Judges: SUSAN BRIMER LOVING, Attorney General of Oklahoma
Filed Date: 7/23/1991
Status: Precedential
Modified Date: 7/6/2016
Dear Secretary of Finance and Revenue, White
¶ 0 The Attorney General has received your letter asking for an official opinion addressing, in effect, the following questions:
1. Does paragraph 2 of Article
¶ 1 Your questions concern Initiative Petition No. 34i (State Question No. 639*) which will, if adopted by the people, repeal House Bill 1017, 1990 Okla. Sess. Laws, c.
The Legislature shall not pass or enact any bill, act or measure making an appropriation of money for any purpose until such certification is made and filed, unless the State Board of Equalization has failed to file said certification at the time of convening of said Legislature. In such event, it shall be the duty of the Legislature to make such certification pursuant to the provisions of this section.
Okla. Const. Article
¶ 3 All appropriations made in excess of the State Board of Equalization's certification are "null and void." Okla. Const. Article
¶ 4 In the event the Legislature enacts laws which provide for either a decrease or increase in revenues, the State Board of Equalization has a duty to certify the revenues which will accrue under such laws:
All appropriations made in excess of such certification shall be null and void; provided, however, that the Legislature may at any regular session or special session, called for that purpose, enact laws to provide for additional revenues or a reduction in revenues. . . . Whereupon, it shall be the duty of the State Board of Equalization to make a determination of the revenues that will accrue under such laws and ninety-five percent (95%) of the amount of any increase or decrease resulting, for any reason, from such changes in laws shall be added to or deducted from the amount previously certified available for appropriation from each respective fund. . . . and such adjusted amount shall be the maximum amount which can be appropriated for all purposes from any such fund for the fiscal year being certified.
Okla. Const. Article
¶ 5 The State Board of Equalization has a duty to make a new determination of revenue when laws increasing or decreasing revenues are enacted by "the Legislature . . . at any regular session or special session, called for that purpose." Okla. Const. Article
¶ 6 The Constitution must be interpreted so as to give effect to the intent of the framers and of the people adopting it.Draper v. State,
The fiscal responsibility shown by Oklahoma has become an enviable example for the nation. This policy of fiscal restraint and control can only be applauded in a time of monetary crisis. We do not find this constitutional requirement to be unduly burdensome nor to be a vain endeavor. The citizens of this state, as well as the Legislature, have a vested constitutional right to know how much money is available for appropriations to the General Revenue Fund and special funds which are to be supported by direct taxes, fees, or other revenue.
¶ 7 The text of Article X, Section 23(2) specifically references laws enacted by "the Legislature." However, the power of the people to enact laws through the initiative process derives from the Constitution itself. Okla. Const. Article
¶ 8 Notwithstanding the failure of Article X, Section 23(2) to specifically provide for recertification in the event laws affecting revenue are enacted by the people, the intent of the budget balancing provision must be considered. "A constitutional amendment should be given a practical interpretation to carry out the plainly manifested purpose of the people who adopted it."
¶ 9 Thus, the most reasonable interpretation is that if H.B. 1017 is repealed by a vote of the people, the State Board of Equalization must recertify revenues before the Legislature may pass or enact any further bills, acts or measures making an appropriation of money from the affected funds, for the fiscal year(s) certified.
¶ 11 A balanced budget is not all that is required by Okla. Const. Article
whereby appropriations shall be divided and set up on a monthly, quarterly or semiannual basis within each fiscal year to prevent obligations being incurred in excess of the revenue to be collected, and notwithstanding other provisions of this Constitution, the Legislature shall provide that all appropriations shall be reduced to bring them within revenues actually collected, but all such reductions shall apply to each department, institution, board, commission, or special appropriation made by the State Legislature in the ratio that its total appropriation for that fiscal year bears to the total of all appropriations from that fund for that fiscal year[.]
¶ 12 The Legislature has complied with this mandate by enacting62 O.S. 41.9 (1981). This section allows appropriations to be allotted for spending only upon written request of the spending agency and approval by the Budget Director. The Budget Director can require the spending agency to revise allotment requests before approval if such is necessary to ensure sufficient balances in the appropriation to finance the agency's operation for the remainder of the year. Id. This section also addresses the occurrence of a revenue failure:
In the event of a failure of revenue, the Budget Director shall control the allotment authorizations to prevent obligations being incurred in excess of the revenue to be collected. However, the Budget Director shall make all reductions within each state fund where a revenue failure occurs apply to each department, institution, board, commission or special appropriation made by the State Legislature, in the ratio that its total appropriation for that fiscal year bears to the total of all appropriations for that fiscal year, as provided in Article
X , Section23 , of the Constitution of Oklahoma.
62 O.S. 41.9 (1981) (Emphasis added).
¶ 13 "Failure of revenue" is nowhere defined in the Constitution or laws of the State of Oklahoma. However, words used in a statute are to be understood in their ordinary sense, unless a contrary intention plainly appears. 25 O.S. 1 (1981). "Failure" is defined by the Webster's Third New International Dictionary (1981) as "the fact of a certain action or process not having occurred" and "not matching hopes or expectations." Thus, the Budget Director's duty to reduce allotments arises whenever the receipt of revenues do not occur as expected, regardless of the reasons therefore. The answer to your second question, then, is that the Budget Director must make pro rata reductions of appropriation allotments in the event of a revenue failure created by the repeal of H.B. 1017.
¶ 14 In your question, you mention the possibility of dealing with a shortfall by unallocating appropriations in the reverse order in which the bills which authorized them were signed. As discussed above, this methodology is authorized when the Legislature passes appropriations which exceed the State Board's revenue certification because all appropriations made in excess of the State Board of Equalization's certification are null and void. Okla. Const. Article
[T]he repeal of House Bill 1017 would be effective only upon its approval by the voters. Article
V , Section3 , Oklahoma Constitution. The debts incurred under the bill and the revenue raised by it would have been validly incurred and collected and expended during the time the bill was law.
In re Initiative Petition No. 347, 62 O.B.A.J 1880, 1882 (June 15, 1991).
¶ 15 Therefore, even if H.B. 1017 is repealed and revenues recertified, Article X, Section 23 does not authorize the unallocation of previous appropriations in reverse order of their enactment.
¶ 17 Title 62 O.S. 41.29a (1990), which was originally enacted as a part of H.B. 1017, provides for the separate accounting and certification of increases in the General Revenue Fund which result from the tax changes contained in H.B. 1017. More particularly, the statute requires Of fice of State Finance, among other things, to:
(1) separately present to the State Board of Equalization, as a part of the Board's official certification process, the estimate of all revenue which will accrue to the General Revenue Fund as a result of tax changes contained in H.B. 1017;
(2) separately account for and report monthly on revenues accruing to the General Revenue Fund as a result of H.B. 1017; and
(3) track appropriations of revenues which are deposited to the General Revenue Fund which are attributable to H.B. 1017.
¶ 18 62 O.S. 41.29a(C) also states that:
Funds separately accounted for herein shall be used only to fund the reforms provided for in this act and for no other purpose. Any appropriation or expenditure of any of such funds for any other purpose shall be null and void and of no effect.
(Emphasis added).
¶ 19 Oklahoma Constitution Article
¶ 20 "Fund" is defined by Webster's Ninth New Collegiate Dictionary as "a sum of money or other resources whose principal or interest is set aside for a specific purpose." The definition contained in Black's Law Dictionary (West 5th Ed. 1979) is almost identical ("an asset or group of assets set aside for a specific purpose"). The word has been similarly defined by the courts of other States. State v. Finney,
¶ 21 Both the Legislature's stated intent in enacting 62 O.S.41.29a, and its obvious effect, is to separately set aside the revenues which result from tax changes contained in H.B. 1017 in order to ensure that the increase will be used specifically and solely for the purpose of funding the reforms contained therein. Similarly, if there is a "failure of revenue" as a result of the repeal of H.B. 1017, it will of necessity be within this separate fund. Accordingly, the Constitution and statutes require this fund — and the agencies which receive allotments from it — to absorb the revenue failure.
¶ 23 The General Revenue Cash-flow Reserve Fund was created for the purpose of making "cash available for the July cash allocation . . . so that, insofar as possible, each monthly cash allocation thereafter can equal one-twelfth (1/12) of the annual appropriation from the General Revenue Fund." 62 O.S. 10.1 (1990). The monies in the fund come from transfers made by the Director of State Finance when the apportionment to the General Revenue Fund is in excess of amounts required for the allocations necessary to fund appropriations for the then current fiscal year. Subsection 2 of 62 O.S. 10.1 states that:
Any monies transferred to the General Revenue Cash-flow Reserve Fund pursuant to paragraph 1 of this section, shall be transferred by the Director of State Finance as nonrevenue receipts to the State General Revenue Fund in the amounts necessary to make cash available for the July cash allocation[.]
Id. (Emphasis added).
¶ 24 The plain language of the above section indicates that the monies in the Cash-flow Reserve Fund are not "revenues." This conclusion is buttressed by the Oklahoma Supreme Court decision in Draper v. State Board of Equalization,
The Emergency Appropriation Fund consists of "all moneys transferred, or authorized to be transferred, by the Legislature from any surplus cash arising incidentally from receipts in excess of appropriations to the credit of other funds in the State Treasury." In other words, accruals in the Emergency Appropriation Fund are not revenue, but such fund is simply a convenient account in which to transfer surplus funds from the General and Special Funds not needed to pay current year appropriations.
¶ 25 The Emergency Appropriation Fund and the Cash-flow Reserve Fund are clearly similar. Neither fund is supported directly by revenue, but by surpluses in other revenue funds. 62 O.S. 10.1
specifically directs the Director of State Finance to characterize deposits from the Cash-flow Reserve Fund as "nonrevenue receipts." This fact together with the Court's reasoning in Draper v. State Board leads to the conclusion that Cash-flow Reserve Fund monies are not "revenues." As such, Oklahoma Constitution Article
¶ 26 It is, therefore, the official opinion of the AttorneyGeneral that:
1. Article
SUSAN BRIMER LOVING ATTORNEY GENERAL OF OKLAHOMA
SHARON K. O'ROKE ASSISTANT ATTORNEY GENERAL