Waters, 052332 PAAGO, AGO 51

• Case Date: May 23, 1932
• Court: Pennsylvania

Honorable Charles A. Waters AGO 51 Opinion No. 51 Pennsylvania Attorney General Opinions Opinions of the Attorney General May 23, 1932          Appropriations — Preferred Appropriations — Non-Preferred Appropriations — Abatements—General Appropriation Bill—Violation of Art. IX, Sec. 4 by the "Talbot Act," Extraordinary Session of 1931, P. L. 1303—Supreme Court Opinion, Commonwealth v. Liveright et al May Term 1932, No. 16.          1. Items In the General Appropriation Act, its amendments and supplements, are either in the preferred class or void. They cannot be abated.          2. The only preferred appropriations made by the regular and special sessions of 1931, other than those made by the General Appropriation Act, its amendments and supplements, are those made by the Talbot Act, Act No. 19-A, the Act of June 12, 19-A, P. L. 575, the Act of June 25, 1931, P. L. 1376, and Act No. 1-E. All other appropriations made at the regular and special sessions of 1931 must abate proportionately.          3. In determining the amount of money available for the present biennium, the Auditor General and State Treasurer must be governed by the estimate of the Budget Secretary, presented to the Governor after the adjournment of the regular session of the Legislature of 1931, upon the bassis of which the Governor acted in approving appropriation acts.          4. The abatement of appropriations must be made as of the effective date of the Talbot Act—December 28. 1931—except that the abatement cannot affect appropriations actually expended prior to that date, and that the abatement cannot in any case disturb contracts lawfully and validly executed prior to the decision of the Supreme Court in the Talbot Act Case.          Honorable Charles A. Waters, Auditor General,          Harrisburg, Pennsylvania;          Honorable Edward Martin, State Treasurer,          Harrisburg, Pennsylvania.          Gentlemen: We have your joint request to be advised concerning the effect of the opinion of the majority of the Supreme Court in Commonwealth v. Alice F. Liveright, et al., May Term, 1932, No. 16, sustaining as constitutional the so-called "Talbot Act," which became effective December 28, 1931, (Pamphlet Laws, page 1503).          Your inquiry arises out of that part of Mr. Justice Kephart's opinion dealing with the question whether the Talbot Act violated Article IX, Section 4, of the Constitution. That section reads as follows:

"No debt shall be created by or on behalf of the State, except to supply casual deficiencies of revenue, repel invasion, suppress insurrection, defend the State in war, or to pay existing debt; and the debt created to supply 'deficiencies in revenue shall never exceed in the aggregate at any one time, one million dollars; * * *."

         Mr. Justice Kephart said:

"* * * The balance of estimated revenue for the biennium, after the regular session of the legislature, was $192,915,000, and the authorized appropriations were $192,394,000. At the special session, prior to the Talbot bill, $716,000 was appropriated; Math it the appropriations of that session totaled $10,716,000. Defendants contend that since the appropriation made by this bill with prior appropriations already made, exceeded the estimated revenues for the biennium, the excess appropriations were invalid.

'' The court below held that though strict constitutional limitations were imposed on municipalities in the creation of debts, this was not so with respect to the sovereign state; that there was no limitation to the debt the latter might incur except when created to supply deficiencies in revenue. This conclusion is erroneous. * * * Under the constitution, neither the legislature, the officers or agents of the State, nor all combined, can create a debt or incur an obligation for or on behalf of the State except to the amount and in the manner provided for in the fundamental law. This section was intended to restrict legislative acts which incurred obligations or permitted engagements on the credit of the State beyond revenue in hand or anticipated through a biennium, and establishes the principle that we must keep within current revenue and $1,000,000. There can be no such thing as a floating debt created through appropriations in excess of revenues and $1,000,000. Such debt may not be directly incurred by statute, nor through an appropriation in excess of current revenue for a gratuity or any purpose. * * *

"Among constitutional requirements is the provision (Art. IX, Sec. 12) that 'The monies of the state, over and above the necessary reserve, shall be used in the payment of the debt of the State, either directly or through the sinking fund,' and by Art. IX, Sec. 13, ' The monies held as necessary reserve shall be limited by law to the amount required for current expenses.' * * * A survey of the Constitution would indicate that the ordinary current expenses of government would be the expenses of the executive, judicial, and legislative departments of government, and of public schools, as provided for in that instrument. It was the intention of the framers of the fundamental law to safeguard and protect these ordinary expenses that the government might exist as such. Therefore, they have a preference or prior claim on all moneys of the Commonwealth over all other expenditures, expenses, debts, or appropriations. * * * The Constitution requires a reserve to be set up sufficient to take care of these preferred claims, and that such reserve be limited by law; but if the legislature fails to so limit it, it is the duty of the fiscal officers to safeguard the ordinary current monthly expenses of government.

"The provision relative to the sinking fund state debt requires only $250,000 annually to be paid, and the transfer of a part of the revenue to that fund, that part, of course, being in the discretion of the legislature. But the ordinary expenses of government and the sinking fund payment are not the only preferred claims on revenues thus established and first entitled to payment. Art. Ill. Sec. 17, permits moneys to be given to charities and normal schools, money for charities if passed by a two-thirds vote. Money given to normal schools has priority on the general fund over an appropriation to charities, etc.; McLeod v. Central Normal School Association, 152 Pa. 575, 589. The balance of the general revenue, subject to constitutional limitations, is in the absolute and complete control of the General Assembly. It follows that it may create preferential appropriations for any purpose which, in its judgment, it deems necessary in the interest of government, and such appropriations would have a claim on this surplus prior to other appropriations not so favored. * * * Any appropriation which embodies an intention to pay the amount therein stated before any other appropriation made at the same session of the legislature or any appropriation which stipulates the time at or within which it must be paid, will take rank as an appropriation next to the ordinary expenses of government. Priority is a question of intention and prior claims rank equally unless there is an intention shown to the contrary or expressed through the Constitution.

"The fiscal officers of the Commonwealth are required to treat such appropriations as having such priority, provided always, that at the time payment is directed, there are funds available in the treasury to meet such payment above all requirements for the current expenses of government. No administrative custom or scheme of payments under unpreferred appropriations will avoid these consequences or that of a deliberate legislative act in preferring an appropriation. If other appropriations are compelled to suffer because of this preference, the complete answer is that it is the legislative will, and as the sovereign people have thus spoken through their designated agent,_ no one can complain. If appropriations for other charities and hospitals, equally as meritorious and perhaps some more deserving, are made to suffer because of insufficient revenue, the fault lies with the legislature in not providing means when it had the opportunity. If there are ample funds on hand, of course, or if .'funds later become available, no difficulty will be experienced.

"The Talbot bill, known as Act 7-E, specifically appropriates $10,000,000, to the Department of Welfare, and contains a mandatory direction to the State Treasurer to pay certain sums at fixed periods; $1,000,000, in December, 1931, $2,000,000, in each of the succeeding four months, and the remaining and final $1,000,000 in May, 1932. The amount, the time, and the purpose of payment, are thus definitely stated in the Act. The legislature intended these payments to take priority over other payments at the times mentioned, and the purpose stated in the Act furnishes a reasonable basis for such action. When we as judges

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