Request By:
Representative Joe Clarke
Presiding Co-chairman of the Interim Joint Committee On Appropriations and Revenue
Legislative Research Commission
State Capitol
Frankfort, Kentucky 40601
Opinion
Opinion By: Chris Gorman, Attorney General; Ross T. Carter, Assistant Attorney General
You have asked the Attorney General to determine whether the secretary of transportation violated KRS 175.505 in lapsing the 1990-91 allocation for the debt payment acceleration fund. We find no such violation.
Background:
KRS 175.505 establishes the debt payment acceleration fund, which is an account to be used for the accelerated payment of the debt service for bonds issued by the Kentucky turnpike authority. The fund is financed by allocation of a portion of the supplemental highway user motor fuel tax imposed by KRS 138.220. The transportation cabinet is directed to use the funds in the account to accelerate payment of debt service and to report annually to the legislature regarding the status of the accelerated payments. The following language in KRS 175.505 provokes your inquiry to the Attorney General:
In the event that, due to bond market conditions, the terms of the bonds issued or other factors, the transportation cabinet is unable to accelerate debt service payments, the transportation cabinet shall provide documentation to the interim joint committee on appropriations and revenue that such acceleration is not possible and the reasons therefor. In such an event, the funds not available for debt acceleration shall be placed in a special escrow account in the transportation cabinet. Such funds shall not be expended for any of the lawful purposes of the transportation cabinet but shall be held in escrow until such time as the debt acceleration described by this section is possible. The transportation cabinet shall invest the funds allocated to the escrow account and any funds generated from these investments shall remain in the escrow account. Any funds remaining in the escrow account at the close of the fiscal year shall not lapse but shall be carried forward to the next fiscal year for use as provided in this section.
In fiscal year 1990-91, the secretary of transportation, facing a shortfall in road fund revenues of $ 37 million, lapsed the entire allocation to the debt payment acceleration fund. The secretary claimed to act under the authority of KRS 48.130 and 48.600. The relevant portion of KRS 48.130 provides:
(2)(a) In recommending budget reductions, the Governor, the Chief Justice, and the Legislative Research Commission shall not recommend universal percentage reductions, but shall weigh the needs of all budget units and shall strive to protect the highest possible level of service in their respective branches. Services which are not essential to constitutional functions shall be subject to reduction.
Subsection 1 of of KRS 48.600 provides:
In the event of an actual or projected deficit, as determined by the finance and administration cabinet, in total tax receipts, as specified in KRS 48.130, of less than five percent (5%), the governor, the chief justice, and the legislative research commission shall make such allotment reductions for the budget units of their respective branches of government as are deemed necessary, and shall take such steps to revise allotments for their respective branches as are necessary to prevent a cash deficit.
You contend that where KRS 175.505 and 48.600 conflict, the specific provisions of KRS 175.505 control over the general provisions of KRS 48.600. You thus conclude that the secretary of transportation had no authority to divert funds intended to finance the debt payment acceleration fund.
Discussion:
One of the most durable tenets of statutory construction provides that "[w]here there is an apparent conflict between statutes or sections thereof, it is the duty of the court to try to harmonize the interpretation of the law so as to give effect to both sections or statutes if possible." Ledford v. Faulkner, Ky., 661 S.W.2d 475, 476 (1983). In obedience to this principle we must, before reaching your question of which statute controls, determine whether the statutes may be construed to avoid conflict altogether.
KRS 175.505 describes only two circumstances that would render the transportation cabinet unable to accelerate debt service payments. These are bond market conditions and the terms of the bonds issued. When these or other factors are present, the statute compels the transportation cabinet to hold the money in escrow, presumably until the repayment is possible or the legislature directs that the funds be expended otherwise. We find it significant that the statute presumes that funds will be available whenever the transportation cabinet is unable to accelerate debt service payments; that is to say, it is the inability of the transportation cabinet to accelerate payments, rather than a shortage of funds, that invokes the escrow procedure. Using the statute's examples as illustrative, the cabinet would be unable to accelerate payments if market conditions or the terms of the bonds themselves prevented accelerated payment. In those circumstances the cabinet could not make accelerated payments even if it wanted to, and hence the statute prescribes the disposition of the funds that cannot be expended.
We construe the phrase "unable to accelerate debt service payments" to denote an inability to expend available funds because of some structural impediment related to the bonds or bond market; in other words, the statute refers to situations in which it is not in fact possible to make the accelerated payments, rather than to situations in which no funds are available to spend in the first place. Any other interpretation would result in the statute's directing how to deposit funds when the funds are unavailable, an obvious irrationality.
We note also that the two specific expressions in the statute, namely bond market conditions and the terms of the bonds themselves, must be construed as illustrative of the scope of the general term "other factors." Steinfeld v. Jefferson County Fiscal Court, 312 Ky. 614, 229 S.W.2d 319 (1950). We find it significant that the statute enumerates two conditions under which it can be invoked, as opposed to a general reference such as "for any reason." We do not believe that the scope of "other factors" includes revenue shortfalls, for such an interpretation would broaden the "other factors" term to include conditions that differ from the "same kind, class or nature as those specifically enumerated." Id. at 320.
Our construction of KRS 175.505 removes any conflict with KRS Chapter 48. Chapter 48 directs the allocation of funds when a shortfall renders the state incapable of expending revenues as originally planned; KRS 175.505 directs the disposition of funds that have been allocated to the debt payment acceleration fund. When construed together as a harmonious whole the statutes provide for the expenditure or escrow of funds allotted to the debt payment acceleration fund while permitting the secretary of transportation, in times of financial need, to reduce the allotment of revenue that would normally be attributed to the fund.
Since we construe the statutes to present no conflict, we need not determine whether the specific provisions in one prevail over the general provisions in the other.
Conclusion:
We conclude that the secretary of transportation acted within his authority in curtailing the allotment of funds to the debt payment acceleration fund.