STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6063

April 29, 1982

CONSTITUTIONAL LAW:

Const 1963, art 4, Sec. 25--effect of provisions of appropriation act amending substantive statute

LEGISLATURE:

Authority to supervise use of investment income from proceeds of comprehensive transportation bonds

TRANSPORTATION, DEPT. OF:

Use of investment income from proceeds of comprehensive transportation bonds.

1981 PA 32, Sec. 41(2), which provides for legislative supervision of the use of investment proceeds from comprehensive transportation bonds contrary to the provisions of 1951 PA 51, violates the reenact and publish provision of Const 1963, art 4, Sec. 25.

John P. Woodford

Director

Department of Transportation

Highway Building

4th Floor

Lansing, Michigan

You have asked for my opinion as to the legality of 1981 PA 32, Sec. 41(2) contained in the 1981-1982 appropriation bill for the Department of Transportation. 1981 PA 32, Sec. 41 provides:

As to 1981 PA 32, Sec. 41(1), the Department of Transportation advises that all of the projects listed therein are, in fact, being funded, in full or in part, pursuant to the general bond resolution, as amended, with the proceeds of the $50,000,000 State of Michigan Comprehensive Transportation Bonds, Series B, dated May 1, 1981 (the 'Series B Bonds'), which were delivered in New York, New York on June 18, 1981. 1981 PA 32, Sec. 41(2), by its terms, requires interest income from proceeds of the Series B bonds to be limited exclusively to the projects listed in 1981 PA 32, Sec. 41(1), and then only after approval by the house and senate appropriation committees.

Section 8 of the said general bond resolution establishes a separate fund known as the Comprehensive Transportation Bond Construction Fund and requires that: 1) the proceeds of sale of each series of bonds, together with any premium thereon, be deposited therein; 2) the State Treasurer continually invest and reinvest all moneys in the Bond Construction Fund with the interest accruing from these investments to be credited to the Bond Construction Fund; and 3) the money in the Bond Construction Fund is to be used to pay costs of the bond projects as these projects may be modified, supplemented or amended, in accordance with Act 51, until all projects are completed or abandoned. At that time, the money remaining in the Bond Construction Fund is to be transferred, at the option of the Director of the State Transportation Department, to either the Comprehensive Transportation Fund or the Comprehensive Transportation Bond and Interest Redemption Fund.

In your letter you state:

The Series B bonds were issued pursuant to resolutions of the State Transportation Commission and orders of the Director of the Department of Transportation pursuant to 1951 PA 51; MCLA 247.651 et seq; MSA 9.1097(1) et seq. 1951 PA 51, supra, Sec. 18b, provides, in pertinent part:

The proceeds of the Series B bonds, by the terms of the Series B authorizing resolution, are being used to fund a number of transportation projects, including but not limited to the projects enumerated in 1981 PA 32, Sec. 41(1) as confirmed by the Legislature in 1981 PA 32, Sec. 42.

The appropriation for debt service for the comprehensive transportation bonds, including Series B, from moneys in the Comprehensive Transportation Fund in 1981 PA 32, Sec. 1, is consistent with the requirement set forth in 1951 PA 51, supra, Sec. 10e(1)(a) that the first priority of expenditure for the Comprehensive Transportation Fund is the payment of debt service on bonds issued for comprehensive transportation purposes under 1951 PA 51, Sec. 18b, supra. OAG, 1981-1982, No 5959, p 318 (August 14, 1981). Numerous specifications concerning the bonds are provided for in 1951 PA 51, Secs. 18b and 18e, supra, including the general statement that other details are to be contained in the Commission's bond resolution. Among the details covered by the general bond resolution, section 8 thereof provides for the handling of interest earned on the proceeds of the bonds as noted above.

In effect, the issue presented is whether the requirements for bonding authorization of 1951 PA 51, supra, were modified by the provisions of 1981 PA 32, Sec. 41(2). OAG, 1981-1982, No 5951, p 304 (August 10, 1981), considered provisions in a Department of Social Services appropriated bill regarding special shelter standards for certain counties. At p ___, it was stated:

The issuance of comprehensive transportation bonds, the use of bond proceeds, and the contents of the general and series bond resolutions are governed by 1951 PA 51, supra. Under the requirements of Const 1963, art 4, Sec. 25, statutory amendments concerning the issuance of such comprehensive transportation bonds, use of their proceeds, and the statutorily required contents of the bond resolution, must be made by reenacting and republishing the provisions of 1951 PA 51, supra, intended to be amended rather than by way of enactment of provisions in an appropriation act. Accord, OAG, 1981-1982, No 6036, p 548 (January 29, 1982).

It is my opinion, therefore, that 1981 PA 32, Sec. 41(2), is void and without effect as being in violation of Const 1963, art 4, Sec. 25.

Since it is clear that 1981 PA 32 would have been enacted without section 41(2), the invalid subsection is severable from the remainder of the act, which remains valid. See, People v McMurchy, 249 Mich 147; 228 NW 723 (1930) and OAG, 1979-1980, No 5688, p 723 (April 21, 1980).

Frank J. Kelley