Who controlled the Colorado Division of Gaming's budget and personnel, the Revenue Department or Gaming Commission?

Plain-English summary

Governor Bill Owens asked whether the Colorado Department of Revenue or the Limited Gaming Control Commission controlled the Division of Gaming's budget and personnel. Attorney General John Suthers concluded that the Department controlled both functions through its executive director, although the Commission had to approve the Division's budget.

The opinion relied on the statutory structure placing the Commission, Division, and Division director under the Department through a type 2 transfer. That arrangement moved budgeting, personnel, planning, records, property, and other administrative functions to the principal department and ultimately its head.

The Commission retained important regulatory powers over licensing, operation, and conduct of limited gaming. It also could withhold budget approval and require further negotiation. But it had no legal role in appointing or retaining the Division director or staff, and its gaming-rule authority did not create general administrative control over the Division.

Currency note

This opinion was issued in 2006. 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.

Who this opinion addressed in 2006

Limited Gaming Control Commission members

The Commission could approve or reject the Division budget and held specified regulatory powers. The opinion rejected the broader claim that these powers gave the Commission plenary control over personnel and day-to-day Division administration.

Department of Revenue leadership

The Department prepared and controlled the budget as part of the executive process. Its executive director held ultimate authority over departmental personnel and appointed or removed the Division director.

Division of Gaming managers

The Division director supervised operations, appointed Division staff, prepared a proposed budget with Commission approval, and worked with the Commission on gaming regulation. Those duties remained within the Department's administrative chain.

Common questions

Q: Could the Gaming Commission hire or fire Division employees? A: No. The opinion said the Commission was not the appointing authority for the Division director or staff.

Q: Did the Commission have any control over the Division budget? A: Yes. Its approval was required, and withholding approval could force revisions. Budget preparation and final executive authority still rested with the Department and Governor.

Q: Why did the type 2 transfer matter?
A: It transferred administrative functions such as budgeting and personnel to the principal department while preserving specified statutory powers for the Commission.

Q: Did the Commission's gaming rulemaking power extend to all Division operations? A: No. The opinion limited that power to licensing, conducting, and operating limited gaming.

Background and statutory framework

C.R.S. § 12-47.1-201 placed the Division, Commission, and Division director under the Department through a type 2 transfer. C.R.S. § 24-1-105(2) described the resulting transfer of administrative functions to the principal department. C.R.S. § 12-47.1-302 preserved the Commission's express gaming-regulation powers.

The opinion also cited C.R.S. § 24-1-101 for the Administrative Organization Act's design and C.R.S. § 24-37-303 for the Governor's final authority over the executive budget. The Limited Gaming Fund financed regulatory expenses without a legislative appropriation, but that funding mechanism did not displace the Department's administrative authority.

Citations and references

Statutes:

• C.R.S. § 12-47.1-302
• C.R.S. § 12-47.1-201
• C.R.S. § 24-1-105(2)
• C.R.S. § 24-1-101
• C.R.S. § 24-37-303

Source

• Landing page: https://coag.gov/attorney-general-opinions/
• Original PDF: https://coag.gov/app/uploads/2019/08/No.-06-5-The-Respective-Authority-of-the-Colorado-Department-of-Revenue-and-the-Colorado-Limited-Gaming-Control-Commission-for-the-Budget-and-Personnel-of-the-Division-of-Gaming.pdf

Original opinion text

STATE OF COLORADO
DEPARTMENT OF LAW

J ohn W. S i tiik k s

Attorney (ieneral
( V M HIA I I . ( Oi l MAN

O f f i c e o f t h e A'i t o k n e v G e n e r a l

Chief Deputy Attorney ( ieneral

S t a t e S e r v i c e s B i i i .d i n c

1525 Sherman Street - 5th Floor
Denver. ( 'olorado 80205
l'hone (505) 866-4500

D a n i i i D. D o m e n i c o

Solicitor ( ieneral

FORMAL
No. 06-05
OPINION
AG Alpha No. EX AD AGBBV
OF
July 24, 2006
JOHN W. SUTHERS
Attorney General

This opinion, requested by Governor Bill Owens, concerns the respective authority o f the Colorado Department o f Revenue and the Colorado Limited Gaming Control Commission for the budget and personnel o f the Division o f Gaming.

QUESTION PRESENTED AND CONCLUSION
Q u estion : Whether authority over the budget and personnel o f the Division o f Gaming

lies with the Department o f Revenue, the Limited Gaming Control Commission, or some combination o f the two entities. A n sw er: While the Commission must approve the Division's budget, both the budget and the Division's personnel decisions are under the control o f the Department and ultimately are made by the executive director.

BACKGROUND
In 1991, Colorado voters approved an initiative to allow limited gaming in Central City, Black Hawk and Cripple Creek. The constitutional amendment included a number o f restrictions on the conduct o f limited gaming evidencing an intent to tightly control the newly-approved practice o f legalized casino gambling. In addition to narrowly defining those geographic areas permitted to host limited gaming, the voters prescribed the hours, space, and income o f limited

authorized limited gaming fund. Cot.o. C onst , art. XVIII. § 9. O f particular signitlcanee for purposes o f this opinion, the amendment directed the general assembly to establish the Colorado Limited Gaming Control Commission ("Commission'') to administer and regulate limited gaming. C o l o . C o n s t , art. XVIII. § 9(2). The Commission is granted specific authority to promulgate rules and regulations governing the licensure, conduct and operation o f limited gaming. A/.; C.R.S. § 12-47.1-302(a). The Commission is created within the Division o f Gaming, under the Department o f Revenue. C.R.S. § 12-47.1-302. Its members are appointed by the Governor; any member o f the Commission can be removed by the Governor at any time. C.R.S. § 12-47.1 -301 (1 )& ( I )(d). The Division o f Gaming ("Division'') also is created within the Department o f Revenue ("Department"). C.R.S. § 12-47.1-201. The function o f the Division is to "license, implement, regulate, and supervise the conduct o f limited gaming” in Colorado. C.R.S. § 12-47.1-202. The Division director is to "supervise and administer the operation of the Division o f Gaming and Limited Gaming” in accordance with statutory provisions and the rules o f the Commission, and to employ and direct such personnel as may be necessary to carry out the purposes o f the Limited Gaming Act. C.R.S. §§ 12-47.1 -201 (2)(a) & 203(2)(c)(I). The Division director is appointed by, and may be removed by, the executive director o f the Department o f Revenue. C.R.S. § 1247.1-201. In the Colorado Gaming Act o f 1991 ("Act") at C.R.S. section 12-47.1-101 et seq., the legislature provided that the Commission, the Division, and the Division director are created under the Department by a "type 2" transfer. “The Division o f Gaming, the Colorado limited gaming control commission created in section 12-47.1-301, and the director o f the division o f gaming shall exercise their respective powers and perform their respective duties and functions as specified in this article under the department o f revenue as if the same were transferred to the department by a type 2 transfer...” C.R.S. § 12-47.1-201. The fact that the Commission, Division, and Division director all were created by a type 2 transfer is significant. The Administrative Organization Act o f 1968 establishes three types o f transfers with a type 1 transfer creating the most autonomous and powerful agencies or institutions. In a type 1 transfer, an entity exercises its prescribed statutory powers, duties, and functions. . . independently o f the head o f the principal department. S ta te H igh w ay C om m ission o f C o lo ra d o v. H a a se , 537 P.2d 300, 303 (Colo. 1975). A type 3 transfer means the abolishing o f an existing department, institution, or other agency and the transferring o f all or part o f its powers and duties to a principal department. C.R.S. § 24-1-105(3). When any department, institution, or other agency is transferred by a type 2 transfer, "its statutory authority, powers, duties, and functions, records, personnel, property, and unexpended balances o f appropriations, allocations, or other funds, including the functions o f budgeting, purchasing, and planning, are transferred to the principal department.” C.R.S. § 24-1-105(2). In addition, the transferred entity's "prescribed powers, duties, and functions, including rule-making, regulation, licensing, promulgation o f rules, rates, regulations, and standards, and the rendering o f findings, orders and adjudications are transferred to the head o f the principal department into which the department, institution, or

notably, the General Assembly reserved to the Commission specific authority to promulgate rules and regulations governing the licensure, conduct and operation o f limited gaming. C.R.S. § 12-47.1-302(a). In addition, C.R.S. § 12 -4 7 .1-302 lists other express statutory powers and duties o f the Commission including, in ter alia, the authority to issue subpoenas; to issue, suspend or revoke licenses or levy lines; to recommend changes in the Gaming Act to prevent abuses and violations o f the Gaming Act; to report concerns to elected officials; to seek injunctive or declaratory relief in order to enforce gaming statutes and rules; and generally “to exercise such incidental powers as may be necessary to ensure the safe and orderly regulation o f limited gaming and the secure collection o f all revenues, taxes and license fees." The Commission, then, is a type 2 institution with certain, express type 1 duties and powers defined by statute. The Department therefore maintains a degree o f direct control over the Commission typical o f a type 2 transfer, a matter that is discussed in more detail below. At the same time, the role o f the Division director is to "supervise and administer the operation of the Division o f Gaming and Limited Gaming" in accordance with statutory provisions and the rules o f the Commission, and to employ and direct such personnel as may be necessary to carry out the purposes o f the Limited Gaming Act. C.R.S. §§ 12 -4 7 .1-203(2 )(a) & (2)(c)(I). The work o f the Division and its director compliments and facilitates the Commission's work. For example, the Division director confers with the Commission at least once a month with regard to the operation o f the division; furnishes the Commission a monthly report which contains a full and complete statement o f the Division's revenue and expenses; advises the Commission and makes recommendations regarding rules or other procedures that the director thinks necessary and advisable to improve the operation o f the Division and the conduct o f limited gaming; and, with Commission approval, prepares a budget for each fiscal year and enters into agreements with other state entities to secure services. C.R.S. § 12-47.1 203. Finally, the Division director is to work with the Commission to “take such action as may be determined by the Commission to be necessary or desirable in order to carry out the purposes and provisions" o f the Act. C.R.S. § 12-47.1 -203(2)(k). The Governor requested this formal opinion after a majority o f Commission members asserted that the Commission had plenary authority over the Division's budget and personnel. The executive director o f the Department, under whose auspices both the Commission and Division are created, maintained that the Department had statutory management and oversight o f both functions. The following discussion addresses the roles o f the Commission, Department and Division regarding the functions o f budgeting and managing Division personnel.

DISCUSSION
In determining the respective roles o f the Commission and Department with regard to the Division's budget and personnel, general guidance can be found in the Administrative Organization Act o f 1968. This legislation is the vehicle by which the General Assembly outlines an arrangement o f state government to strengthen the powers o f the governor and provide a reasonable span o f administrative and budgetary controls within an orderly organizational structure o f state government. C.R.S. § 24-1-101.

department ot the state government and their respective functions, powers, and duties are allocated among and within the principal departments. C.R.S. § 24-1-110. The head o f a principal department is appointed by the governor. C.R.S. § 24-1-108. The State Personnel System provides that the head o f each principal department shall be the appointing authority for the employees o f his office and for heads o f divisions, within the personnel system, ranking next below the head o f each department. Heads ofsuch divisions shall be the appointing authorities for all positions in the personnel system within their respective divisions. Cot.o. Const, art. XII,
§ 13(6). In addition, under a type 2 transfer, the Department's executive director is the party ultimately responsible for the exercise o f the Division's and the director's statutory powers. See O 'C a rm a n v. In du strial C laim A p p e a ls O ffice , 8.39 P.2d 1 149, 1 152 (Colo. 1992). The Department o f Revenue is one o f the nineteen principal departments in the executive department o f state government. C.R.S. § 24-1-117. There are five divisions within the Department. One o f these is the Division o f Gaming, which includes the Colorado Limited Gaming Commission. C.R.S. § 24-1-117(4)(a)( VII). The director o f the Division is appointed by, and is subject to removal by, the executive director o f the Department. C.R.S. § 12-47.1-201. When it comes to hiring Division personnel, state statute provides that the Division director is to supervise and administer the operation o f the Division o f Gaming and "employ and direct such personnel as may be necessary" to carry out the purposes o f the Act. C.R.S. §§ 1247.1-201 (2)(a) & 203(2)(c)( I). The Division director appoints all Division staff and either supervises them directly or delegates supervisory authority to managers. Pursuant to the State Personnel System, the Commission, on the other hand, has no legal role in selecting or retaining the director or any employees o f the Division, flic Commission is not the appointing authority for these positions. See Cot.O. C o n s t, art. XII, § 13(8). The Commission m ay be granted an advisory role to the Division director and the Department executive director by virtue o f the close workings o f the Division and Commission. However, the executive director has ultimate authority in all departmental personnel matters. Turning to the matter o f what entity controls the Division's budget, it is important to understand the funding mechanism created for limited gaming. In the constitutional initiative establishing limited gaming in Colorado, voters approved the institution o f a limited gaming fund in the State Treasury. All casino licensing fees and up to forty percent o f the gross proceeds generated from limited gambling are paid into the Limited Gaming Fund ("Fund''). Coi.o. C o n s t , art. XVIII. § 9 (5 )(a). It is up to the Commission to establish the percentage paid into the Fund by each licensee to the Commission, in addition to license fees and taxes. C.R.S. § 1247. l-302(2)(h). All ongoing expenses o f the Division, the Commission, and any other state agency that are related to administration o f limited gaming, must be paid from the moneys in the Fund. Payment is made upon proper presentation o f a voucher prepared by the Commission. As a result o f this funding arrangement, no appropriation by the General Assembly is needed to support limited gaming and its regulation. At the end o f each state fiscal year, the State Treasurer distributes the balance remaining in the Fund (less two months o f ongoing administrative expenses) according to set guidelines found in the constitutional provision. See

Commission for its approval a proposed budget for the succeeding fiscal year. The budget must set forth a complete financial plan lor all proposed expenditures and anticipated revenues for the Division. C.R.S. § 12-47. l-2()3(j). Review o f a division budget by a type 2 commission is an apparent anomaly in state government. The Department's current executive director and budget director describe the Division's budgeting process as standard with the exception o f the requirement to seek the Commission's approval.1 It is helpful to recount the steps in the budget process in order to better understand the Commission's role. The Division staff begins the budget process by preparing requests for any new decision items above the Division's base continuation budget. The decision items are presented to the Commission for approval prior to inclusion in the Department's budget. The budget, with any decision items, then is drafted by Department budget staff with Division input. The executive director approves the entire Department budget and forwards it to the Governor's Office o f State Planning and Budgeting for review. Eventually, the final Department budget is transmitted to the legislative Joint Budget Committee. At this juncture the Division o f Gaming budget process differs from other divisions in the department because o f the direct funding o f gaming by the industry itself. While the state budget includes a line reflecting the Division's annual continuation budget, in this instance it is for informational purposes only because there is no legislative appropriation for gaming. The money in the [Division's budget line automatically is reserved to the Limited Gaming Fund to pay all ongoing expenses o f the Commission, Division, Department, or any other state agency associated with limited gaming. C.R.S. § 12 -47.1-701(b). After the Division budget has made its way through the Joint Budget Committee, it is returned to the Commission for final presentation. Historically, there has not been any disagreement with the budget and the Commission’s approval has been routine. It is possible, though, that the Commission could reject the budget and insist that changes be made. Ideally, the Commission and. Division and Department staff would negotiate successfully any revisions and agree on an amended budget. Any requested change to the budget at this stage would take the form o f a supplemental budget request or budget amendment and would require that the Department go back through the budget approval process at both the executive and legislative levels. The final authority over the executive budget is vested in the governor. C.R.S. § 24-37303. However, the Commission could withhold its approval thereby giving it de facto control over the Division's portion o f the departmental budget. It has been asserted that the Commission has greater authority over the personnel and budget o f the Division than this opinion finds, based in part o f findings o f the Colorado Supreme Court in S u bm ission o f In terro g a to ries on S en ate B ill 93-74, 852 P.2d 1 (Colo. 1993). The Court was asked by the General Assembly to decide whether the Taxpayer’s Bill o f Rights (“'LABOR") permitted the General Assembly to enact limitations on revenues collected by the Commission 1At the time of this opinion, Michael Cooke is Executive Director of the Department of Revenue and Paul Doyle serves as Chief Financial Officer. They are responsible for providing details of the Denartmeni-’c hu/Wtir.,*

and not the General Assembly has authority to establish the annual percentage o f adjusted gross revenues to be collected from limited gaming licensees. In re: S en ate B ill 9 3 -7 4 , 852 P.2d at Id15. This decision was based on "the plain language” o f section (5)(a ) o f the Limited Gaming Amendment, which states that this "percentage shall be established annually by the commission according to the criteria established by the general assembly. . . .” Id. From this unremarkable decision, some have extrapolated a much broader and unlettered power o f the Commission to control every aspect o f limited gaming including the day-to-day operations o f the Division o f Gaming. Nothing in the state Supreme Court's opinion or in the constitution or statute bears out such an expansive interpretation o f the Commission's authority over functions o f the Division, when the Division and Commission are under and within the Department o f Revenue, an executive branch agency. Finally, it has been argued that the Commission's sole authority to promulgate rules and regulations related to limited gaming, and specifically related to the payment o f costs incurred in the operation and administration o f the division, creates an inference that the Commission has autonomous control over the Division and Commission budgets. This position arguably is bolstered by the fact that payments from the Limited Gaming Fund may be made only upon proper presentation o f a voucher prepared by the Commission. C.R.S. § 12-47.1-701(b). This argument goes far beyond any statutory authority given to the Commission, however. The grant o f rulemaking authority to the Commission is confined to regulations "governing the licensing, conducting and operating of limited gaming." C.R.S. § 12-47302( 1)(a). It cannot be read to extend the Commission's administrative control to the Division's personnel and budget. To do so would require an intentional disregard o f the constitutional and statutory authority of the Department, as an executive agency, over the hiring and firing o f Division personnel and its ultimate control o f the budget process.

CONCLUSION
For the reasons indicated above, 1 conclude that the Department o f Revenue controls the budget and personnel o f the Division o f Gaming. The Colorado Limited Gaming Control Commission must approve the budget, but preparation o f and final authority for that budget rests with Department acting on the Governor's behalf. Issued this 24th day o f July, 2006.