County sues self. Wins!

If you were one of those who wondered whether the county could properly appear on both sides of the Ohana Kaua`i property tax amendment case, you were right. The Hawaii Supreme Court agreed with the doubters, saying,

[T]he presence of the County Council as a defendant in this case destroys the existence of an actual controversy because, at least as between the Plaintiff-County, acting on behalf of the County Council, and the Defendant-County Council itself, their legal interests and duties are identical. Had the County Council not been named as a defendant, then the legal interests and duties between the County, acting on behalf of the County Council, as Plaintiff, and the Mayor and Finance Director as defendants, would be adversarial.

Normally, that would be enough to destroy a case, but no worries. Under Rule 21 of the Hawaii Rules of Civil Procedure the court may "of its own initiative at any stage of the action and on such terms as are just" simply drop a party from the action. In dropping the County Council as a defendant, then, the court kept the suit alive as against the Mayor, the Finance Director and other named defendants who, as interested parties, had impleaded (that is, although not originally part of the case, had come along later and asked the court to make them parties).

(This was not an uncontroversial maneuver. See the dissent).

Constitution says "counties." Court reads, "county councils."

The case came about when Ohana Kaua`i succeeded in getting a proposed property tax amendment to the county charter placed on the general ballot in 2004. The county sued to block the amendment (which was ultimately approved by the voters in the general election) and the circuit court handed it the win, reasoning that the amendment violated the county charter's prohibition against passing tax legislation by ballot initiative, and that it violated the state constitution.

The supreme court reversed the circuit court on the issue of whether the amendment violated the county charter. (The county had argued - and the circuit court had accepted - that the amendment wasn't really an amendment at all but was rather a disguised ordinance).

However, the Supreme Court agreed with the lower court that the amendment violated the state constitution. Article VIII, Section 3 of the Hawai`i Constitution states that "all functions, powers and duties relating to the taxation of real property shall be exercised exclusively by the counties." The county argued, and the court accepted, that by "counties" the constitution means "county councils" or "county governments."

This strikes me as an arbitrary reading of the constitution - though the court does dress it up in "original intent" garb, claiming that committee notes reveal that the true meaning of "counties" is something more specific than what the document actually says.

Here we have a case in which the county did in fact properly exercise its power concerning the taxation of real property - in this case by a ballot initiative amending the county charter. In order to take the win away from the voters of Kaua`i County, the court has invented a rule. It has said that, while the constitution says counties have the exclusive power to regulate property taxes, what the constitution really means is county councils have that power.

I think the court's reasoning is flawed and its conclusion wrong. And I base this not on any opinions I have regarding the political issues involved. I actually have no strong feelings one way or another about the tax policy that would result from the amendment and that was ultimately blocked by the court. I have no idea which would result in the best policy. Instead, I'm offended at the arbitrary (one almost suspects result-oriented) reasoning by which the court created ambiguity in the constitutional text where none really existed.