Request By:
Mr. Calvin G. Grayson, P.E.
Secretary
Department of Transportation
State Office Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
In OAG 78-5 we concluded that the Kentucky Department of Transportation is the agency authorized by the General Assembly to administer the Railroad Rehabilitation Program provided for in Title VIII, P.L. 94-210. Under Section 803 94-210. Under Section 803 of the Federal Act [see P.L. 94-210], a state to be eligible for federal funds had to designate a state agency for this program purpose. See also Federal Register, Vol. 41, Aug. 1976, § 266.1, stating that this means a designation by the Governor. On August 27, 1976, Governor Carroll designated in writing to the Federal Railroad Administration that Kentucky Department of Transportation as the agency responsible for all aspects of rail transportation.
If the Governor's designation was intended to be issued pursuant to KRS 12.025, the letter of designation is not designated as an executive order relating to reorganization as required by KRS 12.027. Thus the legislative validation of the Governor's selection was not really a validation of an executive order of reorganization. See
Martin v. Chandler, Ky., 318 S.W.2d 40 (1958). As the matter stands, we can say that the General Assembly has by KRS 174.020 and the budget document of 1976-78 conferred this role of administering the Railroad Rehabilitation Act Program on the Kentucky Department of Transportation, which we pointed out in OAG 78-5.
The proposed Executive Budget for 1978-79 and 1979-80 provides $420,000 for 1978-79 and $720,000 for 1979-80 to be appropriated out of Kentucky's general fund for the purpose of carrying out P.L. 94-210.
You request our opinion as to whether there are any constitutional prohibitions against the use of such general funds for this railroad program in terms of § 177, 179 and 230 of the Kentucky Constitution.
We assume the work sheets were specifically directed to the problem of funding the 1976 Railroad Revitalization Act Program.
As concerns § 230, Constitution, which prohibits the diversion of road funds to purposes other than roads, we see no problem. The 1978-80 Executive Budget provides for spending money for the purposes of P.L. 94-210 out of the general fund.
Keck v. Manning, 313 Ky. 433, 231 S.W.2d 604 (1950) 606.
As relates to § 179, Constitution, that section has no application here, since it prohibits a political subdivision from appropriating money or lending its credit to any corporation etc.
Now, let us turn to § 177, Constitution, which directly prohibits the Commonwealth from giving or lending its "credit" to any corporation, individual. It expressly states that "nor shall the Commonwealth construct a railroad or other highway."
Section 171 of the Kentucky Constitution provides in part that taxes shall be levied and collected for "public" purposes only. In this connection, the court ruled categorically in
Industrial Develop. Auth. v. Eastern Ky. Reg. Pl. Com'n., Ky., 332 S.W.2d 274 (1960) 276, that the determination of what is a "public purpose" is left primarily to the legislature, which will not be disturbed by the courts so long as it has a reasonable basis. Here the legislature has in effect declared state aid in the revitalization of railroads to be a public purpose. We are of the opinion that the courts would sustain such state expenditure of funds for that purpose [continuation and rehabilitation of rail service] for the simple reasons relating to the public and traffic safety and to the impact of adequate rail freight service on the Kentucky economy, including the adequate hauling of Kentucky's coal and other commodities of vital importance to the state's economic health. See
Ward v. Louisville & Nashville Railroad Company, Ky., 402 S.W.2d 98 (1966), holding that increased traffic safety is definitely a public project for which public funds may be expended. The court said that incidental or collateral benefits which may accrue to the railroad do not constitute a donation or a loan of credit to the railroad by the Department of Highways within the purview of § 177, Kentucky Constitution. The cogent economic factor here substantially buttresses the safety factor.
This railroad rehabilitation program within the Department of Transportation could be spelled out in the statutes with more specificity or particularity; however, Judge Palmore in
Butler v. United Cerebral Palsy of Northern Ky., Inc., Ky., 352 S.W.2d 203 (1961), wrote on page 205 that the legislation before the court in its laconic simplicity left much to be desired but that it was not the court's to disapprove if it could be reasonably upheld. The court added that a private institution could be the instrumentality of carrying out a public purpose. The test is in the end, not the means, the court said, in effecting a public purpose.
We are of the opinion that such expenditures would not constitute a lending of credit or a loan. The court wrote in
Industrial Develop. Auth v. Eastern Ky. Reg. Pl. Com'n, Ky., 332 S.W.2d 274, above, that in a loan of credit such lender of credit is a debtor. Here the state is not a debtor. We are also of the opinion that such expenditures would not constitute the "constructing" of a railroad. The state would be merely promoting, for the public benefit, the continuation of rail service.
We have come a long way from 1890, when the framers of the constitution were clamoring for restraints and restrictions on the railroads. See Kentucky Constitutional Debates, Vol. 4, 1890, §§ 4980-5183. In this era the railroads must be viewed as a vital segment of our Kentucky economic system. Further, the state can in no way abandon any of its police powers relative to the public safety.