OFFICIAL OPINION No. 4

OFFICIAL OPINION No. 4 Pension Funds-House Bill 190-Efject on firemen's and police pension funds. I. House Bill 190 repeals present Gross Premiums Tax, Act of February 21, 1971, P. L. 33*. 2. Act of June 28, 1895, P. L. 408, as amended, 72 P. S. § 2262 and Act of May 12, 1943, P. L. 259, 72 P. S. § 2263.1 provide that the two percent tax paid upon premiums by foreign fire insurance companies shall be paid to local municipalities for firemen's pension funds, and the two percent tax paid upon premiums by foreign casualty insurance companies should be paid to state and local police pension funds. 3. Section 8 of Gross Premiums Tax is surplusage, and premiums obtained from fire insurance companies and foreign casualty insurance companies can be paid to various pension funds as provided by separate statute without the necessity of a section in the tax bill specifically disposing of the proceeds of the tax. 4. To hold that the State Treasurer cannot distribute the taxes on foreign fire and casualty insurance companies as mandated by statute merely because the taxing statutes fail to specifically dispose of a portion of the proceeds would lead to an unreasonable and absurd statutory result. * The first Income Tax was held to violate the Uniformity Clause of the Pa. Const., Art. VIII, Sec. 1, see Amidon v. Kane, 444 Pa. 38, 279 A. 2d 53 (1971). OPINIONS OF THE ATTORNEY GENERAL 11 Harrisburg, Pa., March 1, 1971 Honorable William G. Sesler State Senate Room 352, Main Capitol Building Harrisburg, Pennsylvania Dear Senator Sesler: You have requested advice as to whether under House Bill No. 190, Printer's No. 445, payments to local firemen's pension funds pursuant to the Act of June 28, 1895, P. L. 408, as amended, and payments to state and local police pension funds pursuant to the Act of May 12, 1943, P. L. 259, as amended, will cease. Initially, it is to be noted that House Bill 190, in Article IX, part V, Section 905, specifically repeals the Act of February 21, 1971, P. L. 33, known as the Gross Premiums Tax. However, such repeal does not extend to either the Act of June 28, 1895 or the Act of May 12, 1943. The present Gross Premiums Tax, 72 P. S. § 2270.1 provides in Section 8 as follows: "The taxes paid by foreign fire insurance companies under this act shall continue to be distributed and used for firemen's relief pension or retirement purposes, as provided by section two of the act, approved the twenty-eighth day of June, one thousand eight hundred ninety-five (Pamphlet Laws 408), as amended; and the taxes paid by foreign casualty insurance companies under this act shall continue to be distributed and used for police pension, retirement or disability purposes as provided by the act, approved the twelfth day of May, one thousand nine hundred forty-three (Pamphlet Laws 259), as amended. All other taxes received under this act shall be credited to the General Fund for general revenue purposes." House Bill 190, Printer's No. 445 does not incorporate a similar section as Section 8 quoted above. House Bill 190 does in Article IX continue the Gross Premiums Tax on insurance companies at the same rate and generally under the same terms, expanding the definition of insurance companies to bring within the act additional taxpayers. The Act of June 28, 1895, P. L. 408, as amended, 72 P. S. § 2262 and ·the Act of May 12, 1943, P. L. 259, 72 P. S. § 2263.1 provide, in 12 OPINIONS OF THE ATTORNEY GENERAL part, that the two percent tax paid upon premiums by foreign fire insur- ance companies shall be paid to local municipalities for firemen's pension funds and the two percent tax upon premiums by foreign casualty insur- ance companies should be paid to state and local police pension funds. Pertinent language in each statute is as follows: ". . . there shall be paid by the State Treasury to the trea- surers of several cities, towns, townships, and boroughs within the Commonwealth the entire net amount received from the two percentum t~x paid upon premiums by fire in- surance companies ... " ". . . there shall be paid by the State Treasury to the trea- surers of the several municipalities and counties within the Commonwealth, and to the State Employees Retirement Fund for State Police pension and retirement purposes, the entire amount received from the two percentum tax paid upon pre- miums by foreign casualty insurance companies " (Em- phasis supplied.) The question thus raised is the effect, if any, of the omission in House Bill 190 of a specific provision relating to the partial disposition of the Gross Premiums Tax. It is the opinion of this Department that Section 8 of the present Gross Premiums Tax, supra, is surplusage and that the premiums tax obtained from foreign fire insurance companies and foreign casualty insurance companies can be paid to the various pension funds as pro- vided by separate statute without the necessity of a section in the tax bill specifically disposing of the proceeds of the tax. Both the Act of 1895 and 1943 state that the State Treasurer "shall" pay the proceeds to the various pension funds. Thus, a mandatory duty is placed upon the State Treasurer and not one of discretion. The Pennsylvania Supreme Court in interpreting the Acts of 1895 and 1943 have consistently referred to this duty as mandatory with little discre- tionary powers in State government even as to the utilization of the proceeds. In Firemen's Relief Association of Washington v. Minehart, 430 Pa. 66, 241 A. 2d 7 45 (1968), it was initially stated by the court: "Foreign fire insurance companies in Pennsylvania are as- sessed a tax of two percent on premiums collected by them in this Commonwealth. Under the Act of June 28, 1895, P. L. 408, § 2, as amended, 72 P. S. § 2262, there must be paid OPINIONS OF THE ATTORNEY GENERAL annually to the treasurers of the various municipal subdivi- sions in Pennsylvania a portion of this tax money correspond- ing to the amount of foreign fire insurance written in the receiving municipality . . . ." (Emphasis supplied.) 13 To the same effect, see Volunteer Firemen's Relief Association of the City of Reading v. Minehart, 425 Pa. 82, 227 A. 2d 632 (1967). For a similar decision relating to the payment of monies to the police pension funds, see Hanover Township Police Pension and Benefit Fund Association Case, 396 Pa. 313, 152 A. 2d 705 (1959). In each case, the Pennsylvania Supreme Court refers solely to the Acts of 1895 and 1943 without specific reference to the taxing statutes or specific reference to Section 8 of the Gross Premiums Tax. The decisional language of the Supreme Court, albeit dicta, is mandatory in nature and without a statu- tory reference to the source of the funds. The omission of a similar Section 8, partially disposing of the tax funds, in House Bill 190 does not remove the mandatory duty of the State Treasurer appearing in other acts to dispose of funds to a par- ticular group in a particular manner. As long as the funds are prop- erly appropriated by the Legislature in accordance with Article 3, Section 24 of the Pennsylvania Constitution, the State Treasurer must transmit to the various pension funds the amounts so provided by the Acts of 1895 and 1943. To hold that the State Treasurer cannot distribute the taxes on foreign fire and casualty insurance companies as mandated by statute merely because the taxing statutes fail to specifically dispose of a por- tion of the proceeds would lead to an unreasonable and absurd statu- tory result. This the Statutory Construction Act, Section 52 ( 1), 46 P. S. § 552(1), specifically forbids. We are of the opinion, therefore, and you are accordingly advised, that House Bill 190, Printer's No. 445 does not repeal or restrict the disposition of the Gross Premiums Tax proceeds collected from foreign fire and foreign casualty insurance companies in accordance with the Act of June 28, 1895 and the Act of May 12, 1943. Very truly yours, J. SHANE CREAMER, Attorney General. 14 OPINIONS OF THE ATTORNEY GENERAL