Opn. No. 1980-85

Hon. W.C. Hennessy

Attorney General of New York — Opinion
Dated: February 19, 1980

NY CONST, Art VII; ENERGY CONSERVATION THROUGH IMPROVED TRANSPORTATIONBOND, ACT OF 1979, L 1979, CH 21; STATE FINANCE LAW, §§ 70-72.

The Legislature may appropriate money from the Local Assistance Fund to finance initially capital expenditures for local highways, roads, and streets and provide that the Fund is to be reimbursed from proceeds from the sale of bonds authorized by chapter 21, Laws of 1979.

Hon. W.C. Hennessy Commissioner Department of Transportation

This is in reply to your inquiry as to whether there is any constitutional or statutory bar or restriction on the use of the Local Assistance Fund of the General Fund of the State, rather than the Capital Construction Fund of the General Fund, to finance State expenditures under the Safer Local Roads and Streets Program established by the Energy Conservation Through Improved Transportation Bond Act of 1979, Chapter 369 of the Laws of 1979 (The “Act”). As stated in your letter, the Local Assistance Fund would finance such expenditures initially and proceeds of bonds sold under the Act would then be used to reimburse such fund for the expenditures.

As provided by section 70 (3) of the State Finance Law, the General Fund consists of three parts, the Local Assistance Fund, the State Purposes Fund and the Capital Construction Fund. Neither Article VII of the Constitution, the article pertaining to State finance, nor any other constitutional provision refers to or provides for the existence of the three sub-funds of the General Fund or the nature of payments to be made from the Fund.

Further, only in the housing article, Article XVIII, does the Constitution even refer to capital subsidies from the General Fund. Specifically, sections 2 and 3 of Article XVIII of the Constitution govern laws authorizing capital subsidies for housing from the General Fund, contain no specific reference to any sub-fund thereof, and thus evidence no constitutional intent that such subsidies be paid from the Capital Construction Fund or any other specific sub-fund. I conclude, therefore, that there is no constitutional bar to the use of the Local Assistance Fund rather than the Capital Construction Fund to finance these expenditures initially.

As to any statutory restrictions, section 70 of the State Finance Law, which provides for the existence of the three sub-funds of the General Fund, states in pertinent part that the Local Assistance Fund is to be used for “expenditures to be made for local assistance”, without defining such expenditures. (State Finance Law, § 70 [3] [a].)

Section 71 of that law provides for payments from the Local Assistance Fund and defines local assistance as follows:

“The term `local assistance’ shall include all payments and contributions by the state to and in aid of local governmental units or agencies, in the manner and to the extent provided by law including:

* * *

“(e) Payment of state contributions to counties for the construction or improvement of county roads, under article six of the highway law;
“(f) Payment of state contributions to counties and towns for the repair and improvement of highways outside cities and incorporated villages, under section two hundred seventy-nine of the highway law; * * *.”

The Legislature thus intends that payments from the Local Assistance Fund may be for capital as well as operational and maintenance expenditures.

Further, aside from any general statute, such as section 71, if the Legislature enacts an appropriation within the Local Assistance Fund to finance capital expenditures under the Safer Local Roads and Streets Program, then given the lack of a constitutional restriction as explained above, it is legally proper to use the Local Assistance Fund, as authorized by the appropriation, to finance such capital expenditures.

As to the use of the bond proceeds to reimburse such fund for these expenditures, section 4 of the Act amends section 72 (2) of the State Finance Law to provide that the Rail Preservation and Development Fund, previously created to receive proceeds of bonds sold under the Rail Preservation Bond Act of 1974, is also to receive proceeds of bonds sold under the Act.

Further, section 5 of the Act amends section 72 (3) of the State Finance Law to provide that monies in the Rail Preservation and Development Fund “following appropriation by the legislature and allocation by the director of the budget, shall be available only for reimbursement of appropriations for the purposes set forth in the rail preservation bond act of nineteen hundred seventy-four and the energy conservation through improved transportation bond act of nineteen hundred seventy-nine.” There is no restriction in that section or elsewhere in the Act that the appropriations to be reimbursed may only be appropriations in the Capital Construction Fund. Accordingly, upon appropriation authorizing transfer to the Local Assistance Fund, proceeds of bonds sold under the Act and deposited in the Rail Preservation and Development Fund may be used to reimburse the Local Assistance Fund for expenditures made pursuant to appropriations for projects within the purposes set forth in the Act, including projects within the purposes of the Act under the Safer Local Roads and Streets Program.