MUNICIPAL CORPORATION EXPENDING MUNICIPAL UTILITIES REVENUE FOR ADVERTISING

MUNICIPAL CORPORATION EXPENDING MUNICIPAL UTILITIES REVENUE FOR ADVERTISING

City can not pay industrial consultant, employed to encourage industrial development of community, from public utility revenue.

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                                                                   April 20, 1955

Honorable Cliff Yelle
State Auditor
Legislative Building
Olympia, Washington                                                                                                                Cite as:  AGO 55-57 No. 62

Attention:  !ttMr. A. E. Hankins, Chief Examiner

            Division of Municipal Corporations

Dear Sir:

            You have requested the opinion of this office on the following question:

            "Can a city of the third class, operating under the council-manager form of government, expend utility revenues to engage an industrial consultant for the purpose of encouraging industrial development in the community?"

            In our opinion, such an expenditure would be improper.

                                                                     ANALYSIS

            It is well settled that a municipal corporation has only such powers as are clearly and unmistakably granted to it by law, and may assume no others unless they are necessarily implied from or incidental to the powers expressly granted, or indispensable to the declared objects and purposes of the city.  It is equally true that statutory authority must be found for any expenditure  [[Orig. Op. Page 2]] of public funds.  These propositions are now so familiar as to require no citation of authority.

            A city may of course construct and operate an electrical utility.  RCW 80.40.050.  Disposition of the resulting revenue is governed by RCW 35.24.430, which provides in relevant part that:

            "No taxes shall be imposed for maintenance and operating charges * * * If the rates in force produce a greater amount than is necessary to meet operating and maintenance charges, the rates may be reduced or the excess income may be transferred to the city's current expense fund."  (Emphasis supplied)

            "Maintenance" refers to upkeep, support, or preservation of the property.  Black's Law Dictionary (3rd ed. 1933), p. 1143; State ex rel. King County v. Murrow, 199 Wash. 685.  "Operating charges" may be somewhat broader than maintenance, although it has been held that the former includes the latter.  SeeState ex rel, King County v. Murrow, supra, andPowell v. City & County of San Francisco, 62 Cal.App. (2d) 291, 144 P. (2d) 617.  The California case extends "Operating expense" to include lobbying on utility legislation.  We think, however, that the phrase as used in RCW 35.24.430 means simply the cost of runningthe utility.  Whether or not this might include an expense for advertising or promoting the utility as such, a question which we need not consider, it certainly does not include the general promotion and encouragement of industrial development for the city as a whole.  The rules of construction set out above, when applied to the limited authority of RCW 35.24.430, preclude such an undertaking by means of utility funds.  We have previously applied those rules to municipal utility funds.  See opinion to the Supervisor of Municipal Corporations, 23 March, 1927, a copy of which is attached.

            Whether the city itself could expend funds for the stimulation of industrial development is at least doubtful.  SeeTown of Wooley v. Donnelly, 75 Wash. 206; 77 A.L.R. 466; RCW 35.24.290 (18).  If it be assumed,arguendo, that this  [[Orig. Op. Page 3]] would be possible, we do not believe that utility revenue could be used for the purpose before it had been deposited in the city current expense fund pursuant to RCW 35.24.430.  Nor do we think the existence of council-manager government is material here.

            We conclude that a city of the third class could not pay an industrial consultant, employed to encourage industrial development in the community, from utility revenues.

            We hope the foregoing analysis will prove helpful to you.

Very truly yours,

DON EASTVOLD
Attorney General

MAURICE M. EPSTEIN
Assistant Attorney General