Summary
In State ex rel. La Follette v. Reuter (1967), 33 Wis.2d 384, 405, 147 N.W.2d 304, 316, this court said that "The terms `debt' and `indebtedness' as they appear in sec. 3, art. XI, and sec. 4, art. VIII, Const., have the same meaning in regard to both state and municipal debts."
Summary of this case from State ex Rel. Bowman v. BarczakOpinion
December 2, 1966 —
January 3, 1967.
ORIGINAL ACTION in this court commenced pursuant to leave granted. Writ issued. Declaratory judgment granted.
For the petitioner the cause was argued by William F. Eich, assistant attorney general, with whom on the brief were Bronson C. La Follette, attorney general, and Andrew C. Damon of Madison, counsel for the department of resource development.
For the respondent there was a brief by A. J. Feifarek and Van Alstyne, Hoffman Feifarek, special counsel, all of Madison, and oral argument by A. J. Feifarek.
The petitioner attorney general in his complaint herein seeks (1) a peremptory writ of mandamus directed to respondent Clarence A. Reuter, as director of the bureau of finance, commanding him to honor, audit, and approve a voucher and requisition for the printing of applications submitted to him by the department of resource development and to give effect to and take all steps necessary to carry out the appropriation as provided in ch. 614, Laws of 1965; and (2) a declaratory judgment adjudging that the financial assistance portion of ch. 614, Laws of 1965, was and is a valid enactment not in violation of the Wisconsin constitution and that under the terms thereof the said Clarence A. Reuter, as director of the bureau of finance, is required and has the right to honor, audit, and approve any and all warrants, requisitions, purchase orders, and allotment requests issued to him by the department of resource development, pursuant to said statute and to give effect to and take all steps necessary to carry out the appropriations as provided by ch. 614, Laws of 1965.
The parties stipulated that the petition for leave to commence an original action shall stand as the petitioner's complaint. The respondent filed a general demurrer putting in issue the constitutionality of the statute relied upon and the validity of the acts purported to have been taken and to be taken pursuant thereto.
Under the provisions of secs. 144.023 and 144.025,, Stats. (created by ch. 614, Laws of 1965) the department of resource development (hereinafter referred to as "the department") is entrusted with the duty to serve as the central unit of state government to protect, maintain, and improve the quality and management of the waters of the state, ground and surface, public and private. Such department is authorized by sec. 144.21, Stats. (created by ch. 614, Laws of 1965) to administer a state program of financial assistance to municipalities for the construction of pollution prevention and abatement facilities.
Sec. 144.21, Stats., provides as follows:
"(1) The legislature finds that state financial assistance for the construction and financing of pollution prevention and abatement facilities is a public purpose and a proper state government function in that the state is trustee of the waters of the state and that such financial assistance is necessary to protect the purity of state waters.
"(2) In order that the construction of pollution prevention and abatement facilities necessary to the protection of state waters be encouraged, a state program of assistance to municipalities for the financing of such facilities is established. The state program shall be administered by the department of resource development and the department shall make such rules as are necessary for the proper execution of the state program.
"(3) (a) The department shall establish criteria to determine those municipalities and projects which are eligible for the state program and to determine appropriate priorities among the projects.
"(b) Until May 1, 1967, the criteria in par. (c) shall apply only to agreements under sub. (6) (a) and the only municipalities eligible for agreements under sub. (6) (b) are those which have reached the limit of their bonding authority or those which, in the opinion of the department would face extreme financial hardship because of equalized valuation, governmental structure, size, population or such other factors as the department finds relevant were they to bond for such projects.
"(c) After May 1, 1967, all municipalities are eligible for agreements under sub. (6) (a) and (b) based on the criteria in this paragraph. The criteria shall consider the health hazards of existing conditions, the extent and nature of pollution, per capita costs of the project, property valuation of the municipalities as equalized by the state, income of the residents in the municipalities, the availability of federal funds for the project, soil conditions, the feasibility and practicality of the project, the borrowing capacity of the municipality and any other factors which the department considers important.
"(d) After May 1, 1967, the program under sub. (6) (b) shall be conducted through the issuance of state bonds, if then constitutionally allowed, or, if the issuance of such bonds is not allowed, through the lease and sublease agreements with nonprofit corporations set forth in this section.
"(4) Municipalities which desire to participate in the state program shall submit application for participation to the department. The application shall be in such form and include such information as the department prescribes.
"(5) The department shall review applications for participation in the state program. It shall determine those applications which meet the criteria it established under sub. (3), and shall arrange the applications in appropriate priority order.
"(6) The department may enter into agreement with municipalities to provide state assistance for the financing of those pollution prevention and abatement facilities projects it approves under sub. (5). The department may enter into one of 2 alternative agreements with municipalities:
"(a) The department may enter into agreement with municipalities to make payments to municipalities from the appropriation made by s. 20.706 (1) (c) to pay up to 33 1/3 % of the total combined cost of the approved project costs and the net interest and financing costs. These payments shall be in even annual amounts, based on the total net interest to be paid during the life of the bonds or other obligations issued by the municipality divided by the number of years of the bond issue or the period of obligation, and shall extend for a period of not less than 15 years and not more than 30 years. It is the intent of this alternative that state payments will reimburse municipalities which finance approved projects through bond issues or other forms of borrowing for the approximate net interest costs it incurs over the term of the bond issue or other borrowing techniques.
"(b) The department may enter into agreements with municipalities for the municipalities to sublease and eventually acquire from the department the approved project for which the department has entered into lease and sublease agreements with nonprofit corporations pursuant to sub. (7). Such an agreement shall provide that municipalities shall make even annual rental payments to the state which shall not be less than 66 2/3% of the lease rental payments for the approved project for which appropriation is made by s. 20.706 (1) (d). The even annual rental payments shall be 66 2/3% of the lease rental payments by the department to the nonprofit-sharing corporation under sub. (7) for that project divided by the number of years such lease rental payments are made. Municipal rental payments shall be deposited in general fund general purpose revenues pursuant to s. 20.951. It is the intent of this alternative that the state may assist municipalities to acquire approved projects when it is impractical for the municipalities to finance such approved project through their municipal borrowing authority. It is the further intent that state payments similar in concept and amount to those authorized under par. (a) will reimburse municipalities which finance projects under sub. (7) for the approximate net interest costs it incurs under the life of the sublease.
"(c) The department shall determine which of the 2 agreements authorized under pars. (a) and (b) it will enter into with a municipality applying for participation in the state program of financial assistance.
"(d) The net state payments for agreements entered into pursuant to pars. (a) and (b) and sub. (7) and for which appropriation is made by s. 20.706 (1) (c) and (d) shall not exceed $6 million annually. `Net state payments' means the combined total of the payments for which appropriation is made by s. 20.706 (1) (c) and (d), less the municipal rental payments received under agreements entered into pursuant to par. (b).
"(e) The department shall review and approve the plans and specifications of all facilities designed and constructed by agreement under this section.
"(7) In order to assist municipalities to acquire pollution prevention and abatement facilities it deems necessary to the protection of state waters, for those projects it has entered into agreements pursuant to sub. (6) (b) the department:
"(a) May lease from municipalities any land and any existing improvements thereon owned by the municipality for such consideration and upon such terms as the department deems in the public interest.
"(b) May lease or sublease to a nonprofit-sharing corporation, for terms not exceeding 50 years each, any land and any existing improvements thereon leased from municipalities pursuant to par. (a) upon such terms as the department deems in the public interest.
"(c) May lease or sublease from such nonprofit-sharing corporation and then lease or sublease to municipalities, any such lands and existing improvements leased to such corporation under par. (b), and any new pollution prevention and abatement facilities constructed upon such land or any other land owned by the corporation, upon such terms, conditions and rentals, subject to available appropriations, as the department deems in the public interest.
"(d) Shall submit all conveyances, leases and subleases made under this subsection to the governor and the department of administration, for written approval before they are finally adopted, executed and delivered.
"(e) May pledge and assign, subject to available appropriations, all moneys provided by law for the purpose of the payment of rentals pursuant to leases and subleases made under par. (c) as security for the payment of rentals due under any lease or sublease of such pollution prevention and abatement facilities made under par. (c).
"(f) Shall, upon receipt of notice of any assignment by any such corporation of any lease or sublease made under par. (c), or of any of its rights under any such lease or sublease, recognize and give effect to such assignments, and pay to the assignee thereof rentals or other payments then due or which may become due under any such lease or sublease which has been so assigned by such corporation.
"(8) (a) The state shall be liable for accrued rentals and for any other default under any lease or sublease executed under sub. (7) and may be sued therefor on contract as in other contract actions pursuant to ch. 285, but it shall not be necessary for the lessor or any person or other legal entity on behalf of such lessor to file any claim with the legislature prior to the commencement of any such action.
"(b) If a municipality with which the department has entered into an agreement pursuant to sub. (6) (b) is delinquent in making rental payments to the state under such agreement, the department shall notify the department of administration of such delinquency as it stands on October 1 each year. On or before the 3rd Monday of October in each year, the department of administration shall notify the secretary of state of the rental delinquency of each municipality. On or before the 4th Monday [of October] in each year, the secretary of state shall certify to the county clerk the delinquency as it exists in said county. The county clerk shall charge such delinquency to the proper municipality as follows:
"1. If the delinquent municipality is a town, village or city, such town, village or city shall be charged for its liability.
"2. If the delinquent municipality is a county or a county utility district, such delinquency shall become a part of the county's next calendar year budget and shall be apportioned to the towns, villages and cities in accordance with s. 70.63.
"3. If the delinquent municipality is a town sanitary district, such town shall be charged for the liability.
"4. If the delinquent municipality is a metropolitan sewage district, such charge shall be apportioned to the towns, villages and cities or the parts of such municipalities in the metropolitan sewage district on the basis of the preceding May 1 equalized value of taxable general property of such municipality or portion thereof in the metropolitan sewage district as determined by the department of taxation. If the metropolitan sewage district lies in more than one county, the delinquency shall be allocated on the basis of the equalized value of each county in the district as determined by the department of taxation as of the preceding May 1.
"(c) Delinquent rental payments shall bear interest at the rate of 5 % from the due date of the payment until paid by the municipality or if certified as delinquent by the secretary of state from the due date of the payment to the next February 1.
"(d) Delinquent rental payments shall be paid into the state treasury by the county treasurer on or before February 1 of the year following the delinquency certification by the secretary of state. Such payments shall be deposited in general fund general purpose revenues pursuant to s. 20.951.
"(9) Nothing contained in this section shall create a debt of the state.
"(10) All powers and duties conferred upon the department pursuant to subs. (6) (b) and (7) shall be exercised and performed by resolution of the resource development board. All conveyances, leases and subleases made pursuant to subs. (6) (b) and (7), when authorized pursuant to resolution of the board, shall be made, executed and delivered in the name of the department and shall be signed by a person designated by the board.
"(11) This section shall be construed liberally in aid of the purposes declared in sub. (1)."
Under sec. 144.21 (4), Stats., municipalities desiring to participate in the financial assistance program are directed to submit formal applications to the department, in such form and to include such information as the department prescribes. On or about the 18th day of August, 1966, the department submitted a printing requisition for 1,000 sets of application forms for financial assistance to the department of administration. The requisition was accompanied by a transfer voucher in the sum of $54.84, duly certified, which approved transfer of the funds. The voucher was received by the bureau of finance, a division of the state department of administration, on the 19th day of August, 1966.
On or about the 23d day of August, 1966, the bureau of finance served notice that the voucher had been suspended pending receipt of an explanation of the purpose of the application forms.
On the same day, August 23, 1966, Trygve Thoreson, director of the administration service division of the department of resource development wrote to the respondent, Clarence A. Reuter, director of the bureau of finance, that the application forms were necessary to initiate the program of financial aid under ch. 614, Laws of 1965.
On or about the 25th day of August, 1966, the respondent notified the department that he refused to honor the voucher, expressing the conclusion that the expenditure violated the constitution of the state of Wisconsin.
The respondent agrees that the application forms are essential in order for the department to carry out the financial assistance under sec. 144.21, Stats. However, he continues to refuse to honor the voucher on the grounds that the financial assistance provisions, namely, sec. 41, ch. 614, Laws of 1965, are unconstitutional.
The attorney general seeks a peremptory writ of mandamus to compel the respondent to honor the $54.84 voucher. We deem the prayer for a declaratory judgment on the questions raised of constitutionality to be determinative of all issues to be considered by the court. Such issues are as follows:
1. Does sec. 144.21, Stats., delegate legislative powers to the department in violation of sec. 1, art. IV, Const.?
2. Does sec. 144.21, Stats., authorize the payment of state money for purposes that are not of statewide concern in violation of sec. 2, art. VIII, Const.?
3. Does sec. 144.21, Stats., authorize the lending of the credit of the state in violation of sec. 3, art. VIII, Const.?
4. Does sec. 144.21, Stats., authorize the creation of a public debt in violation of sec. 4, art. VIII, Const.?
5. Does sec. 144.21, Stats., authorize the state to carry on work of internal improvements in violation of sec. 10, art. VIII, Const.?
6. Does sec. 144.21, Stats., authorize municipalities to exceed debt limits in violation of sec. 3, art. XI, Const.?
With reference to the first issue presented, it is the position of the respondent that the powers delegated to the department result in a violation of sec. 1, art. IV, Const., which provides that the legislative powers shall be vested in a senate and assembly.
This court said in State ex rel. Thomson v. Giessel (1953), 265 Wis. 185, 193, 60 N.W.2d 873, quoting from People ex rel. Curren v. Schommer (1945), 392 Ill. 17, 24, 63 N.E.2d 744, 748, 167 A.L.R. 1347, 1352, that:
"`. . . it has long been accepted that the legislature may delegate that reasonable measure of authority which is necessary to accomplish the constitutional purpose desired. We hardly see how . . . it can be said that the legislature, which is the voice of the people, has no freedom of action in determining the best methods of giving to the public that service for which it is willing and able to pay. It is the best judge of what is necessary to meet the needs of the public and in what manner the service shall be directed. . . .'"
In Olson v. State Conservation Comm. (1940), 235 Wis. 473, 479, 293 N.W. 262, a similar claim was made in regard to ch. 366, Laws of 1937, which authorized the state conservation commission to "regulate hunting and fishing on and in all interstate boundary waters, except the outlying waters specified in subsection (4) of section 29.01,. . ."
Ch. 366 then referred to existing statutes which provided that the commission shall establish such seasons, size limits, and other conditions governing the taking of fish and game "as will conserve the fish and game supply and insure to the citizens of this state continued opportunities for good fishing, hunting and trapping." In holding that ch. 366, Laws of 1937, did not constitute an unconstitutional delegation of legislative power, this court stated at page 482:
". . . It is clear that the power delegated to the commission by ch. 366, Laws of 1937, authorized the commission to act in such a way ` as will conserve the fish and game supply.' It thus appears that the legislature declared that there should be a law, and determined the general policy sought to be achieved, and that regulations or orders of the commission expressing such public policy and promulgated by it, should have the force and effect of law. Ch. 366, in our opinion, contains a sufficient standard `as will conserve the fish and game' and therefore may not be assailed on the ground that it unconstitutionally delegates legislative power."
Secs. 1 and 2 of ch. 614, Laws of 1965, declare the statutory policy and fix the standards for administering the law. It is obvious that no more than a general standard can be prescribed by the legislature. It could not make specific provisions for all items entering into the operation of the financial assistance program for the very reason that the size, extent, and character of the problems and the curative acts required differ in each area where the evils to be corrected by the act exist.
In Milwaukee v. Sewerage Comm. (1954), 268 Wis. 342, 351, 67 N.W.2d 624, this court said:
". . . The true test and distinction whether a power is strictly legislative, or whether it is administrative and merely relates to the execution of the statutory law, is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done. To the latter, no valid objection can be made."
The responsibility of ascertaining as a matter of fact under the statutory guidelines and principles whether a particular municipality requires financial assistance and which plan is best suited to its particular needs is an administrative act and not the exercise of legislative power.
The legislature acting within the scope of its authority has determined what the law concerning water pollution prevention and abatement shall be. A legislative enactment, sec. 144.21, Stats., goes into operation on the determination of certain facts by the department.
Sec. 144.21, Stats., does not result in an unlawful delegation of legislative authority in violation of sec. 1, art. IV, Const.
The next issue to be determined is whether sec. 144.21 (6) (a), Stats., which provides for payment by the state of one third of the total combined cost of approved projects and net interest and financing cost to those municipalities which finance their own projects contravenes the provisions of sec. 2, art. VIII, Const., in that such appropriation is not for a purpose of statewide concern.
The statewide importance of water pollution abatement in any given locality of the state is obvious since our rivers, streams, lakes and tributaries are not confined by municipal boundaries. The abatement of water pollution is essential to the health and welfare of all of the people of the state. The primary reason in constructing pollution abatement facilities is to protect the health of all citizens of the state whose need for pure water is essential to life itself.
In determining what are proper expenditures by the state, this court said in State ex rel. Thomson v. Giessel (1953), 265 Wis. 185, 216, 60 N.W.2d 763:
"`. . . The existence of local conditions which, because of their nature and extent, are of concern to the public as a whole, the modes of advancing the public interest by correcting them or avoiding their consequences, are peculiarly within the knowledge of the legislature, and to it, and not to the courts, is committed the duty and responsibility of making choice of the possible methods. . . .'"
In State ex rel. Martin v. Juneau (1941), 238 Wis. 564, 570, 571, 300 N.W. 187, this court stated in regard to the home rule section of the state constitution that:
". . . there can be no question but that the promotion and protection of public health is a matter of state-wide concern."
The purpose of the appropriation provided for in ch. 614, Laws of 1965, is clearly public and is a matter of statewide concern.
It is therefore our conclusion that sec. 144.21 (6) (a), Stats., does not violate sec. 2, art. VIII, Const.
We now consider the third issue raised of whether the financial assistance plan results in the state lending its credit in violation of sec. 3, art. VIII, Const., which provides:
"The credit of the state shall never be given, or loaned, in aid of any individual, association or corporation."
In State ex rel. Wisconsin Development Authority v. Dammann (1938), 228 Wis. 147, 197, 277 N.W. 278, 280 N.W. 698, this court stated as follows:
"It is our conclusion that the giving or loaning of the credit of the state which it was intended to prohibit by sec. 3, art. VIII, Wis. Const., occurs only when such giving or loaning results in the creation by the state of a legally enforceable obligation on its part to pay to one party an obligation incurred or to be incurred in favor of that party by another party. There is no such giving or loaning of the state's credit within the meaning of that prohibitory provision when all that is done by the state is to incur liability directly or only to such other party as, for example, where the state lawfully employs someone to perform an authorized service for the state."
There is no loaning of state credit (contrary to sec. 3, art. VIII, Const.) unless the state becomes legally obligated for a debt.
Since there is no enforceable legal obligation on the part of the state to pay the obligations of the building corporations or to pay any obligations of the municipalities under their own separate leases, there can be no loaning of the credit of the state.
There is no loaning of credit when one performs a lawful service for the state. In State ex rel. Thomson v. Giessel (1953), 265 Wis. 185, 199, 60 N.W.2d 873, this court said:
"Respondent argues that the bond-buying public will feel that the state is giving its credit to the turnpike-corporation bonds even though there is no legal obligation on the part of the state, because it will be reasoned that the state could not afford to allow the project to fail. Obviously, this cannot be the test to be applied. The test of a `legally enforceable obligation' laid down in the Wisconsin Development Authority Case, supra, is the only sound One."
We conclude that sec. 144.21, Stats., does not operate so as to extend the credit of the state of Wisconsin in violation of sec. 3, art. VIII, Const.
Next we consider the fourth issue raised of whether sec. 144.21, Stats., creates a state debt in violation of sec. 4, art. VIII, Const., which provides:
"The state shall never contract any public debt except in the cases and manner herein provided."
The respondent concedes cases hold that where there is no legally enforceable obligation there is no debt.
The respondent contends that the terms of sec. 144.21 (6) (a), Stats., are unclear in that they may result in binding the state irrevocably to making the annual payments to the municipalities under this section.
First of all, sub. (6) (a) does not require the department to enter into such agreement with a municipality; it merely authorizes the department to so agree by providing as follows:
"The department may enter into agreement with municipalities to make payments to municipalities from the appropriation made by s. 20.706 (1) (c) . . . ."
The above language similarly makes it clear that any payments to municipalities made under this first alternative plan, shall come from the appropriation made by sec. 20.706 (1) (c), Stats. Thus, the only agreement that can be made under sub. (6) (a) is an agreement to pay municipalities out of the funds appropriated by sec. 20.706 (1) (c).
This court in State ex rel. Board of Regents v. Donald (1916), 163 Wis. 145, 147, 157 N.W. 782, said:
"Undoubtedly the legislature can repeal a statute carrying an appropriation and thus put an end to the appropriation, so far as it is unexpended, at any time."
Sec. 144.21, Stats., clearly provides for financing through nonprofit corporations such as the state building corporation and the Wisconsin turnpike corporation; and it has been held that they are not agencies of the state nor are their obligations debts of the state. State ex rel. Thomson v. Giessel (1955), 271 Wis. 15, 72 N.W.2d 577; Glendale Development v. Board of Regents (1960), 12 Wis.2d 120, 135, 106 N.W.2d 430.
Sec. 144.21 (6) (b), Stats., which is nothing more than the lease and sublease plan, does not create a legally enforceable obligation. The reason for this is stated in State ex rel. Thomson v. Giessel (1954), 267 Wis. 331, 345, 65 N.W.2d 529, as follows:
"Historically the common-law principles governing the landlord-tenant relationship did not recognize future rent as a presently existing debt or liability."
Therefore it follows that no state debt is created because "future rent" under the leases does not become a debt until the land and pollution facilities have been used.
It is further stated in State ex rel. Thomson v. Giessel (1955), 271 Wis. 15, 32, 33, 72 N.W.2d 577, that:
"It is to be noted also that the state is not under a legally enforceable obligation to pay rent in any of the causes of action. Under provision of ch. 144, Laws of 1955, particularly secs. 14.89 (1) (c), 36.06 (6) (b), Stats., it is expressly provided that the obligation of the state to pay rent to a building corporation shall be subject to available appropriations. Since the availability of appropriations is within the sole control of the state, this condition renders the state s rental obligation entirely optional and within its discretion. No legally enforceable obligation results."
Insofar as all of the constitutional challenges are concerned, it may arguably be said that the state encourages the works envisioned by sec. 144.21, Stats., but the state is not a party to such action.
We now consider the fifth issue raised of whether sec. 144.21, Stats., authorizes the state to carry on work of internal improvements in violation of sec. 10, art. VIII, Const., which provides:
"The state shall never contract any debt for works of internal improvement, or be a party in carrying on such works; . . ."
The question of what is considered to be a work of internal improvement within the meaning of sec. 10, art. VIII, Const., was considered by this court in the case of State ex rel. Owen v. Donald (1915), 160 Wis. 21, 79, 151 N.W. 331, where it was said:
"In Rippe v. Becker, 56 Minn. 100, 117, 57 N.W. 331, the precise question we now have under consideration was carefully considered. As we have heretofore said the result there was fully approved here. The opinion of the court, written by MITCHELL, J., is well abridged, as to the principle declared, in the syllabus:
"`"Works of internal improvement," as used in the constitution, means, not merely the construction or improvement of channels of trade and commerce, but any kind of public works, except those used by and for the state in performance of its governmental functions such as a state capitol, state university, penitentiaries, reformatories, asylums, quarantine buildings, and the like, for the purposes of education, the prevention of crime, charity, the preservation of public health, furnishing accommodations for the transaction of public business by state officers, and other like recognized functions of state government.'"
The foregoing definition of internal improvement was approved and adopted by this court in State ex rel. Thomson v. Giessel (1954), 267 Wis. 331, 343, 65 N.W.2d 529.
In State ex rel. Martin v. Juneau, supra, at page 572, this court said:
". . . The pollution of the waters of the state is as a matter of common knowledge inimical to public health."
In Norway v. State Board of Health (1966), 32 Wis.2d 362, 370, 145 N.W.2d 790, this court said:
". . . The pollution of public waters is a matter of great public concern and inimical to public health."
In Visina v. Freeman (1958), 252 Minn. 177, 193, 89 N.W.2d 635, 649, the Minnesota supreme court said:
". . . In determining whether an act of the legislature contravenes a constitutional provision we should endeavor to interpret the provision in the light of existing conditions, particularly when those conditions could not have been foreseen at the time the constitution was adopted. . . . The limitation on spending public money for internal improvements obviously was not intended to circumscribe such activity. . . .
". . . If the language of the constitution permits, we should give to it that meaning which would have been expressed when adopted if the present conditions that are involved had then existed or had been within the contemplation of those who drafted the instrument."
Even though the court in Visina, supra, was considering the problem of port facilities the reasoning seems more appropriate to the case presented.
In Appeal of Van Dyke (1935), 217 Wis. 528, 544, 259 N.W. 700, 98 A.L.R. 1332, this court was faced with the question of whether ch. 29, Laws of Sp. Sess. 1931-1932, known as the emergency unemployment relief income tax law, was unconstitutional for the reason, among others, that it violated the internal improvements clause of the Wisconsin constitution. Sec. 2(2) of the act provided for payments from the general fund to counties, cities, towns and villages of 25 percent of their expenditures for the labor costs of public works such as forestry works, forest fire protection facilities, highway and bridge construction, and similar projects. In passing on this question, the court stated:
". . . It is true that some of the moneys which were paid out by the industrial commission, pursuant to the provision of sec. 2(2) of the act, which permitted reimbursement to the county or city of twenty-five per cent of the labor cost of public works undertaken to provide for the unemployed, went into such public works, but the primary purpose of the state was not to become a party to carrying on works of internal improvements, but to reimburse the counties and cities which had made work simply for the purpose of providing employment to the unemployed."
The Van Dyke Case, along with State ex rel. New Richmond v. Davidson (1902), 114 Wis. 563, 88 N.W.2d 596, 90 N.W. 1067, were later characterized by this court as sustaining legislative enactments by which the state promoted or encouraged the making of internal improvements through appropriations of state funds. See State ex rel. Wisconsin Development Authority v. Dammann, supra.
We conclude that matters pertaining to the abatement of water pollution are governmental functions of the state of Wisconsin and that water pollution prevention and abatement facilities are not works of internal improvement within the prohibition of sec. 10, art. VIII, Const.
This brings us to the consideration of the last issue raised as to whether sec. 144.21, Stats., authorizes municipalities to exceed debt limits in violation of sec. 3, art. XI, Const., which provides:
"SECTION 3. Cities and villages organized pursuant to state law are hereby empowered, to determine their local affairs and government, subject only to this constitution and to such enactments of the legislature of state-wide concern as shall with uniformity affect every city or every village. The method of such determination shall be prescribed by the legislature. No county, city, town, village, school district or other municipal corporation may become indebted in an amount that exceeds an allowable percentage of the taxable property located therein equalized for state purposes as provided by the legislature. In all cases the allowable percentage shall be five per centum except as follows: (a) For any city authorized to issue bonds for school purposes, an additional ten per centum shall be permitted for school purposes only, and in such cases the territory attached to the city for school purposes shall be included in the total taxable property supporting the bonds issued for school purposes. (b) For any school district which offers no less than grades one to twelve and which at the time of incurring such debt is eligible for the highest level of school aids, ten per centum shall be permitted. Any county, city, town, village, school district, or other municipal corporation incurring any indebtedness as aforesaid, shall before or at the time of doing so, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting the same; except that when such indebtedness is incurred in the acquisition of lands by cities, or by counties having a population of one hundred fifty thousand or over, for public, municipal purposes, or for the permanent improvement thereof, the city or county incurring the same shall, before or at the time of so doing, provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within a period not exceeding fifty years from the time of contracting the same. An indebtedness created for the purpose of purchasing, acquiring, leasing, constructing, extending, adding to, improving, conducting, controlling, operating or managing a public utility of a town, village or city, and secured solely by the property or income of such public utility, and whereby no municipal liability is created, shall not be considered an indebtedness of such town, village or city, and shall not be included in arriving at such five or eight per centum debt limitation."
The above constitutional provision places a debt limit upon municipal corporations. The apparent reason for the debt limitation is to prevent municipal bankruptcy which would result from the creation of a fiscal burden beyond the financial capacity of local taxpayers. Sec. 144.21, Stats., authorizes the department to enter into agreements with municipalities whereby the municipalities would sublease from the department land and improvements for which the state has entered into lease and sublease agreements with a nonprofit corporation. The same arguments pertaining to whether or not the state of Wisconsin incurs a debt by entering into lease and sublease agreements with the corporation are applicable here insofar as the question of municipal debt is concerned.
This court held that the payment of future rent is not a presently existing debt of the state within the meaning of the term "indebtedness" referred to in the constitution. State ex rel. Thomson v. Giessel (1954), 267 Wis. 331, 346, 65 N.W.2d 529; State ex rel. Thomson v. Giessel (1955), 271 Wis. 15, 28, 29, 72 N.W.2d 577.
The terms "debt" and "indebtedness" as they appear in sec. 3, art. XI, and sec. 4, art. VIII, Const., have the same meaning in regard to both state and municipal debts. The leading case on the subject of future rent is Walla Walla City v. Walla Walla Water Co. (1898), 172 U.S. 1, 19 Sup. Ct. 77, 43 L.Ed. 341.
In holding that the city by its contract with the water company did not become indebted in the constitutional sense until it had the use of the premises for each successive rental term, the court stated at page 20:
"There is a distinction between a debt and a contract for a future indebtedness to be incurred, provided the contracting party perform the agreement out of which the debt may arise. There is also a distinction between the latter case and one where an absolute debt is created at once, as by the issue of railway bonds, or for the erection of a public improvement, though such debt be payable in the future by instalments. In the one case the indebtedness is not created until the consideration has been furnished; in the other the debt is created at once, the time of payment being only postponed."
Sec. 144.21(6)(b), Stats., requires that even annual payments be made by the municipality in its lease or sublease from the department, and it is contended by the respondent that this creates a debt. In the Walla Walla Case, supra, the ordinance provided specifically that the city "shall pay" the sum of $1,500 a year for a period of twenty-five years. The supreme court held, however, that this annual rental did not become an indebtedness until the use of the subject of the rental agreement had been accomplished by the city. In the instant situation, no liability for rent can accrue to the municipality until it has received the use of the water pollution facilities. Until such time as the use and enjoyment of these facilities occurs, no rent can be payable. The distinction here, which has been recognized by this court in State ex rel. Thomson v. Giessel (1954), 267 Wis. 331, 65 N.W.2d 529, is between a debt, which arises only when enjoyment and use of the premises is had by the lessee, and a contract for a future debt, which is no present debt at all. Under the rules enunciated by this court there can be no liability beyond actual occupancy and use.
The provisions of sec. 144.21(8)(b), Stats., do not operate to change the future rental payments into a debt within the meaning of the constitutional provisions. Sec. 144.21(8)(b) merely relates to the collection of annual rent after the use of the premises has been enjoyed by the municipality ( e.g., after the rental instalment has become a "debt"), and after a default has occurred. The payments are to be made annually pursuant to. sec. 144.21(6)(b), and there is nothing in the act to suggest that anything is contemplated other than annual rental payments for the annual use and enjoyment of the premises on the part of the municipality.
Sec. 144.21(7)(b), Stats., is the only portion of the financial assistance program relating to rental payments on the subleases by the department and the municipality.
A reading of that section clearly reveals that the rentals for both the lease or sublease from the corporation to the department and the lease or sublease of the improved land from the department to the municipality are subject to available appropriations. The provisions made by sec. 144.21(8)(b), Stats., are not "enforcement provisions." They merely provide a method of repayment after, and only after, a default has occurred. That is, only after the municipality has enjoyed the use and occupancy of the premises for a year and has failed to pay the specified rental therefor. Clearly, rent to be paid in the future is not a present debt nor a liability.
In State ex rel. Thomson v. Giessel (1955), 271 Wis. 15, 33, 34, 72 N.W.2d 577, this court considered the question of whether the state building corporation's pledging of rentals from the state office building to the lending institution which was legally enforceable in the constitutional sense and also whether the state's agreement to charge rentals sufficient to pay all costs and rent payable by it under the lease is a legally enforceable obligation. The court held that the state may obligate itself to impose charges sufficient to meet a rental obligation without creating state debt. A promise by the state to maintain rates of imposed charges sufficient to produce revenues large enough to make specified payments does not constitute state debt.
Sec. 144.21(8), Stats., merely constitutes a method of collecting rental payments only after the municipality has had the use of the improved premises and after a default on the part of the municipality has occurred.
We conclude that under the established rules governing leases which have been applied to similar financing programs by this court, it cannot be said that the above subsection creates a debt on the part of the municipality. The constitutional provisions relating to municipal debt limitations are not violated by the act.
We hold that sec. 41, ch. 614, Laws of 1965, which creates sec. 144.21, Stats., is a valid enactment not in violation of the public debt and internal improvement sections of the Wisconsin constitution and that under the terms thereof the said Clarence A. Reuter, as director of the bureau of finance, is required and has the right to honor, audit and approve any and all warrants, requisitions, purchase orders, and allotment requests issued to him by the department of resource development, pursuant to said statute, and to give effect and take all steps necessary to carry out the aforementioned appropriation as provided by ch. 614, Laws of 1965. By the Court. — The petition for a peremptory writ of mandamus is granted; and a declaratory judgment granted adjudging that sec. 41, ch. 614, Laws of 1965, which creates sec. 144.21, Stats., is a valid enactment.