August 27, 1982

Mr. Gordon K. Milbrandt 
Auditor General 
Department of Legislative Audit 
435 South Chapelle 
Pierre, South Dakota 57501

Official Opinion No. 82-46

Municipality's Warrant Issuing Capacity

Dear Mr. Milbrandt:

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

FACTS: 

City A, as of January 1, 1981, had a general fund cash balance of $602.58 and general fund registered warrants outstanding totaling $180,931.60.

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

QUESTION: 

Should the cash balance on January 1, 1981, have been reduced by the amount of registered warrants outstanding against the general fund on that date in order to calculate the warrant issuing capacity of City A as provided for in SDCL 9-21-21?

In pertinent part, SDCL 9-21-21 states: 

No warrant shall be drawn pursuant to any appropriation in excess of ninety-five percent of the tax levy made for any ad valorem tax supported fund provided for such appropriation for the current fiscal year and all cash actually in the treasury of the municipality to the credit of any such fund derived from sources other than such tax levy.  (Emphasis added.)

In Official Opinion No. 80-6, I reviewed this statute and reached the following conclusion: 

[W]arrants can be drawn on the general fund up to the total of ninety-five percent of [the amount of total appropriation to be raised by ad valorem tax] and of the money in the treasury credited to the general fund.

In its simplest form, your question asks where outstanding general fund registered warrants fit into the statutory limit set by SDCL 9-21-21.  To answer that question, one must first review the nature of warrants and registered warrants.  SDCL 9-23-3 states, in part, that: 

Unless otherwise ordered by the governing body or specially provided, no money shall be paid out of the treasury except upon the warrant of the mayor or president of the board of trustees, counter-signed by the auditor or clerk.

SDCL 9-23-4 provides for the registration of unpaid warrants in the following manner: 

Every warrant on the municipal treasurer shall be paid upon presentation if there is sufficient money in the fund upon which it is drawn to pay the same.  If not paid, it shall be registered as provided by law.

The registration process is set in SDCL 9-23-9: 

Whenever any warrant shall be presented to the treasurer for payment and there shall be no funds in the treasury appropriated for that purpose, he shall enter such warrant in his warrant register for payment in the order of presentation.

SDCL 9-23-11 provides for the payment of registered warrants in the order of their registration.

It is apparent from this review that warrants and registered warrants are current obligations of the municipality against the particular fund from which they are issued.  The outstanding general fund registered warrants should be considered when determining 'the cash actually in the treasury of the municipality to the credit of [the general fund],' for the purpose of SDCL 9-21-21.  Therefore, it is my opinion that the answer to your question is YES, the cash balance on January 1, 1981, should have been reduced by the amount of registered warrants outstanding against the general fund on that date in order to calculate the warrant issuing capacity of City A, as provided for in SDCL 9-21-21.

Respectfully submitted,

Mark V. Meierhenry
Attorney General