OFFICIAL OPINION NO. 27

OFFICIAL OPINION NO. 27 Bonds-Issuance of General Obligation Bonds. 1. In connection to the issuance sale today by the Commonwealth of Pennsylvania of $50 million principal amount of Commonwealth of Pennsylvania, General Obligation Bonds, Second Series of 1971, and $50 million principal of Com- monwealth of Pennsylvania, General Obligation Highway Bonds, Third Series T of 1971, the constitutional provisions and statutes in such other matters and documents including specimens of the bonds, the preambles and resolution adopted by the Governor, the Auditor General, and the State Treasurer and the Certificates delivered today at the closing have been examined. 2. Section 7 of Article VIII of the Constitution of Pennsylvania has been duly approved and adopted and has become part of the Constitution of Pennsyl- vania and the Acts have been duly and properly enacted. OPINIONS OF THE ATTORNEY GENERAL 47 3. The Governor, the Auditor General, and the State Treasurer have, pursuant to the full and adequate legal power conferred upon them by the amendment and the Acts, validly taken all necessary and proper action to issue and sell the Bonds, and the Bonds have been validly authorized, issued and sold pur- suant to proper and appropriate action of such officials in accordance with the Amendments and the Acts. 4. The Bonds are lawful, valid, direct and general obligations of the Common- wealth of Pennsylvania, and the full faith and credit of the Commonwealth are pledged for the payment of interest thereon as the same shall become due and the payment of the principal thereof at maturity. 5. The Bonds are exempt from taxation for state and local purposes within the Commonwealth of Pennsylvania, except succession or inheritance taxes. 6. The Commonwealth of Pennsylvania has the power to provide for the pay- ment of the principal of and interest on the Bonds by levying unlimited ad valorem taxes upon all taxable property within the Commonwealth and excise taxes upon all taxable transactions within the Commonwealth, except certain excise taxes and fees which are specifically limited to special purposes by Section 11 of Article VIII of the Constitution. 7. If suffieient funds are not appropriate for the timely payment of interest upon and installment of principal of the Bonds, the Constitution requires the State Treasurer to set apart from the first revenues thereafter received applicable to the appropriate fund a sum sufficient to pay such interest and installments of principal and to apply said sum to such purposes; the State Treasurer may be required so to set aside and apply such revenues at the suit of the holder of any of the Bonds. Harrisburg, Pa., April 15, 1971 To THE PURCHASERS OF THE WITHIN DESCRIBED BONDS: Re: $50,000,000 Commonwealth of Pennsylvania, General Obliga- tion Bonds, Second Series S of 1971 $50,000,000 Commonwealth of Pennsylvania, General Ob- ligation Highway Bonds, Third Series T of 1971 This opinion is furnished to you in connection with the issue and sale today by the Commonwealth of Pennsylvania of $50,000,000 principal amount of Commonwealth of Pennsylvania, General Obliga- tion Bonds, Second Series S of 1971 (the "Series S Bonds"), and $50,000,000 principal amount of Commonwealth of Pennsylvania, General Obligation Highway Bonds, Third Series T of 1971 (the "Series T Bonds", and, together with the Series S Bonds, the "Bonds"), dated April 15, 1971, and maturing serially in varying amounts on October 48 OPINIONS OF THE ATTORNEY GENERAL 15 of each year, commencing October 15, 1973 and ending October 15, 2000. The Bonds have been issued as coupon Bonds, registrable as tb principal only, in the denomination of $5,000 each. Bonds are subject to redemption on and after April 15, 19 81 as a whole at any time, or from time to time in part on any interest payment date in the inverse order of their stated maturity date. The Bonds are authorized by and have been issued and sold pursuant to (i) Section 7 of Article VIII of the Constitution of Pennsylvania, (ii) Acts Nos. 217, 218, 220, 221 and 222 of the 1968 Session, all approved July 20, 1968, Act No. 348 of the 1968 Session, approved November 27, 1968, Act No. 360 of the 1968 Session, approved December 2, 1968, Act No. 4 of the 1969 Session, approved March 26, 1969, Act No. 7 of the 1969 Session, both approved July 24, 1969, Act No. 114 of the 1969 Session, approved October 24, 1969, Act No. 133 of the 1969 Session, approved November 25, 1969, Acts Nos. 16 and 17 of the 1970 Session, both approved February 18, 1970, Acts Nos. 94 and 95 of the 1970 Session, both approved March 26, 1970, Act 127 of the 1970 Session, approved June 22, 1970, Act No. 227 of the 1970 Session, approved November 24, 1970, Act No. 256 of the 1970 Session, approved November 27, 1970, Act No. 267 of the 1970 Session, approved November 30, 1970 (the "Acts"), and (iii) certain Preambles and Resolutions adopted by the Governor, the Auditor General and the State Treasurer, which among other things, authorized the . issuance and sale of the Bonds and prescribed the form thereof, the manner of bidding therefor, and forms of the bidding documents used in connection with the issue and sale of the Bonds. The Bonds have been issued to finance public improvement projects (Series S Bonds), and highway projects (Series T Bonds), specifically itemized in a capital budget. Subsection 7 (a) ( 4) of Article VIII of tbe. Constitution authorizes the incurring of debt for such purpose if such debt will not cause the amount of all net debt outstanding to exceed one and three-quarters times the average of the annual tax revenues deposited in the previous five fiscal years as certified by the Auditor General. I have examined such constitutional prov1s10ns and statutes and such other matters and documents, including specimens of the Bonds, the Preambles and Resolutions adopted by the Governor, the Auditor General and the State Treasurer, and the certificates delivered today at th.e Clo~ing as I have thought necessary or appropriate. OPINIONS OF THE ATTORNEY GENERAL I am of the opinion that: 1. Section 7 of Article VIII of the Constitution of Pennsyl- vania has been duly approved and adopted and has become part of the Constitution of Pennsylvania, and the Acts have been duly and properly enacted. 2. The Governor, the Auditor General and the State Treasurer have, pursuant to the full and adequate legal power conferred upon them by the Amendment and the Acts, validly taken all necessary and proper action to issue and sell the Bonds, and the Bonds have been validly authorized, issued and sold pursuant to proper and appropriate action of such officials in accordance with the Amendment and the Acts. 3. The Bonds are lawful, valid, direct and general obliga- tions of the Commonwealth of Pennsylvania, and the full faith and credit of the Commonwealth are pledged for the payment of the principal thereof at maturity. 4. The Bonds are exempt from taxation for state and local purposes within the Commonwealth of Pennsylvania, except succession or inheritance taxes. 5. The Commonwealth of Pennsylvania has the power to provide for the payment of the principal of and interest on the Bonds by levying unlimited ad valorem taxes upon· all taxable property within the Commonwealth, except certain excise taxes and fees which are specifically limited to special purposes by Section 11 of Article VIII of the Constitution. 6. If sufficient funds are not appropriated for the timely payment of interest upon and installments of principal of the Bonds, the Constitution requires the State Treasurer to set apart from the first revenues thereafter received applicable to the appropriate fund a sum sufficient to pay such interest and installments of principal and to apply said sum to such purposes; the State Treasurer may be required so to set aside and apply such revenues at the suit of the holder of any of the Bonds. Very truly yours, J. SHANE CREAMER, Attorney General.