COUNTIES ‑- FUNDS ‑- MUNICIPAL CORPORATIONS ‑- STATE RESTRICTIONS UPON USE OF FEDERAL REVENUE SHARING FUNDS RECEIVED UNDER PUBLIC LAW 92-512

COUNTIES ‑- FUNDS ‑- MUNICIPAL CORPORATIONS ‑- STATE RESTRICTIONS UPON USE OF FEDERAL REVENUE SHARING FUNDS RECEIVED UNDER PUBLIC LAW 92-512

(1) No county of any class may donate a portion of its federal revenue sharing entitlement under Public Law 92-512 (the state and local fiscal assistance act of 1972) to a private nonprofit senior citizens' center.

(2) A county not operating under a home rule charter may not donate a portion of its entitlement under this federal act to a fire protection district for the purchase of an ambulance by such district.

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                                                                  August 2, 1973

Honorable Robert V. Graham
State Auditor
Legislative Building
Olympia, Washington 98504

                                                                                                                 Cite as:  AGO 1973 No. 18

Dear Sir:

            You have requested the opinion of this office on two questions regarding the use of federal revenue sharing funds by counties in this state.  We paraphrase your questions as follows:

            (1) May a county of any class donate a portion of its entitlement under Public Law 92-512 (the state and local fiscal assistance act of 1972) to a private nonprofit senior citizens' center?

            (2) May a county not operating under a home rule charter donate a portion of its entitlement under this federal act to a fire protection district for the purchase of an ambulance by such district?

            We answer both of these questions in the negative.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            Public Law 92-512, now codified as 31 U.S.C.A. §§ 1221-1263, is entitled the State and Local Fiscal Assistance Act of 1972, and is commonly known as the federal revenue sharing act.  Under this act, the Secretary of Treasury is directed to disburse to state and local units of government throughout the nation certain amounts of federal revenues which are referred to in the act as "entitlements."  Your questions involve the uses which may be made of these "entitlements" by their recipients in this state ‑ particularly, counties.

            First to be noted in responding is a section of the revenue sharing act, now codified as 31 U.S.C.A § 1222, which provides that:

            "Funds received by units of local government under this subchapter may be used only for priority expenditures.  For purposes of this chapter, the term 'priority expenditures' means only‑-

            "(1) ordinary and necessary maintenance and operating expenses for‑-

            "(A) public safety (including law enforcement, fire protection, and building code enforcement),

            "(B) environmental protection (including sewage disposal, sanitation, and pollution abatement),

            "(C) public transportation (including transit systems and streets and roads),

            "(D) health,

            "(E) recreation,

            "(F) libraries,

            "(G) social services for the poor or aged, and

            "(H) financial administration; and

            "(2)  ordinary and necessary capital expenditures authorized by law."

             [[Orig. Op. Page 3]]

            For the purposes of this opinion we will assume that the operation of a senior citizens' center by a municipality would constitute a priority project under subpart (G) of this section and the purchase of an ambulance would also fall within this list of priority items ‑ either in terms of public safety or health.  This, however, does not resolve your questions as above stated because of certainother restrictions imposed by the federal act ‑ particularly, § 1243 which provides that:

            "In order to qualify for any payment under subchapter I of this chapter [Chapter 24‑-Fiscal Assistance to State and Local Governments] for any entitlement period beginning on or after January 1, 1973, a state government or unit of local government must establish . . . to the satisfaction of the secretary that‑-

            ". . .

            "(4) it will provide for the expenditure of amounts received under subchapter I of this chapteronly in accordance with the laws and procedures applicable to the expenditure of its own revenues;. . ."  (Emphasis supplied.)

            Bearing in mind the rule of statutory construction that all words of a statute are to be given their full meaning and effect whenever possible,1/ we are constrained to regard this subsection of the federal act as restricting all expenditures of "entitlement" funds by either this state or any of its local units of government to those which will comply with both the substantive and procedural requirements of state law with respect to the expenditure of their own locally generated revenues.  To conclude otherwise would be to read the phrase "laws and procedures" in the subsection  [[Orig. Op. Page 4]] as meaning only "procedures"; thus reading out of it entirely the word "laws."  Consequently, the ultimate answers to both of your questions depend upon whether or not any of the counties in this state may expend their own funds in either of the manners indicated.

            Question (1):

            Turning to your first question, the issue is thus that of whether or not a county of any class in this state may make a gift of its own funds to a private nonprofit senior citizens' center.  In view of the restraints imposed upon counties and other municipalities by Article VIII, § 7 of the Washington Constitution, as construed by our supreme court, we must answer this question in the negative.

            Article VIII, § 7 provides that:

            "No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation."

            The senior citizens' center in question, which your letter describes as "nonprofit," is also described as being privately owned and operated, and this constitutional provision has been consistently interpreted by our supreme court as a prohibition against gifts of funds by counties and other municipal corporations to private associations, regardless of the purpose of such gifts.  One of the earliest cases on the subject wasJohns v. Wadsworth, 80 Wash. 352, 141 Pac. 892 (1914), which dealt with the constitutionality of a statute expressly authorizing gifts of county funds to private nonprofit associations for the operation of fairs.  While the court in that case recognized the educational value and worthy purpose of such fairs, it concluded, nevertheless, that Article VIII, § 7,supra, prohibits and gifts of county funds to a private entity for any purpose.  Accord,State ex rel. O'Connell v. Port of Seattle, 65 Wn.2d 801, 399 P.2d 623 (1965), andState v. Klickitat County PUD, 79 Wn.2d 237, 484 P.2d 393 (1971), in which the same principle has more recently been applied.

             [[Orig. Op. Page 5]]

            In determining by reason of this constitutional provision that your first question must be answered in the negative, we are fully aware of our previous opinion, AGO 1970 No. 24 [[to David G. Sprague and George Fleming, State Representatives on November 5, 1970]], concerning the relationship between Article VIII, § 7 and certain grants to municipalities under Title I of the Demonstration Cities and Metropolitan Development Act of 1966 (42 U.S.C. §§ 3301-3313).  In that prior opinion we concluded that a first class city's expenditure of federal grants under that act (which would have constituted gifts if made from a city's own funds) did not fall within the prohibition of this section of the Constitution for the reason that under the terms of the grants there in question the funds involved were only available for the specific purposes for which they were granted.  Because of this we determined that these funds never actually became city funds subject to the constitution.  The city in making the expenditures thus acted only as a "conduit" for the expenditure of federal funds.  That reasoning, however, is simply not applicable in a situation where, as in the case of general revenue sharing monies granted under the federal act here under consideration, the funds in question become those of the local governmental units to which they are granted and/or are expressly made subject to applicable restrictions of state law in any event.

            In addition, we have not overlooked the possible argument in support of a contrary answer to your first question which might be based upon the exception in Article VIII, § 7,supra, regarding expenditures for the ". . . necessary support of the poor and infirm."  An initial answer to such an argument, however, is that there is no evidence that the senior citizens who may be served by the private association to which the funds in question would be given are either poor or infirm.  Furthermore, the question to be answered in this opinion is not whether a county's revenue sharing funds may be expended by that county itself for the direct benefit of any particular class of persons; instead, it concerns the legality of expending such funds by way of a gift or grant to a nonprofit private association ‑ which cannot itself be characterized as either a "poor" or "infirm" person within the meaning of Article VIII, § 7, supra.  Such a grant or gift may not be made even though its ultimate purpose might be to benefit persons who are eligible for direct assistance under the Constitution.  Accord,Johns v. Wadsworth, supra; also, our opinion to the prosecuting attorney of Walla Walla county, January 15, 1931, a copy of which is enclosed.

            Therefore, in answer to your first question, we first conclude that no county of any class may constitutionally donate  [[Orig. Op. Page 6]] any of its own funds to a private nonprofit senior citizens' center such as you have described.  For that reason we then further conclude that those counties must be regarded as being forbidden by 31 U.S.C.A. § 1243(a) (4), supra, from donating any of their general revenue sharing funds to such an organization.

            Question (2):

            Your second question, asking whether a county not operating under a home rule charter may donate a portion of its federal revenue sharing fundsto a fire protection district for the purchase of an ambulance, is distinguishable from your first in that it presents no constitutional problem under Article VIII, § 7,supra.  Gifts of municipal funds to other public agencies are not prohibited by that section.  Rands v. Clarke County, 79 Wash. 152, 139 Pac. 1090 (1914).  For other reasons, however, we must nevertheless also answer this question in the negative as well.

            Except in the case of King county which has adopted and is now operating under its own charter as provided for in Article XI, § 4 (Amendment 21) of the Constitution, and must therefore be considered as having the same power as the legislature itself except where restricted by the Constitution, statutes, or its own charter and ordinances, all counties in this state are vested with only those powers specifically granted by the legislature or necessarily implied therefrom.  See,State ex rel. Port of Seattle v. Superior Court, 93 Wash. 267, 160 Pac. 755 (1916); and Pacific First Fed. v. Pierce County, 27 Wn.2d 347, 178 P.2d 351 (1947).

            The term "necessarily" for the purposes of this rule has been regarded generally as meaning a legal necessity; i.e., it must be gathered, from a reading of the language of a particular statute, that the legislature actually intended to grant the power in question as an incident to some other expressly granted power or duty.  See,City of Madison v. Daley, 58 Fed. 751, 755 (1893).

            Our research has disclosed no statute meeting this test which may be said to grant to any class of county the authority to give any of its money to a fire protection district.  On the contrary, all existing statutory references to intergovernmental cooperation between such municipal corporations  [[Orig. Op. Page 7]] contemplate some form of contractual relationships.  See, for instance, RCW 52.08.030, relating to mutual aid and other agreements with fire protection districts; also, chapter 39.34 RCW permitting joint ventures and other agreements between public agencies, including both counties and fire protection districts.  Another statute, RCW 43.09.210, expresses a legislative policy requiring separate accounts to be maintained of all appropriated funds, and expressly prohibits gratuitous transfers between departments or funds of any taxing body.  Accord, AGO 61-62 No. 29 [[to Charles O. Carroll, Prosecuting Attorney, King County on May 18, 1961]], copy enclosed.  While that statute does not expressly prohibit transfers of funds between municipal corporations, its existence would render totally absurd any argument that general authority for such transfers could be found by implication.

            And, finally, where the legislature has authorized gifts of public property from one agency to another, it has done so by express statute.  See, RCW 39.33.010, which provides as follows:

            "(1) The state or any municipality or any political subdivision thereof, may sell, transfer, exchange, lease or otherwise dispose of any property, real or personal, or property rights, including but not limited to the title to real property, to the state or any municipality or any political subdivision thereof on such terms and conditions as may be mutually agreed upon by the proper authorities of the state and/or the subdivisions concerned:  Provided, That such property is determined by decree of the superior court in the county where such property is located, after publication of notice of hearing is given as fixed and directed by such court, to be either necessary, or surplus or excess to the future foreseeable needs of the state or of such municipality or any political subdivision thereof concerned, which requests authority to transfer such property.