PHILIP WATSON, an individual; RAY CARTER, an individual; FARWEST SPORTS, INC., d/b/a OUTDOOR EMPORIUM, a Washington corporation; PRECISE SHOOTER, LLC, a Washington limited liability company; THE SECOND AMENDMENT FOUNDATION, INC., a Washington nonprofit corporation; NATIONAL RIFLE ASSOCIATION OF AMERICA, INC., a New York nonprofit association; and NATIONAL SHOOTING SPORTS FOUNDATION, a Connecticut nonprofit association, Appellants,
CITY OF SEATTLE, a municipality; ED MURRAY, Mayor of the City of Seattle, in his official capacity; SEATTLE DEPARTMENT OF FINANCE and ADMINISTRATIVE SERVICES, a department of the City of Seattle; and GLEN LEE, Director of Finance and Administrative Services, in his official capacity, Respondents.
case concerns Seattle Ordinance 124833 (Ordinance), which
imposes a "Firearms and Ammunition Tax" on each
firearm and round of ammunition sold within the city limits.
Its stated purpose is to raise revenue for public health
research relating to gun violence and to fund related social
programs. Two individual gun purchasers, Phillip Watson and
Ray Carter, along with various organizations (hereinafter
Watson),  brought this suit challenging the
constitutionality of the Ordinance.
9.41.290 forbids the local regulation of guns. Watson argues
that the Ordinance is actually a regulation, not a tax, and
is preempted by RCW 9.41.290 in any case. Watson also argues
that even if the Ordinance is a tax, it exceeds Seattle's
delegated taxing authority. The King County Superior Court
ruled in favor of Seattle, holding that the Ordinance imposes
an authorized tax and that this tax is not preempted by RCW
9.41.290. Watson appealed, and the Court of Appeals certified
the matter to this court.
affirm the trial court. Under Washington law, a charge
intended to raise revenue for the public benefit is a tax.
While courts should be dubious of regulations masquerading as
taxes (and vice versa), in this case Watson offers no
convincing evidence that the Ordinance has a regulatory
purpose or intent. It is a tax. The Ordinance is also
authorized by the broad grant of taxing authority delegated
to cities like Seattle. Finally, the Ordinance is not
preempted by state law; RCW 9.41.290 preempts only municipal
gun "regulation, " not taxation.
AND PROCEDURAL HISTORY
August 2015, the Seattle City Council (Council) unanimously
passed the Ordinance, and Mayor Ed Murray signed it into law.
The Ordinance imposes a "Firearms and Ammunition
Tax" of $25.00 on each firearm and $0.02 to $0.05 per
round of ammunition sold within the city
limits. The tax applies only to licensed retail
sellers of guns and ammunition. Clerk's Papers (CP) at 76
(applying the tax to "every person engaging within the
City in the business of making retail sales of firearms or
ammunition"). The Ordinance became effective on January
1, 2016. Id. at 80.
Council designed the Ordinance to fund gun safety programs
and related public health research. The Ordinance recites
that "gun violence directly affects the City and its
residents, " id. at 68, and notes it is
difficult for cities to obtain outside funding for related
research. Id. at 67 (stating that Congress has
blocked federal funding for gun violence research since
1996). The Council locally funded a 2014 study by the
Harborview Injury Prevention and Research Center on the
predictors and consequences of gun violence. Id. at
67 (noting that Harborview Medical Center leveraged that
research to develop a hospital-based gun violence
intervention program). The Council passed the Ordinance in
part to create a local source of funding for gun violence
research and programming. Id. at 68 ("[T]he
City intends to .. . provide broad-based public benefits for
residents of Seattle ... by funding programs that promote
public safety [and] prevent gun violence."). To this
end, the Ordinance created the "Firearms and Ammunition
Tax Fund, " which is authorized to support "basic
research" and "programs that promote public safety,
prevent gun violence and address in part the cost of gun
violence in the City." Id. at 78. The tax will
generate an estimated $300, 000 to $500, 000 per year.
Id. at 135.
challenged the Ordinance in King County Superior Court,
alleging that the "tax" imposed under the Ordinance
is actually a regulation preempted by state gun laws. CP at
32-35; RCW 9.41.290 (the legislature "fully occupies and
preempts the entire field of firearms regulation").
Watson argued in the alternative that even if the Ordinance
is a tax, it exceeds Seattle's constitutional taxing
authority. In response, Seattle argued that the Ordinance is
a tax rather than a regulation, is not preempted by RCW
9.41.290, and is a lawful exercise of Seattle's taxing
authority. Both parties filed motions for summary judgment.
The trial court ruled in favor of Seattle. In a December 22,
2015 order, the court held that the Ordinance imposes a tax
because its primary purpose is to raise revenue; that the tax
is authorized by RCW 35.22.280(32); and that state preemption
does not apply because RCW 9.41.290 preempts conflicting
regulations, not taxes. The court granted Seattle's
motion and dismissed the case. Watson appealed.
One of the Court of Appeals, pursuant to RCW 2.06.030 and RAP
4.4, certified the following question to this court:
"Whether a municipal ordinance imposing a tax on retail
firearm and ammunition sales within the municipality is a
constitutional and lawful exercise of taxing authority?"
Order of Certification, Watson v. City of Seattle,
No. 74534-4-1 (Wash.Ct.App. Oct. 14, 2016). We accepted
review constitutional challenges and questions of statutory
interpretation de novo. See, e.g., Okeson v. City of
Seattle, 150 Wn.2d 540, 548-49, 78 P.3d 1279 (2003).
City ordinances are presumed to be valid and constitutional;
the challenging party has the burden of showing
unconstitutionality. See State v. Kirwin, 165 Wn.2d
818, 825, 203 P.3d 1044 (2009); State v. Immelt, 173
Wn.2d 1, 6, 267 P.3d 305 (2011). As with statutory
interpretation, the primary objective of courts interpreting
an ordinance is to "ascertain and carry out the
legislature's intent" by giving effect to the
ordinance's "plain meaning." Arborwood
Idaho, LLC v. City of Kennewick, 151 Wn.2d 359, 367, 89
P.3d 217 (2004); see also Bowie v. Dep't of
Revenue, 171 Wn.2d 1, 11, 248 P.3d 504(2011).
Does the Ordinance levy a tax or instead assess a regulatory
the Ordinance imposes a tax, is that tax within Seattle's
taxing authority under RCW 35.22.280(32)?
the Ordinance preempted by RCW 9.41.290?
something a tax does not make it so. Watson argues that
Seattle levied a charge on the sale of firearms and
ammunition in order to restrict gun sales, making the
"tax" imposed by the Ordinance a regulatory fee
that is facially preempted by RCW 9.41.290. In the
alternative, Watson argues that even if classified as a tax,
the Ordinance exceeds Seattle's taxing authority under
RCW 35.22.280(32). Watson also asserts an alternative
preemption argument not raised below: that RCW 9.41.290
preempts taxation as well as regulation and therefore
preempts the Ordinance under either classification.
reject each of Watson's arguments. Following Covell
v. City of Seattle, 127 Wn.2d 874, 905 P.2d 324 (1995),
the Ordinance is a tax because its primary purpose is to
raise revenue for public services. To be a valid tax, the
Ordinance must be based on a delegation of legislative taxing
authority. Here, the Ordinance is authorized by RC W
35.22.280(32), which delegates broad taxing authority to
first class cities. Finally, the Ordinance is not preempted.
RCW 9.41.290 preempts only "regulation" of
firearms, not taxation. There is no basis for selectively
invalidating the Ordinance while leaving traditional (and
unchallenged) sales and gross receipts taxes in place.
Under the Covell Analysis, the Ordinance Imposes a
Tax, Not a Regulatory Fee
first to the question of whether the charge imposed on
firearm and ammunition sales is a tax or a regulatory fee. If
the Ordinance is a regulation, it is facially preempted by
RCW 9.41.290 and our analysis ends. If the Ordinance instead
levies a tax, we must then determine whether that tax is
authorized. See infra Part B.
speaking, a charge "imposed to raise money for the
public treasury" is a tax. Okeson, 150 Wn.2d at
551. Nontax charges, by contrast, may be imposed for
regulatory purposes. This court refers collectively to nontax
charges as "'regulatory fees.'" Samis
Land Co. v. City of Soap Lake, 143 Wn.2d 798, 805, 23
P.3d 477 (2001) (quoting Covell, 127 Wn.2d at 878
n.1). Classifying a charge as a tax or a fee is important
because distinct constitutional constraints govern each
classification. Fees are generally based on a local
government's police powers, while the taxing authority of
Washington's municipalities largely depends on
legislative delegation. See Covell, 127 Wn.2d at 878
(characterizing Seattle's police powers as
"extensive"); Okeson, 150 Wn.2d at 551
(noting that "[a] local government does not have the
power to impose taxes without statutory or constitutional
authority"). Thus, there is a concern that cities could
"avoid the constitutional limitations on taxes" by
simply characterizing a tax as a regulatory fee. Id.
Consider the Covell Factors To Distinguish between
Taxes and Fees
determine whether an ordinance imposes a tax or a fee,
Washington courts follow the three-part test outlined in
Covell. Ill. Wn.2d at 879. The first-and most
important-Covell factor asks whether the
"'primary purpose'" of the ordinance is to
raise revenue or to regulate. Id. (quoting
Hillis Homes, Inc. v. Snohomish County, 97 Wn.2d
804, 809, 650 P.2d 193 (1982) (Hillis Homes I)). If
the legislative purpose behind the Ordinance is '"to
accomplish desired public benefits which cost money,
'" the charge is a tax. Id. (quoting
Hillis Homes I, 97 Wn.2d at 809). On the other hand,
if the primary purpose is to exert regulatory control over
those paying the fee, then the "charges are properly
characterized as 'tools of regulation, ' rather than
taxes." Teter v. Clark County, 104 Wn.2d 227,
239, 704 P.2d 1171 (1985).
second Covell factor asks "whether the money
collected must be allocated only to the authorized regulatory
purpose." Covell, 127 Wn.2d at 879. Collecting
funds into a segregated, dedicated account indicates a
regulatory fee. See, e.g., Hillis Homes, Inc. v.
Pub. Util. Dist. No. 7, 105 Wn.2d 288, 300, 714 P.2d
1163 (1986) (Hillis Homes II) (water fees used to
pay only for improvements to the water system). Tax revenue,
by contrast, is more likely to be mixed into the general
fund. See Samis Land Co., 143 Wn.2d at 810-11
(revenue from vacant lot tax applied to city-wide utility
system expenses). However, Covell itself recognized
that this factor is "not dispositive." 127 Wn.2d at
885 (determining that Seattle's street utility charge
constituted a tax, despite the segregation of fees). While
the segregation of fees is part of the analysis, segregation
alone is not sufficient; the funds must also be used to
"serve a regulatory purpose." Okeson,
150 Wn.2d at 553 ("All funds could be deposited into
special accounts, and that would not necessarily turn taxes
into fees."). Otherwise, taxes could be "guised as
fees" simply by depositing them into a dedicated
third Covell factor examines "whether there is
a direct relationship between the fee charged and the service
received [or] the burden produced by the fee payer."
Covell, 127 Wn.2d at 879. If so, the charge is
likely a regulatory fee. Id. However, if the amount
does not correlate to the cost of the burden (or the value of
the benefit), the charge is likely a tax. Id.
context, "direct relationship" means that the
amount paid is calculated to offset the burden created (or
benefit received) by the payer. Id. This
relationship does not need to be mathematically precise or
individualized. See Teter, 104 Wn.2d at 238;
Hillis Homes II, 105 Wn.2d at 301. Nevertheless,
there must be some '"practical basis'" for
asserting that it exists. Covell, 127 Wn.2d at 884
(finding no direct relationship between a flat lighting tax,
uniformly assessed, and the benefit received by individual
to Covell, the Ordinance Imposes a Tax
asserts that the Ordinance is, in effect, a regulation
masquerading as a tax. Watson argues that all three
Covell factors indicate the Ordinance should be
classified as a regulation. See Appellants'
Opening Br. at 10. He argues that (1) the Ordinance's
primary purpose is regulatory because it seeks to limit
access to firearms, (2) segregation of funds indicates the
Ordinance is a regulation, and (3) there is a "direct
relationship" between the tax and the burden of gun
violence. Id. at 10-14. We disagree.
first Covell factor indicates that the Ordinance
imposes a tax. The statutory text is clear: the purpose of
the Ordinance is to "raise general revenue ... to
provide broad-based public benefits for residents of
Seattle." CP at 68. Revenue raised will "fund
programs that promote public safety, " including
"youth education and employment programs, " and
support "basic research." Id. at 78.
Because public health research and gun safety programs are
"'desired public benefits which cost money,
'" the Ordinance imposes a tax. Covell, 127
Wn.2d at 879 (quoting Hillis Homes I, 97 Wn.2d at
809). There is no regulatory language in the text of the
Ordinance or evidence of a regulatory purpose. See
CP at 66-79. As the superior court observed, other than
requiring payment of the tax, the Ordinance "does not
place any burden or restriction on the plaintiffs [or]
prescribe any activity." Id. at 180. The
Ordinance does not limit retailers in the number or type of
firearms and ammunition they can sell, nor does it restrict
what a gun buyer can do with purchased firearms or
Watson urges this court to look past the Ordinance's
"textual wrapping paper, " Appellant's Reply
Br. at 3, to its alleged regulatory purpose:
"burden[ing] the sale of firearms and ammunition."
Id. Watson relies heavily on "legislative
history" to support this analysis, quoting
pro-gun-control statements by the Council's members as
evidence that the Ordinance is part of a broader regulatory
scheme to limit gun access. Appellants' Opening Br. at
10-11 (citing CP at 52, 61-62, 88). Watson's argument
would unwisely embroil courts in second-guessing the motives
of lawmakers. Statements by "individual legislators]
do not show legislative intent." State ex rel
Citizens Against Tolls (CAT) v. Murphy, 151 Wn.2d 226,
238, 88 P.3d 375 (2004); Seattle Times Co. v. County of
Benton, 99 Wn.2d 251, 255 n.1, 661 P.2d 964 (1983)
(resort to statements by legislators inappropriate unless
"more substantial" legislative history is
unavailable, such as bill reports specific to the statute
before the court). As a tool of statutory interpretation, an
examination of legislative history is intended to
supplement textual analysis-not to replace it
entirely, as Watson urges here. See, e.g., Seattle
Times, 99 Wn.2d at 255 n.1. Covell addressed
the primacy of statutory language when differentiating a tax
from a fee: classification "turns on a determination of
the primary purpose of the fees as derived from the
language of the authorizing and implementing
legislation''' 127 Wn.2d at 886 (emphasis
added). Here, the plain language of the Ordinance states it
imposes a "tax." CP at 75.
second Covell factor is inconclusive. Because
revenue is segregated into the Firearms and Ammunition Tax
Fund, this factor initially suggests that the Ordinance may
be a regulation. CP at 78; see also Lane v. City of
Seattle, 164 Wn.2d 875, 883, 194 P.3d 977 (2008)
(segregation into a dedicated account indicates a regulatory
fee). However, segregation of funds is not the only
requirement for classification as a fee; the funds must also
be "allocated only to the authorized regulatory
purpose." Covell, 127 Wn.2d at 879. An
ordinance with no regulatory language cannot
"authorize" a regulatory purpose, much less
dedicate funds to that end. Id. Here, the Ordinance
dedicates the revenue to education and research. CP at 78.
Because the Ordinance segregates funds but allocates them for
a nonregulatory purpose, the second factor is inconclusive.
See Okeson, 150 Wn.2d at 553 (revenue deposited into
the city's light fund, absent a regulatory purpose, is
inconclusive); Covell, 127 Wn.2d at 885 (segregation
of funds is "not dispositive").
maintains that the Ordinance does allocate funds to a
regulatory purpose, because it requires the "tracking
and auditing of the number of firearms and rounds of
ammunition sold by retailers." Appellants' Opening
Br. at 11. But Watson does not explain how requiring
retailers to keep sales records for tax purposes--already
mandated by RCW 82.32.070 with respect to the gross receipts
tax and sales tax- constitutes regulation. See id.
On this record, the second factor remains inconclusive.
the third Covell factor also indicates that the
Ordinance is a tax. The Ordinance imposes a flat charge of
$25.00 per firearm sold, and $0.02 to $0.05 per round of
ammunition. CP at 76. There does not appear to be a
"direct relationship" between the amount of annual
revenue the Ordinance is expected to generate ($300, 000 to
$500, 000, see CP at 135) and the economic burden of
gun violence in King County (roughly $180 million per year,
see CP at 66). Covell, 127 Wn.2d at 879.
Moreover, a flat tax is uniformly applied, while we would
expect a regulatory fee to vary according to the value of the
burden or benefit. Id. at 884-85.
advances a more lax interpretation of Covell, noting
that a fee may be regulatory even if it is not individually
calculated. See Appellants' Opening Br. at 13
(citing Okeson, 150 Wn.2d at 554). Watson is correct
that a "direct relationship, " Covell, 127
Wn.2d at 879, does not mean one that is mathematically
precise. See Teter, 104 Wn.2d at 238.
However, in this case it does not appear that the Council
made any attempt to correlate the economic burden of
gun violence with the revenue generated by the tax. The
record does not reveal how the Council arrived at the tax
rate imposed.Under Covell, when these
"calculations" are completely absent, the charge is
a tax. 127 Wn.2d at 884 (classifying a flat $2 per unit
charge as a tax). Without some mechanism to ensure the amount
paid reflects the payer's burden, there is no
'"practical basis'" for asserting a direct
relationship between the two. Id.
the first and third Covell factors indicate that the
Ordinance is a tax, not a regulation. The second factor is
inconclusive. Under Washington law, the Ordinance is properly
classified as a tax. See, e.g., Covell, 127 Wn.2d at
888; Okeson, 150 Wn.2d at 553; Arborwood Idaho,
LLC, 151 Wn.2d at 372-73 (classifying charge as a tax
despite the second Covell factor indicating
"fee"). Watson's first argument thus fails: as
a tax, the Ordinance is not facially preempted by state law.
See RCW 9.41.290. However, we must further consider
whether the Ordinance exceeds Seattle's municipal
Ordinance Is Legislatively Authorized
taxation must be authorized by a legislative delegation of
taxing power. See Wash. Const, art. I, § 1.
Watson acknowledges that RCW 35.22.280, which outlines the
broad delegation of legislative power to first class cities,
authorizes Seattle to levy local taxes. See
Appellants' Opening Br. at 16. However, Watson argues
that RCW 35.21.710 severely limits that authority, requiring
business taxes to be uniform, measured by gross receipts, and
capped at a certain rate. See Appellants'
Opening Br. at 17-19. Watson's argument is inconsistent
with Washington's constitutional authorization of local
taxing authority and this court's precedent. See
Citizens for Financially Responsible Gov't v. City of
Spokane,99 Wn.2d 339, 343, 662 P.2d 845 (1983) (holding
that RCW 35.22.280(32) ...