Request By:
Mr. William S. O'Daniel
Commissioner
Department for Local Government
909 Leawood Drive
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
KRS 42.332 requires the Department for Local Government to examine each capital project, selected by the Coal Severance Economic Aid Board in coal producing counties, to be funded, if approved by the Secretary of the Department of Finance, with the Coal Severance Economic Aid Fund established in KRS 42.325 et seq. The Department for Local Government, provided certain criteria named in KRS 42.332 are met, is then required to recommend approval of the project to the Secretary of Finance. Conversely, where certain criteria are not met, the D.L.G. is required to disapprove, giving detailed reasons. One of the criteria is that the proposed project conforms to the requirements of KRS 42.330 to 42.340. KRS 42.330(2) outlines the exclusive list of specific projects which may be approved for such financing out of the Coal Severance Economic Aid Fund.
Question No. 1:
"Is the upgrading of a privately-owned natural gas facility a public purpose for which public money can be expended, particularly in view of the fiscal court finding on health, safety and welfare of the residents?"
First, there is no statutory authority for a fiscal court's declaring the maintenance of a natural gas facility in good order to be a public purpose. In fact, KRS 67.083(3)(r) expressly prohibits enacting ordinances involving gas. Implicit in KRS 42.325, et seq., is the premise that the beneficiary agency must have the statutory powers to carry the grant into effect, even if the project on its face appears to fit one of the project categories detailed in KRS 42.330(2). And it must be remembered that all power exercised by a fiscal court must be expressly delegated to it by statute, involving a thoughtful, purposeful and deliberate delegation of a known power by the General Assembly. Fiscal
Court, Etc. v. City of Louisville, Ky., 559 S.W.2d 478 (1977) 481, 482. The answer to the first question is "no".
Question No. 2:
"Is it permissible for the fiscal court to delegate administration of the project to the private company?"
This is academic in view of the answer to Question No. 1.
Question No. 3:
"Does the state-operated revolving loan fund qualify as a beneficiary agency under KRS 42.325?"
KRS 42.325(1) reads:
"As used in KRS 42.330 to 42.340 the words:
"(1) 'Beneficiary agency' means an agency eligible to receive the benefit of a capital project to be wholly or partly financed out of the coal severance economic aid fund, including and limited to the fiscal courts of coal producing counties, political subdivisions, municipal corporations, special districts and agencies created pursuant to the Interlocal Cooperation Act, within coal producing counties, or any combination thereof; and, not-for-profit corporations organized for public purposes and performing governmental functions and services within coal producing counties;"
The answer is that the definition of "beneficiary agency" does not include an agency of the central state government. The answer here is "no".
Question No. 4:
"If the loan fund does not qualify as beneficiary agency, can the fiscal court as beneficiary agency lend the money through the state-operated loan fund to a natural gas company serving the county, and delegate administration of the project to the private company until the project is terminated upon repayment of the loan?"
The fiscal court cannot qualify as a beneficiary agency for reasons outlined above. In addition, § 179 of the Kentucky Constitution would prohibit this lending of county money to or appropriating money for this private gas company, even though this is accomplished in a round about manner.