May 12, 1976
Mr. Herb Teske, Secretary
Department of Transportation
Transportation Building
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 76-53
Authority of State Department of Transportation to accept federal funds pursuant to PL 94-30
Dear Mr. Teske:
You have requested an opinion as to the interpretation of PL.94-30. Section 1 of that enactment states as follows:
That, notwithstanding any other provision of law, the Federal share of any project, approved by the Secretary of Transportation under section 106(a), and of any project for which the United States becomes obligated to pay under section 117, of title 23, United States Code, during the period beginning February 12, 1975, and ending September 30, 1975 (both dates inclusive), shall be such percentage of the construction costs as the State highway department requests, up to and including 100 per centum.
However, Section 2 requires repayment by the state of the normal state matching percentage prior to January 1, 1977. Presently the state's share is 8.96% on interstate projects and 26.85% on primary highways.
The specific question you have asked is:
Does the Federal Government’s paying of the state’s matching share now and requiring repayment by January 1, 1977, constitute borrowing in excess of the constitutional debt limit as far as the State of South Dakota is concerned?
What constitutes borrowing, and thus is the subject of the South Dakota constitutional debt limitations in articles XI and XIII, has been the subject of several Supreme Court decisions.
In an advisory opinion to the Governor, the Court in In re State Warrants, 62 N. W. 101, stated that appropriations from the assessed but uncollected revenues of the state, and the issuance of warrants in pursuance thereof to defray current expenses, is not the incurring of an indebtedness, within Const. art. XIII, § 2. Revenues of the state, assessed and in process of collection are to be considered as constructively in the treasury, and may be appropriated and treated as though actually there.
Shannon et al. v. City of Huron, 69 N.W. 598, affirmed the position that current taxes may be appropriated in anticipation of their receipt to the payment of proper and ordinary expenses and such appropriation is not the creation of a debt.
SDCL 31-2-14 provides; in part:
So much of such state highway funds as is necessary for construction of highways as defined in chapter 31-1 and purchase of rights of way and borrow pits pursuant to chapter 31-19, is hereby annually appropriated from said state highway funds, . . .
Therefore, the Department of Transportation is vested with the responsibility and authority to expend highway funds appropriated for a particular fiscal year. Encumbering certain of these anticipated revenues for repayment of funds advanced by the federal government is proper function and within the discretionary authority of the Department. Applying the rationale of the hereinbefore cited cases, it is my opinion that the advancement of federal funds pursuant to PL 94-30 does not constitute a debt, assuming revenues coming into the highway fund during the fiscal year can reasonably be anticipated to be sufficient to repay the state's share. The answer to your question is NO.
Respectfully submitted,
WILLIAM J. JANKLOW
ATTORNEY GENERAL
WJJ:LLV:dk
