Can an Arkansas county library use surplus maintenance millage revenue to match grants for a building expansion?

Plain-English summary

An Arkansas senator asked whether a county library board could use surplus revenue from a voter-approved maintenance and operation millage to match other money for a library expansion. The question assumed the board had satisfied the procedural requirements in subsections (b) and (c) of the library funding statute.

The AG answered no for this source of money. The statute let a library board use surplus funds available in its operating or maintenance account to match federal or other funds for necessary expansions or improvements. But Amendment 38 restricted the proceeds of a maintenance and operation millage to that purpose. The opinion quoted the constitutional command that those proceeds "shall be segregated by the county officials and used only for that purpose." It also invoked Arkansas Constitution article 16, section 11's restriction on using tax revenue for a purpose other than the one for which it was levied.

The matching arrangement made no difference to the AG's conclusion: outside funding did not turn maintenance millage proceeds into money available for construction. He expressly left open whether surplus operating funds from other sources could be transferred under the statute.

Currency note

This opinion was issued in 2013. 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.

What the opinion meant at the time

County library boards. A board could not use surplus revenue from an Amendment 38 maintenance and operation millage as the local match for a construction or improvement project. The opinion treated the source and voter-approved purpose of the surplus as decisive, despite the statutory authority to transfer surplus funds that were "available."

County officials and grant administrators. A proposed match from the maintenance millage remained a diversion even if federal or other construction money was ready to be matched. The AG said the availability of outside money did not validate the transfer.

Voters and taxpayers. The opinion drew a distinction between a millage identified on the ballot for library maintenance and operation and one identified for capital improvements or construction. It quoted an earlier AG opinion saying that voters could approve redesignating the permitted use of a maintenance millage.

Common questions

Could the library use surplus maintenance millage money if the expansion grant required a local match?

No. The AG said the presence of outside construction funds did not change the constitutional restriction on the maintenance millage proceeds.

Did satisfying the library statute's procedural requirements allow the transfer?

No. The question assumed compliance with subsections (b) and (c). The AG still concluded that the proceeds of this maintenance millage were unavailable for construction under Amendment 38.

What if the library's surplus operating money came from donations or another source?

The opinion did not answer that question. It said that library operating revenue could come from sources other than an Amendment 38 millage and expressly declined to decide when those other funds could be transferred.

Could voters authorize a county library construction millage?

The attached earlier opinion, which the AG adopted, described Amendment 38 as allowing a separately identified capital-improvements or construction millage and said voters could approve redesignating a maintenance millage's permitted use. This opinion did not address a particular ballot proposal.

Background and statutory framework

The statute's matching provision said a county library board could use "any surplus funds available in the operating or maintenance account" to match "federal or other funds available for financing necessary expansions or improvements." The AG read available in light of the constitutional restriction on the tax proceeds, rather than as permission to spend every surplus dollar in that account.

The senator suggested that the constitutional phrase "Act 244 of 1927 ... or similar legislation" might affect whether the matching statute applied. The AG said the phrase recognized that a county library could exist without a library board; it did not answer whether tax money dedicated to maintenance could be diverted to construction. The question was about the use of voter-approved tax revenue, not the board's existence.

The AG attached and endorsed Opinion No. 2005-090. That earlier opinion distinguished a library millage approved for maintenance and operation from one expressly approved for capital improvements or construction. The 2013 opinion applied the same distinction to a proposed grant match. Its footnote also distinguished Opinion No. 90-319, which concerned whether a quorum court could administer an approved library appropriation, from the separate question whether maintenance tax proceeds could be transferred to a construction account.

Citations and references

• A.C.A. § 13-2-405(a): statutory authority to match outside expansion or improvement funds using surplus funds available in the operating or maintenance account.
• Ark. Const. amend. 38: voter-approved county library millage purposes.
• Ark. Const. art. 16, § 11: tax proceeds restricted to their approved purpose.
• A.C.A. § 13-2-404: cited for other sources of library operating revenue.
• Op. Att’y Gen. No. 2005-090: earlier opinion attached to and endorsed in this opinion.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STATE OF ARKANSAS

THE ATTORNEY GENERAL
DusTIn McDANIEL

Opinion No. 2012-140

March 11, 2013

The Honorable Bryan B. King

State Senator

871 County Road 814

Green Forest, Arkansas 72638-2657

Dear Senator King:
I am writing in response to your request for my opinion on the following question:

Assuming the governing board of the county public library satisfies the requirements under Arkansas Code Annotated § 13-2-405(b) and (c), does § 13-2-405 allow the governing board of a county public library to use surplus funds in the operating and maintenance account of the library to match funds to finance necessary expansions or improvements for the library if the surplus maintenance and operation funds were derived from a millage levied for maintenance and operation under Amendment 38?

RESPONSE

The statute authorizes the diversion of surplus funds “available” in a library’s maintenance and operation (“M&O”) account to a capital improvement and construction account. Under the statute, this diversion of surplus “matching” M&O funds may be in any amount up to the amount of “federal or other funds available for financing necessary expansions or improvements of the public library.” Notwithstanding these provisions, however, I do not believe that surplus funds realized from an M&O millage levied pursuant to Ark. Const. amend. 38 can constitutionally be deemed “available” for any such diversion from M&O to capital construction or improvement. Amendment 38 is unambiguous in restricting to maintenance and operation the proceeds of a voter-approved M&O millage. Article 16, § 11 of the Arkansas Constitution more generally mandates that tax

323 CENTER STREET, SUITE 200 ° LITTLE Rock, ARKANSAS 72201
TELEPHONE (501) 682-2007 * Fax (501) 682-8084
INTERNET WEBSITE ®* http://www.ag.state.ar.us/

The Honorable Bryan B. King
State Senator

Opinion No. 2012-140

Page 2

revenues be used for their designated purposes. Accordingly, in my opinion, the constitution forecloses interpreting this statute as authorizing any diversion to a capital-expenditure account of surplus M&O revenues realized from an Amendment 38 millage. You have not asked about, and I will not address, the diversion under this statute of surplus M&O revenues arising from sources other than an Amendment 38 millage.

Subsection (a) of the statute you recite in your request authorizes the following:

The governing board of any county public library is authorized to use any surplus funds available in the operating or maintenance account of the public library for matching federal or other funds available for financing necessary expansions or improvements of the public library. '

Subsections (b) and (c) set forth various procedural requirements that you assume, for purposes of your question, have been met.

The upshot of your question is whether the following provisions of Amendment 38 might foreclose any transfer of revenues of the sort you have described:

The proceeds of any tax voted for the maintenance of a county public library or county library service or system shall be segregated by the county officials and used only for that purpose. . .
. No claim against said funds shall be approved by the County Court unless first approved by the County Library Board, if there is a county Library Board functioning under Act 244 of 1927 [§§ 17- 1001—17-1011] or similar legislation.’

Before directly addressing this question, I feel obliged to address what I consider a misconception in your request. You apparently view your underlying question as arising from what you term an “ambiguity in law.” Specifically, you point out in your discussion of background facts that the statute quoted above does not derive from Act 244 of 1927,° which is expressly mentioned in Amendment 38. The

'A.C.A. § 13-2-405(a) (Repl. 2003).

• Ark. Const. amend. 38, 2 (emphasis added; brackets in original), Act 244, as subsequently amended, is
  currently codified in various sections of subchapter 4, chapter 2, title 13 of the Arkansas Code (Repl. 2003
  & Supp. 2011).

The Honorable Bryan B. King
State Senator

Opinion No. 2012-140

Page 3

ambiguity you perceive consists in what you consider a lack of clarity regarding whether the above quoted statute qualifies as “similar legislation” of the sort referenced in Amendment 38. You appear to assume that if the statute indeed qualifies as “similar legislation,” it might without offending Amendment 38 authorize the diversion of surplus Amendment 38 M&O tax proceeds to match “federal or other funds available for financing necessary expansions or improvements of the public library.”

In my opinion, this assumption is mistaken, and your focus on the scope of Amendment 38’s reference to “similar legislation” is misplaced. The constitutional phrase “ifthere is a county Library Board functioning under Act 244 of 1927... or similar legislation’ does no more than acknowledge the possibility that a county library may exist without being administered by a library board.> In the present case, a library board clearly exists, and it just as clearly functions under the statute recited above, among others. Concluding as much, however, does not resolve the underlying constitutional question, which is whether a library board, pursuant to the statute at issue, may divert voter-approved M&O funds to the different end of financing capital construction. In my opinion, a reviewing court would almost certainly conclude that the answer to this question is “no,”

My immediate predecessor, in addressing generally whether a county library board could divert Amendment 38 M&O millage funds “to buy, build, add onto, or remodel” county libraries,° offered the following conclusions:

Although Ark. Const. amend. 38, as amended by Ark. Const. amend. 72, does authorize using a library millage for capital improvements and construction of the sort referenced in your question, it requires that the millage be expressly identified on the ballot as dedicated to

3 Section 13-2-405(a) instead derives from Acts 1965, No. 402, § 1.

• Emphasis added.

> The fact that a county library may operate without a board is expressly acknowledged in A.C.A. § 13-2-
404(b)(1) (Supp. 2011). Accord Op. Att’y Gen. No. 90-319 (“[RJather than creating the Library Board,

Amendment 38 contemplates the possibility that there is no such Board.”).

° My predecessor was not asked specifically asked about using surplus M&O revenues as “matching” funds under the statute here at issue.

The Honorable Bryan B. King
State Senator

Opinion No. 2012-140

Page 4

that purpose.”] Amendment 38 contains a separate section

authorizing the voters to approve a millage expressly identified on the ballot as dedicated to library maintenance and operation.”! | believe that the proceeds of a millage approved for maintenance and operation of a county library may not be diverted to fund capital improvements or construction of the sort described in your question. See Ark. Const. art. 16, § 11 (prohibiting the use of tax proceeds for any purpose other than that approved by the voters). However, if the voters approve, a millage dedicated to maintenance and operation might be recharacterized as dedicated to capital improvements and construction.’

Without here repeating my predecessor’s full analysis, which I have attached for your convenience, I will merely note that I concur fully both in his conclusions and in the reasoning offered in their support.

Your question differs from that addressed by my predecessor only in that you have specifically asked not about simply using M&O library-tax proceeds to finance capital construction, but rather about using such proceeds to match funds already available to finance such capital construction. In my opinion, in terms of constitutional propriety, this distinction is immaterial. The crucial factor here is the constitution’s express proscription against diverting state funds from an authorized use approved by the voters to another use not so authorized. This diversion is in no way validated by the fact that funds from one or more other sources are available for capital construction or improvements, thereby arguably providing an occasion under the statute to use “available” surplus M&O funds to match such available capital funds. As my predecessor pointed out, as a matter of constitutional law, the proceeds of a tax levied by the voters pursuant to

’ The levy of such a millage for capital improvements and construction is authorized at Amendment 38, § 5.

3 Amendment 38, § 1.

• Op. Att’y Gen. No. 2005-090. This opinion details the changes to Amendment 38 effected by Amendment
  72, which I need not review here. The types of expenditures falling under the rubric of “support, operation, and maintenance of the public library” under Amendment 38 are detailed in A.C.A. § 13-2-404 (Supp. 2011); see also Op. Att'y Gen. No, 2009-019 (further discussing the permissible scope of such expenditures). Both the statute just referenced and my analysis in Opinion 2009-019 are fully consistent with the conclusion that the “expansions or improvements of the public library” contemplated in A.C.A. § 13-2-405(a) do not fall within the category of “operation and maintenance.”

The Honorable Bryan B. King
State Senator

Opinion No. 2012-140

Page 5

Amendment 38, § 1 specifically to finance library M&O expenses must be used for that purpose unless the voters redesignate the permitted use.

The foregoing discussion should not be read to suggest that any diversion of surplus M&O funds to a capital construction or improvement account is constitutionally impermissible. The Code expressly acknowledges that library M&O revenues may arise from sources other than an Amendment 38 millage. You have not asked, and I will not here address, under what circumstances the diversion of surplus M&O from a source other than an Amendment 38 millage might be permissible.'° In my opinion, however, the statute could not constitutionally be read as applying to surplus M&O funds arising from an Amendment 38 millage.'!

Assistant Attorney General Jack Druff prepared the foregoing opinion, which | hereby approve.

DUSTIN McDANIEL
Attorney General

DM/JHD:cyh

Enclosure

© | will simply note here that alternative sources of M&O financing are expressly addressed in A.C.A. § 13-2-404.

' | do not consider this conclusion as contradicting my predecessor’s conclusion in Op. Att’y Gen. No. 90- 319, which addressed whether, if a library board exists, a quorum court might control Amendment 38 M&O revenues beyond appropriating them. My predecessor answered this question in the negative, commenting in passing as follows: “The clearest area of infringement would involve a Quorum Court’s attempt to prevent a Library Board’s use of surplus funds for matching federal or other funds available for financing expansions or improvements of the library. See A.C.A. § 13-2-405.” In offering this conclusion, however, my predecessor was not opining that the constitution would permit transferring surplus Amendment 38 M&O funds to a capital construction account. On the contrary, invoking Amendment 38, § 2, my predecessor quite appropriately observed: “{T]he proceeds of any tax levied for the maintenance of the county libraries can only be used for that purpose.” My predecessor summarized as follows the only principle upon which his opinion tured: “While the tax proceeds must be appropriated, it does not follow that the Quorum Court retains the right to administer 4 previously approved appropriation.”

THE ATTORNEY GENERAL
STATE OF ARKANSAS
MIKE BEEBE

Opinion 2005-090

May 31, 2005

The Honorable Randy Laverty
State Senator

Post Office Box 303

Jasper, AR 72641-0303

Dear Senator Laverty:
Iam writing in response to your request for my opinion on the following question:

Does the Administrative Board of the Carroll County Library Department have the authority to use maintenance and operation funds derived from the library millage to buy, build, add onto, or remodel any of the Carroll County public libraries?

RESPONSE

In my opinion, the answer to this question is “no.” Although Ark. Const. amend. 38, as amended by Ark. Const. amend. 72, does authorize using a library millage for capital improvements and construction of the sort referenced in your question, it requires that the millage be expressly identified on the ballot as dedicated to that purpose. Amendment 38 contains a separate section authorizing the voters to approve a millage expressly identified on the ballot as dedicated to library maintenance and operation. I believe that the proceeds of a millage approved for maintenance and operation of a county library may not be diverted to fund capital improvements or construction of the sort described in your question. See Ark. Const. art. 16, § 11 (prohibiting the use of tax proceeds for any purpose other than that approved by the voters). However, if the voters approve, a millage dedicated to maintenance and operation might be recharacterized as dedicated to capital improvements and construction.

323 Center Street, Sutre 1100 # Lirrte Rock, Arkansas 72201 Tevernone (501) 682-2007 » Fax (501) 682-8084 Internet Wexssite * http://www.ag,state.ar.us/

The Honorable Randy Laverty
State Senator

Opinion No. 2005-090

Page 2

The voters adopted Ark. Const. amend. 38 in the general election of 1946, As initially adopted, Amendment 38, § 1 authorized the voters to approve “an annual tax on real and personal property . . . for the purpose of maintaining a public county library or a county library service or system... not exceeding one mill on the dollar... .” In 1992, the voters approved Amendment 72, which amended Amendment 38 § 1 by raising the permissible rate of taxation from one mill to five mills and by providing that tax proceeds might be used for “maintaining and operating a public county library or a county library service or system. . . 7 Amendment 72 further added a new § 5 to Amendment 38, subsection (a) of which provides in pertinent part:

Whenever 100 or more taxpaying electors of any county shall file a petition in the County Court asking that an annual tax on real and personal property be levied for the purpose of capital improvements to or construction of a public county library or a county library service or system and shall specify a rate of taxation not to exceed three mills on the dollar, the question as to whether said tax shall be levied shall be submitted to the qualified electors of such county at a general or special election....

Subsection (b) of § 5 authorized the issuance of bonds to finance the capital construction, secured by a pledge of the tax proceeds.”

Both prior to and following the adoption of Amendment 38, counties were authorized to establish public libraries financed by such sources as public appropriations, gifts and bequests. See Acts 1927, No. 244, § 2, currently codified at A.C.A. § 13-2-404 (Repl. 1999).

2 Subsection 13-2-404(a)(2) of the Code (Repl. 1999) closely tracks the constitutional language as amended:

A county which supports a county public library or library system with a library tax under Arkansas Constitution, Amendment 38, shall by ordinance of the quorum court of the county levy a tax at a millage rate approved by the voters on all taxable property within the county to be used for the support, operation, and maintenance of the public library or public library system located in the county.

(Emphasis added.)

> With respect to the authorization to issue construction and capital improvement bonds, the emergency

clause of the Local Government Library Bond Act (the “Act”), A.C.A. §§ 14-142-301 through -222 Repl. 1998), which implemented the provisions of Amendment 38, § 5, provides in pertinent part:

The Honorable Randy Laverty
State Senator
Opinion No. 2005-090

Page 3

In my opinion, nothing supports the conclusion that a county might use for capital improvements or construction the proceeds of the particular millage earmarked for maintenance and operations of a library or library system under Amendment 38 in both its original and its amended form. Indeed, the county’s inability so to divert a millage dedicated for maintenance and operations is reflected in the fact that Amendment 38 as amended by Amendment 72 expressly differentiates between the two varieties of millage. With respect to a proposed millage to finance maintenance and operations, Amendment 38, § 1 requires that the ballot “be in substantially the following form”:

For a mill tax on real and personal property to be used for maintenance and operation of a public county library or county library service or system.

Against a mull tax on real and personal property to be used for maintenance and operation of a public county library or county library service or system.

By contrast, with respect to a proposed millage to finance capital improvements or construction, Amendment 38, § 5 mandates that the ballot “be in substantially the following form”:

For a mill tax on real and personal property to be used for capital improvements to or construction of a public county library or county library service or system.

It is hereby found and declared that by virtue of adoption of Arkansas Constitution, Amendment 72, that there are now no provisions for municipalities and counties to conduct elections or otherwise implement the provisions of said amendment and that municipalities and counties have an immediate and pressing need for borrowing funds through the issuance of bonds authorized by Amendment 30 and Amendment 38 as amended by Amendment 72, attributable in substantial part to the lack of authority prior to the adoption of Amendment 72, for the levy and pledge of ad valorem taxes sufficient to finance the construction of capital improvements to or for libraries in the State of Arkansas,

The Honorable Randy Laverty
State Senator

Opinion No. 2005-090

Page 4

Against a mill tax on real and personal property to be used for capital improvements to or construction of a public county library or county library service or system."*!

In my opinion, under the circumstances you have described, given that the voters have expressly dedicated the proceeds of the millage to maintenance and operation of the library, expending these proceeds for capital improvements or construction would be a diversion of public revenues in derogation of Ark. Const. art. 16, § 11, which provides that “no moneys arising from a tax levied for one purpose shall be used for any other purpose.” However, nothing would preclude the county from submitting to the voters a proposal that all or part of the millage be devoted to capital improvements or construction instead of maintenance and operation.

Assistant Attorney General Jack Druff prepared the foregoing opinion, which I hereby approve.

Sincerely,

(Oe

IKE BEEBE
Attorney General

MB:JD/cyh

‘ Amendment 38, § 5 also mandates differently worded ballot language if the capital improvements or construction is to be financed through bonds.