Opinion ID: 2538420
Heading Depth: 1
Heading Rank: 10

Heading: The Purpose of the Bonds

Text: ¶ 2 Section 16 of Article 10 states as follows: § 16. Borrowing moneySpecification of purposeUse All laws authorizing the borrowing of money by and on behalf of the State, county, or other political subdivision of the State, shall specify the purpose for which the money is to be used, and the money so borrowed shall be used for no other purpose. Section 16 provides that laws . . . shall specify the purpose for which the money is to be used.... ¶ 3 Provisions of the Oklahoma Constitution are interpreted in conformity with their ordinary significance in the English language. In re Initiative Petition No. 363, State Question No. 672, 1996 OK 122, 927 P.2d 558, 570. The words of those provisions are given their plain, natural and ordinary meaning. A.E. v. State, 1987 OK 76, 743 P.2d 1041, 1046. This sensus literalis approach to the meaning of a particular word is followed unless the context furnishes some ground to control, qualify, or enlarge the meaning. State ex rel. Ogden v. Hunt, 1955 OK 125, 286 P.2d 1088, 1091. The context of the language in § 16 does not require a technical meaning for the phrase laws ... shall specify the purpose for which the money is to be used.... The ordinary meaning of these words should be applied. ¶ 4 Section 55 of Article 5 states as follows: § 55. AppropriationsNecessity and requisites No money shall ever be paid out of the treasury of this State, nor any of its funds, nor any of the funds under its management, except in pursuance of an appropriation by law, nor unless such payments be made within two and one-half years after the passage of such appropriation act, and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated and the object to which it is to be applied, and it shall not be sufficient for such law to refer to any other law to fix such sum. (Emphasis added). The term object for which funds are appropriated by law is also the purpose stated in that appropriation for which the money is to be expended. Sibel v. State Bd. of Public Affairs, 1952 OK 196, 244 P.2d 307, 310, quoting, Meyer, State Auditor, v. Clift, 1912 OK 201, 123 P. 1042, 1043. This definition is consistent with the definition of purpose in the Oklahoma Bond Oversight and Reform Act: `Purpose' means the issuer's principal intended use of the funds derived from the issuance of bonds or other obligations. 62 O.S.2001 § 695.3(6). ¶ 5 The object requirement for appropriations in Art. 5 § 55 is similar to the purpose requirement for borrowed funds in Art. 10 § 16. [1] In Edwards v. Childers, 1924 OK 652, 228 P. 472, we looked at Art. 5 § 55 and approved a lump sum appropriation, via the creation of a special fund, to the State Highway Commission for building new highways and the repair and maintenance of highways already constructed. Id. 228 P. at 473. Although specific capital projects were not listed we said that by the terms of the act, appropriated and directed to be expended for a special purpose and in an express manner, amounts to an appropriation of the entire fund so created, and where the amount accruing to and paid into said fund is capable of being definitely ascertained, it is sufficiently definite and certain to comply with the provisions of article 5, § 55, of the Constitution..... No set of lawmakers can sit in the Capitol of the state and intelligently specify for a year or two in advance the moneys to be expended in the different items of cost of the various projects or road business or just how that detailed work shall be done. The general object for these moneys are to be expended is designated in the statutes under consideration as the construction of a primary system of highways and the repairing and maintenance of state highways. No law could intelligently and successfully make detailed classifications and distinctions in a very extensive further subdivision of these objects specified in the statute. The term object may be satisfied by a descriptive designation without a complete description of its various possible subdivisions. Id. 228 P. at 476. ¶ 6 Our conclusion in Edwards was based upon three concepts: (1) That construction, maintenance, and repair of a system of highways was incapable of being itemized for exact amounts per project, (2) That funding for some of the capital projects would have a source other than the appropriation (such as bonds); and (3) That the Commission, as officials of the State, had its discretion controlled by other enactments involving the duties of the Commission. Id. 228 P. at 476. ¶ 7 As to the first element mentioned in Edwards, this Court is aware that appropriating or borrowing a specific amount of funds for constructing a specific road or highway sometimes is possible. See, e.g., Application of Oklahoma Turnpike Authority, 1966 OK 139, 416 P.2d 860, (turnpike bonds). But the issue in Edwards was whether the Legislature could approach the problem of capital improvements to the highways of the state as a system instead of the Legislature trying to determine the exact location of individual roads needed for the system. The Court concluded that (1) the specific amount appropriated, (2) a legislative purpose of creating and repairing highways (capital projects), and (3) statutes setting forth the nature of the state entity's duties worked together to define the object of the appropriation sufficient to satisfy Art. 5 § 55. To hold otherwise would unnecessarily hinder the Legislature's ability to address and fund problems on a system-wide basis that occur within a particular state agency's sphere of responsibility. ¶ 8 Clearly, as the Court's opinion states, money borrowed for one purpose or object may not be expended upon a different one. But, as the Court's opinion indicates, the issue is how specific the Constitution requires the Legislature to be when stating the purpose or object of public borrowing. ¶ 9 The Court states that lump-sum amounts designated to specific state agencies for capital projects does not specify the purpose of the expenditure sufficient to satisfy Art. 10 § 16. The Court has discussed the meaning of phrases such as capital expenditure and capital outlay, and equated them with the act of constructing or building a capital improvement. Oklahoma Public Employees Association v. Oklahoma Dept. of Central Services, 2002 OK 71, ¶ 26, 55 P.3d 1072, 1083, explaining, City of Sand Springs v. Department of Public Welfare, 1980 OK 36, 608 P.2d 1139. ¶ 10 As the Court's opinion indicates, these capital projects are assigned to particular state agencies. We have recently explained that public officers possess only such authority as is granted by law, and that authority must be exercised in the manner provided by law. Oklahoma Public Employees Association v. Oklahoma Dept. of Central Services, 2002 OK 71, at ¶ 27, 55 P.3d at 1084. State agencies and their public officers are limited, as matter of law, upon what they spend public funds. This limit springs from several sources, and one of these is the nature of the authority vested in the agency or officer doing the spending. ¶ 11 For example, § 301(16)(p) provides $2,010,101.00 for the Department of Human Services. In Oklahoma Public Employees Association the Court examined at some length the contractual authority of the Department of Human Services. Id. at ¶¶ 22-39, 55 P.3d at 1081-1088. Section 301 authorizes the issuance of bonds but does not expand upon the authority of state agencies, such as DHS, that receive the funds. [2] In other words, the capital projects funded by the bond issue must fund capital expenditures that are within the statutory and constitutional authority of the particular agency. ¶ 12 Linking capital expenditures to specific state agencies is also consistent with the Oklahoma Program Performance Budgeting and Accountability Act. 62 O.S.2001 § 45.1 et seq. This Act requires a state agency to make a strategic plan for its operations that includes: A summary of the capital improvement needs of the agency which were provided to the Long-Range Capital Planning Commission as required by Section 901 of Title 62 of the Oklahoma Statutes. 62 O.S.2001 § 45.3(A) & (B)(7). [3] The amounts from the bond issue in the case before us are not mere numbers pulled from of the air, but reflect the Legislature's considered judgment based upon particularized capital needs of the state agencies involved. ¶ 13 The stated purpose of § 301 is consistent with how the Legislature has approved past bond issues of the Oklahoma Capitol Improvement Authority. The Authority was created in 1959 as an instrumentality of the State and given the authority for the construction, equipping, operation and maintenance of the state building or buildings.... 73 O.S.1961 § 152(a). These buildings were identified as those for the use of state and/or federal agencies and departments, with the Authority selecting the place of erection within the Capitol Improvement and Zoning District. 73 O.S.1961 § 153(a). The Authority could issue ten million dollars in bonds for the construction of the buildings.73 O.S.1961 § 153(b). The Authority had other powers relating to the erecting and maintaining these buildings. 73 O.S.1961 § 161. ¶ 14 The 1959 Act gave a statutorily stated purpose of providing office space to state agencies. 73 O.S.1961 § 151. However, the Authority possessed the discretion to determine the number of buildings and their size. 73 O.S.1961 §§ 153, 161. The Authority possessed the discretion, jointly with the State Board of Public Affairs, to determine those state agencies which would use the new buildings. 73 O.S.1961 § 163. In other words, in addition to the dollar amount of the bonds, the Act specified only that the buildings (capital improvements) must be used by state or federal agencies, and that they be built within the Capitol Improvement and Zoning District. The Act did not specify how many or what kind of buildings, or which state agencies would use the buildings. ¶ 15 In 1971 the Authority was given a general authorization to erect, equip, operate, and maintain buildings for the use of state and/or federal agencies at any place or location within the State of Oklahoma. 73 O.S. 1971 § 153(a). The Legislature has also at various times given the Authority an authorization to construct and maintain buildings for specific agencies. For example, in 1971 the Authority was authorized to erect, operate, and maintain buildings for the Department of Public Safety on Northeast 36th Street in Oklahoma City. Id. The Authority has also been given an authorization for capital expenditures other than buildings. For example, in 1997 the Legislature added that: It shall also be the purpose of this act to provide an improved and expanded highway infrastructure for the health, safety, and welfare of the traveling public in this state and for the continued economic development of this state. 73 O.S.Supp.1997 § 151. ¶ 16 The legislative history of the Capitol Improvement Authority thus shows a purpose in its function. It was created and has been used for erecting, operating, and maintaining, certain projects for the State, i.e., capital projects that fulfill a public purpose. The legislation before the Court today continues that purpose. ¶ 17 The stated purpose of § 301 is similar to the legislatively expressed purposes in bond issues involving other Authorities. The Act before the Court today specifies dollar amounts for capital projects for specific state agencies. If other statutes are examined some have more specificity than § 301, [4] some have the same, and some have both. For example, the purposes section of the 1961 Building Bonds Act states in part that: . . . [the] Building Bonds Commission ... shall incur indebtedness to the extent of the sum of Thirty-five Million Five Hundred Thousand Dollars ($35,500,000.00) as principal, for the purpose of constructing new buildings and other capital improvements, and for equipping, remodeling, modernizing and repairing any and all existing buildings and capital improvements, at the constituent institutions of the Oklahoma State System of Higher Education provided that Five Million Dollars ($5,000,000.00) thereof shall be used to construct and equip a school and hospital for mentally retarded children in Northeastern Oklahoma.. . . 62 O.S.1961 § 57.32. A state entity, State System of Higher Education, was provided with approximately thirty million dollars for new buildings and other capital improvements, and for equipping, remodeling, modernizing and repairing any and all existing buildings and capital improvements, at the constituent institutions. . . . In sum, the purposes statement did not tell the state entity what individual projects would be funded, or how much money would be spent on the individual capital projects the state entity chose to build. In similar fashion, today's § 301 identifies the state entity and the amount going to the state entity, but does not specify particular projects in that statute. ¶ 18 In sum, § 301 states that its purpose is to fund capital projects for particular state entities in specified amounts. Past bond issues have stated a purpose of funding capital projects for particular state entities. Those state agencies possess only that authority granted to them by statute and constitution. I must therefore conclude that Article 10 § 16 has been satisfied.