May 17, 1978

Mr. Vern W. Butler, Secretary 
Department of Natural Resource Development 
Foss Building 
Pierre, South Dakota 57501

Official Opinion No. 78-19

Board of Natural Resource Development approval of conservancy subdistrict budgets and contracts

Dear Mr. Butler:

You have requested the official opinion of this office on the following two questions:

QUESTIONS: 

1.  May the Board of Natural Resource Development approve a conservancy subdistrict budget which would result in a mill levy of .15 when the proposed budget does not show that the expenditures in excess of .1 mill are to be paid for contractual obligations? 
    
2.  Must all subdistrict contracts be approved by the Board of Natural Resource Development?

IN RE QUESTION NO. 1:

SDCL 46-18-42 requires that the South Dakota Conservancy District Board, whose functions are performed by the Board of Natural Resource Development, approve the budget of a conservancy subdistrict before the subdistrict can levy taxes for the purpose of meeting that budget.  Section 46-18-42 does not, however, state the criteria on which the Board of Natural Resource Development shall base its approval or disapproval of the conservancy subdictrict budget. It is my opinion, based on this section, that one of the reasons for requiring the approval of the Board of Natural Resource Development is to ensure that the proposed tax levy will not exceed the statutory limits.  If, therefore, a subdistrict presents a budget requiring a tax levy in excess of statutory limits, the Board of Natural Resource Development may not approve that budget.

This leads us to the central question of your inquiry concerning the limits of the taxing powers of the various conservancy subdistricts.  The statutes involved in answering this question have been amended a number of times by various legislatures.  As in all situations like this, the task of determining a single legislative intent from the amendments of several distinct legislative sessions is not an easy one.  The answer to your first question, however, lies in an interpretation of the legislative history of two sections of South Dakota law:  SDCL 46-18-31 and SDCL 46-18-41.

After reviewing this legislative history, I base my opinion on the following facts.  Chapter 453 of the 1959 Session Laws is the initial enactment of these two sections into law.  Section 27 of that original statute reads as follows: 
    
The Sub-District Board of Directors shall have the power to levy a tax which shall not result in a levy in excess of one (1) mill by the appropriate tax listing entities, against all taxable property within the boundaries of Sub-Districts, in accordance with the procedures provided in this Act.  (The rest of section deleted as immaterial.)

This must of this section has been carried forward into SDCL 46-18-41 without any material change.

In the original statute, however, this power to levy a tax of up to one mill was qualified by section 21 of the same statute. Section 21 of that statute reads as follows: 

After a favorable vote for the establishment of the Sub-District and until such time as a contract has been executed and approved by the electorate of the Sub-District as herein provided, the Sub-District Board of Directors shall have power to levy taxes not to exceed one-tenth (1/10) of one (1) mill on each dollar of taxable property in the Sub-District, for the purposes including but not limited to payment of the Sub-District Board of Directors' per diem, mileage, subsistence, contract negotiations, elections and other administrative expenses.

Under this original statute it is clear that as a general proposition the subdistricts had the power to levy taxes up to one mill, but until such time as a contract for a water resource development project was entered into with the United States and approved by the electorate, the taxing power of the subdistricts was limited to a levy of one-tenth (1/10) of one (1) mill.

Section 21 of Chapter 453, Sessions Laws 1959, has been carried forward into SDCL 46-18-31 with significant changes.  The present statute has deleted the phrase “until such time as the contract has been executed and approved by the electorate of the Sub-District as herein provided” and leaves the power to levy up to one-tenth of one mill contingent only upon the establishment of the subdistrict.  In addition, the list of the purposes for which the smaller tax could be levied has been deleted from the section and has been replaced by a statement that the tax may be levied “for the accomplishment of the purposes of this chapter and chapter 46-17.”

The deletion of the phrase which increased the taxing power upon the execution and approval of a contract creates a great deal of confusion within Chapter 46-18.  As the two sections read now, SDCL 46-18-31 and 46-18-41 authorize two different mill levies without any clarification as to the circumstances in which each mill levy is to be used.  Although I hesitate to believe that the Legislature deletes language from a statute without intending to change the statute's meaning, I am convinced that is the case here.  It is, therefore, my opinion that the tax levy of one-tenth of one mill as provided in SDCL 46-18-31 is the proper limit to be placed on a conservancy subdistrict until such time as a contract for the development of a water resource project has been executed by the conservancy subdistrict under contracting authority granted by a referendum.  After the execution of such a contract, SDCL 46-18-41 becomes effective and the tax levy may then rise to a total of one mill.  It is also my opinion that in conditioning the increased tax levy on the execution of such a contract, the Legislature intended that all taxes in excess of one-tenth of one mill must be expended in the performance of the subdistrict's duties with regard to the contract.  The answer to your first question is no.

IN RE QUESTION NO. 2:

You have asked if subdistrict contracts must be approved by the Board of Natural Resource Development.  SDCL 46-18-38 states: 

A favorable vote shall be a majority of the votes cast on the question of contracting authority.  Such favorable vote shall authorize the subdistrict board of directors to enter into and execute contracts for the payment of all or any part of the costs incurred or to be incurred in the studies, investigations, acquisition of land, construction, operation and maintenance of desirable water resource development projects within the subdistrict, subject to approval of each proposed contract by the district board, and to levy a tax within the limitations proposed by this chapter in support of such contracts.  If the financial obligations to be incurred as a result of the execution of contracts do not extend beyond the current fiscal year of the subdistrict or can be paid from revenues presently accruing to the subdistrict under provisions of this chapter, the subdistrict board shall have the authority to enter into contracts without approval of the electorate for contracting authority as provided in this section and §  46-18-37.

It is my opinion that this statute requires approval by the South Dakota Board of Natural Resource Development for all subdistrict contracts executed pursuant to authority received from the electorate.  As the last sentence of SDCL 46-18-38 provides, contracts involving limited financial obligations do not require contracting authority from the electorate, and the first part of that section requires Board of Natural Resource Development approval only for contracts executed pursuant to such authority.  Contracts not requiring authority obtained through a referendum, therefore, need not be submitted for approval to the Board of Natural Resource Development.

This, of course, is tied to the subject of your first question in that a subdistrict may not levy in excess of .1 mill unless it receives electoral approval and executes a contract requiring that additional money.  In addition, if its obligations under a contract would exceed the limits of SDCL 46-18- 38, a subdistrict has no authority to execute any contract unless it receives authority through a referendum.  The additional hidden question involved in your request is whether a contract requiring a levy in excess of .1 mill necessarily exceeds the limits of SDCL 46-18-38.  It is my opinion that SDCL 46-18-38, although not explicitly stating this, does require a tax levy in excess of .1 mill since those obligations could not “be paid from revenues presently accruing to the subdistrict under provisions of this chapter.”  The answer to your second question is yes, but only for contracts needing contracting authority approved by the electorate.

I specifically offer no advice herein on the proper criteria to be used by the Board of Natural Resource Development in acting on contracts under §  46- 18-38.

Respectfully submitted,

William J. Janklow
Attorney General

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