August 16, 1978

Mr. Carl J. Koch 
Shandorf, Bleeker & Boldt 
115 West Fourth Avenue 
Mitchell, South Dakota 57301

Official Opinion No. 78-33

Mitchell city sales tax revenues

Dear Mr. Koch:

You have requested an opinion from this office based upon the following factual situation:

FACTS: 

The City of Mitchell passed a municipal sales tax ordinance which provided that ten percent of all monies collected would be used for the purchase and development of offstreet parking.  Now the municipality desires to use the money collected from this city sales tax to be used to fix the city streets.

Based on the above facts, you ask the following question:

QUESTION: 

Can monies collected under a municipal sales tax ordinance, which provides a purpose specified by the ordinance, be diverted to uses other than the said uses specified by the ordinance when such ordinance was passed upon a referendum and passed by a majority vote of the people?

SDCL 9-21-26 provides: 
    
If upon the expiration of any fiscal year there remains in any fund any cash balance, after paying all obligations of the municipality properly chargeable against such fund, the governing body by unanimous vote may transfer such balance to such other funds as it may deem advisable. Provided, however, that money transferred pursuant to this section shall not be expended for any purpose not provided for in the annual appropriation ordinance; except that the governing body may by unanimous vote transfer the balance of any such funds to the auditorium building fund established by §  6- 4-1.

Based on the facts presented it would appear that SDCL 9-21-26 could be used as a vehicle for using the money collected for development of offstreet parking for the purpose of fixing the city streets.  This approach, however, would be available only in the event the funds are not committed toward the discharging of bonding obligations for the development of the offstreet parking to which you refer.  See article XIII, section 5 of the South Dakota Constitution.

From the fact situation presented it is not clear if the funds remain to be transferred at the end of a fiscal year as contemplated by SDCL 9-21-26. If SDCL 9-21-6 does not apply, it would appear that the governing body will then need to change the ordinance which had specified the use of these monies for offstreet parking.  At that point, of course, it would require action of the governing body as well as the possibility of a referendum if the citizens of Mitchell so desire.

Respectfully submitted,

William J. Janklow
Attorney General

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