Can Maine constitutionally credit interest earned on Highway Fund investments to the General Fund?

Plain-English summary

Me. Const. art. IX, § 19, adopted in 1944, dedicates revenues from vehicle registration fees, license fees, and motor-fuel taxes to highway purposes. The exact text says "all revenues derived from fees, excises and license taxes relating to registration, operation and use of vehicles on public highways, and to fuels used for the propulsion of such vehicles shall be expended solely [for highway purposes]." From 1944 until 1991, the State treated the constitutional language as protecting not just the fees themselves but the investment interest they earned. The Highway Fund kept its own interest.

In 1991 the Legislature changed that. P.L. 1991, ch. 622, § K-1 amended 5 M.R.S.A. § 135 to provide that "effective November 1, 1991, interest earned on investments of the Highway Fund must be credited to the General Fund of the State." The amendment was a routine budget-balancing move that picked up a fresh stream of General Fund revenue. The chair of the Joint Standing Committee on Transportation asked the AG whether that diversion was constitutional.

The AG concluded it was not. The constitutional language is two-fold: it protects "fees, excises and license taxes," and it also protects "all revenues derived" from those fees. Interest earned on Highway Fund investments is, in the most natural reading, a revenue derived from the underlying fees. The fees go in, the Fund invests them, the interest comes out, and the interest exists only because the fees were deposited. Calling that interest General Fund money would render the "all revenues derived" language a nullity, because every dollar of the underlying fees is already protected without that phrase. The AG read § 19 to protect the secondary revenue stream alongside the primary one.

The opinion was short (two pages of text) because the constitutional language was relatively clear and the historical practice from 1944 to 1991 reinforced the reading. The AG flagged that the same Highway Fund interest had been kept by the Fund for 47 years before the Legislature switched course, and saw no basis for concluding the constitutional dedication had ever permitted the diversion.

Currency note

This opinion was issued in 1995. 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

What is Me. Const. art. IX, § 19?

A 1944 amendment to the Maine Constitution that dedicates motor-vehicle-related revenue (registration fees, license taxes, fuel taxes) to highway purposes. It is one of Maine's strongest constitutional revenue protections, designed to prevent the Legislature from siphoning road-user fees into general government.

Why does the wording "all revenues derived from" matter so much?

Because if § 19 only protected the fees themselves, the constitutional clause would not need the phrase "revenues derived from." That phrase only does work if it captures secondary revenue streams that the underlying fees produce. Investment interest is the canonical example of a derived revenue: it exists only because the principal exists. So treating interest as outside the dedication would empty the phrase of meaning.

What happened to the 1991 amendment after this opinion?

This opinion advised the Legislature that § 135's interest-diversion provision was unconstitutional. AG opinions are persuasive, not binding, so technically the statute remained on the books until the Legislature or a court acted. Future Highway Fund handling would depend on whether the Legislature followed the AG's view, repealed the diversion, or left it in place for judicial challenge.

Does this opinion address other dedicated funds?

No. The AG addressed only the Highway Fund and Article IX, Section 19. The reasoning turned on the specific wording of that dedication, in particular the phrase "all revenues derived from" the protected fees. The opinion did not speak to any other dedicated-revenue regime, each of which has its own constitutional or statutory language.

Background and statutory framework

The Highway Fund is the principal dedicated revenue stream for Maine's Department of Transportation. The 1944 constitutional amendment (Me. Const. art. IX, § 19) protects motor-vehicle revenues from general-fund diversion. 5 M.R.S.A. § 135 is the General Fund accounting statute, which P.L. 1991, ch. 622, § K-1 amended to redirect Highway Fund investment interest.

The constitutional dedication has two operative phrases: (1) the fees, excises, and license taxes themselves, and (2) "all revenues derived" from those fees, excises, and license taxes. The AG read the second phrase to encompass investment interest. The opinion does not engage with the question of whether the Legislature could prospectively change the structure (for example, by directing that Highway Fund balances not be invested at all, eliminating the interest stream entirely), but that question was not before the AG.

Citations

• Me. Const. art. IX, § 19 (Highway Fund dedication, adopted 1944)
• 5 M.R.S.A. § 135 (General Fund accounting; amended in 1991 to direct Highway Fund interest to General Fund)
• P.L. 1991, ch. 622, § K-1 (the 1991 amendment to 5 M.R.S.A. § 135 at issue)

Source

• Landing page: https://www.maine.gov/legis/lawlib/lldl/agops/agops.htm
• Original PDF: https://lldc.mainelegislature.org/Open/AG/Opinions/1995/ag_19950620.pdf

Original opinion text

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

95-11

ANDREW KETTERER
ATTORNEY GENERAL

STATE OF MAINE
DEPARTMENT OF THE ATTORNEY GENERAL
STATE HOUSE STATION 6
AUGUSTA, MAINE 04333

June 20, 1995

Senator Albert G. Stevens, Jr.
Chair, Joint Standing Committee on Transportation
115 State House Station
Augusta, ME 04333-0115

Dear Senator Stevens:

I am writing in response to your request to this Department, asking whether the provision of 5 M.R.S.A. § 135, providing that interest earned on the investments of the Highway Fund be credited to the General Fund, is in violation of Article IX, Section 19 of the Maine Constitution, which established the Highway Fund. For the reasons which follow, it is the Opinion of this Department that the statute is unconstitutional.

Article IX, Section 19 of the Maine Constitution provides in pertinent part:

All revenues derived from fees, excises and license taxes relating to registration, operation and use of vehicles on public highways, and to fuels used for the propulsion of such vehicles shall be expended solely [for highway purposes, generally].

So far as this Department is aware, since the enactment of this provision in 1944, interest earned on the assets of the Highway Fund has been retained by the Fund. At its first regular session in 1991, however, the Legislature amended 5 M.R.S.A. § 135 to include the following provision:

Effective November 1, 1991, interest earned on investments of the Highway Fund must be credited to the General Fund of the State.

Laws of Maine of 1991, ch. 622, § K-1, amending 5 M.R.S.A. § 135, first paragraph. Your question is whether this statute is constitutional, in light of the constitutional provision.

In the Opinion of this Department, the statute is not constitutional. The text of the constitutional provision specifies that not only must all "fees, excises and license taxes" relating to motor vehicle use be expended for highway purposes generally, it also provides that "all revenues derived" from such fees, excises and license taxes be so expended. It thus appears that the drafters of the constitutional provision intended that not only were these fees, excises and license taxes to be deposited into the Highway Fund, but that any additional revenues derived therefrom also be part of the Highway Fund. As such revenues clearly would include interest derived from any investments made by the Fund, such interest must be regarded as part of the Fund, and not subject to diversion for nonhighway purposes. Thus, since the provision of 5 M.R.S.A. § 135 quoted above directs such a diversion, by specifying that interest derived from Highway Fund investments be credited to the General Fund, the provision conflicts with Article IX, Section 19, and is therefore unconstitutional.

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

Sincerely,

ANDREW KETTERER
Attorney General

AK:sw

cc: Governor Angus S. King, Jr.
Senator Dana C. Hanley
Representative George J. Kerr
Co-Chairs, Joint Standing Committee on Appropriations and Financial Affairs