Application of the Budget
Limit Provisions of LB 299 to Newly Established Political Subdivisions
(August 28, 1996)
Opinion 96064
SUBJECT: Application of the
Budget Limit Provisions of LB 299 to Newly Established Political Subdivisions
REQUESTED BY: John Breslow,
Auditor of Public Accounts
WRITTEN BY: Don Stenberg,
Attorney General
Fredrick F. Neid, Assistant Attorney General
LB 299 was passed during the
Second Session of the Ninety-Fourth Legislature and approved by the Governor on
April 16, 1996, with the emergency clause. Among other things, LB 299
establishes budget limits for restricted funds for fiscal years after July 1,
1996, for governmental units. The term, governmental unit, is defined in the
act to mean, "every political subdivision which has authority to levy a
property tax except sanitary and improvement districts . . . ." LB 299, ¤
1(3).
You relate certain facts that a
village in this state has recently created a community redevelopment authority
and you ask whether this constitutes a transfer of financial responsibility for
the village. Of course, this question is fact specific and we may only provide
a generalized answer to your inquiry for this reason. Establishment of a new
governmental unit in and of itself would not constitute a transfer of financial
responsibility for the village. For purposes of LB 299, a transfer of financial
responsibility would take place if a service or program of the transferring
government unit, the village, was previously financed by restricted funds in
the village's budget.
Section 2 of LB 299 in material
part provides:
. . . If a
governmental unit transfers the financial responsibility of providing a service
financed in whole or in part with restricted funds to another governmental unit
or the state, the amount of restricted funds associated with providing the
service shall be subtracted from the last prior year's total of budgeted
restricted funds for the previous provider and may be added to the last prior
year's total of restricted funds for the new provider.
For purpose of the act,
restricted funds is defined in Section 1 of LB 299 as follows:
(5) Restricted funds means (a)
property tax, excluding any amounts required to pay interest and principal on
bonded indebtedness and any amounts refunded to taxpayers, (b) payments in lieu
of property taxes, (c) local option sales taxes, (d) state aid, and (e)
transfers of surpluses from any user fee, permit fee, or regulatory fee if the
fee surplus is transferred to fund a service or function not directly related
to the fee and the costs of the activity funded from the fee. . . .
We believe a transfer of
financial responsibility occurs when a service or program financed by
restricted funds is transferred from one governmental unit to another political
subdivision. As you observe, the amount of restricted funds of the previous
provider would be reduced from the last year's total of budgeted restricted
funds if a transfer of financial responsibility took place.
This Office previously issued an
opinion that concluded newly established political subdivisions are not
required to obtain voter approval to levy a tax authorized by law. Op. Att'y
Gen. No. 92108 (Aug. 27, 1992). In light of passage of LB 299, you further
inquire whether political subdivisions are "limited in their first year of
existence?" Based on the express provisions of section 4 of LB 299, we
reach the similar conclusion that a newly established political subdivision may
increase its restricted funds by the full amount allowed by law in a particular
year.
Section 4 of
LB 299 states:
A governmental unit may choose
not to increase its restricted funds by the full amount allowed by law in a
particular year. In such cases, the governmental unit may carry forward to
future budget years the amount of unused restricted funds authority. The
governmental unit shall calculate its unused restricted funds authority and
submit an accounting of such amount with the budget documents for that year.
Such unused restricted funds authority may then be used in later years for
increases in the total of restricted funds allowed by law. Any unused budget
authority existing on the effective date of this act by reason of any prior law
may be used for increases in restricted funds authority.
(Emphasis added).
The express
provisions of section 4 allow the political subdivision the discretion to
determine whether restricted fund amounts will be increased to the full amount
permitted by law. Use of the word "may" in statutes is generally
construed to mean that discretionary action was intended by the legislature.
Neb. Rev. Stat. ¤ 49-802 (1993) sets forth the general rules of construction
for statutes and in material part provides, "[W]hen the word may appears,
permissive or discretionary action is presumed."
Application of this tenet of
statutory construction to the language in question makes apparent that it is
within the discretion of the political subdivision whether to increase its
total of restricted funds by the full amount allowed by law.
Sincerely yours,
DON STENBERG
Attorney General
Fredrick F. Neid
Assistant Attorney General