Opinion #6132

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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. 6132

March 7, 1983

CONSTITUTION LAW:

Const 1963, art 9, Sec. 9--payment of judgments awarded against State Department of Transportation with proceeds of State Trunk Line Fund

STATE TRUNK LINE FUND:

Use of monies to pay judgments awarded against the State Department of Transportation

Monies in the State Trunk Line Fund established in accordance with Const 1963, art 9, Sec. 9 may be used for the payment of judgments awarded against the State Department of Transportation pursuant to 1964 PA 170, Sec. 2.

Mr. Robert A. Bowman

State Treasurer

Treasury Building

Lansing, Michigan

Your predecessor requested my opinion whether monies deposited in the State Trunk Line Fund may be used to pay civil judgments rendered against the State Department of Transportation pursuant to 1964 PA 170, Sec. 2; MCLA 691.1402; MSA 3.996(102), for failure to maintain highways under its jurisdiction in reasonable repair and in reasonably safe condition.

The Michigan Transportation Fund, created by 1951 PA 51, Sec. 10(1), as last amended by 1982 PA 438; MCLA 247.660; MSA 9.1097(10), is made up of fuel and weight tax revenues and fees limited as to use under Const 1963, art 9, Sec. 9, as amended. 1951 PA 51, Sec. 11(1), as last amended by 1982 PA 438; MCLA 247.661; MSA 9.1097(11), created a separate fund, the State Trunk Line Fund, to receive and hold that portion of the Michigan Transportation Fund which is apportioned to the Department of Transportation. Necessarily, the State Transportation Department Fund, the separate State Trunk Line Fund, and the separate Comprehensive Transportation Fund established by 1951 PA 51, Sec. 10b(1), as last amended by 1982 PA 438; MCLA 247.660b; MSA 9.1097(10c), are each impressed with the limitations imposed on the Michigan Transportation Fund by Const 1963, art 9, Sec. 9, as amended.

1964 PA 170, Sec. 2, supra, imposes a statutory duty upon the State Department of Transportation to maintain highways under its jurisdiction in reasonable repair and in reasonably safe and convenient condition for public travel. It supplies a remedy against the State Department of Transportation for damages suffered as the result of the department's failure to observe the duty imposed, and it also provides for payment of judgments awarded:

'Any judgment against the state based on a claim arising under this section from acts or omissions of the state highway department shall be payable only from restricted funds appropriated to the state highway department or funds provided by its insurer.' (Emphasis added.)

The State Department of Transportation maintains no insurance coverage to pay judgments rendered against the department pursuant to 1964 PA 170, Sec. 2, supra.

At the time 1964 PA 170, Sec. 2, supra, was enacted, Const 1963, art 9, Sec. 9 provided:

'All specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and on registered motor vehicles shall, after the payment of necessary collection expenses, be used exclusively for highway purposes as defined by law.' (Emphasis added.)

As noted in the Address to the People, 2 Official Record, Constitutional Convention, 1961, pp 3400, the underscored language contained a significant change:

'This is a revision of Sec. 22, Article X, of the present [1908] constitution and retains earmarking of gas and weight taxes for highway purposes. The only significant change is accomplished through the addition of the words 'as defined by law' following 'highway purposes' at the conclusion of the section. This gives the legislature power to define and limit the meaning of the term 'highway purposes'.' (Emphasis added.)

The predecessor provision, Const 1908, art X, Sec. 22 was extremely restrictive in that it authorized the use of highway funds 'exclusively for highway purposes.' Const 1963, art 9, Sec. 9 was adopted to be less limited than Const 1908, art X, Sec. 22 because the framers believed it was better to leave the definition of 'highway purposes' to the Legislature. Advisory Opinion on Constitutionality of 1976 PA 297, 401 Mich 686, 704; 259 NW2d 129, 135 (1977).

Effective January 1, 1979, Const 1963, art 9, Sec. 9 was amended by the people to provide:

'All specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and to propel aircraft and on registered motor vehicles and aircraft shall, after the payment of necessary collection expenses, be used exclusively for transportation purposes as set forth in this section.

'Not less than 90 percent of the specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and on registered motor vehicles shall, after the payment of necessary collection expenses, be used exclusively for the transportation purposes of planning, administering, constructing, reconstructing, financing, and maintaining state, county, city, and village roads, streets, and bridges designed primarily for the use of motor vehicles using tires, and reasonable appurtenances to those state, county, city, and village roads, streets, and bridges.

'The balance, if any, of the specific taxes, except general sales and use taxes and regulatory fees, imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways and on registered motor vehicles, after the payment of necessary collection expenses: 100 percent of the specific taxes, except general sales and use taxes and regultory fees, imposed directly or indirectly on fuels sold or used to propel aircraft and on registered aircraft, after the payment of necessary collection expenses; and not more than 25 percent of the general sales taxes, imposed directly or indirectly on fuels sold to propel motor vehicles upon highways, on the sale of motor vehicles, and on the sale of the parts and accessories of motor vehicles, after the payment of necessary collection expenses; shall be used exclusively for the transportation purposes of comprehensive transportation purposes as defined by law.

'The legislature may authorize the incurrence of indebtedness and the issuance of obligations pledging the taxes allocated or authorized to be allocated by this section, which obligations shall not be construed to be evidence of state indebtedness under this constitution. (Emphasis added.)

In Const 1963, art 9, Sec. 9, the people have enumerated the transportation purposes for which the specific taxes may be expended. The meaning of the enumerated purposes is not clear. Therefore, construction is necessary. The rules for construction of the Constitution were explicated in Council No 11, AFSCME v Civil Service Commission, 408 Mich 385, 405; 292 NW2d 442, 450 (1980). An appropriate rule of construction delineated therein and quoted from Traverse City School Dist v Attorney General, 384 Mich 390, 405-406; 185 NW2d 9, 14 (1971), is that "to clarify meaning, the circumstances surrounding the adoption of a constitutional provision and the purpose sought to be accomplished may be considered."

Thus, in determining the meaning of Const 1963, art 9, Sec. 9, as amended by the people in 1978, it is appropriate to look at the circumstances leading to its adoption and the purpose sought to be accomplished.

The Michigan Court of Appeals examined the circumstances leading to the most recent amendment to Const 1963, art 9, Sec. 9 in Southeastern Michigan Transportation Authority v Secretary of State, 104 Mich App 390, 403-404; 304 NW2d 846, 852-853, lv den 411 Mich 979 (1981). The case involved a writ of mandamus to compel the Secretary of State to collect taxes on certain motor vehicle registrations and on transfer of motor vehicle titles for comprehensive transportation purposes:

'In 1976, when the Legislature broadened the definition of highway purposes to include public transportation, rapid transit vehicles, people movement, and railroad cars--this being permitted under article 9, Sec. 9, as it then read--road contractors, suppliers of road building machinery and equipment, and manufacturers of automobiles and auto parts became alarmed that unless article 9, Sec. 9 was amended massive appropriations for mass transportation would be made from the earmarked taxes which traditionally had been used for building and maintaining highways. Conversely, proponents of mass transportation moved to have even greater appropriations made from the earmarked funds.

'By placing a ceiling on the total or aggregate amount of earmarked revenues which could be diverted to public transportation and similar purposes, the fears of the road building and automobile interests could be allayed. This is precisely what House Joint Resolution F did. It placed a top limit on the amount of money which could be diverted from conventional highway purposes to comprehensive highway purposes. The important point, for purposes of this case, is that the competing interests were concerned with total dollar amounts. They compromised their differences by placing limits in aggregate amounts. Based on the circumstances under which House Joint Resolution F was written and approved by the people, we conclude that Article 9, Sec. 9 imposes its limitations in the aggregate and that as long as the SEMTA taxes distributed under Sec. 16a(3) do not exceed 10% of all of the constitutionally-earmarked taxes on motor vehicles and motor fuels, Sec. 16a(3) is not unconstitutional. In our opinion, Const 1963, art 9, Sec. 9, as amended, does not require that 90% of each tax governed by that section be spent for conventional highway purposes.' (Emphasis added.)

This interpretation of the circumstances surrounding the amendment of Const 1963, art 9, Sec. 9 by the people in 1978 is supported by a study of the recommendation of the Governor that such an amendment be adopted:

'MICHIGAN TRANSPORTATION FUND

'The Governor recommends the creation of a Michigan Transportation Fund to replace the Motor Vehicle Highway Fund as a point of revenue deposit and allocation.

'The Motor Vehicle Highway Fund was created by Act 51, P.A. 1951, as the receiving fund for motor fuel taxes, vehicle registration fees, motor carrier fees and related revenue. Pursuant to Article IX, Section 9 of the State Constitution, the Fund is dedicated to highway-related activities as defined by law and revenues are distributed by statutory formula or in the form of grants for specific purposes.

'The proposed Michigan Transportation Fund will operate under virtually identical terms and conditions.' (Emphasis added.) Executive Budget of the State of Michigan, 1978-1979 Fiscal Year, p Y3.

Moreover, the people were provided the following notice of the proposed constitutional amendment to be voted on:

'PROPOSAL M

'PROPOSED CONSTITUTIONAL AMENDMENT

'(AMENDMENT TO ARTICLE 5, SECTION 28, AND ARTICLE 9, SECTION 9 OF THE STATE CONSTITUTION, PROPOSED BY THE LEGISLATURE, TO ALLOCATE AT LEAST 90% OF GAS TAX REVENUES FOR GENERAL ROAD PURPOSES AND THE REMAINDER FOR OTHER TRANSPORTATION PURPOSES AND TO REPLACE THE STATE HIGHWAY COMMISSION WITH A TRANSPORTATION COMMISSION.)'

(Emphasis added.)

The people voted on Proposal M containing the following official ballot wording:

'PROPOSAL M

'PROPOSAL TO ALLOCATE AT LEAST 90% OF GAS TAX REVENUES FOR GENERAL ROAD PURPOSES AND THE REMAINDER FOR OTHER TRANSPORTATION PURPOSES AND TO REPLACE STATE HIGHWAY COMMISSION WITH A TRANSPORTATION COMMISSION.

'THE PROPOSED AMENDMENT WOULD:

'1. Provide that at least 90% of gas and license tax revenue be used exclusively for general road purposes.

'2. Provide that remainder of gas and license tax revenue and not to exceed 25% of sales tax on cars and parts be used exclusively for other transportation purposes.

'3. Limit bonding for roads, streets, bridges and other transportation purposes to amounts to be derived from specific motor vehicle tax and sales tax revenues.

'4. Replace State Highway Commission with a nonpartisan State Transportation Commission which shall establish a state transportation policy.

'Should this amendment be adopted?

'YES ()

'NO ()

(Emphasis added.)

The people approved Proposal M based upon the notice of election provided and the form of the ballot proposition voted upon, so their understanding of the meaning of Const 1963, art 9, Sec. 9 should reflect the common understanding that at least 90% of the special tax revenues be used for 'general road purposes' as previously administered by the State Highway Department.

The Legislature has consistently authorized, pursuant to 1964 PA 170, Sec. 2, supra, the State Department of Transportation to pay judgments awarded out of these funds. 1965 PA 195, Sec. 2(f); 1966 PA 311, Sec. 2(e); 1967 PA 250, Sec. 2(e); 1968 PA 228, Sec. 15; 1969 PA 236, Sec. 14; 1970 PA 81, Sec. 17; 1971 PA 114, Sec. 18; 1972 PA 245, Sec. 18; 1973 PA 124, Sec. 27; 1974 PA 235, Sec. 29; 1975 PA 253, Sec. 14; 1976 PA 246, Sec. 11; 1977 PA 126, Sec. 1; 1978 PA 10, Sec. 1; 1978 PA 127, Sec. 11; 1978 PA 468, Sec. 12; 1979 PA 46, Sec. 12; 1980 PA 363, Sec. 11; and in 1981 the Legislature enacted 1981 PA 18; MCLA 21.501 et seq; MSA 3.584(1) et seq, Sec. 11, a substantive act regulating appropriations to authorize the payment of judgments from appropriations contained in the budget act for a state agency, including the State Department of Transportation. Thus, uniformly, the Legislature, pursuant to Const 1963, art 9, Sec. 9 in its original form, and Const 1963, art 9, Sec. 9 as amended by the people, has authorized the payment of judgments from the constitutionally restricted funds provided therein as a highway purpose or a general road purpose.

The power of the Legislature to authorize the payment of judgments against the then State Highway Department under 1964 PA 170, Sec. 2, supra, from state highway funds restricted by Const 1963, art 9, Sec. 9 as originally ratified by the people in 1963 may not be questioned. Const 1963, art 9, Sec. 9, as amended by the people in 1978, was understood by the Governor in proposing the amendment to the Legislature, and the people in ratifying the amendment, based upon the notice of election and the ballot proposal wording, to mean that the restricted funds therein provided were to be used for general road purposes. In this connection, it is significant that the same Legislature that adopted the Joint Resolution H, which was voted upon by the people as Proposal M, enacted 1978 PA 468, Sec. 12, which authorizes continued payment of such judgments from such restricted funds. This sequence of events supports two conclusions: First, the intent of division of the restricted funds between transportation purposes and mass transportation purposes is clear. Second, there is no indication in the circumstances surrounding the formulation and adoption of the amendment of an intent to bar the use of the restricted transportation funds for payment of judgments awarded against the State Department of Transportation under 1964 PA 170, Sec. 2, supra.

Roop v Byer, 171 NE2d 222, 224 (Ohio, Com Pl Ct, 1959), involved a damage claim against a township arising out of an accident between a township truck being used in repairing township roads and a private citizen's vehicle. In ruling upon the issue whether the damage claim may be paid with moneys from the road and bridge fund and gasoline tax fund in light of Ohio Const, art 12, Sec. 5a, which permitted use of constitutionally restricted funds for 'administering, building, maintaining, and repairing' roads, very similar to Const 1963, art 9, Sec. 9, as amended, the court held that funds set up for road and bridge purposes may be used to pay any expense caused by the maintenance of the roads and should be paid from moneys in the road and bridge fund. This included the payment of judgments arising from the repair of roads. The court also noted that denial of use of the restricted funds to pay judgments arising from maintenance of highways would unfairly burden the general fund.

Support may also be found in Keck v Manning, 313 Ky 433, 439; 231 SW2d 604, 607 (1950), where the Court of Appeals broadly construed the terms 'maintenance' and 'administration' in Kentucky Const, Sec. 230, restricting the use of certain highway funds, not unlike those words contained in Const 1963, art 9, Sec. 9, as amended, so as to permit the cost of printing and distributing of road maps, booklets, photographs, and advertisements in motor magazines and national magazines to be paid from the constitutionally restricted highway funds. The court stated:

'It assists in safely directing and distributing traffic over our roads, and since the administration of the highway system is concerned with the safety of travelers, which requires it to consider 'traffic density or intensive use by the traveling public', we think the publication of this booklet may be properly classed as an item of administrative expense. . . .'

These decisions construing state constitutional provisions not unlike Const 1963, art 9, Sec. 9, as amended, restricting highway funds for 'administration' and 'maintenance' purposes support the conclusion that payment of judgments awarded against the State Department of Transportation under 1964 PA 170, Sec. 2, supra, from the State Trunk Line Fund would be within the concept of administering and maintaining the state highway system.

A contra decision is Automobile Club of Washington v City of Seattle, 55 Wash 2d 161; 346 P2d 695 (1959), which, in a six to three divided opinion, held that tort judgments arising from negligent operation of a bridge by employees of a city may not be paid from motor vehicle funds earmarked by Washington Const, Am 18 for highway purposes enumerated as 'construction, reconstruction, maintenance, repair and betterment of highways, roads, bridges and streets.'

Another contrary decision in State, ex rel Wharton v Babock, 181 Minn 409; 232 NW 718 (1930), where the court held that Minnesota Const, art 16, Sec. 2 restricting moneys for 'location, construction, improvement and maintenance of public highways' prohibited the use of such moneys to pay damages for personal or property damage arising from the negligence on the part of the state highway department in maintaining a state trunk highway.

Both the Washington and Minnesota constitutions are more restrictive than Const 1963, art 9, Sec. 9, as amended, since neither includes the term 'administering.' In addition, in the Automobile Club of Washington case, supra, the decision of the majority denied the city the right to use constitutionally restricted funds to pay a judgment for negligent operation of a bridge, despite the fact that such funds were used by the state to purchase insurance to protect against such claims, thereby raising serious question as to the soundness of the decision. Further, both states, at the time of said decisions, had a public policy rendering the state immune from liability for any claim of negligence of the state or its agents. It should also be noted that 1976 Minn Stat, Sec. 3.736(3)(d), excludes the state and the highway department from sovereign immunity when the injuries to persons or property are caused by the negligent acts of a state employer, except in the cases of loss caused by snow or ice conditions on any highway not affirmatively occasioned by the negligence of a state employee. In Michigan, the Legislature waived sovereign immunity in the area of negligent maintenance of public highways by means of 1964 PA 170, Sec. 2, supra. Neither case should be followed.

A case that dealt directly with Const 1963, art 9, Sec. 9, as amended, is distinguishable. County Road Association of Michigan v Michigan Department of Transportation, 94 Mich App 242; 288 NW2d 382 (1979), held that the Department of Transportation may not finance a vehicle emissions testing program with funds derived from constitutionally restricted fuel and weight tax revenues. However, the funding of the vehicle emissions testing program at issue in that case was found by the court to serve the purpose of improving the quality of the air and environment with funds derived from the General Transportation Fund, a purpose which the court concluded was not associated with general highway purposes.

Based on the examination of the circumstances originally enacted and as amended, certain conclusions follow. The people intended to divide up constitutionally earmarked money between general transportation purposes and comprehensive transportation purposes. The moneys restricted to transportation may be used for general road purposes, including payments of judgments awarded against the State Department of Transportation pursuant to 1964 PA 170, Sec. 2, supra. Payment of such judgments from transportation funds restricted by Const 1963, art 9, Sec. 9, as amended, is also authorized as being within the 'administering' of state roads and bridges.

It must be observed that in accordance with 1951 PA 51, Sec. 11(1)(a); MCLA 247.661; MSA 9.1097(11), moneys in the state trunkline fund must first be expended to pay bonds, notes or other obligations, including interest thereon, as ordered by the Legislature, before moneys therein may be used to pay judgments awarded arising from negligence in the maintenance or operation of the state trunk line highway system in accordance with this statute.

It is my opinion, therefore, that monies in the State Trunk Line Fund established in accordance with Const 1963, art 9, Sec. 9 may be used for the payment of judgments awarded against the State Department of Transportation pursuant to under 1964 PA 170, Sec. 2, supra.

Frank J. Kelley

Attorney General

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