February 6, 1981

Mr. Warren R. Neufeld 
Secretary 
Department of Water and Natural Resources 
Foss Building 
Pierre, South Dakota 57501

Official Opinion No. 81-7

Apportionment of Personal Property Tax Replacement Funds

Dear Mr. Neufeld:

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

FACTS: 

The Department and Board of Water and Natural Resources are required to review the proposed budget of each conservancy subdistrict and determine that the budget conforms to the statutory restrictions of SDCL 46-18, prior to the Board's approval of the budget (SDCL 46-18-42).  One of the restrictions (SDCL 46-18-31) limits the tax levy for the administrative purposes of the subdistrict to one tenth of one mill on each dollar of taxable property.  The subdistricts have the power to levy a tax greater than one tenth of one mill, but not to exceed one mill, only after receiving authority from their electorate to enter into contracts which could obligate the subdistrict to raise more revenue than the one tenth levy could provide (Official Opinion No. 78-19).  All tax revenues above the amount generated by the one tenth levy are to be used strictly for meeting contractual obligations and are not available for administrative purposes (Official Opinion No. 78-19). 

It has been the practice of the Board to allow certain other revenues besides tax receipts to be applied for administrative purposes.  These revenues are:  (1) unobligated balance from previous administrative budgets; (2) unobligated interest; and (3) personal property tax replacement funds. 

On July 1, 1980, the Board approved a 1982 budget for the Oahe Conservancy Subdistrict that totals $661,325 of which $137,500 is to be used for administrative purposes.  According to a recent analysis by the Department of Water and Natural Resources, based on the 1980 assessed values on real property in the subdistrict, a tax of one tenth mill in 1981 will raise an estimated $109,000.  This means that $28,500 of the Oahe administrative budget must come from the three sources mentioned above.  In their anticipated revenues in the budget, Oahe listed no funds from Unobligated Balance, $5,300 from Interest Income, and $35,000 from Personal Property Replacement. Thus, Oahe is proposing to use a large proportion of the personal property tax replacement funds ($23,200 out of $35,000) for administrative purposes.  The suggestion was made that only a portion of the funds, based on a ratio of the one tenth mill tax levy for administrative expenses to the total 1981 tax of four tenths mill, should be applied for administration.

Based on the foregoing facts, you have asked the following question: 

Is it the intention of Section 6, Chapter 67 of the 1979 Session Laws to limit the portion of personal property tax replacement funds applicable by the Oahe Conservancy Subdistrict for administrative purposes to a proportion of the total replacement funds based on the ratio of the one tenth mill levy for administration to the total mill levy?

Your question centers on the use of these personal property tax replacement funds for administrative purposes by the Oahe Conservancy Subdistrict.

Section 6, Chapter 67 of the 1979 Session Laws has been codified into SDCL 10-13A-9, and states as follows: 

Upon receipt of the funds from the county, a taxing subdivision shall apportion the distribution to the various funds that were authorized to be levied for the current year in the same proportion as the current real property taxes.  (Emphasis added.)

It is my opinion that this statute requires that subdivisions receiving monies from a county as personal property tax replacement funds must use those funds under the same restrictions which apply to the subdivision's use of monies based on real property taxes. Further, SDCL 10-13A-9 also requires that the personal property tax replacement funds be used in the same proportions as the real property taxes are used.

Thus, Oahe Conservancy Subdistrict would be restricted to using only 25 percent of the personal property tax replacement funds for administrative purposes.  This figure is based on the facts that the subdistrict is authorized to use for administrative purposes, an amount equal to one tenth of one mill on each dollar of taxable property (SDCL 46-18-31); and that the subdistrict currently has a total 1981 tax levy of four tenths of one mill.  Therefore, the  proportion of monies used for administrative purposes from the current real property taxes is 25 percent (one tenth out of four tenths).

It is therefore my opinion that Oahe Conservancy Subdistrict is restricted by SDCL 10-13A-9 and 46-18-31, to use only 25 percent of its 1981 personal property tax replacement funds for administrative purposes.

Respectfully submitted,

Mark V. Meierhenry
Attorney General