. Some Northern States also had a poll tax but paying it was not onerous or not a condition of being eligible to vote. So it was not surprising when the U.S. Supreme Court decided that the taxpayer requirement violated the Equal Protection Clause of the Fourteenth Amendment to the Constitution in Kramer v. Union Free School District No.15, 395 U.S. 621 (1969). At the same time it decided, per curiam, the case of Cipriano v. City of Houma, 395 U.S. 701, holding void an election that would have authorized electric revenue bonds for Houma, Louisiana. It turned out that Mr. Cipriano, the plaintiff, was the local manager for the electric company whose facilities would have been expropriated if the bonds so voted had been issued; since he owned no immovable property in the City and lived in rented quarters, he was not a taxpayer and had standing to sue.

After oral argument, John Cox of New Orleans mentioned to me that the Louisiana practice was even more egregious than the Court had been told because of the generous homestead exemption provided by that State's law. Most homeowners were not required to pay property taxes at all; such taxes were paid by business corporations that didn't vote and by landlords who passed the taxes on to their tenants. Yet the homeowners and individual landlords were nevertheless entitled to vote the full assessed valuations of their properties.

This decision affected only revenue bonds, but opened the question of whether general obligation bonds could still be voted by taxpayers only. At that time the list of states with such taxpayer requirements included all where my partner, Phil Holm, and I approved bonds. It was clear that we could not approve revenue bonds voted at a taxpayers-only election; and we hesitated to approve any bonds, revenue or G.O., issued in violation of a State constitutional or statutory requirement that they be so voted. Although the U.S. Supreme Court had left open the question of general obligation bond elections, we were pretty clearly on notice that an adverse decision was likely, but not sure enough to justify violating State law.

We thought about suggesting double-barreled elections -- one for taxpayers only and the other "free for all" -- but that ran into the problem that the latter was not authorized by State law and the former still gave the taxpayers veto power over a bond issue; the power to veto a bond issue proposed by a local governing body is all that a bond election really is. We decided to await State legislation or supreme court decisions before going ahead with "free for all" elections, as did the other bond lawyers who worked in those states with the exception of Michigan. That State's bond lawyers may have hesitated for a while but then concluded that their Court would act sensibly and treat the Cipriano decision as simply excising the taxpayer provision from the election requirement.

About a year later the case of City of Phoenix v. Kolodziejski, 339 U.S. 204 (1970), held that the right to vote in general obligation bond elections could not be restricted to taxpayers. Around that time most of the States listed above had come into line, either by amending statutory provisions or by decisions of their supreme courts, so that bond elections could go ahead. Texas held out for a while on the theory that their law only required that a voter in a bond election must have rendered his property for taxation, and personal property, such as a bicycle, would be enough. A further Supreme Court decision held that its prior decisions applied to Texas, too. Hill v. Stone, 421 U.S. 289 (1975). For a few years, under the protection of an Attorney General's opinion, Texas used a two-ballot approach and, as I recall hearing, there were only one or two bond elections where the property owners and the voters at large differed.

For several months, while various State laws were brought into line, there was little work for lawyers who approved bonds of issuers in the affected States. This was when Phil Holm and I wrote amicus curiae briefs to urge the Supreme Court not to invalidate outstanding bonds, and I started writing law review articles. See "New Rules for Bond Elections" 3 The Urban Lawyer 17, Winter, 1971.

Manly W. Mumford