Opinion Number ( 2006 )

Dear Mr. Watkins:

Your request for an Attorney General's Opinion has been assigned to me for research and reply. On behalf of the City of Covington, you have asked for our opinion on whether the City of Covington may use the revenue sharing money it receives, which is derived from a 2% sales tax, to purchase or construct a vehicle maintenance facility.

Your request indicates that the voters of Sales Tax District Three of the Parish of St. Tammany renewed a 2% sales tax on July 15, 2005, the proceeds of which are to be used for the purposes of:

"constructing, acquiring, extending, improving, maintaining and/or operating (1) roads, streets and bridges and (ii) drains and drainage facilities, including acquiring all necessary land, equipment and furnishings for any said public works, improvements and facilities, and further including allocation of funds under intergovernmental agreements with municipalities relating to annexations, revenue sharing areas and growth management areas, to be used by said municipalities for any one or more of the aforesaid purposes that have a benefit to residents of the District."

You also indicate that the City of Covington has entered into an Intergovernmental Agreement with the Parish of St. Tammany entitled "Growth Management and Revenue Sharing Agreement Supplementing and Amending the 1990 Sales Tax Enhancement Plan", which provides in pertinent part:

ARTCLE 7. — Uses of tax — Proceeds from the tax shall be used for projects that benefit residents of Tax District #3 as defined by the tax proposition or propositions approved by the voters."

In addressing the question presented, we note that La. R.S. 39:704 provides as follows:

§ 704. Proceeds of special tax

The proceeds of any special tax shall constitute a trust fund to be used exclusively for the objects and purposes for which the tax was levied. The records of the taxing authority shall clearly reflect the objects and purposes for which the proceeds of the tax are used.

Accordingly, the monies derived from the 2% sales tax may only be used for the objects and purposes approved by the voters of Sales Tax District Three of the Parish of St. Tammany. Therefore, we are of the opinion that if the proposed vehicle maintenance facility will be utilized to service vehicles used in constructing, improving, or maintaining, etc., the roads, streets, or bridges, etc., of District Three, the City of Covington may use the money it receives from the 2% sales tax and purchase or construct the vehicle maintenance facility. Such expenditure comports with the objects and purposes for which the tax was levied.

We trust this adequately responds to your request. If you should have any questions about the response contained herein, please feel free to contact our office.

Yours very truly,

CHARLES C. FOTI, JR. Attorney General

BY:__________________________ MICHAEL J. VALLAN Assistant Attorney General

CCF, JR/MJV/crt