Which Maine state accounts could not be touched by the 0.9% General Fund transfer under Part KKK?

Plain-English summary

This is Attorney General Michael Carpenter's December 15, 1992 cover letter to Commissioner Sawin Millett of the Maine Department of Finance, summarizing the AG's conclusions on which categories of state trust accounts could not lawfully be reached by Part KKK of the 1991 budget bill (P.L. 1991, ch. 780).

Part KKK provided a 0.9% across-the-board transfer from state accounts to the General Fund. The AG had previously issued a detailed memo (August 5, 1992) addressing trust accounts at the Bureau of Parks and Recreation and Bureau of Public Lands, and a follow-up memo (December 14, 1992) addressing DOT funds. This cover letter to Finance bundles those conclusions in a short, executable list.

The five protected categories:

1. Baxter State Park accounts. Funds in trust accounts held by the State for purposes of managing Baxter State Park, given to and accepted by the State under explicit trust instruments.
2. Bureau of Parks and Recreation donor-restricted accounts. Monies donated to and accepted by the State with an explicit understanding that they would be used for a particular park facility, even where no formal trust instrument exists.
3. Bureau of Public Lands accounts restricted to the public reserved lands or submerged lands. These derive from Maine's Articles of Separation (Article X of the Maine Constitution) and long-standing common-law public-trust doctrine.
4. Bond issue accounts. Monies raised by bond issues for a particular purpose. Article IX, § 14 of the Maine Constitution requires bonded indebtedness to specify purposes, and voter approval of the bond ratifies that purpose. Once ratified, the Legislature cannot redirect proceeds through ordinary budget legislation.
5. Highway Fund accounts. Monies in or drawn from highway trust fund accounts.

The opinion package included an attachment from May 16, 1991: a letter from AG Carpenter to Representative Paul F. Jacques. That earlier letter concluded that § 0-1 of the 1991 Supplemental Appropriations Act, which directed the Treasurer to transfer the unexpended balance of the Maine State Park and Recreation Area Fund to the debt service account for a 15-month period before replacing it, violated Article IX, § 14. The Fund's source was the 1967 P.&S.L. 1967, ch. 167 bond, authorized by voters in 1967 for outdoor recreation acquisition, historic and scientific site preservation, scenic highway areas, wildlife and ecological conservation. The temporary diversion, even with promised restoration, was unconstitutional because voters who approved the bond were "constitutionally entitled to have the proceeds of the issue spent for the purposes stated at the time."

The May 16, 1991 letter also flagged but expressly did not decide a separate Contracts Clause issue under the U.S. and Maine Constitutions, citing United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977). Some of the 1967 bonds remained outstanding through 1993, raising bondholder-rights concerns.

The AG's cover letter to Commissioner Millett notes that the listed categories are not necessarily exhaustive: "There may be other trust funds, of which we have not been made aware, and we will respond to these circumstances as they arise."

Currency note

This opinion was issued in 1992. 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.

Common questions

Why was the AG's office writing to the Finance Commissioner in December 1992?

The Finance Department needed an operational list of which accounts could and could not be subject to the Part KKK 0.9% sweep. The August 5 memo gave the legal reasoning. This letter gave a clean, list-form summary for budget execution.

Why was the Maine State Park and Recreation Area Fund example so strong?

The Fund's source was a 1967 voter-approved bond issue. Article IX, § 14 of the Maine Constitution requires bond proceeds to be used for the purposes the voters approved. The 1991 Supplemental Appropriations Act tried to take the unspent balance for general debt service for 15 months and then restore it. The AG said no, the constitutional bargain with the voters is broken the moment the proceeds are diverted, even temporarily.

Did the AG say all special accounts were protected?

No. The distinction is between fiduciary or constitutionally protected accounts (where the State holds money under a trust duty or specific voter mandate) and routine "special" or "dedicated" accounts where the Legislature retains discretion. Only the former are protected from the across-the-board sweep.

What did the May 16, 1991 attachment add?

It established the constitutional principle that the AG then applied to Part KKK. The Legislature cannot, by ordinary budget legislation, redirect bond proceeds to purposes outside the original authorization, even if it promises to restore the funds. The principle was already in three earlier AG opinions: Op. Me. Att'y Gen. (Dec. 8, 1977); Op. Me. Att'y Gen. (July 18, 1977); Op. Me. Att'y Gen. (Apr. 7, 1976).

Background and statutory framework

The opinion package includes the May 16, 1991 letter on Section 0-1 of the 1991 Supplemental Appropriations Act, which violated Article IX, § 14 of the Maine Constitution. The Maine Constitution provides that the Legislature shall not create debt or liability over $2,000,000 unless approved by two-thirds of both houses and ratified at a general election, with the times of issuance, amounts, and purposes specified. The constitutional implication is that proceeds must be used for the specified purposes; redirection by ordinary legislation defeats the voter approval requirement.

The 1967 bond at issue (P.&S.L. 1967, ch. 167) authorized $4 million in bonds for the Maine State Park and Recreation Area Fund, for 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.

As stated in the letter, it attaches the more detailed August 5, 1992 memorandum on the Parks and Recreation and Public Lands trust accounts, along with the May 16, 1991 letter to Representative Jacques that set out the bond-proceeds principle.

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1992/ag_19921215.pdf

Original opinion text

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

MICHAEL E. CARPENTER, ATTORNEY GENERAL
STATE OF MAINE
DEPARTMENT OF THE ATTORNEY GENERAL
STATE HOUSE STATION 6
AUGUSTA, MAINE 04333

December 15, 1992

Sawin Millett, Commissioner
Department of Finance
State House Station #78
Augusta, Maine 04333-0078

Re: Transfer of Trust Monies to General Fund under Part KKK of Legislative Appropriations Bill

Dear Sawin:

As you know, my office has been in contact with yours regarding the applicability to certain trust funds of Part KKK of the appropriations bill enacted in the last legislative session. Part KKK provides an across-the-board transfer of .9% of accounts to the general fund. It is this office's opinion that Part KKK cannot, however, lawfully effect a transfer to the general fund of monies that the State holds in trust for certain legally designated purposes. Such a transfer would either violate the legal trust relationship by which the State holds the monies involved, or would violate constitutional requirements by which bond or other revenues must be held for expenditure. More detailed legal analysis describing the rationale for this opinion is attached.

In the discussions between my office and yours, the suggestion was made that we provide a concise summary of our views on this issue as it pertains to the trust monies that have been brought to our attention. My purpose then is to simply state what we believe to be the law on the matter and to point out the types of trust-type funds, to the extent known by us, to which this opinion applies. Again, as to the funds described below, an across the board transfer to the general fund as envisioned by Part KKK would violate the trust duties under which the State holds these particular funds. This is in contrast to the applicability of Part KKK to other special or dedicated revenue accounts, held by the State in a non-trust capacity, and over which the Legislature has discretion in making allocations for any designated governmental purpose, including reallocation to the general fund.

These are the funds that have been brought to our attention and from which monies should not be reallocated to the general fund under Part KKK:

• Monies in Baxter State Park accounts;
• Monies in accounts of Bureau of Parks and Recreation of the Department of Conservation, which were donated to and received by the State with the explicit understanding that the monies would be used for certain park facilities;
• Monies in accounts of the Bureau of Public Lands of the Department of Conservation, restricted to the public reserved lands or submerged lands;
• Monies raised by bond issues designated for a particular purpose;
• Monies in or drawn from highway trust fund accounts.

There may be other trust funds, of which we have not been made aware, and we will respond to these circumstances as they arise. In the meantime, if you have any questions, please let me know.

Sincerely,
MICHAEL E. CARPENTER
Attorney General

cc: Michael D. Pearson, Senate Chair, Legislative Appropriations Committee
Lorraine N. Chonko, House Chair, Legislative Appropriations Committee
Jim Clair
Jack Nicholas

Attachment 1: August 5, 1992 Memorandum (see separate opinion at ag_19920805.pdf)

Attachment 2: May 16, 1991 Letter to Representative Paul F. Jacques

State of Maine, Department of Attorney General

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 0-1 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 0-1 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 0-1 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, 1991, 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.

Because of this conclusion, this Department expresses no view on the question of whether Section 0-1 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 reinquire if further clarification is necessary.

Sincerely,
MICHAEL E. CARPENTER
Attorney General

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