Request By:
Hon. H. Ramsey Morris
Co-Chairman
Budget Review Subcommittee
on Justice, Corrections and Judiciary
House of Representatives
Capitol
Frankfort, Kentucky 40601
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You question the transferring of surplus funds in the law enforcement foundation program and the professional fire fighters foundation program to the state's general fund in 1983 in the amount of 1.2 million dollars. You specifically request our opinion as to the legality of such transfer.
LAW ENFORCEMENT FOUNDATION PROGRAM
The program was established in 1972, pursuant to KRS 15.430, such funds to be distributed to local units of government in accordance with KRS 15.410 to 15.510. KRS 15.430(2), prior to the 1982 amendment, provided that the resources of the law enforcement foundation program fund shall be paid into the state treasury and shall be drawn out or appropriated only as provided hereinafter. KRS 15.430 was amended in 1982 to provide that the fund shall consist of appropriations from the state's general fund and insurance premium surcharges proceeds. Subsection (2) of KRS 15.430, as amended in 1982, provided that all moneys in the fund on July 1, 1982, shall be deemed a trust and agency account, and shall not lapse, and shall be continuously appropriated for the purposes specified in KRS 15.410 to 15.500. KRS 15.470 spells out the specific purposes for which the funds may be used, including salary supplements. KRS 15.500 provides that if funds available to this fund are insufficient to provide the supplemental payments to local governments under KRS 15.460, the Justice Cabinet is required to establish the rate of assistance to be paid to eligible local units of government. Unexpended funds do not lapse.
PROFESSIONAL FIRE FIGHTERS FOUNDATION PROGRAM
The fund was originally established in 1980 under KRS 95A.220, which was amended in 1982 to provide the same fund sources as relate to the law enforcement program. Here again the fund was characterized as a trust and agency account, nonlapsing fund, to be appropriated for purposes specified in KRS 95A.200 to 95A.300. KRS 95A.260 contains the specific purposes for which the fund may be expended, including salary supplements, involving fire fighters of local governments. Under KRS 95A.290, where funds are insufficient to meet the amount of money called for in KRS 95A.250, the commission on fire protection personnel standards and education shall make a uniform percentage reduction in the allotment of funds available.
There is a close parallelism in the statutory provisions relating to these two funds. KRS 42.190, enacted in 1982, reiterates that such funds shall not lapse and shall be used for the purposes as specified by law.
SURPLUS FUNDS TRANSFERRED TO GENERAL FUND
It is our understanding that surplus money ($1.2 million) involving the two above funds was transferred by the Secretary of Finance in 1983 to the state's general fund in order to accommodate a budget shortfall of FY 1983-84.
ALLOTMENT OF APPROPRIATIONS-DEVIATIONS
In OAG 80-410 we concluded that, under KRS 45.160, and where a budget shortfall is readily apparent, the Secretary of Finance was authorized and directed by that statute to prevent an overdraft or deficit by equitably reducing, according to needs, the appropriations made in the state budget to each state budget unit, so long as the constitutional functions of the various departments or agencies were not impaired. We mentioned seven different guidelines to be used in carrying out that exercise in equity and common sense government.
The key point in OAG 80-410 was that KRS 45.160 described a power emerging out of a financial crisis that transcended and cut across any statutory funds restrictions. Kentucky is simply not a deficit government. See §§ 49 and 50, Kentucky Constitution. Obligations of contract cannot be impaired. See § 19, Kentucky Constitution, and Article 1, Section 10, U.S. Constitution. However, and although policemen and firemen are not constitutional officers, they should not, by a withdrawal of such funds, be subjected to a reduction of their salaries below the level of adequacy, since the courts might hold that such submarginal pay impact would be arbitrary under § 2 of the Kentucky Constitution. See Pritchett v. Marshall, Ky., 375 S.W.2d 253 (1964) 258. All state and local public officers and employees are entitled to payment of adequate compensation. The General Assembly must provide the money. The work of the government depends upon the workers.
As the court wrote in Davis v. Steward, 198 Ky. 248, 248 S.W. 531 (1923), "An appropriation by the Legislature is the setting apart of a particular sum of money for a specific purpose. . ." That specificity generally cannot be violated, except where the General Assembly has expressly so authorized such deviation. In OAG 80-410, KRS 45.160 was construed as a reasonable vehicle of flexibility in meeting temporarily the demands of state government during periods of economic austerity or tax decline.
STATUS OF KRS 45.160
KRS 45.160 was expressly repealed by House Bill 649, Chapter 450, Section 79, 1982 Acts, effective July 1, 1983. The remaining question is whether there is any remaining statute which has the equivalent function.
KRS 48.130 provides that the branch budget recommendation submitted by each branch of government must include a plan for the reduction of the respective budget recommendations, by budget unit, under certain circumstances named therein. Transfer of funds may be authorized by the budget reduction plan. The budget reduction plan shall be enacted as modified by the General Assembly in each joint budget resolution. Where an actual or projected deficit in tax receipts is envisioned by the Department of Revenue, allotments in the three branches shall be reduced according to the reduction provisions embodied in the joint budget resolution; and the heads of each branch will automatically implement budget reductions for their branches according to the reduction provisions in the joint budget resolution. Where funds that have accrued to the surplus accounts of the general or road funds are sufficient to meet these deficits, budget reductions will not take place. See also KRS 48.600, relating to allotment reductions.
However, it must be observed that KRS 48.130 and 48.600, enacted in 1982, became effective July 1, 1983. Thus in 1983 the new statutes could not be effectively activated, as relates to budget reductions, until after the 1984 budget has been enacted. In the meantime, KRS 45.160 was repealed as of July 1, 1983. If the Finance Department transferred the funds to the general fund prior to July 1, 1983, the doctrine expressed in OAG 80-410 would govern, provided that the Cabinet of Finance made an equitable reduction in the appropriations under the guidelines therein mentioned, and if it determined that policemen's and firemen's salaries were not reduced arbitrarily, as mentioned above. And if the transfer of such funds was effected on or after July 1, 1983, the principle of appropriations reductions was expressly adopted in the 1982 budget. See House Bill 295, Chapter 398, part VI, paragraph 8, pages 1339-1340, 1982 Acts. We are informed that such appropriations reductions principle has been placed in the state budget for many years. Thus the budget-statutes provisions for necessary reduction of appropriations by the executive branch in the face of economic and tax revenue decline have existed for many years as a continuum. Sheer human experience has indicated that the precise amount of revenue available to state government cannot be determined with any reasonable accuracy until after the legislative adjournment. The Governor is not mandated to call special sessions. Section 80, Kentucky Constitution. Thus, where an economic or tax revenue storm arises between sessions of the General Assembly, the Governor necessarily has to become the captain of the vessel in order to prevent money deficits and an impairment of necessary constitutional functions of government.
CONCLUSION
Under the foregoing analysis and assumptions, we conclude that the transfer of the subject funds to the general fund was permissible, provided that an "equitable reduction" scheme was employed in line with the guidelines mentioned in OAG 80-410. We are not organized to determine the actual factual point. Since our constitutional system does not permit deficit financing, that fact alone eloquently attests the constitutional vitality of the "equitable reduction of appropriations" concept, as employed by the executive branch of government between legislative sessions. Section 81 of the Kentucky Constitution demands that the Governor take care that the laws be faithfully executed. Begley v. Louisville Times Co., 272 Ky. 805, 115 S.W.2d 345 (1938) 352. It is no wonder that the appellate courts historically are not inclined to examine specifically the various motives or reasons of the Chief Executive when he or she is under the "gun," so long as the basic reason for the Governor's actions are reasonably apparent. The supreme executive power is in the Governor, under § 69, Kentucky Constitution. The Legislature cannot by legislation render the Governor ineffective in fulfilling his or her necessary functions. Johnson v. Commonwealth, 291 Ky. 829, 165 S.W.2d 820 (1942). Here the maintaining of an executive branch free of dificits is the responsibility of the Governor, which, when properly exercised, cannot be curtailed by even explicit statutory provisions.