The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 5624

December 20, 1979

FUNDS:

Adjustments to funds transferred from a special fund for economic stabilization

APPROPRIATIONS:

From special fund for economic stabilization

Revenue transferred out of the counter-cyclical budget and economic stabilization fund may be adjusted during a particular fiscal year as provided by law.

The Legislature may appropriate funds from a counter-cyclical budget and economic stabilization fund in any calendar quarter following the calendar quarter in which the unemployment rate is 8 percent or more, provided that the calendar quarter in which the unemployment rate is 8 percent or more and the following calendar quarter when the appropriation bill is enacted are within the same fiscal year.

Dr. Gerald H. Miller

Director

Department of Management and Budget

Stevens T. Mason Building

Lansing, Michigan

You have requested my opinion on the following questions:

1. May the revenue transferred pursuant to 1979 PA 111, Sec. 102 from the counter-cyclical budget and economic stabilization fund to the general fund be increased or decreased in accordance with 1977 PA 76, Sec. 3(2)?

2. If the Legislature fails to include a final estimate of the transfer into or out of the counter cyclical budget and economic stabilization fund in the general appropriation bill as set forth in 1977 PA 76, Sec. 6, may the treasurer, nevertheless, make transfers between that fund and the general fund in the current fiscal year?

3. May the Legislature appropriate funds from the counter-cyclical budget and economic stabilization fund only in the calendar quarter following the calendar quarter in which the unemployment rate exceeds 8 percent?

Your questions will be answered seriatim.

1977 PA 76; MCLA 21.401 et seq; MSA 3.116(51) et seq, creates a counter-cyclical budget and economic stabilization fund (hereafter the Fund), and provides for transfers into and out of the Fund. The Legislature has expressly delineated the purposes for the establishment of the Fund 'to assist in stabilizing revenue and employment during periods of economic recession and high unemployment.' 1977 PA 76, supra, Sec. 2.

In OAG, 1977-1978, No 5204, p ___ (June 15, 1977), the Attorney General upheld the authority of the Legislature to create a special fund for the public purpose of providing counter-cyclical budget and stabilization for the state. Relying upon the public purpose for the enactment of 1977 PA 76, supra, the opinion stated:

'As noted, the purpose of creating an economic stabilization fund is to regulate expenditures of state funds in a manner which will moderate the effects of fluctuations of economic activity in the private sector. Absent this effort on the part of the state, economic activity will rise and fall in a pattern of extremes. During the high point of economic activity unemployment will be low and the public will have a comparatively large sum of money to spend. At such times there will not be a great demand made upon the public treasury for welfare payments and other forms of public services that are generally required during times of economic stress. Yet it is at this time that the public is best able to afford payment of taxes in anticipation of the economic downturns which are predictable.

'Conversely, during periods of high unemployment and a general slowdown in the economy, the demands made upon the public treasury are at the highest level. Payments must be made for the cost of social services which increases at a rapid pace but the ability of the taxpayers to meet this increased burden is then at a low ebb.'

The statutory scheme adopted by the Legislature contemplates an estimate of transfer into and out of the Fund to be made, first, in the executive budget for each fiscal year, 1977 PA 76, supra, Sec. 5, and a final estimate of such transfer to be determined by the Legislature in the general appropriation bill for the fiscal year, 1977 PA 76, supra, Sec. 6, preliminary to the operative effect of 1977 PA 76, supra, Secs. 3 and 7, to determine the amount eligible to be transferred into or out of the fund and the requisite adjustments needed to accomplish the purposes of the act.

1977 PA 76, supra, Sec. 3, provides:

'(1) When the annual growth rate is more than 2% except as provided in section 12, the percentage excess over 2% shall be multiplied by the total general fund revenue for the fiscal year ending in the current calendar year to determine the amount to be transferred to the fund from the general fund in the fiscal year beginning in the current calendar year.

'(2) When the annual growth rate is less than zero, the percentage deficiency under zero shall be multiplied by the total general fund revenue for the fiscal year ending in the current calendar year to determine the eligible amount to be transferred to the general fund from the fund in the current fiscal year. When the formula calls for a larger transfer from the fund than is necessary to balance the current fiscal year general fund-general purpose budget, the excess shall remain in the fund.'

In 1977 PA 76, Sec. 7, supra, the Legislature has provided:

'(1) The transfer into or out of the fund as provided in section 3 of this act, for each fiscal year beginning after September 30, 1978, shall be adjusted in light of revision in the annual growth rate for the calendar year upon which that transfer was made. The adjustment shall be directly proportional to an increase or decrease in the annual growth rate, but the adjustment shall not be in excess of 1% multiplied by the total general fund revenue of the fiscal year upon which the transfer was based. The basis for an adjustment shall be a change in the personal income level for that calendar year as determined by the bureau of economic analysis of the United States department of commerce in the last report it makes prior to April 30 of the fiscal year in which that calendar year ended.

'(2) An appropriation from the fund as provided in section 4 shall be adjusted for a change in the unemployment rate statistics for the 4 quarters immediately preceding the quarter in which the appropriation is to be made, as long as an adjustment has not already been made in an appropriation from the fund because of a prior change in the unemployment rate statistics for 1 or more of those 4 quarters. A change in the unemployment rate statistics also shall not be made until that change is certified by the director of the Michigan employment security commission.

'(3) An adjustment made pursuant to subsection (2) shall not be made unless the change in the unemployment rate statistics would have provided for a difference percent of the fund to be appropriated under section 4. If the adjustment creates a general fund liability, that liability shall be offset against future appropriations which would have been made under section 4.'

The task at hand is to give meaning and effect to every section of 1977 PA 76, supra, Collins v Secretary of State, 19 Mich App 498; 172 NW2d 879 (1969), aff'd 384 Mich 656; 187 NW2d 423 (1971), in light of the purposes of the act. People v Harrison, 194 Mich 363; 160 NW 623 (1916).

Pursuant to 1977 PA 76, Secs. 3 and 6, supra, the Legislature has made the determination required for the fiscal year 1979-1980 in the general appropriation bill for fiscal year 1979-1980, 1979 PA 111, Sec. 102, which provides:

"Budget Stabilization

(in millions)

Calendar Calender

Year Year

1979 1980

Estimated Michigan Personal Income $ 85,308 $ 92,133

Less: Estimated Transfer Payments 9,948 11,440

-------- --------

Equals: Estimated Michigan Personal Income Less Transfer $ 75,360 $ 80,693

Payments

Reduced by: Detroit Consumer Price Index (1967 = 1.00) k 2.051 k 2.226

for 12 months ending June 30 of given calendar year

-------- --------

Adjusted Michigan Personal Income $ 36,743 $ 36,008

Percentage Decrease in Calendar Year 1980 ............................... 1.35%

Times: Estimated General Fund/General Purpose Revenue in Fiscal Year

1979-80 ............................................................. $ 4,549

Equals: Transfer from counter-cyclical budget and economic

stabilization [sic] fund to the general fund ........................ $ 59.1"

As required by 1977 PA 76, Sec. 6, supra, the sum of $59,100,000 is the final estimate by the Legislature of the transfer out of the Fund based upon the best information available to it at the time of the enactment of 1979 PA 111, Sec. 102, supra.

In 1977 PA 76, Sec. 7, supra, the Legislature has contemplated and provided for certain adjustments to be made during the particular fiscal year for which the final estimate of transfer was made by the Legislature in light of more complete information becoming available, but all adjustments must be made during the particular fiscal year. This section expressly requires that adjustments be made upon determinations of the bureau of economic analysis of the United States Department of Commerce in its reports made prior to April 30 of 1980 for the calendar year 1979.

Thus, it is the intent of the Legislature that revenue transferred be increased or decreased in accordance with 1977 PA 76, Sec. 3(2) during the particular fiscal year. Therefore, in response to your first question, it is my opinion that the revenue transferred by 1979 PA 111, Sec. 102, supra, may be increased or decreased during the fiscal year 1979-1980 in accordance with 1977 PA 76, Sec. 3(2).

Turning to your second question, you ask whether transfers may be made from or into the counter-cyclical budget and economic stabilization fund during a particular fiscal year if the general appropriation bill for that fiscal year does not contain a final estimate of the transfer into or out of the fund made by the Legislature as required by 1977 PA 76, Sec. 6, supra.

In the answer to question No. 1, it was demonstrated that the Legislature has made the required estimate of transfer for fiscal year 1979-1980 in 1979 PA 111, Sec. 102, supra. There is no basis to conclude that the Legislature will not do so in general appropriation bills for future fiscal years.

Therefore, it is unnecessary to answer your question at this time.

In your third question, you have requested my opinion as to whether the Legislature must make appropriations from the Fund in the calendar quarter immediately following the quarter in which the unemployment rate exceeds 8 percent and at no other time.

Your attention is directed to 1977 PA 76, supra, Sec. 4, which provides:

'(1) In a calendar quarter following a calendar quarter in which the state unemployment rate as certified by the director of the Michigan employment security commission is 8% or more, an amount may be appropriated from the fund by the legislature for the purposes listed in this section in accordance with the following table:

"Percent of unemployment in Percent of fund available for

the calendar quarter preceding economic stabilization during

the calendar quarter in which the calender quarter following

an amount may be appropriated a calender quarter of high

unemployment

------------------------------ ------------------------------

8.0-11.9% 2.5% of fund balance

12.0% and over as of first day of calendar

quarter.

5.0% of fund balance

as of first day of calendar

quarter.

'(2) The legislature may appropriate by law money from the fund in the amounts as provided in this section to assist in the following counter-cyclical economic stabilization purposes:

'(a) Capital outlay.

'(b) Public works and public service jobs.

'(c) Refundable investment or employment tax credits against state business taxes for new outlays and hiring in this state.

'(d) Any other purpose the legislature may provide by law which provides employment opportunities counter to the state's economic cycle.' (Emphasis added.)

From a reading of this section, the Legislature has in the beginning sentence referred to a calendar quarter after a calendar quarter and in the table portion of this section has first referred to the calendar quarter after the calendar quarter and yet in another portion of the table has referred to the calendar quarter after a calendar quarter. Thus, it must be concluded that the meaning of this section of 1977 PA 76, Sec. 4, supra, is ambiguous and a reasonable interpretation must be given looking to the purpose to be subserved. Grand Rapids Motor Coach Co. v Public Service Commission, 323 Mich 624; 36 NW2d 299 (1949).

In construing a statute, the terms used by the Legislature are to be given their ordinary meaning. Jewell Tea Co, Inc v Board of Pharmacy, 335 Mich 673; 57 NW2d 425 (1953). The term 'a', when used as a function word before a noun, is defined by Webster's Third New International Dictionary to mean 'undetermined.' It has also been held that the term 'the', when used before a noun with a specifying or particularizing effect, is a word of limitation, as opposed to the indefinite or generalizing force of the term 'a'. United States v Hudson, 65 F 68 (WD Ark, 1894), appeal dismissed, 166 US ----; 17 S Ct 994; 41 L Ed 1178 (1897); Brooks v Zabka, 168 Colo 265; 450 P2d 653 (1969). The term 'a' has been construed to be synonomous with the term 'any'. People v One 1940 Buick Sedan, 71 Cal App 2d 160; 162 P2d 318 (1945).

The statute lends itself to two readings; (a) the Legislature may, in any fiscal year, appropriate moneys from the Fund during any calendar quarter after a calendar quarter in the same fiscal year in which the unemployment rate is 8 percent or more; and (b) the appropriation may only be made in the calendar quarter immediately following the calendar quarter within the same fiscal year in which the unemployment rate is 8 percent or more. In light of purposes of the act, the need for the Legislature to legislate as a deliberative body, and the authorities cited, the reading most reflective of legislative intent is that the Legislature may appropriate funds from the Fund in any calendar quarter following the calendar quarter in which the unemployment rate is 8 percent or more, provided that the calendar quarter of high unemployment and the following calendar quarter of appropriation are in the same fiscal year.

It is, therefore my opinion, in response to your third question, that the Legislature is not required by 1977 PA 76, Sec. 4, supra, to appropriate funds from the counter-cyclical budget and economic stabilization fund only in the quarter following the quarter in which the unemployment rate exceeds 8 percent.

Frank J. Kelley

Attorney General