July 17, 1981

Mr. Douglas J. Luebke 
Horstman, Braley & Luebke 
Attorneys at Law 
Armour, South Dakota 57313

Official Opinion No. 81-24

Tax allocation fund

Dear Mr. Luebke:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

Upon receipt of the Tax Allocation funds from the State pursuant to SDCL Chapter 10-13A, the County Treasurer invested the money received.  Upon distribution to the subdivision, the Treasurer distributed the money received from the State but retained in the County Treasury, the interest earned.

Based on the above facts, you have asked the following questions:

QUESTIONS: 

1.  Is the County Treasurer entitled to invest the funds upon receipt from the State? 

2.  If the County Treasurer is entitled to invest funds while in his possession who is entitled to the interest earned, the County or the subdivision which is the ultimate recipient of the funds?

IN RE QUESTION NO. 1:

In view of SDCL § 7-20-9 (cited in response to Question No. 2), it is my opinion that a county treasurer may invest the funds received pursuant to SDCL Chapter 10-13A.  I emphasize the word may, as it is also my opinion that a  county treasurer is not required to invest the funds.

IN RE QUESTION NO. 2:

SDCL 7-20-9 provides: 

All moneys shall be deposited in such banks in demand accounts, savings accounts, or on time deposit, and any interest accrued from such deposits shall be credited to the respective funds as deposited.  All such demand deposits shall be subject to payment when demanded by the county treasurer on his check, countersigned by the county auditor, and subject always to such regulations as are imposed by law.

SDCL 10-13A-5 provides: 

Within thirty days of receipt of the funds provided by this chapter, the county treasurer shall distribute the funds to the various subdivisions.  The entitlement of each subdivision is determined by multiplying the current real property taxes levied by the subdivision times the ratio of personal property taxes to real property taxes levied by the subdivision in 1977 and payable in 1978 or the ratio of personal property taxes to real property taxes levied from 1972 to 1976 and payable from 1973 to 1977 at the discretion of the board of county commissioners.  If the entitlements exceed the amount received by the county, then each subdivision shall receive its prorata share  of the entitlement.

In response to Question No. 2, it is my opinion that, in view of the foregoing statutes, the county is entitled to the interest earned on the Chapter 10-13A moneys and need not transfer the interest earned to the other recipient subdivisions.

I say this because, notwithstanding § 7-20-9, §  10-13A-5 only refers to the distribution of 'funds provided by this chapter' and also establishes an entitlement formula to determine the amounts to be distributed.  Since the interest in question is not funds provided by this chapter and since the entitlement formula does not contemplate any interest earned, I must conclude that the county is not required to distribute the interest earned to the other recipient subdivisions.

Respectfully submitted,

Mark V. Meierhenry
Attorney General