Request By:
Mr. Phillip D. Scott
Attorney at Law
156 Market Street
P.O. Box 1808
Lexington, Kentucky 40501
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your client, the Lexington Health Department, requests an Attorney General's opinion relative to an interpretation of KRS 212.637, which concerns an urbancounty board of health. That statute reads:
"The board shall not incur nor permit the incurrence of any indebtedness, in any manner or for any purpose, in an amount exceeding, in any fiscal year of the board, the income and revenue provided for such year through the appropriation provided for in KRS 212.639 or under any other provision of KRS 212.626 to 212.639 and funds derived from any other sources, without the assent of two thirds (2/3) of the voters in such county, voting at an election called and held for that purpose in accordance with the provisions of KRS 66.120 and 66.130. Any indebtedness contracted in violation shall be void and the county shall not be liable therefor."
The Lexington-Fayette County Health Department desires to execute a promissory note [not to exceed 90 days] in favor of the Second National Bank and Trust Company in an amount which is within their budget for the present fiscal year. The note will not extend beyond the present fiscal year, and it is expected that the projected revenues of the L-F Health Department will be sufficient to retire the note within the 90 day time frame. The purpose of the loan is merely to alleviate a cash flow problem on its accounts payable during the 90 day period of the proposed loan.
The proposed lending bank requires a legal opinion as to the legality of the loan.
From the facts you have given, it is our opinion that the proposed loan would be legal, since the borrowed amount can be paid off out of current revenues. This statute, KRS 212.637, borrows a financing restriction device from § 157, Constitution. It is a pay-as-you-go policy. The court, in