Opinion ID: 1716385
Heading Depth: 1
Heading Rank: 5

Heading: Relationship of Article 7, Section 9 to Article 14, Section 10

Text: In the construction we have reached of Article 14, Section 10, we have not discussed the state's contention that Article 7, Section 9 of the 1974 constitution mandates the use of tidelands funds to pay debts maturing during the fiscal year of receipt. We did not reach this argument, in view of our finding of a clear constitutional intent to prohibit use of tidelands funds to pay indebtedness maturing during an initial period following the funds' receipt. Nevertheless, we deem it appropriate at this point to discuss the relationship of the two constitutional provisions, not only because of this contention of the state, but also because of an ancillary contention raised by the taxpayers in connection therewith. Section 9 of Article 7 (Revenue and Finance) is entitled State Funds. Subsection A provides: All money received by the state or by any state board, agency, or commission shall be deposited immediately upon receipt in the state treasury, except [exceptions immaterial to the present discussion]   . Subsection B provides that all state money deposited in the state treasury shall be credited to a special fund designated as the Bond Security and Redemption Fund. . . . In each fiscal year an amount is allocated from the bond security and redemption fund sufficient to pay all obligations [maturing during the fiscal year] . . . . Thereafter, except as otherwise provided by law, money remaining in the fund shall be credited to the state general fund. [12] (Italics ours.) (We should here note, as conceded by all parties, that, whether or not the tidelands funds may ever form part of the bond security and redemption fund, they do not revert to the general fund for general appropriation. Article IV, Section 10, dedicates their use (with exceptions not here pertinent) to reduction of the bonded indebtedness of the state existing on the date of the receipt of these funds. The italicized phrase, except as otherwise provided by law, expressly directs recognition of such other disposition of law.) Article 14, Section 10 (see Table 1), provides that, when received, tidelands funds shall be deposited in the state treasury. It also provides that these funds, except the portion otherwise allocated or dedicated by this constitution, shall be used to purchase, retire, or pay in advance of maturity the existing bonded indebtedness of the state or shall be invested for [such] purpose. The state argues that, upon deposit of the funds into the state treasury, they are immediately allocated to pay currently maturing debt, by operation of Article 9(B). The taxpayers contend, to the contrary, that the tidelands funds are never credited to the bond security and redemption fund established by that section, since Article 14, Section 10, is a special directive that such funds be maintained as a special fund. With regard to the state's contention: Although the funds are deposited in the state treasury, no portion of these tidelands funds is allocated to payment of the currently maturing debt. To do so, is to defeat the express intention of Article 14, Section 10, previously noted; which is not to use such tidelands funds for debt matured at the time of their receipt or maturing within a limited period thereafter. This special provision of Section 10, to this extent, excepts tidelands funds and interest upon their investment from being so used by applying to them the general provisions of Article 7, Section 9(B). The reference to other allocation of a portion of the tidelands funds refers solely to the allocation of royalties from mineral leases to the parish in which the production occurs. Article 7, Section 4(E). See also Part V, questions 1-3 below. If there were doubt, this intention is made clear in the convention debates. 34 Proceedings (103rd day, December 18) 133-34, (104th day, December 19) 2-9. With regard to the taxpayers' contention: Article 14, Section 10, provides for the deposit of tidelands funds into the state treasury for payment of the state's bonded indebtedness or for investment for such purpose. We have further held that the intent of the provision prevents use of such funds in the bond security and redemption fund to pay debts maturing during the current fiscal year. However, as we have noted, the intent of the provision does not prohibit use of the tidelands funds (deposited in the treasury and invested for such purpose) from being used to any bonded indebtedness which matures in subsequent fiscal years. From this bond and security fund, without the necessity of legislative appropriation (by virtue of Article 7, Section 9(B)), an amount is automatically allocated each year to pay currently maturing debt. But the provision does not require that such allocation shall be only from funds otherwise reverting to the general fund; nor does it prohibit using other funds available for debt reduction (such as the tidelands funds), as may be determined by the political instrumentalities of the state (see Part V, Question 6) entrusted with power to make the decision. The effect of the provision is not to designate the particular state monies in the state treasury which shall be allocated for retirement of currently maturing debt. It is primarily only to give holders of currently maturing bonds a first lien and privilege and privilege on the funds in the Bond Security and Redemption Fund, La. R.S. 39:1402(C), and to direct the legislature to authorize the treasurer to pay such bonds without the legislative appropriation otherwise normally required, La.R.S. 39:1366(4). Article 7, Section 9(B) (quoted in footnote 12 above) provides that all state money deposited in the state treasury shall be credited to the bond security and redemption fund. From this entire fund, a portion is allocated sufficient to pay currently maturing obligations of the state. The subsection constitutionalized the concept of a former statutory provision to the same effect [13] ; its purpose was to assure a more favorable bond rating for Louisiana bonds (making them more desirable and permitting their sale at lower rates of interest) by assuring their payment first call from the treasury when they mature, without the necessity for legislative appropriation. See Proceedings (102nd day, December 17) 41-52, especially 43. We are unable to find that the explicit provisions and purpose of Section 9(B) do not apply to tidelands funds deposited in the treasury and thus (although invested as required by law, as are other state funds, general special, see La.R.S. 39:462) forming part of the state money deposited in the state treasury required to be available for allocation to pay bonded indebtedness in the fiscal years following their receipt. [14] In finding a contrary intent, the majority relies upon an excerpt of a statement by Senator DeBlieux, who was author of an amendment which lost by a vote of 73 to 16. Proceedings (103rd day, December 18) 134-39. The purpose of the amendment was to delete all portions of Section 10 other than requiring their deposit into the state treasuryto completely undedicate the funds (Delegate David Conroy noted in opposing it, that the amendment totally undedicates the funds that would be received in this lump sum settlement, p. 135). The excerpt of Senator DeBlieux's comments cited by the majority, p. 134, was only to the effect that deposit of tidelands funds (undedicated) into the general fund would not handicap operation and management of our funds (immediately preceding majority's quotation) because, upon deposit in the state treasury, the bond security and redemption fund was the mechanism for good debt management. The defeat of the senator's amendment was not a defeat of any proposal to make tidelands funds subject to being included in the bond security and redemption fund. It was a defeat of a proposal to place tidelands funds in the general funds available, except for the bond security and redemption fund allocation (as with all other monies in the state treasury), for spending for any purpose whatsoever. The ascription of any constitutional intent to this out-of-context excerpt of the statement of the author of a defeated (16-73) amendment is without legal foundation, and it flies in the face of the express language of the constitution (and the specific intent reflected by the debates) that all monies in the state treasury shall be credited to the bond security and redemption fund for the purpose of securing (not necessarily paying) state debt. By our proposed holding, we would not intend to imply that tidelands funds must be used to pay debts maturing in the fiscal years next succeeding their receipt, simply because they are available for inclusion in the bond security and redemption fund for those years and thus available for this purpose. So long as (by requirement of Section 10) the funds are used to reduce the bonded indebtedness of the state existing on the date of their receipt, the constitutional provisions at issue do not direct the particular debts to which these funds are applied, as decided by the political instrumentalities of our government in whom this power is entrusted by our constitution and statutes. In short, we find no constitutional strait-jacket on the manner in which, in the fiscal years succeeding that in which received, the tidelands funds are to be used to reduce the bonded indebtedness of the state existing on the date of their receipt. Fiscal Decisions and Economic Policy Primarily for the Political Branches of Government, not the Courts We are mindful of the strong but opposing policy arguments made both by the taxpayers and by the state. On the one hand, the taxpayers contend that the best economic advantage to the state will result from application of the tidelands funds to reduce longterm indebtedness at a discount, with consequently longrange savings in principal and interest. On the other hand, with equal force, the state contends that, in view of the present high-interest borrowing rates and the constant inflation of construction costs, the state's longterm economic advantage may best be served by using the tidelands funds to retire soon-maturing indebtedness and using any thus-freed current revenues to build, for cash and without borrowing (at present high-interest rates), needed capital improvements (which must later, if not today, be constructed at much greater capital cost to the state). The function of the courts, however is not to make political determinations as to fiscal questions where, as here, the constitution does not dictate their decision. In the absence of restriction by the constitution, the choice of fiscal and economic policies is entrusted to the executive and legislative branches of our government, not to the judicial branch. The function of the judiciary is not to weigh the wisdom or unwisdom of policy choices constitutionally open to the political officials and instrumentalities of the state entrusted with the responsibility and duty to make them; the judiciary's function is limited to ruling upon the legality of these policy decisions, and whether the constitution restricts the political choices open to those empowered to choose. Finding no such constitutional restriction here, we would find no occasion for judicial enforcement of the concepts advanced either by the taxpayers or by the state, however meritorious and wise they respectively may or may not be.