If Oregon voters approved Measure 93 in 2000 to require voter approval of new taxes, would the state lose the ability to repay its bonds, raise loan interest rates, or use lottery money for debt service?

Plain-English summary

In September 2000, an initiative measure that would appear as Ballot Measure 93 on the November 2000 ballot would have required voter approval for new and increased state and local taxes, fees, and charges. The State Treasurer wanted to understand how the measure, if approved, would affect the state's bond programs, loan programs, and lottery-related debt service. The AG worked through five questions and concluded that the measure largely preserved existing programs but would require voter approval for new state GO bond programs and the associated property taxes.

Bond issuance. Measure 93 did not require voter approval for the issuance of GO bonds, revenue bonds, or COPs. The state could continue to issue bonds under existing authority. If a new bond program were submitted for voter approval, Measure 93 required specific information in the ballot title and Voters' Pamphlet.

Property taxes for bond repayment. Existing state GO bond programs (under Articles XI-A, XI-F(1), XI-G, XI-H, XI-I(1), and XI-J) had built-in constitutional authority to levy property taxes for repayment. Measure 93 did not impair the state's authority to levy property taxes to repay bonds issued under those existing programs, whether the bonds were issued before or after Measure 93's effective date. If, however, a new GO bond program were created on or after Measure 93's effective date, the state could not levy a statewide property tax to repay those new-program bonds unless the tax levy was approved by the percentage of voters Measure 93 required.

State loan program interest rates and fees. The state operated bond programs (small-scale energy loans, housing loans, water development loans) that funded loans to borrowers, with the borrowers repaying through interest and fees. Measure 93 would not limit the state's ability to adjust those interest rates or to increase origination fees and other borrower charges. The AG offered several independent reasons. First, the borrower payments were not taxes, fees, or charges "imposed, assessed or levied" by the state in the Measure 93 sense. Second, even if a court disagreed, the interest received by the state fell within the Measure's exception for "earnings from interest." Third, the loan-program charges generally came within the exception for charges for a service available from government at a cost equal to or less than that from the private sector. Fourth, any interest-rate increase needed to maintain the same spread between state bond rates and state lending rates fell within the exception for pass-through of increased wholesale costs.

Lottery proceeds. Measure 93 had an explicit exception for lottery revenues. The state could continue to use lottery proceeds to repay bonds.

Practical effect. Measure 93, if approved, would have left the state's existing bond and loan programs functioning normally. New GO bond programs would face a voter-approval hurdle. Existing programs were grandfathered.

Measure 93 was defeated at the November 7, 2000 election, so the analysis was never put to the test. The opinion states it was provided at the request of the State Treasury and may be relied upon only by the State of Oregon, its officers, and employees.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did Measure 93 pass?
No. Measure 93 was defeated at the November 7, 2000 general election. The analysis in this opinion describes what would have happened if the measure had passed.

Would existing state bonds have been impaired by Measure 93?
The AG concluded no. Existing bond programs had their own constitutional taxing authority approved by voters when the programs were created. Measure 93 carved out previously approved bond programs.

What about the next time the state wanted to issue bonds under one of those programs?
The AG concluded the state could continue to issue bonds under existing programs without new voter approval. Only a new GO bond program (a new program created after Measure 93's effective date) would have triggered the voter-approval requirement.

Would the state have been able to raise interest rates on state-program loans?
Yes. The AG concluded that loan-program interest rates and origination fees did not fall within Measure 93's voter-approval requirement. The borrower payments were not taxes or government-imposed charges in the Measure 93 sense, and even if they were, multiple exceptions would have applied.

What about lottery-funded debt service?
The AG concluded lottery proceeds were excepted from Measure 93. The state could have continued to use lottery proceeds to repay bonds regardless of Measure 93.

Did the opinion account for the Voters' Pamphlet arguments?
No. The opinion was written before the pro and con arguments were published in the Voters' Pamphlet, so the AG limited the analysis to the measure's text, its certified ballot title, and the official explanatory statement. The AG cautioned that the later-published arguments could become part of the measure's history that a court might consider, and could materially affect the conclusions if the measure passed.

Background and statutory framework

Ballot Measure 93 (2000) was an initiative measure that would have required voter approval, at specified percentages, for new and increased state and local taxes, fees, and charges. The measure had multiple exceptions, including for earnings from interest, for charges below private-sector cost, for wholesale-cost pass-throughs, and for lottery revenues.

Oregon's state GO bond programs operated under Articles XI-A (veterans), XI-F(1) (higher education buildings), XI-G (higher education institutions), XI-H (pollution control), XI-I(1) (water development), and XI-J (small-scale energy loans). Each article contained its own constitutional authority for the state to levy ad valorem property taxes to repay the bonds.

State revenue bonds and COPs operated under various statutory authorities. Repayment came from program revenues rather than property taxes.

Lottery-backed bonds were a separate category. Several state bond programs were backed by lottery revenue, for example bonds for Westside light rail (ORS 391.140) and State Fair improvements (ORS 565.103). Measure 93 expressly excepted lottery revenue from the revenues treated as taxes, fees, or charges.

Citations

• Ballot Measure 93 (November 7, 2000) (proposed but rejected voter-approval-of-taxes initiative)
• Oregon Constitution Articles XI-A, XI-F(1), XI-G, XI-H, XI-I(1), XI-J (state GO bond programs)
• ORS 391.140 (Westside light rail), ORS 565.103 (State Fair improvements) (lottery-backed bonds)
• PGE v. Bureau of Labor and Industries, 317 Or 606 (1993); Roseburg School District v. City of Roseburg, 316 Or 374 (1993); Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551 (1994); Novick v. Myers, 329 Or 11 (1999)

Source

• Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
• Original PDF: https://www.doj.state.or.us/wp-content/uploads/2000/09/op8272.pdf

Original opinion text

September 1, 2000

No. 8272
This opinion is issued in response to questions presented by Chuck Smith, Director of the
Oregon State Treasury Debt Management Division, about the possible effects of an initiative
measure that will appear as Ballot Measure 93 (the Measure) on the ballot for the general
election on November 7, 2000.1/
FIRST QUESTION PRESENTED
Will the Measure, if approved by the people, impair the state’s authority to
issue general obligation (GO) bonds, revenue bonds or certificates of participation
(COPs) on or after the effective date of the Measure?
ANSWER GIVEN
No. The Measure does not require voter approval for the issuance of bonds or COPs or
otherwise impair the state’s authority to issue bonds or COPs. If a measure to approve a new
bond or COP program were presented to the voters, the Measure would require the state to
include specific information in the ballot title and Voters’ Pamphlet.
SECOND QUESTION PRESENTED
Will the Measure, if approved by the people, impair the state’s authority to
levy a statewide property tax, if needed, to repay state GO bonds that are
(a) issued before the effective date of the Measure, or (b) issued on or after the
effective date of the Measure?
ANSWER GIVEN
The Measure would not impair the state’s authority to levy a statewide property tax to
repay bonds issued under existing state GO bond programs, whether the bonds are issued before
or after the effective date of the Measure. If a new state GO bond program were created on or
after the effective date of the Measure, the state could not levy a statewide property tax to repay

bonds under such a program unless the tax levy were approved by the percentage of voters
required by the Measure.
THIRD QUESTION PRESENTED
Will the Measure, if approved by the people, limit the state’s ability to
adjust loan interest rates or to increase origination fees or other charges to
borrowers for loans that are made on or after the effective date of the Measure
under state bond programs operating before that date?
ANSWER GIVEN
No. The Measure will not affect the state’s ability to adjust interest rates or to increase
fees or other charges to borrowers. The payments made by borrowers to repay state bond
program loans are not taxes, fees or charges “imposed, assessed or levied” by the state for
purposes of the Measure.2/ Even if a court were to disagree with that conclusion, we believe that
the interest received by the state would not be subject to the Measure because it is excepted as
“earnings from interest.” Additionally, the interest, origination fees and other charges to
borrowers would generally come within the Measure’s exception for charges for a service that is
available from government at a cost equal to or less than that from the private sector. Moreover,
any increase in interest rates for new loans that is necessary to maintain the same spread between
the rate paid by the state on its bonds and the rate received by the state for its loans would come
within the exception for a pass-though of increased costs for wholesale inputs that are outside the
state’s control.
FOURTH QUESTION PRESENTED
Will the Measure, if approved by the people, limit the state’s ability to
repay bonds from lottery proceeds on or after the effective date of the Measure?
ANSWER GIVEN
No. The Measure has an exception for lottery revenues.
DISCUSSION
If approved by the people, Measure 93 would amend the Oregon Constitution by adding a
new section to Article I that would require voter approval of most new or increased state and
local government taxes, fees and charges on or after December 7, 2000, the effective date of the
Measure.3/ Proposed Art. I, sec. 32a (1)(a).4/ Under this provision, the new or increased taxes,
fees or charges must be approved “by not less than the percentage of participating voters who
voted ‘Yes’” on the Measure.5/ Id.
The Measure would also require the repeal and a refund of certain new or increased state
and local government taxes, fees and charges enacted in the two years before December 7, 2000,
unless those taxes, fees and charges were approved by the voters at the time of enactment, or are

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approved at the next election by at least the percentage of participating voters who voted “yes”
on the Measure. Sec. 32a (4)(a). Taxes to pay voter approved bonded indebtedness are exempt
from this requirement. Id.
In interpreting a constitutional provision adopted through the initiative process, we apply
the method of analysis outlined by the court in PGE v. Bureau of Labor and Industries (PGE),
317 Or 606, 612 n 4, 859 P2d 1143 (1993). We first look at the text and context of the provision
to determine the intent of the voters, giving words of common usage their plain, natural and
ordinary meaning. Id. at 611. The context of a constitutional provision adopted by ballot
measure includes related ballot measures before the voters at the same election and pre-existing
provisions of the constitution. Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or
551, 560 n 8, 871 P2d 106 (1994). If the voters' intent is clear from the text and context, the
search ends there. If the voters' intent is not clear from the text and context of the constitutional
provision, we look to its history to attempt to discern that intent. Id. at 559. The history of an
initiated constitutional provision includes information available to the voters at the time the
measure was adopted, such as the ballot title, explanatory statement and arguments for and
against the measure included in the Voters' Pamphlet, as well as contemporaneous news reports
and editorials on the measure. Id. at 560 n 8.
Because we are interpreting the Measure before publication in the Voters' Pamphlet of
any arguments about the measure, our analysis is limited to the existing materials that we know
will be available to the voters. Aside from the Measure’s text and context, the only other sources
of information from which we may attempt to discern the intent of the voters, at this time, are the
ballot title certified for the Measure and the official explanatory statement.6/ The arguments
concerning the Measure that will be published in the Voters' Pamphlet and distributed to the
voters will become part of the context and history of the Measure that a court may consider if the
Measure is adopted. See Lipscomb v. State Board of Higher Education, 305 Or 472, 484-85,
753 P2d 939 (1988); Northwest Natural Gas Co. v. Frank, 293 Or 374, 381, 648 P2d 1284
(1982). Although the Oregon Supreme Court has admonished that "[d]iscriminating and
cautious use must be made of such material because of its partisan character," id. at 383 (quoting
State ex rel Chapman v. Appling, 220 Or 41, 68-69, 348 P2d 759 (1960)), the possibility
remains that discourses about the Measure in the Voters' Pamphlet could yet create an additional
"legislative history" on the meaning of the Measure that has the potential of materially affecting
the conclusions stated in this opinion.
I.

Authority to Issue New Bonds or COPS

We are first asked whether the Measure, if approved, would impair the state’s authority to
issue general obligation bonds, revenue bonds or COPs on or after the effective date of the
Measure.
The Measure contains several references to “bonds,” section 32a(1)(b), (1)(c), (10), (11),
and one reference to COPs, section 32a(10). None of those provisions imposes any express
limitation or restriction on the state’s authority to issue bonds or COPs, except section 32a(1)(b),
which requires the ballot title and official Voters’ Pamphlet explanatory statement for a measure

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to approve a bond measure to begin with specific words and to include a projection of the total
cost of the bond, including interest.7/
At least three provisions of the Measure may suggest, however, that the Measure would
require voter approval before the state may issue bonds. First, by describing ballot title and
Voters’ Pamphlet requirements for “a measure to * * * approve a bond measure,” section
32a(1)(b) implies that bond measures must be approved by the voters. Second, by stating that
section 32a “does not require voter approval for the issuance of * * * bonds issued to repay
bonds issued prior to the effective date of this section or issued in conformance with this
section,” section 32a(1)(c) implies that section 32a requires voter approval for the issuance of all
other bonds. Third, by making COPs subject to the “same limitations and requirements as a
bond measure,” section 32a(10) implies that there are both limitations and requirements on bond
measures. The only limitations or requirements in the Measure that restrict government activity
other than the requirements for the ballot title and Voters’ Pamphlet is the voter approval
requirement for new or increased taxes, fees or charges. Therefore, we consider whether the
issuance of a bond or COP would itself be a new “tax, fee, or charge * * * imposed, assessed or
levied,” as those terms are used in the Measure. If so, the state could not issue a new bond or
COP on or after December 7, 2000, without voter approval, unless the bond came within the
exception in section 32a(1)(c) for refunding bonds.
The Measure contains no specific definitions of the terms “tax,” “fee” or “charge.”
Instead, it identifies a limited series of revenues that are not to be considered new or increased
taxes, fees or charges for purposes of the measure. This subsection states:
The following revenues shall not be considered new or increased taxes,
fees, or charges for the purposes of this section: user fees charged by Peoples'
Utility Districts or port districts; mass transit fares; college or university tuition
and fees; incurred charges and assessments for local improvements as defined by
Article XI Section 1lb of this Constitution; increases in charges for government
products and services solely to pass through increased costs of wholesale inputs
that are not government employee labor costs, or otherwise under the charging
government's control; fines or forfeitures for violation of law; lottery revenue;
fees paid to official business and trade associations by those engaged in that
business or occupation; earnings from interest, investments, donations, or asset
sales; and fees or charges for products or services which may be legally obtained
from a reasonably available source other than government, provided that the new
or increased fee or charge for the product or service is not greater than the average
private sector charge for the same product or service in the same market.
Sec. 32a(3). Because this section provides that the “revenues” listed in section 32a(3) shall not
be considered taxes, fees or charges, we could infer that all other revenues received by a state or
local government or taxing district are taxes, fees or charges that require voter approval unless
expressly excepted by another provision of the Measure. Such an interpretation might seem
particularly apt given that this provision specifically excepts “earnings from interest,
investments, donations, or asset sales” – none of which would generally be understood to be
taxes, fees or charges. See also sec. 32a(6)(a) (vote not required when increases in revenue

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“occur solely due to a change in federal tax law, increases in income, or other changes in the
circumstances of individual taxpayers”).
When a government issues a bond or COP, it both receives “revenue” 8/ in the form of the
proceeds from the bond sale (the principal) and creates a governmental obligation.9/ If the
Measure is intended to require voter approval whenever a government receives revenues other
than those excepted by section 32a(3), then voter approval would be required when the state
issues (or sells) a bond or COP and receives the proceeds from the sale.
By its terms, however, the Measure does not require voter approval of all “revenues.”
Instead, the Measure requires voter approval only for a “new tax, fee, or charge * * * imposed,
assessed or levied” or an “existing tax, fee or charge * * * increased” by the state, a local
government or a taxing district. Sec. 32a(1)(a). Based on its text, we conclude that the Measure
requires voter approval only for nonexempt revenues that are taxes, fees or charges imposed,
assessed or levied by a government or taxing district. Cf. Roseburg School District v. City of
Roseburg, 316 Or 374, 381, 851 P2d 595 (1993) (Measure 5 “is a limitation on only those
certain forms of revenue generation that fall within its definitions”). Nothing in any related
provisions of the Oregon Constitution (context) or in the ballot title (history) suggests any
different interpretation. Hence, to ascertain whether the state’s authority to issue new bonds or
COPs is limited by the voter approval requirement, we must determine whether the proceeds
from the sale of a bond or COP are a “tax, fee, or charge * * * imposed, assessed or levied.”
A.

Bonds10/

We do not believe that bond sale proceeds are a “tax,” “fee,” or “charge” as those terms
are commonly understood.11/ Although section 32a(10) directs the courts to apply the strictest
scrutiny to any “new or renamed government funding mechanism,” bonds are not new funding
mechanisms. In fact, section 32a makes several references to bonds. If the voter approval
requirements in section 32a(1)(a) were intended to apply to the issuance of a government bond,
we believe that the Measure would state that expressly, rather than relying on an interpretation of
three terms, “tax, fee or charge,” that do not readily apply to the proceeds from the sale of bonds.
Rather than attempt to ascertain the scope of those terms for purposes of this opinion, however,
we look to the plain meaning of the terms “imposed,” “assessed” and “levied” because the only
new taxes, fees or charges that require voter approval are those that are “imposed, assessed or
levied.”
The word "impose" means:
to make, frame, or apply (as a charge, tax, obligation, rule, penalty) as
compulsory, obligatory, or enforcible <[impose] a duty on a city official>
WEBSTER’S at 1136. The word “assess” means:
2 a : to determine the amount of and impose (as a tax, charge, or fine) according
to an established rate or apportionment <the tax to be [assess]ed upon all retail

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sales> b : to subject to a tax, charge, or levy so determined
Id. at 131. The verb “levy” means:
to impose or collect (as a tax or tribute) by legal process or by authority : EXACT
Id. at 1301. Both “impose” and “assess” are more than a request for voluntary action; they
involve an element of compulsion. The term “levy” may either involve this element of
compulsion or may merely mean to collect. In interpreting the term “levy” as used in other
ballot measures limiting taxes, we have stated:
because the property tax limitation measure was intended to be a limitation on
governmental authority, "levy" should be construed relative to the government act
that authorizes the charge. That act "occurs when the fees are imposed and made
compulsory by official governmental action." * * * Thus, "levy" should be given
the meaning "to impose" rather than "to collect."
48 Op Atty Gen 241, 253 (1997) (quoting 44 Op Atty Gen 85, 226 (1984)). See also Dept. of
Rev. v. Co. of Multnomah, 4 OTR 133, 147-48 (1970) (citing Carkonen v. Williams, 76 Wash
2d 617, 458 P2d 280 (1969)) (“when used in connection with the authority to tax, [“levy”]
denotes the exercise of the legislative function * * * determining that a tax shall be imposed”).
Thus, we conclude that a tax, fee or charge is subject to the voter approval requirements in
section 32a(1)(a) only if its payment is made compulsory or obligatory by government.
This interpretation is supported by the explanatory statement that will appear in the
Voters’ Pamphlet. The explanatory statement says, in relevant part, that “[t]he measure does not
require voter approval for * * * voluntary payments to governments which are not imposed,
assessed or levied.”
When the state issues bonds, it is incurring debt by selling a bond.12/ The bond is the
written evidence of the state’s obligation to pay to the bondholder the bond principal, with
interest. The state sells bonds to one or more underwriters within or outside of the state of
Oregon, either at a public sale or a private negotiated sale.13/ ORS 286.038. In either case, the
underwriters’ purchase of the bonds is not compulsory or obligatory, but completely voluntary.
The revenue received by the state in a bond sale is the result of a voluntary exchange; it is not a
tax, fee or charge “imposed, assessed or levied” upon the underwriters. Not only is the purchase
of bonds entirely voluntary, but bonds are available from a variety of governmental and
nongovernmental sources.14/ The underwriters who purchase Oregon state bonds have available
a whole menu of municipal bonds, which include bonds issued by all 50 states and other
government bodies. They need not buy Oregon state bonds.
Because the revenue received from the bond sale (the proceeds) is not a tax, fee or charge
that is “imposed, assessed or levied,” the voter approval requirement in section 32a(1)(a) does
not apply to the issuance of state bonds. Accordingly, we conclude that the Measure would not
impair the state’s authority to issue general obligation bonds or revenue bonds after the effective

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date of the Measure. If the state chose to present a new bond program to the voters for
approval,15/ the Measure would require the state to include specific information in the ballot title
and Voters’ Pamphlet.
B.

Certificates of Participation

Section 32a(10) states that “certificates of participation * * * shall be subject to the same
limitations and requirements as a bond measure.” We conclude above that the voter approval
requirement in section 32a(1)(a) does not apply to bonds. Therefore, we also conclude that the
voter approval requirement does not apply to COPs and that the Measure would not impair the
state’s authority to issue COPs after its effective date.
The only limitation or restriction on the issuance of bonds is the requirement in section
32a(1)(b) that the ballot title and official Voters’ Pamphlet explanatory statement for a measure
to approve a bond measure must begin with specific words and include a projection of the total
cost of the bond, including interest. Thus, if a measure to approve a COP program were
presented to the voters, the Measure would require the state to include this information in the
ballot title and Voters’ Pamphlet.
II.

Authority to Levy Taxes to Repay State General Obligation Bonds

The repayment obligation of the state’s general obligation (GO) bonds is secured by the
full faith and credit of the state. This generally means that, if other repayment sources are
inadequate, the state agrees to use any or all of its unrestricted revenue sources, including its
authority to levy a statewide property tax, as needed to pay the principal and interest on the
bonds. See DICTIONARY OF FINANCE AND INVESTMENT TERMS (Barrons 4th ed 1995). We are
asked whether the Measure would impair the state’s authority to levy a statewide property tax to
repay state GO bonds.
The Measure requires voter approval of any new or increased taxes, fees or charges
“unless the new tax, fee, or charge, or increase thereof is first approved * * * by not less than the
percentage of participating voters who voted “Yes” on [the Measure].” Sec. 32a(1)(a). There is
an exception to this requirement for taxes levied to repay certain bonded indebtedness. Section
32a(1)(c) provides:
Nothing in this section [32a] shall affect taxes levied for the repayment of
bonded indebtedness approved by voters in an election held prior to Nov. 7, 2000,
or the issuance of refunding bonds to pay such bonded indebtedness. This section
does not require voter approval for the issuance of, or the levy of taxes to pay,
bonds issued to repay bonds issued prior to the effective date of this section or
issued in conformance with this section.
(Emphasis added.)
In 48 Op Atty Gen 241, 288-290 (1997), we interpreted language in Measure 47 (1996) 16/
that was identical to the first sentence of section 32a(1)(c), except for the date before which the

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election must have occurred.17/ We were asked whether the phrase “approved by the voters”
modifies “taxes levied for the repayment of bonded indebtedness” or only the “bonded
indebtedness.” Based on the text alone, we found that the language of that sentence was
susceptible to only one interpretation – that the phrase modified only “bonded indebtedness.”
Otherwise, the reference to “such bonded indebtedness” at the end of the first sentence has no
appropriate antecedent. Thus, we concluded that exception applied “to taxes to repay bonds,
provided the bonds were approved by the voters” in an election before the critical date. Id. at
288. Nothing in the text or context of Measure 93 suggests a different interpretation.
In 48 Op Atty Gen 315 (1997), we specifically considered the application of that same
language to certain state GO bonds. Relying in part on our previous interpretation of the term
“bonded indebtedness” in other provisions of Measure 47 as including “all kinds of bonds,
including but not necessarily limited to general obligation bonds and revenue bonds,” 48 Op Atty
Gen 67, 82 (1996), 48 Op Atty Gen 241 at 251, and the apparent intent of the exception for
bonded indebtedness to preserve contractual obligations for bonds issued with a promise to levy
a tax to repay the bonds, id. at 254, we concluded first that state GO bonds were “bonded
indebtedness” as that term was used in this exception. 48 Op Atty Gen 315 at 320. We then
concluded that because the people of the State of Oregon (i.e., the voters) approved each of the
then-existing state GO bond programs as an amendment to the Oregon Constitution in a general
election held before the effective date for Measure 47 (December 5, 1996), and no further voter
approval or action is needed to issue bonds under those programs, those state GO bonds have
been approved by the voters within the meaning of the exception.18/ Id. at 321-22. Again, there
is nothing in the text or context of Measure 93 that would suggest any different interpretation.
Each of the now-existing state GO bond programs was approved by the voters in a
general election held before November 7, 2000. Because the bonded indebtedness authorized by
those programs has already been voter-approved, the levy of statewide property taxes to repay
any bond issued under Articles XI-A, XI-D, XI-E, XI-F(1), XI-F(2), XI-G, XI-H, XI-I(1), XII(2), XI-J or XI-K of the Oregon Constitution would come within the exception in section
32a(1)(c), whether the bonds themselves are issued before or after the effective date of the
Measure.
If any new state GO bond programs are approved by the people of the State of Oregon on
or after November 7, 2000, new or increased taxes could not be levied to repay bonds issued
under such programs unless the voter approval requirements of section 32a(1)(a) are met.
Failure to obtain the requisite supermajority of votes, however, would mean only that the state
could not levy or increase taxes, or impose or increase any other fees or charges, to repay the
bonds. If a simple majority of the voters approved a new state GO bond program, the program
would be valid, and bonds could be issued so long as sufficient revenues existed to cover
repayment of the bond obligations.
III.

Ability to Adjust Interest Rates for New Loans

The purpose of many of the state’s GO and revenue bond programs is to provide loans.19/
See, e.g., Or Const Art XI-A (farm and home loans to veterans); ORS 285B.575 (loans to
municipalities for safe drinking water projects), ORS 456.645 (single-family mortgage loans).

8

The revenue to repay such bonds comes primarily from the principal and interest payments made
by those who receive loans under the bond program, e.g., veterans, municipalities, homeowners.
Generally, when the interest that the state must pay on its new bonds goes up or down due to
inflation or other factors, the state increases or reduces the interest rate on the new loans that it
finances with those bonds so as to keep the “spread” between the rate paid by the state and the
rate received by the state sufficient to cover the state’s costs for the loans, including defaults, and
to pay the ongoing administrative costs of the loan program.
We are asked whether the Measure would limit the state’s ability to adjust interest rates
or to increase origination fees or other charges to borrowers for loans that are made on or after
the effective date of the Measure. We conclude that any increases in loan interest rates,
origination fees or other loan charges are not subject to the Measure’s voter approval
requirement for several reasons.
First, the revenue received by the state from its loans is not a tax, fee or charge “imposed,
assessed or levied.” As discussed above with respect to the issuance of bonds, voter approval is
required by section 32a(1)(a) only for payments that are compulsory or obligatory. The loan is a
voluntary agreement between the state and the borrower. Not only is the borrower making a
voluntary decision to obtain a loan, but the borrower is also choosing to borrow from the state,
rather than other lenders, such as banks, savings and loans or financial service firms. Because
the borrower voluntarily agrees to pay interest, loan origination fees and other charges when the
borrower chooses to obtain a loan under one of the state’s bond programs, we conclude that the
interest, fees and charges are not “imposed, assessed or levied,” and therefore the Measure would
not require voter approval for any increases. The explanatory statement that will appear in the
Voters’ Pamphlet confirms this interpretation, stating: “[t]he measure does not require voter
approval for * * * voluntary payments to governments which are not imposed, assessed or
levied, such as * * * loan payments.”
Second, even if a court were to disagree that loans are not taxes, fees or charges imposed,
assessed or levied, we believe that the loan interest payments, fees and charges would come
within several of the specific exceptions in section 32a(3). Section 32a(3) provides:
The following revenues shall not be considered new or increased taxes,
fees, or charges for the purposes of this section [32a]: * * * earnings from interest,
* * * and fees or charges for products or services which may be legally obtained
from a reasonably available source other than government, provided that the new
or increased fee or charge for the product or service is not greater than the average
private sector charge for the same product or service in the same market.
When the borrowers make interest payments on loans obtained from the state under its
bond programs, the state receives revenue in the form of “earnings from interest.”20/ Under
section 32a(3), these interest earnings are not considered to be new or increased taxes, fees or
charges for purposes of the Measure. Consequently, the state would not need voter approval to
increase the interest charges for loans made on or after the effective date of the Measure.

9

Additionally, under section 32a(3), fees and charges for products or services that are
available from a nongovernment source are not considered to be new or increased taxes, fees or
charges for purposes of the Measure if the new or increased fee or charge is not greater than the
average private sector charge for the same product or service in the same market. A loan can
reasonably be regarded as both a financial product and service.21/ We understand that because
the purpose for the loan programs that are funded by state bonds is to offer loans at a lower cost
than those available from the private sector, the interest rates, fees and charges for state loans are
generally no greater than those charged in the private sector. If the state loans were more costly
than loans from the private sector, the borrowers would not seek loans from the state. Thus, we
believe that any increase in interest, fees or other charges for loans made under the state’s bond
programs would come within this exception.22/
Finally, section 32a(3) also excepts from the revenues that are considered taxes, fees or
charges any “increases in charges for government products and services solely to pass through
increased costs of wholesale inputs that are not government employee labor costs, or otherwise
under the charging government’s control.” Thus, if its loan interest rates, fees and charges were
subject to the Measure, to the extent that the state had to pay a higher interest rate on the bonds
that provided money for the new loans, the state could increase interest rates for those loans
solely to reflect this increase in the cost of the funds.23/
In sum, we conclude that the borrowers’ payments made to repay the state bond program
loans are not taxes, fees or charges “imposed, assessed or levied” for purposes of the Measure.
Even if a court were to disagree with that conclusion, we believe that the interest received by the
state would not be subject to the Measure because it is “earnings from interest” and that,
additionally, the interest, origination fees and other charges to borrowers would generally come
within the exception in section 32a(3) as charges for a service that is available from government
at a cost equal to or less than that from the private sector. Moreover, any increase in interest
rates for new loans that is necessary to maintain the same spread between the rate paid by the
state on its bonds and the rate received by the state for its loans would come within the exception
as a pass-though of increased costs for wholesale inputs that are not within the state’s control.
IV.

Repayment of Bonds from Lottery Proceeds

Several of the state bond programs are backed by lottery revenue. See, e.g., ORS
391.140 (Westside light rail), ORS 565.103 (State Fair improvements). The Measure excepts
“lottery revenue” from the revenues that are considered new or increased taxes, fees or charges.
Section 32a(3). Because new or increased lottery revenue is excepted, the amount that the
Oregon State Lottery charges for lottery games could be increased without voter approval.
Consequently, the Measure would not impair the ability of the state to repay bonds from lottery
proceeds on or after the Measure’s effective date.

10

V.

Status of Opinion

This opinion is provided at the request of the Oregon State Treasury and may be relied
upon only by the State of Oregon, its officers and employees.

HARDY MYERS
Attorney General
HM:AV/GEN52493.DOC
1/

Measure 93 provides in relevant part as follows:
Be it enacted by the People of the State of Oregon:
The Constitution of the State of Oregon is amended by creating a new, Section 32a in
Article I, which section shall read:
Section 32a. People's right to approve all taxes. The purpose of this 2000 Amendment
is to ensure that new taxes and tax increases, which further deprive citizens of income
and property, are hereafter directly approved by the people. Therefore, except as
provided in Section 6 of Article IX, any new tax, fee, or charge, or increase in an existing
tax, fee, or charge, shall require approval by the people, as follows:
(1)(a) No new tax, fee, or charge shall be imposed, assessed or levied, and no
existing tax, fee or charge shall be increased by the state or any local government or
taxing district, unless the new tax, fee, or charge, or increase thereof is first approved in
an election held on the first Tuesday after the first Monday of November of an even
numbered year, or any other election held on a date which the state legislative assembly
has designated as an annual election date on which measures may be placed on the
statewide ballot by initiative petition, and the new tax, fee, or charge, or increase thereof,
is approved by not less than the percentage of participating voters who voted "Yes" on
this 2000 Amendment. For purposes of this section and subject to subsection (5) of this
section, the following shall require only approval by a majority of those voting in the
election: (i) a measure to renew an expiring tax levy, which levy solely funds police, fire,
or 911 emergency services, the rate or amount of which levy is not greater than the rate or
amount of the expiring levy, and (ii) a measure to increase the state motor vehicle fuel
tax.
(b) The ballot title and official voters pamphlet explanatory statement for a measure
to adopt a new tax, fee, or charge; to approve a bond measure; or to increase an existing
tax, fee, or charge, shall begin with the words: A "Yes" vote on this measure is a vote to
increase taxes. The question submitted to voters also shall clearly describe the proposed
new tax, fee, or charge, or increase thereof; if the measure is a bond measure, a projection
of the total cost of the bond, including interest thereon; and revenue the measure would
produce annually.
(c) Nothing in this section shall affect taxes levied for the repayment of bonded
indebtedness approved by voters in an election held prior to Nov. 7, 2000, or the issuance
of refunding bonds to pay such bonded indebtedness. This section does not require voter
approval for the issuance of, or the levy of taxes to pay, bonds issued to repay bonds

11

issued prior to the effective date of this section or issued in conformance with this
section.
(2) For purposes of this section, any elimination, limitation, or reduction of a tax
exemption, credit, deduction, exclusion, or cost-of-living indexing shall be considered a
tax increase.
(3) The following revenues shall not be considered new or increased taxes, fees, or
charges for the purposes of this section: user fees charged by Peoples' Utility Districts or
port districts; mass transit fares; college or university tuition and fees; incurred charges
and assessments for local improvements as defined by Article XI Section 1lb of this
Constitution; increases in charges for government products and services solely to pass
through increased costs of wholesale inputs that are not government employee labor
costs, or otherwise under the charging government's control; fines or forfeitures for
violation of law; lottery revenue; fees paid to official business and trade associations by
those engaged in that business or occupation; earnings from interest, investments,
donations, or asset sales; and fees or charges for products or services which may be
legally obtained from a reasonably available source other than government, provided that
the new or increased fee or charge for the product or service is not greater than the
average private sector charge for the same product or service in the same market.
(4)(a) If in the two years previous to the effective date of this section, an existing
tax, fee, or charge was increased more than three percent (3%), or a new tax, fee, or
charge was adopted or first imposed, the increase in the existing tax, fee, or charge, to the
extent it exceeded a three percent increase, and any new tax, fee, or charge, shall be either
repealed or submitted to the voters for approval at the next election, if the new or
increased tax, fee or charge was not approved by at least the percentage of voters required
in paragraph (a) of subsection (1) of this section. If a new tax fee or charge was imposed,
or an existing tax, fee, or charge increased in the two years previous to the effective date
of this section, and the new tax, fee, or charge or increase in an existing tax, fee, or
charge, was not approved in conformance with this section, and not approved by voters at
the next election, the amount of the new tax, fee, or charge or excessive increase
collected shall be refunded to the payer. Taxes to pay voter approved bonded
indebtedness, and taxes, fees, and charges listed in subsection (3) of this section are
exempt from the requirements of this paragraph (a) of this subsection (4).
(b) Provided that the amount of a fee or charge does not exceed the actual cost of
providing the product or service, the following fees and charges may be increased at a
rate not greater than the rate of inflation since the effective date of this section, without a
public vote: (i) charges and fees in effect on or before December 6, 1998; (ii) charges and
fees first adopted or first effective after December 6, 1998, if adopted in accordance with
this section.
(5) Nothing in this section shall be construed as nullifying the requirement in
Section 11 of Article XI of this Constitution that elections for property tax measures,
which are voted on in an election held on a date other than the general election, achieve
not less than fifty percent (50%) voter participation to be valid.
(6)(a) This section shall not require a vote of the people when increases in
government revenue occur solely due to a change in federal tax law, increases in income,
or other changes in the circumstances of individual taxpayers. Nothing in this section
shall be construed as authorizing an increase in the tax on a property tax in an amount
greater than allowed under Article XI of this Constitution.
(b) If, after the effective date of this section, a government temporarily suspends or

12

voluntarily lowers a tax, fee, or charge; the tax, fee or charge may be increased later,
without a public vote, to the rate or amount it would have been under this section had the
suspension or reduction not occurred.

(10) Because governments have at times been creative at redefining terms, or
otherwise creating new funding mechanisms in order to circumvent limitations placed
upon them by the people, the legislature, in implementing this section, and the courts in
interpreting it, shall apply the strictest scrutiny to any new or renamed government
funding mechanism; and shall require in every reasonable circumstance voter approval as
required in this section for new or increased taxes, fees, or charges, regardless of the
creativity used by the government in designing or naming the funding mechanism. Under
this section, certificates of participation and all such funding mechanisms shall be subject
to the same limitations and requirements as a bond measure.

(12) If any phrase, clause, or part of this Amendment is invalidated by a court of
competent jurisdiction, the remaining phrases, clauses, and parts shall remain in full force
and effect. If any provision of this amendment is found to violate or infringe upon a right
of any person or group under the U.S. Constitution, the provision shall remain in full
force and effect for all other persons or groups for which no infringement has been found.
2/

This opinion does not address local governments or the Measure’s effect on the ability of local
governments to increase taxes, fees or charges to repay state bond program loans.
3/

An initiated measure becomes effective 30 days after the date on which it is approved by the
people. Or Const Art IV, § 1(4)(d).
4/

For ease of reference in this opinion, we will hereinafter refer only to the section and subsection of
the proposed constitutional provision.
5/

The vote must be at a regular general election or any other election designated by the Legislative
Assembly as an annual election at which measures may be placed on the statewide ballot by initiative
petition. Sec. 32a (1)(a).
6/

As certified by the Oregon Supreme Court in Novick v. Myers, 329 Or 11, 986 P2d 1 (1999), the
ballot title for Measure 93 states:
AMENDS CONSTITUTION: VOTERS MUST APPROVE
MOST TAXES, FEES; REQUIRES CERTAIN
APPROVAL PERCENTAGE
RESULT OF "YES" VOTE: "Yes" vote means voters approve taxes, fees by certain
approval percentage; may repeal recent increases.
RESULT OF "NO" VOTE: "No" vote retains current rules for approving, increasing
taxes, fees; maintains previously approved taxes, fees.
SUMMARY: Amends Constitution. Currently voters approve taxes by majority vote; not
all new, increased taxes, fees require voter approval. Measure requires voter approval
after November 7, 2000 of most new, increased taxes, fees by same percentage of voters
passing this measure. Requires repeal and refund of certain recent tax, fee increases
unless voters approve increase. Exempts some charges, bonded indebtedness, public
safety levies from new approval requirement. Public vote not required in limited
circumstances. Establishes standards for taxpayer challenge, judicial review of tax
measures. Other changes.

13

The explanatory statement for Measure 93 which has been filed with the Secretary of State under
ORS 251.215 and will be published in the Voters’ Pamphlet, states:
Measure 93 would amend the Oregon Constitution to require approval by no less than
the percentage of voters approving this measure for new or increased taxes, fees or
charges proposed by state and local governments, unless exempted. For example, if this
measure passes by sixty percent, it will require sixty percent approval of future taxes, fees
and charges. It also requires a refund of certain past collections.
Oregon law generally requires voter approval for property taxes, and allows voters to
refer other taxes. Fees and charges generally are not subject to voter approval.
Voter approval of new and increased taxes, fees and charges can be given only at the
biennial general election or at an annual election if the legislature permits approval of
statewide initiatives at that election. However, simple majority approval is required to
renew certain police, fire, and 911 levies and for state gas tax increases. All ballots,
including those that propose fee and charge increases, must state "A ‘Yes’ vote on this
measure is a vote to increase taxes."
Affected charges range widely from photocopy fees, to parking fees, to sewer and
water charges. However, the measure exempts a variety of charges, including Peoples’
utility and port districts; mass transit; college and university; charges for anything
provided by government which is available from the private sector if the governmental
charge does not exceed the average private sector charge in that market; and inflationary
increases in certain charges which were in effect on December 6, 1998 or which are
approved by voters as the measure requires.
Governments must refund voter approved levies and other fees lawfully imposed or
increased more than three percent after December 6, 1998 unless they are exempt or
approved by a simple majority of voters at the next election.
The measure does not require voter approval for: increases which result from changes
in income, federal tax laws, property values or other changes in individual taxpayer
circumstances; actions which alter the distribution of revenues among governments; and
voluntary payments to governments which are not imposed, assessed or levied, such as
rent for government property or loan payments.
Certificates of participation and similar financing techniques which may be
developed in the future are subject to the same limitations and requirements as a bond
measure; this does not add new requirements for bonds.
This measure permits the state to impose temporary charges for not more than one
year without voter approval. State temporary charges must be: for a specific purpose,
approved by a three-fourths vote of each house of the Legislative Assembly, and signed
by the Governor.
The measure permits local government emergency taxes for not more than one year if
the Governor declares a local emergency, the local governing body approves the tax by a
three-fourths vote, and the tax is approved by voters as the measure requires within 90
days after the declaration of emergency.

This measure prescribes procedures for tax elections, ballot title review, the
refund of unlawfully collected taxes and court challenges.
7/

The ballot title and official Voters’ Pamphlet explanatory statement must begin with the words: “A
‘Yes’ vote on this measure is a vote to increase taxes.”

14

8/

WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY (WEBSTER’S) 1942 (unabridged 1993)
defines “revenue” as “public income of whatever kind.”
9/

The government bond itself is the written evidence of the government’s obligation to repay the
principal amount of the bond at maturity, together with interest. See MOODY’S ON MUNICIPALS – AN
INTRODUCTION TO ISSUING DEBT (1987).
10/

Because the Measure refers to “bonds” without any distinction between GO bonds and revenue
bonds, we find no basis to distinguish between them in analyzing the effect of the Measure on the state’s
authority to issue GO or revenue bonds. Accordingly, for ease of reference, we use the term “bonds” to
refer to both.
11/

A “tax” is defined as:
1 a (1) : a [usually] pecuniary charge imposed by legislative or other public authority
upon persons or property for public purposes : a forced contribution of wealth to meet the
public needs of a government.

A “fee” is defined as:
3 b : a charge fixed by law or by an institution (as a university) for certain privileges or
services 4 a : a charge fixed by law for the services of
a public officer
A “charge” is defined, in its relevant sense, as:
5 a : expenditure or incurred expense * * * as (1) : payment of costs : money paid out (2)
: a pecuniary liability (as rents or taxes against property, a person, or an organization * *
* b : the price demanded for a thing or service
WEBSTER’S at 2345, 833, 377, respectively.
12/