CITIES AND TOWNS ‑- FOURTH CLASS ‑- FUNDS ‑- TRANSFER FUNDS ‑- FOURTH CLASS CITIES ‑- TRANSFER

CITIES AND TOWNS ‑- FOURTH CLASS ‑- FUNDS ‑- TRANSFER FUNDS ‑- FOURTH CLASS CITIES ‑- TRANSFER

A fourth class city has authority to transfer utility funds to current expense funds under both RCW 35.27.510 and RCW 35.37.020.

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                                                                February 16, 1973

Honorable Earl F. Tilly
State Representative, 12th District
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as:  AGLO 1973 No. 26

Dear Sir:

            This is written in response to your recent letter requesting our opinion on a question which we paraphrase as follows:

            To what extent does a municipality in this state incorporated as a fourth class city and having a population of less than 20,000 inhabitants have authority to transfer funds of its light utility department to its current expense fund for the support of general state government?

            We answer this question in the manner set forth in our analysis.

                                                                     ANALYSIS

            As held in theTown of Othello v. Harder, 46 Wn.2d 747, 284 P.2d 1099 (1955), a fourth class city (also known as a town) in this state has only such powers as have been granted to it by the legislature, either expressly or by necessary implication.  Insofar as the subject matter of your immediate question is concerned, specific authority to transfer moneys from a utility fund to a town's current expense fund is granted to all fourth class cities by the following provisions of RCW 35.27.510:

            "When any special fund of a public utility department of a town has retired all bond and warrant indebtedness and is on a cash basis, if a reserve or depreciation fund has been created in an amount satisfactory to the division of municipal corporations in the office of the state auditor and if the fixing of the rates of the utility is governed by contract with the supplier of water,  [[Orig. Op. Page 2]] electrical energy, or other commodity sold by the town to its inhabitants, and the rates are at the lowest possible figure, the town council may set aside such portion of the net earnings of the utility as it may deem advisable and transfer it to the town's current expense fund:  Provided, That no amount in excess of fifty percent of the net earnings shall be so set aside and transferred except with the unanimous approval of the council and mayor."

            Also to be noted is RCW 35.37.020.  This statute which applies to any city or town having less than 20,000 inhabitants, provides, in part, that:

            ". . .  Any surplus in the waterworks fund, lighting fund, cemetery fund, or other like funds at the end of the fiscal year shall be paid into the current expense fund except such part as the council by a finding entered into the record of the proceedings may conclude to be necessary for the purpose of:

            "(1) Extending or repairing the particular utility or institution; or

            "(2) Paying interest or principal of any indebtedness incurred in the construction or purchase of the particular utility or institution; or

            "(3) Creating or adding to a sinking fund for the payment of any indebtedness incurred in the construction of purchase of the particular utility or institution."

            Both RCW 35.27.510 and RCW 35.37.020 are applicable in the case of a city such as is described in your question; i.e., a city incorporated as a fourth class city and having a population of less than 20,000 inhabitants.  Therefore, our answer to your question is as follows:

            Acting pursuant to RCW 35.27.510, the city you have describedmay transfer moneys from its light utility department to its current expense fund to the extent that the several factual conditions set forth in RCW 35.27.510 are found by the town council to exist; however, even if  [[Orig. Op. Page 3]] those conditions do not all exist so as to bring this statute into play, transfers may be made at the end of each fiscal year "of any surplus" in the city's lighting fund except such part of that fund as the town council, ". . . by a finding entered into the record of the proceedings . . .," concludes to be necessary for one or more of the three purposes listed in RCW 35.37.020,supra.

            It is hoped that the foregoing explanation of these two statutes will be of some assistance to you.

Very truly yours

SLADE GORTON
Attorney General

DONALD FOSS, Jr.
Assistant Attorney General