OFFICIAL OPINION No. 27

OFFICIAL OPINION No. 27 Pennsylvania Tax Anticipation Notes, Series of 1957, dated October 29, 1957, ma- turing May 20, 1958-Legal status. Harrisburg, Pa., October 31, 1957. Honorable George M. Leader, Governor, Honorable Charles C. Smith, Auditor General, Honorable Robert F. Kent, State Treasurer. OPINIONS OF THE ATTORNEY GENERAL 127 Sirs: We have your request for an opinion as to the legal status of thirty-three million dollars ($33,000,000) Tax Anticipation Notes, Series of 1957, dated October 29, 1957, maturing May 29, 1958. We have examined the proceedings relative to the issuance by the Commonwealth of Pennsylvania of Tax Anticipation Notes, Series of 1957, in the amount of thirty-three million dollars ($33,000,000). This issue was authorized by the General Assembly of this Com- monwealth by the Act approved September 29, 1951, P. L. 1646, as amended by the Act approved June 30, 1955, P. L. 247. We are satis- fied that the Act of September 29, 1951, P. L. 1646, and the amendment thereto of June 30, 1955, were duly and properly enacted. We have also examined the official estimates submitted to the Governor, through the Budget Secretary, by the Department of Revenue, stating the amount of the contemplated revenues provided for the current bien- nium by the General Assembly for the current purposes of any fiscal biennium and the amount thereof that remains uncollected. The constitutionality of the issuance of Tax Anticipation Notes was upheld by the Supreme Court of Pennsylvania in the case of Kelley v. Baldwin et al., 319 Pa. 53, 179 Atl. 736 (1935). Since the Act of September 29, 1951, as amended, is similar to the act held to be constitutional in Kelley v. Baldwin, supra, we believe it to be con- stitutional. The act provides, inter alia, that the current revenues for any bien- nial fiscal period accruing to the General Fund of the .State Treasury shall be pledged for the payment of principal of the interest on all notes issued during such fiscal biennium, and that so much of said revenues as may be necessary, are specifically appropriated for such payment, the Department of Revenue being authorized to allocate such revenues to said payment. The act authorizes the Governor, the Auditor General and the State Treasurer to determine the terms and conditions of the issue, rates of interest and time of payment of inter- est, provided that the notes shall not mature later than May 31 of the second fiscal year of any current biennium, and shall not bear interest in excess of 4:Y2% per annum. The minutes of the meetings held by the Governor, the Auditor General and the State Treasurer, show that all proceedings taken relative to the issuance of the notes comply fully with the provisions of the act and are in due legal form, and that all necessary action has been duly taken. 128 OPINIONS OF THE ATTORNEY GENERAL We have examined fully executed notes of the following denomina- tions; five thousand dollars ($5,000.00), ten thousand dollars ($10,- 000.00) twenty-five thousand dollars ($25,000.00), fifty thousand dollars ($50,000.00) and one hundred thousand dollars ($100,000.00), in bearer form and find that the same are duly and properly executed and conform with the form approved by you. In conclusion, we have no hesitation in advising you that the thirty- three million dollars ($33,000,000) Tax Anticipation Notes of the Com- monwealth of Pennsylvania, Series of 1957, dated October 29, 1957, maturing May 29, 1958, constitute legal obligations payable by the Commonwealth of Pennsylvania from current revenues accruing to the General Fund of the State Treasury of the Commonwealth of Pennsylvania during the two fiscal years ending May 31, 1959, and are being issued in anticipation of collectible current revenues. The total amount of the Commonwealth of Pennsylvania Tax Antic- ipation Notes, Series of 1957, is less than one-third of the officially estimated revenues provided by the General Assembly under existing laws for the General Fund in the current two year fiscal period, one of the two borrowing limitations now applicable since the General Assembly is not in session. The amount of this issue of notes is also less than one-third of the uncollected amount of such revenues, the other applicable borrowing limitation. We are further of the opinion that the allocation of the moneys in the General Fund, which are specifically set forth on the face of the notes, made by the Department of Revenue, and approved by the Governor, the Auditor General and the State Treasurer, to provide a sinking fund for the payment of said notes, are payable into and must be set aside in the sinking fund accounts, mentioned on the face of the notes in the amounts and at times specified, prior to all other ex- penditures, expenses, debts and appropriations, including current ex- penses, payable from the General Fund. Very truly yours, DEPARTMENT OF JUSTICE, HARRINGTON ADAMS, Deputy Attorney General. THOMAS D. McBRIDE, Attorney General. OPINIONS OF THE ATTORNEY GENERAL 129