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Opinion No. 5393

November 28, 1978


Art 4, Sec. 31 (balanced budget)

Art 5, Sec. 18 (preparation of budget by governor)


Continuing appropriations


Expenditure of gift to State requiring appropriation

Donations to the State or its agencies may not be expended unless appropriated by the Legislature.

Honorable Russell Hellman

State Representative

The Capitol

Lansing, Michigan 48909

Referring to certain donations made to the game and fish protection fund, you have asked my opinion on the following question:

Must the legislature appropriate funds received by the state or any of its agencies, including monies received as a donation, before such funds may be expended?

Const 1963, art 9, Sec. 17 states:

'No money shall be paid out of the state treasury except in pursuance of appropriations made by law.'

Thus it is clear that a state agency may not expend funds not appropriated by law.

1919 PA 98, Sec. 9, MCLA 21.9; MSA 3.289, provides in part:

'All departments, institutions, boards, commissions, and offices of the state government except the University of Michigan and the Michigan State College of Agriculture and Applied Science, shall hereafter be wholly financed and maintained by specific appropriations by the legislature, . . . Nothing herein contained shall be construed . . . to prevent any institution, department, board, commission or office from accepting gifts, grants, bequests or any assistance whatsoever from private sources or from the United States government, in the furtherance of the purposes of such institution, department, board, commission or office.'

In interpreting 1919 PA 98, Sec. 9, supra, the Attorney General has held that this provision permitting the acceptance by state institutions of grants from private resources is tantamount to a legislative appropriation. OAG, 1949-1950, No 1194, p 566 (May 31, 1950). The basis for this conclusion is stated in OAG, 1947-1948, No 25, p 166, 167 (January 27, 1947), as follows:

'Although it may be technically correct to say that the moneys in question could not be paid out without legislative appropriation, it is our opinion that sufficient legislative appropriation has been made for the purposes herein discussed. Generally speaking, an appropriation is considered to be the setting aside or earmarking of a specified sum for a particular purpose. The legislature having contemplated the acceptance of grants by state departments in furtherance of the purposes for which such departments were created has fixed the object and the amount is made certain when the donation is received. In other words, no special or specific appropriation of particular moneys is required. It would be beyond the power of the legislature to appropriate funds specifically earmarked for one purpose to one foreign thereto.'

See also OAG, 1935-1936, No 22, p 73 (February 26, 1935); OAG, 1947-1948, No 0-5300, p. 125 (December 20, 1946); OAG, 1949-1950, No 1194, p 566 (May 31, 1950); OAG 1961-1962, No 4027, p 372 (April 12, 1962).

All of these referenced opinions of the Attorney General concluded that a state institution may accept funds from private sources in furtherance of its purposes and may expend these funds as a continuing appropriation although, it was noted the donated funds must be deposited in the state treasury and earmarked for the institution's use.

However, with the adoption of the 1963 Michigan Constitution, specifically art 4, Sec. 31 and art 5, Sec. 18, continuing appropriations such as those which the Attorney General recognized as being authorized by 1919 PA 98, Sec. 9, supra, are now prohibited.

In Oakland Board of Education v Superintendent of Public Instruction, 392 Mich 613; 221 NW2d 345 (1974), the Supreme Court stated that the legislature may not enact a continuing appropriation without violating its obligation under Const 1963, art 4, Sec. 31 to annually match revenues with appropriations. Correspondingly, the Governor, in preparing a budget, would be unable to properly assess the fiscal needs of the State as required by Const 1963, art 5, Sec. 18 if continuing appropriations were not included in the annual budget.

The statement in Oakland v Superintendent of Public Instruction, supra, was reinforced in Advisory Opinion on Constitutionality of 1975 PA 227 (Questions 2-10), 396 Mich 465, 501; 242 NW2d 3 (1976), in which the Supreme Court explained that a continuing appropriation is an appropriation '. . . that does take effect in the enusing fiscal year, but which by its terms continues to appropriate beyond that fiscal period.' Therefore, the Court concluded:

'. . . under the rationale of Oakland, there can be an appropriation to the state campaign fund, only for the ensuing fiscal year but not thereafter, appropriations necessarily being made on a year-to-year basis.'

It is, therefore, my opinion that, if it wishes to authorize the expenditure of donations to the state or its agencies, the Legislature must appropriate such funds.

The opinions of the Attorney General, which were issued prior to the changes in the Constitution wrought by Const 1963, art 4, Sec. 31 and art 5, Sec. 18, are therefore superseded.

Frank J. Kelley

Attorney General