Montana Attorney General Opinion 15-94

Opinion No. 94 Cities a11(1 Towns-\Val'l'ants-Budget Law-Revenues. HELD: ,",'arrants of a municipality issued in excess of actual receipts but within estimated receipt~ el'en though issued after it is apparent that actual receipts will fall short of the estima ted receipts, are not by reason thereof iI- Ipgally issued. February 24, 1933. You haye submitted to this office the following- questions: "Pursuant to Chapter 121 of the Session La ws of 1931, the council pre- pared its budget and set forth 'the estimated receipts from all sources.' It is now found that in a number of instanees ·the estimated' receipts are too hig-h anel that the amounts so 'estima ted' will not be collected or realized. OPIXIOXfl OF THE ATTORNEY GE);,ERAL 75 "1. Hence, the question which has :lI'i~('n is this: :\Iay warrants he le- ;.:ally drawn on such funtis so hudgeted up to the full amount set forth in the hudget notwithstanding the fact that 'the estimated receipts' will not be eollected and notwithstanding the fact that the actual receipts are and will be mueh less than the estimated re- ('('ipts and much less than the amount ~et forth in the budget? "'J Assuming that, in making up the budget, the council included in ·the ('stima ted receipts from all sources' monies estimated to be col- lected from police court fines, from licenses, frolll dog taxes, 01' anyone of them, and assuming that the amounts actuall~' received and collect- ed or which will he actually received and collected from such police court fines or licenses or dog taxes, is much less for the year than the amounts estimated at the time of the prepara- tion of the hudget, would these facts or conditions affect the legality of warrants drawn on such fund, assum- ing that the budgeted alllount is con- siderably in excess of the actual re- ceipts from such sources and from such funds?" As a matter of law I do not think t.here is any difference between the an, swer to your question 1 and your ques- tion 2. In question 1, you have de- ta iled the sources from which estimat- eti revenue was calculated. The ques- tion presented is whether or not war- rant.s drawn within the budget as fixed and finally determincd by the council, are legally issued even though the esti- ma ted revenues from all sources are not sufficient to pay the warrants, The talmlation of expenditures and sources of revenue, provided for in flection 4 of Ohapter 121, Laws of 1931, is submitted ll\' the clerk to the council : whereupon, tl~e council is required to ('onsider the same in detail and before the 25th day of ,July, make any re"i- ~ions, reductions, additions or changes that they may deem advisable, and as changed and approved they constitute the preliminary budget for the fiscal ~'ear. A public hearing is then adver- tised and heW and upon the conclusion the council shall fix and determine pach item of the budget separately and shall by resolution adopt the budget as so finally determined and enter the same in detail in the official minutes of the council. The budget as finally adopt{'{l shall specify the fund or funds against which warrants ma~' be issued for the expen- tlitures so authorized, rE'specth'ely, and the aggregate of all expenditures au- thori7~d against any fund shall not ex- ceed the estimated ,'evenues to accrue to such fund during the current fiscal YE'ar from all sources including taxa- tion. The budget act is very definite and ><pecific as to the total amollnt of ex- penditures that can he made. War- rants cannot be issued in excess of the estimated revenues. It is not, how- e,'er, clear that no wanants shall be issued where it IS apparent to the coun- cil that their actual receipts are going to . fall short of their estimated re- ceipts. Under Section fl, the clerk is required to ·submit a report to the council of ex- penditures. of each separate appropria- tion ilH.:urred during the vrece(ling caJ- emlar month amI also to set forth til(' receipts from taxes and in detail the re- ceipts from all other sources hy each fund for the same period. The council is thus kept advised from month to month of actual receipts from all sources. 1'he budget acts for counties, cities and school districts are new with us. 1'hey have in fact received few con- structions hy the courts. Officel's have found that budgets are "er~' definite limits on expenditures and that emer- ~encies cannot be declared merely for the purpose of exceefling limitations. Officers have not been slow in steer- ing a course around this limitation on ('xpcnditures. The course taken is to liberally estimate expenditures for any department or agency in fixing the hudget. How far may the council go in excess of reasonably to be expected receipts in fixing budget estimates? ~Iay the council continue to issue war- rants after collections from fines and licenses demonstrate conclush'ely that l'stimated receipts will not be realized in the current year? The fixing of the budget is a legis- lati,'e act. Insofar as the estimated income L~ to he derived from tax le"ies which become a lien on property, the presumption is that the tax will ulti- 76 OPINIONS OF THE ATTORNEY GENERAL mately he collected by sale of the prop- erty. ;0;0 lack of good faith can be charged to the council in issuing war- rants up to the full amount of the esti- mated receipts in such cases eyen though a considerable portion of the tax can never be collected. But there is no such pl'esUlnption (of ultimate col- lection) in favor of warrants issued against items estimated on receipts from fines not imposed, or, if imposed, not paid, or as to licenses not taken out or not renewed when business becomes unprofitable or is discontinued. In conclusion, it is my opinion that warrants issued in excess of actual re- ceipts, but within estimated receipts m'en though issued after it is appar- en t that actual receipts will fall short of estimated receipts, are not by reason thereof illegally issued.