Request By:
Mr. T. Allan Heard
Assistant State Conservationist
United States Department of Agriculture
333 Waller Avenue
Lexington, Kentucky 40504
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
You are concerned about OAG 77-322, which deals with a watershed plan agreement between the Estill County Conservation District, Estill County Fiscal Court, City of Irvine, City of Ravenna, and the Soil Conservation Service, United States Department of Agriculture. The plan is designed to solve a flood problem which primarily affects parts of the two named cities, and is under the authority of Public Law 83-566 (16 U.S.C. 1001-1008). Under the plan one small earth dam would be designed and constructed to control flooding.
The costs of technical assistance and construction of the dam would be from federal funds, i.e., from P.L. 83-566 funds. The costs of landrights, local administrative costs, and operation and maintenance of the dam would be borne by fiscal court. You point out that the federal law (16 U.S.C. 1004) requires local sponsorship to assume the long-term operation and maintenance responsibility. This long-term condition is common to many federal grants made to local governments.
You ask whether the Estill agreement (you enclosed a copy) violates § 157 of the Kentucky Constitution and whether § 157 applies to cities and watershed districts, as well as to counties.
As we said in OAG 77-322, § 157 provides that no county, city, town, taxing district (which would include a watershed district) shall be permitted to become indebted, in any manner or for any purpose, to an amount exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the voters thereof, voting at an election to be held for that purpose. Any indebtedness contracted in violation of this section shall be void. Bell v. Board of Education of Barren County Sch. Dist., Ky., 343 S.W.2d 804 (1961). "Income and revenue provided for such year" has been held to mean that which the particular taxing district has actually provided for in reasonable and good faith anticipation of collecting. See Bell, above, p. 806.
Thus § 157 (and OAG 77-322) applies to counties, cities, towns, and watershed districts. See KRS 262.700 and 262.745.
Since the debt that will be assumed by the local sponsoring governments must run concurrently with the current revenues (of the year the obligation is assumed), we must look to the debt that will be assumed by the local governments.
The local governments will have to pay for landrights at an estimated cost of $21,500. They will share in the dwelling relocation costs (10.6%). They will have to procure necessary water rights. They will bear the costs of administration of $1,500. The local governments will be responsible for the operational, maintenance, and replacement costs involving the dam. Actually the plan calls for the Estill Fiscal Court's obtaining all landrights and paying an annual operational and maintenance cost of $300. The financial agreement will be projected for a long term.
You have asked whether this financial agreement will violate § 157 of the Constitution.
Since we do not know the actual income and revenue provided for by the fiscal court for the year in question (year the obligation is created), we cannot answer the question categorically, yes or no. If the total financial obligation of the county (the aggregate projected for the entire long-term period), when considering other obligations of the county for the subject year, do not exceed the income and revenue of the county for subject year, then § 157 would not be violated. If such obligations do exceed the available revenue for the year in which the obligation is created, then § 157 would be violated, unless two-thirds of the voters of the county at an election held for that purpose vote for the special obligation.
In the event that the fiscal court determines from the best estimates that the special obligation (watershed agreement) would exceed the available revenue for the year in question, and thus would violate § 157 in the absence of a vote of the people, the fiscal court could either: (1) insert certain language in the contract, which we will state hereinafter, or (2) have the question placed on the ballot for the people of the county to vote on, as mentioned in § 157, Constitution.
The following provisions could be inserted in the agreement to reflect the legal realities of the Kentucky and federal law: "The local sponsors agree to comply with all applicable federal and state laws. Nothing herein shall be construed as legally obligating the fiscal court to make any appropriations beyond the fiscal year in which this contract is executed. Nothing herein shall be deemed to pledge the credit of any person acting or purporting to act on behalf of the local sponsors. " We are of the opinion that the insertion of the foregoing statements would resolve any constitutional question.
We hope that these stated options will help you in entering into an agreement that will be free from constitutional defect.