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
JENNIFER M. GRANHOLM, ATTORNEY GENERAL
TREASURY, DEPARTMENT OF:
Appropriation of estimated but uncollected revenues
The Legislature may incorporate estimated tobacco litigation settlement monies into appropriation bills before the state actually receives such revenues. The ultimate expenditure of appropriations, however, may only be made from monies actually received.
Opinion No. 7022
June 16, 1999
Honorable Ruth Ann Jamnick
Lansing, MI 48913
You have asked if the Legislature may incorporate estimated tobacco litigation settlement monies into appropriation bills before the state actually receives such revenues.
Tobacco litigation settlement monies are due annually in perpetuity to the state by virtue of a settlement and consent judgment entered on December 7, 1998, in the civil action titled Attorney General ex rel Michigan v Philip Morris Inc, Ingham County Circuit Court No. 96-84281-CZ. During the next 25 years, Michigan is expected to receive settlement proceeds exceeding $8 billion.
An appropriation is the setting aside of a specified sum of money in the state treasury to be used for some governmental expenditure, purchase or expense. Bds of County Road Comm'rs v Bd of State Canvassers, 50 Mich App 89, 95-96; 213 NW2d 298 (1973), aff'd 391 Mich 666; 218 NW2d 144 (1974); 1 OAG, 1955, No 2249, pp 565, 567 (October 25, 1955). Const 1963, art 9, § 17, prohibits the payment of money from the state treasury "except in pursuance of appropriations made by law." This constitutional provision restricts appropriations to legislative enactments, and to constitutional appropriations apart from any action by the Legislature. Civil Service Comm v Auditor General, 302 Mich 673, 679; 5 NW2d 536 (1942).
The people have provided for a budget procedure for the orderly management of the state's fiscal affairs. The Governor is required to timely submit a budget for the ensuing fiscal year "setting forth in detail, for all operating funds, the proposed expenditures and estimated revenue of the state." Const 1963, art 5, § 18. (Emphasis added.) The people have imposed a comparable duty on the Legislature in passing general appropriation bills to insert in one of them "an itemized statement of estimated revenue by major source in each operating fund for the ensuing fiscal period, the total of which shall not be less than the total of all appropriations made by each fund in the general appropriations bills as passed." Const 1963, art 4, § 31. (Emphasis added.)
Thus, the respective roles of the Governor and the Legislature in the appropriation process contemplate estimates of projected revenues as the basis for appropriations of those revenues to be expended when the revenues are ultimately collected. While the term "estimated" is not expressly defined in either Const 1963, art 4, § 31, or art 5, § 18, it should be given its "natural, obvious and ordinary" meaning. John Hancock Mutual Life Ins Co v Ford Motor Co, 322 Mich 209, 222; 33 NW2d 763 (1948). A word in the constitution should be given the "meaning which it would naturally convey to the popular mind." Committee for Constitutional Reform v Secretary of State, 425 Mich 336, 340; 389 NW2d 430 (1986) [Quoting People v Dean, 14 Mich 406, 417 (1886)].
The word "estimate" does not contemplate that it be based upon "exact information," but, rather, "such information as that [permits] a fair, [and] honest" calculation. Horse Heaven Irrigation District Bd of Directors v Mineah, 112 Wash 325; 192 P 997, 998-999 (1920). The authority conferred upon the Governor and the Legislature to make fair and honest calculations of expected revenues for appropriations for the ensuing fiscal year cannot reasonably be read to be exercised only when revenues are actually collected and deposited in the state treasury. Such a reading is not supported by the common understanding of the word "estimate" and would be destructive of the process of appropriation of moneys from the state treasury.
Moreover, the people have provided for the Governor, with the approval of the House and Senate appropriating committees, to "reduce expenditures authorized by appropriations whenever it appears that actual revenues for a fiscal period will fall below the revenue estimates on which the appropriations for that period were based." Const 1963, art 5, § 20. (Emphasis added.) This constitutional process serves to minimize "impending year-end deficits." 2 Official Record, Constitutional Convention 1961, p 3381.
It is my opinion, therefore, that the Legislature may incorporate estimated tobacco litigation settlement monies into appropriation bills before the state actually receives such revenues. The ultimate expenditure of appropriations, however, may only be made from monies actually received.
JENNIFER M. GRANHOLM
STATE OF MICHIGAN