Louisiana law provides that only "property taxpayers" have the
right to vote in elections called to approve the issuance of
revenue bonds by a municipal utility system. At a special election,
a majority of the property taxpayers approved a bond issue for the
City of Houma's municipally owned utility systems. Within the
period permitted to contest the election result, appellant, a
nonproperty taxpayer otherwise qualified to vote, brought suit for
himself and others similarly situated to enjoin the issuance of the
bonds and to obtain a declaratory judgment that the limitation of
the franchise to property taxpayers is unconstitutional. A
three-judge District Court held the limitation constitutional.
Held:
1. The "property taxpayer" limitation on the franchise violates
the Equal Protection Clause of the Fourteenth Amendment.
Kramer
v. Union Free School District No. 15, ante, p.
395 U. S. 621.
(a) Where the State grants the right to vote in a limited
purpose election to some qualified voters and denies it to others,
"the Court must determine whether the exclusions are necessary to
promote a compelling state interest."
Kramer, supra, at
395 U. S.
627.
(b) Here, the benefits and burdens of the bond issue fall
indiscriminately on property owner and nonproperty owner alike, and
the classification thus unconstitutionally excludes otherwise
qualified voters who are as substantially affected and directly
interested in the matter voted on as those who are permitted to
vote.
2. This decision will have prospective effect, and will apply
only where the time for challenging the election result has not
expired, or in cases brought within the time specified for
challenging the election and which are not yet final.
286 F.
Supp. 823, reversed and remanded.
Page 395 U. S. 702
PER CURIAM.
In this case, we must determine whether provisions of Louisiana
law which give only "property taxpayers" the right to vote in
elections called to approve the issuance of revenue bonds by a
municipal utility are constitutional. This case thus presents an
issue similar to the one considered in
Kramer v. Union Free
School District No. 15, ante, p.
395 U. S. 621.
With one judge dissenting, a three-judge District Court determined
that the Louisiana provisions were constitutional. However, as in
Kramer, we find that the challenged provisions violate the
Equal Protection Clause of the Fourteenth Amendment; we therefore
reverse.
The Louisiana Constitution provides that the legislature may
authorize municipalities to issue bonds "[f]or the purpose of
constructing, acquiring, extending or improving any
revenue-producing public utility." La.Const., Art. 14, § 14 (m).
Pursuant to this provision, the legislature enacted legislation
authorizing Louisiana municipalities to issue revenue bonds.
La.Rev.Stat. § 33:4251 (1950). [
Footnote 1] The legislature further provided, however,
that the municipalities could issue the bonds
Page 395 U. S. 703
only if they were approved by a "majority in number and amount
of the property taxpayers qualified to vote . . . [who vote at the
bond election]." [
Footnote 2]
La.Rev.Stat. § 39:501 (1950).
See also La.Rev.Stat. §§
33:4258, 39:508 (1950).
Appellee City of Houma owns and operates gas, water, and
electric utility systems. In September, 1967, the city officials
scheduled a special election to obtain voter approval for the
issuance of $10,000,000 of utility revenue bonds. The city planned
to finance extension and improvement of the municipally owned
utility systems with the bond proceeds. At the special election, a
majority "in number and amount" of the property taxpayers approved
the bond issue. However, within the period provided by Louisiana
law for contesting the result of the election, La.Rev.Stat. §
33:4260 (1950), this suit was instituted in the United States
District Court for the Eastern District of Louisiana.
Appellant alleged that he was a duly qualified voter [
Footnote 3] of the City of Houma, and
that he had been prevented from voting in the revenue bond election
solely because he was not a property owner. He sued for himself and
for a class of 6,926 nonproperty taxpayers otherwise qualified as
City of Houma voters. Appellant sought to enjoin the issuance of
the bonds approved at the special election and to obtain a
declaratory judgment that the limitation of the franchise to
property taxpayers is unconstitutional. A three-judge District
Court was convened pursuant to 28 U.S.C. §§ 2281, 2284. The
Page 395 U. S. 704
court then dismissed the suit, finding the Louisiana provisions
constitutional.
Cipriano v. City of Houma, 286 F.
Supp. 823 (D.C.E.D.La.1968). Appellant brought a direct appeal
to this Court, 28 U.S.C. § 1253; we noted probable jurisdiction.
393 U.S. 1061 (1969).
As we noted in
Kramer, supra, if a challenged state
statute grants the right to vote in a limited purpose election to
some otherwise qualified voters and denies it to others, [
Footnote 4] "the Court must determine
whether the exclusions are necessary to promote a compelling state
interest."
Kramer v. Union Free School District No. 16,
supra, at
395 U. S. 627.
Moreover, no less showing that the exclusions are necessary to
promote a compelling state interest is required merely because "the
questions scheduled for the election need not have been submitted
to the voters."
Id. at
395 U. S. 629,
n. 11.
The appellees maintain that property owners have a "special
pecuniary interest" in the election, because the efficiency of the
utility system directly affects "property and property values," and
thus, "the basic security of their investment in [their] property
[is] at stake." Assuming,
arguendo, [
Footnote 5] that a State might, in some
circumstances, constitutionally limit the franchise to qualified
voters who are also "specially interested" in the election, whether
the statute allegedly so limiting the franchise denies equal
protection of the laws to those otherwise qualified voters who are
excluded depends on "whether all those excluded are, in fact,
substantially less interested or affected than those the statute
includes."
Id. at
395 U. S. 632.
Page 395 U. S. 705
At the time of the election, only about 40% of the city's
registered voters were property taxpayers. Of course, the operation
of the utility systems -- gas, water, and electric -- affects
virtually every resident of the city, nonproperty owners as well as
property owners. All users pay utility bills, and the rates may be
affected substantially by the amount of revenue bonds outstanding.
[
Footnote 6] Certainly property
owners are not alone in feeling the impact of bad utility service
or high rates, or in reaping the benefits of good service and low
rates.
The revenue bonds are to be paid only from the operations of the
utilities; they are not financed in any way by property tax
revenue. Property owners, like nonproperty owners, use the
utilities and pay the rates; however, the impact of the revenue
bond issue on them is unconnected to their status as property
taxpayers. Indeed, the benefits and burdens of the bond issue fall
indiscriminately on property owner and nonproperty owner alike.
Moreover, the profits of the utility systems' operations are
paid into the general fund of the city and are used to finance city
services that otherwise would be supported by taxes. Of course,
property taxpayers may be concerned with expanding and improving
the city's utility operations; such improvements could produce
revenues which eventually would reduce the burden on the property
tax to support city services. On the other hand, nonproperty
taxpayers may feel that their interests as ratepayers indicate that
no further expansion of utility debt obligations should be made. Of
course, these differences of opinion cannot justify excluding
either group from the bond election, when, as in this case, both
are substantially affected by the utility operations.
Page 395 U. S. 706
For, as we noted in
Carrington v. Rash, 380 U. S.
89,
380 U. S. 94
(1965), "
[f]encing out' from the franchise a sector of the
population because of the way they may vote is constitutionally
impermissible."
The challenged statute contains a classification which excludes
otherwise qualified voters who are as substantially affected and
directly interested in the matter voted upon as are those who are
permitted to vote. When, as in this case, the State's sole
justification for the statute is that the classification provides a
"rational basis" for limiting the franchise to those voters with a
"special interest," the statute clearly does not meet the "exacting
standard of precision we require of statutes which selectively
distribute the franchise."
Kramer v. Union Free School District
No. 1, supra, at
395 U. S. 632.
We therefore reverse the judgment of the District Court.
Significant hardships would be imposed on cities, bondholders,
and others connected with municipal utilities if our decision today
were given full retroactive effect. Where a decision of this Court
could produce substantial inequitable results if applied
retroactively, there is ample basis in our cases for avoiding the
"injustice or hardship" by a holding of nonretroactivity.
Great
Northern R. Co. v. Sunburst Oil & Refining Co.,
287 U. S. 358,
287 U. S. 364
(1932).
See Chicot County Drainage Dist. v. Baxter State
Bank, 308 U. S. 371
(1940).
Cf. Linkletter v. Walker, 381 U.
S. 618 (1965). Therefore, we will apply our decision in
this case prospectively. That is, we will apply it only where,
under state law, the time for challenging the election result has
not expired, or in cases brought within the time specified by state
law for challenging the election and which are not yet final. Thus,
the decision will not apply where the authorization to issue the
securities is legally complete on the date of this decision. Of
course, our decision will not affect the validity of securities
which have been sold or issued prior to this decision and pursuant
to such final authorization.
Page 395 U. S. 707
The judgment of the District Court is reversed. The case is
remanded for further proceedings consistent with this opinion.
It is so ordered.
MR. JUSTICE BLACK and MR. JUSTICE STEWART concur in the judgment
of the Court. Unlike
Kramer v. Union Free School District No.
15, ante, p.
395 U. S. 621,
this case involves a voting classification "wholly irrelevant to
achievement" of the State's objective.
Kotch v. Board of River
Port Pilot Comm'rs, 330 U. S. 552,
330 U. S.
556.
MR. JUSTICE HARLAN, while adhering to his views expressed in
dissent in
Reynolds v. Sims, 377 U.
S. 533,
377 U.S.
589 (1964);
Harper v. Virginia Board of Elections,
383 U. S. 663,
383 U. S. 680
(1966), and
Avery v. Midland County, 390 U.
S. 474,
390 U. S. 486
(196), but considering himself bound by the Court's decisions in
those cases, concurs in the result.
[
Footnote 1]
The amount of debt a municipality may incur is limited by the
Louisiana Constitution. La.Const., Art. 14, § 14(f). These revenue
bonds are not included in computing the municipal debt, however, if
they are secured exclusively by a mortgage on the assets of the
utility system and a pledge of the system revenues. La.Const., Art.
14, § 14(m).
[
Footnote 2]
We were informed at oral argument that "number and amount" means
the bonds must be approved by a majority of the property taxpayers
voting and their votes must also represent a "majority of the
assessed property owned by those taxpayers who are actually
voting."
[
Footnote 3]
The qualifications are of age, residence, and registration.
See La.Rev.Stat. § 39:508 (1950).
[
Footnote 4]
Appellant does not challenge any other voter qualification
regulations. The sole issue in this case is the constitutionality
of the provisions of Louisiana law permitting only property
taxpayers to vote in utility bond elections.
[
Footnote 5]
As in
Kramer v. Union Free School District No. 15,
supra, we find it unnecessary to decide whether a State might,
in some circumstances, limit the franchise to those "primarily
interested."
[
Footnote 6]
For example, a proposed decrease in utility rates may be
forestalled by the issuance of new revenue bonds.