Request By:
Mr. Charles D. Wickliffe
Attorney
Executive Department for Finance and Administration
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your problem concerns the Coal Severance Economic Aid Fund created in the state treasury by KRS 42.330. The money can only be spent for capital projects, and the program is administered by the Department of Finance.
Some months ago the Floyd County Coal Severance Economic Aid Board selected a capital project involving the Volunteer Fire Department [firetruck] of Maytown, Kentucky. The project includes a request for a grant of $5,000 of the fund to be applied on a promissory note, leaving a balance of around $13,000 secured by a lien on the fire department's truck. The Department for Local Government has recommended approval of the project [KRS 42.332]. Your office concluded that the project was ineligible since the funds requested would not retire but would reduce the indebtedness owed on the firetruck, as indebtedness created prior to January 1, 1977.
Later the Maytown Volunteer Fire Department executed another note for $5,000 and then sought approval of the project in the sum of $5,000 to retire the last executed note.
Your question is whether it is permissible to extend coal severance economic aid funds for the purpose of reducing, but not completely retiring, an indebtedness secured by a lien upon the truck, which truck would have been eligible for original acquisition out of the fund.
KRS 42.330(2)(f) provides in part that "money in the fund may be used to retire a mortgage or other indebtedness encumbering an eligible capital project made on and after January 1, 1977, to secure the repayment of moneys loaned or advanced to finance the construction or acquisition of such capital project, and may be used in match or in combination with funds obtained from other sources for an eligible capital project. " (Emphasis added).
When we read the entire sentence, just cited, in the above subsection, we are of the opinion that the fund in question may be used to either retire a preexisting indebtedness (involving an eligible project) in full or in part thereof. There is no adjectival modifier of "retire" . It does not say "retire in full." And then the sentence in subsection (2)(f) concludes by saying: "and be used [the fund] in match or in combination with funds obtained from other sources for an eligible capital project. " (Emphasis added). The financing obtained from the First National Bank of Prestonsburg constitutes "other source", as mentioned in the statute.
Under this literal construction we believe the fund can be spent for eligible capital projects by way of retiring, in whole or in part, a preexisting debt involving the capital project. See Barrett v. Stephany, Ky., 510 S.W.2d 524 (1974). This construction makes sense. See Department of Revenue v. Greyhound Corp., Ky., 321 S.W.2d 60 (1959), in which the court wrote that "we conceived it to be our duty to accord the words of a statute their diteral meaning unless to do so would lead to an absurd or wholly unreasonable conclusion." On the other hand it seems unreasonable to us to say that the fund can be used to pay off the whole debt, but not a part. If a part of the debt is liquidated, that seems to promote the basic purpose of the legislation.