Can the Maine Legislature borrow money out of a voter-approved bond fund and put it back later if it does not change the original purpose?

Plain-English summary

Maine voters in 1967 approved a $4 million bond issue to acquire land for state parks, historic sites, scenic highway pull-offs, wildlife habitat, and similar conservation purposes. The proceeds were deposited in the Maine State Park and Recreation Area Fund. By 1991, some of that money was still sitting unspent in the Fund.

The 1991 Supplemental Appropriations Act, at Section O-1 of Chapter 9, directed the State Treasurer to transfer the unspent balance out of the Park Fund into the state's debt-service account on or before April 1, 1991, and to return the money to the Park Fund by June 30, 1992. So, a temporary loan to cover other obligations, with a promise to repay.

Attorney General Michael Carpenter concluded the maneuver was unconstitutional. Article IX § 14 of the Maine Constitution requires bond issues over $2 million to be approved by two-thirds of each chamber and ratified by voters, and the authorizing legislation must specify the amounts and purposes for which the proceeds will be used. The AG read that requirement to mean the proceeds actually have to be used for those purposes. Otherwise, the voter-approval safeguard would be hollow. Three earlier AG opinions (1976, 1977, 1977) had reached the same conclusion in other contexts.

The 1991 redirect, even though framed as a short-term transfer, used voter-approved park-fund proceeds for an unauthorized purpose during the period of the transfer. That violated Article IX § 14. The AG declined to reach a separate Contract Clause question about whether the diversion also harmed bondholders, because at least some of the 1967 bonds had not yet been retired.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Article IX § 14 of the Maine Constitution limits the Legislature's ability to incur state debt above $2 million. Above that threshold, both a two-thirds supermajority vote in each chamber and a statewide voter ratification are required, and the authorizing act must specify when bonds will be issued, how much will be raised, and what the proceeds will fund.

In 1967, the Legislature passed and voters ratified P.&S.L. 1967, ch. 167, authorizing up to $4 million in bonds for the Maine State Park and Recreation Area Fund. Section 3 of that act listed the permitted uses: acquisition of land and water for outdoor recreation; preservation of sites of historic or scientific interest; highway scenic or picnic areas; wildlife preservation; ecological conservation.

Twenty-four years later, with funds still in the account, the Legislature attached Section O-1 to the 1991 Supplemental Appropriations Act (P.L. 1991, ch. 9). That section amended the 1967 bond act by adding a directive to transfer the unspent balance to the debt-service account by April 1, 1991, and to restore it by June 30, 1992.

The AG read prior opinions (Dec. 8, 1977; July 18, 1977; Apr. 7, 1976) as having repeatedly held the same principle: the Legislature may not, by ordinary legislation, redirect bond proceeds to purposes outside those voters approved.

Common questions

Can the Legislature pass a law that just borrows from a bond fund and pays it back later?
According to this 1991 opinion, no, not if the bond was a voter-approved general-obligation issue. The constitutional voter-approval requirement at Article IX § 14 contemplates that the proceeds will be used for the purposes the voters were told about when they ratified the bond. A 15-month detour is still a detour.

What was the AG's concern about bondholders?
The opinion flagged but did not decide it. At least some of the 1967 bonds had not been retired by 1991, meaning private bondholders held instruments backed by the original revenue commitment. Redirecting the supporting fund could implicate the Contract Clauses of the federal and Maine constitutions. The AG left that question open because the Article IX § 14 violation already disposed of the issue.

Did this opinion strike down the law?
No. AG opinions are advisory. They are persuasive but not binding. The opinion put the Legislature and the Governor on notice that Section O-1 was constitutionally infirm. Whether the transfer actually happened, and whether anyone sued, would have to be checked against the historical record.

Does this apply to fund transfers generally?
The opinion's reasoning is narrow to bond proceeds approved by voters under Article IX § 14. Routine transfers between general-fund accounts, or even diversions of fee-funded special revenue, would be analyzed differently. A Park Fund built from voter-ratified bonds is constitutionally distinct from one built from user fees.

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1991/ag_19910516.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

State of Maine
Department of the Attorney General
State House Station 6
Augusta, Maine 04333

May 16, 1991

Honorable Paul F. Jacques
House of Representatives
State House Station 2
Augusta, Maine 04333

Dear Representative Jacques:

I am writing in response to your inquiry of May 1, 1991 inquiring into the constitutionality of Section O-1 of Chapter 9 of the Laws of Maine of 1991, "An Act Making Additional Appropriations From the General Fund and Allocations From Other Funds for the Expenditures of State Government for the Fiscal Year ending June 30, 1991," directing the transfer of funds in the Maine State Park and Recreation Area Fund for other purposes for a 15-month period. For the reasons which follow, it is the opinion of this Department that this provision violates Article IX, Section 14 of the Maine Constitution.

Article IX, Section 14 of the Maine Constitution provides that the Legislature shall not create any debt or liability on behalf of the State in excess of $2,000,000, unless such debt is approved by two-thirds of both of its houses and ratified by the voters at a general election. In authorizing such a bond issue, the Legislature is required by the section to specify the "times" of issuance and the "amounts" and "purposes" for which the proceeds shall be used. It is implicit in this requirement that the proceeds actually be used for the stated purposes. Otherwise, the requirement of voter approval would be substantially compromised. Thus, this Department has consistently been of the view that the Legislature may not, by ordinary legislation, redirect the proceeds of bond issues to purposes outside of those specified in the authorizing legislation. Op. Me. Att'y Gen. (Dec. 8, 1977); Op. Me. Att'y Gen. (July 18, 1977); Op. Me. Att'y Gen. (Apr. 7, 1976).

The bond issue to which Section O-1 of the 1991 Supplemental Appropriations Act is directed was authorized by the Legislature and the voters in 1967. P.&S.L. 1967, ch. 167. That Act authorized the Treasurer of the State to issue bonds in an amount not exceeding 4 million dollars and to place the proceeds in the Maine State Park and Recreation Area Fund, for the purpose of the acquisition of lands and waters for outdoor recreation, preservation of sites of historic or scientific interest, highway scenic or picnic areas, wildlife preservation and ecological conservation. P.&S.L. 1967, ch. 167, § 3. Evidently, as of the effective date of the 1991 Supplemental Appropriation Act, some of the proceeds of the authorized bonds remained in the Fund, under the control of the State Treasurer. Section O-1 amended the 1967 Bond Authorization Act by adding the following sentences:

On or before April 1, 1991, the Treasurer of State shall transfer the unexpended balance in the Maine State Park and Recreation Area Fund and the interest-earning account established for that fund to the debt service account in the Office of the Treasurer of State. By June 30, 1992, the Treasurer of State shall restore to the Maine State Park and Recreation Area Fund and the interest-bearing account established for that fund the amounts transferred to debt service under this section.

In effect, the Treasurer was directed to take the funds remaining in the Fund and transfer them for some other purpose for a period not to exceed 15 months, and then to replace them in the Fund.

In the view of this Department, this action violated Article IX, Section 14 of the Maine Constitution, since the voters approving the bond issue in 1967 are constitutionally entitled to have the proceeds of the issue spent for the purposes stated at the time. Thus, these proceeds may not be used for other purposes, however general or temporary.[1]

[1] Because of this conclusion, this Department expresses no view on the question of whether Section O-1 also violates the rights of bondholders protected by the Contract Clauses of the United States and Maine Constitutions. U.S. Const. art I, § 10, cl. 1; Me. Const. art. I, § 11. See generally United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977). We are advised that at least some of the bonds issued pursuant to the 1967 legislation will not be retired until 1993.

I hope the foregoing answers your question. Please feel free to reinquiry if further clarification is necessary.

Sincerely,

Michael E. Carpenter
Attorney General

MEC/bls

cc: Governor John R. McKernan
President Charles P. Pray
Speaker John L. Martin
Senator Michael D. Pearson
Representative Lorraine N. Chonko, Chairpersons, Joint Standing Committee on Appropriations
Samuel Shapiro, State Treasurer