STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL

February 13, 1969

John C. Penne
Auditor General
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 69-11

Interpretation of SDC 45.1414 and 45.1415 relating to expenditures from Municipal Fund

Dear Mr. Penne:

You have requested my official opinion in interpreting the provisions of SDC 45.1414 and 45.1415 relating to expenditures and obligations of municipalities. You have advised that these two statutes have caused much confusion to the officials of the several municipalities within this state.

An examination of the records of the official opinions issued by this office reveals that this office has never heretofore had occasion to distinguish the purposes of these two statutes, notwithstanding that the statutory history shows that such are derived from enactments of the 1890 Legislature. An examination of our Supreme Court decisions also reveals that such Court has never been called upon to directly determine the purpose and meaning of these statutes.

For the purposes of clarification the two statutes in question read as follows:

"45.1414: No warrant shall be drawn pursuant to any appropriation in excess of ninety-five per cent of the tax levy made for the fund provided for such appropriation for the current fiscal year and all the cash actually in the treasury of the municipality to the credit of such fund derived from sources other than such tax levy.

"No liability shall be incurred under any appropriation for which a warrant cannot be drawn as herein provided.

"It shall be unlawful for any member of the governing body to vote to incur a liability or to issue a warrant, or for any mayor or auditor to sign, issue, or deliver any warrant, or for any treasurer to pay any warrant issued in violation of the provisions of this section."

"45.1415: No obligation under any appropriation shall be incurred or warrant drawn in excess of seventy-five per cent of the tax levy made for the fund provided for such appropriation for the current fiscal year and seventy-five per cent of the cash in the treasury in such fund derived from sources other than such tax levy prior to the second Monday in May of each fiscal year, except under appropriation made exclusively for the purchase of land or buildings or the erection of buildings for the municipality."

From the source notes to the various codes of South Dakota, it is conceded that these statutes originated in an enactment of the 1890 Legislature. The 1890 Act, for all practical purposes, in its original version, became Section 1246 of the Political Code of 1903. This section provided for certain duties and responsibilities of the City Auditor. The appropriate portion of such section then reads as follows:

"If before the first day of .Tune of any year the amount expended, or to be expended, chargeable to any city fund, adding thereto the current expenses estimated for the remainder of the fiscal year, and chargeable to such fund, shall be equal to three-fourths of the tax authorized to be raised or revenue estimated for such fund, and shall report at once the same to the city council, and he (the City Auditor) shall not countersign any contract chargeable to such fund until the amount of taxes actually collected be ascertained; and during the remainder of the fiscal year, he shall not countersign any contract, the expenses of which shall exceed the revenue actually collected for the fund to which such expenses are properly chargeable . . ."

In 1913 the Legislature enacted Chapter 119 which provided a comprehensive statute governing cities operating under the Commission form of Government. Sections 119 and 120 of such statute brought in language more akin to the statutes as it appears in the 1939 Code. This language, as said, was applicable only to municipalities operating under a Commission Form of Government. These sections were amended by Chapter 117 of the Session Laws of 1915.

With the adoption of the Revised Code of 1919, Ch. 119 of 1913, as so amended by Ch. 117 of the Session Laws of 1915, were designated as Section No. 6342 and 6343 of the Revised Code of 1919. The cross-reference tables for the 1919 Code show that these two sections covered the provisions of Section 1246 of the Political Code of 1903.

While the 75% contingency appeared prior to the Revised Code of 1919, it was in the 1919 Revised Code that the 95% limitation was definitely established to be applicable to the statute now designated SDC 45.1414. Because of the similarity of the language between the statutes as they appeared in the 1919 Code and the 1939 Code, I am not quoting from the 1919 Code.

With this historical background, there seems little question that the legislative intent since 1890 has been to require that proper financial records be kept so that there will be no expenditures over appropriations for particular municipal purposes. As originally enacted, the duty to keep track of expenditures was placed on the City Auditor, and if he found that by June 1 of any year the estimated expenditures from a particular fund, as computed by the actual expenditures made together with the estimate of the expenditures for the remainder of the year, amounted to 3/4 or 75% of the moneys in a particular fund, he was obligated to report this fact to the governing body of the city, and refuse to honor any expenditures from the fund until he could ascertain the amount of money to be collected by taxes for such fund. Thereafter, he had to keep track of the actual revenue in such fund, and the expenditures therefrom and refuse to honor expenditures that would exceed the actual revenue of such fund.

While the duty to report to the governing body is no longer required, certainly at this time the city auditor has the duty to ascertain the amount of moneys in any particular fund, and the expenditures made from such fund. All city officials are bound to limit expenditures to the particular fund, and in fact, throughout the entire fiscal year only 95% of such fund, together with increments added thereto, either by a carry-over from previous years, or moneys received from any source other than such tax levy for such fund. This is the direct requirement of SDC 45.1414.

The fiscal year of a municipality runs from January 1 through December 31 of each year. Various funds are created to fulfill the municipal functions. Expenditures may be made at any time from such funds. However, prior to the second Monday in May (except for appropriations made exclusively for the purchase of land or buildings or the erection of buildings for the municipality), expenditures from any such fund (together with moneys derived from any source other than tax levies) are limited to 75% or 3/4 of such fund. This is the direct requirement of SDC 45.1415.

This interpretation in my opinion captures the legislative intent, and satisfies the general rule that all legislative enactment must be interpreted together so that each enactment is applicable, and one enactment is not construed to supersede or to repeal another.

To summarize, it is my opinion that SDC 45.1414 and 45.1415 provide that in the expenditures of moneys in any particular municipal fund, and conceding that such fund consists of moneys derived from tax levies for such purpose together with additional money, either carried over from a previous fiscal year, or derived from a source other than a tax levy, that only 95% of any fund may be expended in any particular fiscal year. This limitation applies to all funds and provides a 5% "cushion" to be carried over in such fund to the next fiscal year. However, prior to the second Monday in May in each fiscal year, except for an appropriation made exclusively to purchase land or buildings, or to erect a building for the municipality, only 75% or %, of a fund may be expended. This in my mind provides for a "cushion" of 25% of such funds to be expended for municipal purposes during the balance of the fiscal year.

I am hopeful this explanation may assist in clearing up the confusion that you report exists among city officials within our state.

Respectfully submitted,

Gordon Mydland
Attorney General