County of Volusia v. State
417 So. 2d 968 (1982)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A local government's pledge of all legally available, unencumbered, non-ad valorem revenues, coupled with a covenant to maintain the services that generate those revenues, constitutes an indirect pledge of ad valorem taxing power that requires voter approval by referendum under the Florida Constitution.
Facts:
- Volusia County determined it needed to construct a new jail facility to address overcrowding.
- The County proposed building the new jail on Indian Lake Road, a location eleven miles outside of DeLand, the county seat.
- To finance the construction, the County sought to issue $40,000,000 in capital improvement bonds.
- As security for the bonds, the County pledged all of its legally available, unencumbered sources of revenue, excluding ad valorem (property) taxes.
- These pledged revenues included various regulatory fees and user charges collected by the county.
- The County also covenanted to do everything necessary to continue receiving the pledged revenues, which required maintaining the programs and services that generated them.
Procedural Posture:
- The County of Volusia filed a complaint in the circuit court (trial court) seeking validation of a $40,000,000 bond issue.
- The State of Florida and taxpayers of the county were named as appellees.
- The circuit court denied the complaint and refused to validate the bonds.
- The County of Volusia, as appellant, appealed the trial court's judgment directly to the Supreme Court of Florida.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a county's pledge of all legally available, unencumbered revenues, other than ad valorem taxes, coupled with a covenant to maintain the services that generate those revenues, constitute an indirect pledge of ad valorem taxing power requiring a referendum under Article VII, Section 12 of the Florida Constitution?
Opinions:
Majority - Boyd, J.
Yes, this pledge constitutes an indirect pledge of ad valorem taxing power requiring a referendum. While prior cases have permitted the pledge of specific non-ad valorem revenue sources as having only an 'incidental effect' on the ad valorem taxing power, this case is different. Here, the County pledged all legally available non-ad valorem revenues and promised to maintain the programs that generate them. This combination will inevitably require the County to increase ad valorem taxes to fund its general operations, creating a 'substantial impact' on the ad valorem taxing power, not merely an incidental one. Following the precedent of State v. Halifax Hospital District, a financing scheme that cannot be accomplished without putting a direct and substantial burden on the ad valorem taxing power must be approved by the voters.
Dissenting - Alderman, J.
No, this bond issue does not require a referendum. The authorizing documents specifically state that ad valorem taxing power is not pledged, and repayment cannot be compelled by bondholders through such taxes. This case should be governed by Town of Medley v. State and State v. Alachua County, which hold that an 'incidental effect' on ad valorem taxes caused by pledging other revenues does not trigger the referendum requirement. The majority misapplies State v. Halifax Hospital District, which involved an express pledge not to reduce the existing ad valorem tax levy, a fact not present here. The county has not directly obligated its ad valorem taxing power, and therefore no referendum is required.
Analysis:
This decision significantly clarifies the 'incidental effect' doctrine by establishing that a comprehensive pledge of all non-ad valorem revenues crosses the line from an incidental to a substantial impact on the ad valorem taxing power. It serves as a major limitation on the ability of local governments in Florida to finance large capital projects without voter approval. The ruling forces governments to either secure a referendum or be more selective, pledging only specific, limited revenue streams to avoid an indirect pledge of their property taxing authority. This case creates a clear distinction between pledging some non-ad valorem funds (permissible without a vote) and pledging all of them in a way that functionally mandates future property tax increases (impermissible without a vote).
Unlock the full brief for County of Volusia v. State