What should a Louisiana water district do with surplus property taxes after bond debt is paid?

Plain-English summary

Cameron Parish Waterworks District No. 10 expected a surplus in the sinking fund for bonds issued for Johnson Bayou improvements. It asked whether to refund taxpayers and, if so, how far back to go. In Opinion 03-0112, the Attorney General said surplus general-obligation bond money should be returned pro rata if a refund was practical. The district should start with the latest tax roll and work backward, setting aside amounts that could not be refunded, until the surplus was exhausted.

The AG said a refund might be impractical if its cost exceeded the amount returned. In that event, the district could use the surplus for a similar purpose. Given the district's description that both bond issues served substantially similar water purposes, he said transfer to the Hackberry water-well sinking fund appeared permissible if refunds proved impractical. He expressly left the factual practicability decision to the district's board.

Currency note

This opinion was issued in 2003. 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 issuance

Water district board

The AG supplied the refund priority and the similar-purpose alternative. He did not determine whether this district's refund costs made refunds impractical; the board had to make that factual decision.

Taxpayers

If a pro-rata return was practical, the opinion said refunds should reach every possible taxpayer beginning with the most recent tax year, then previous years in order until the surplus ran out.

Common questions

Q: Did the district have to refund every prior taxpayer from the bond's first year? A: The AG said to start with the most recent roll and go backward until the refundable surplus was exhausted, if a refund was practical.

Q: Who decided whether a refund was too burdensome? A: The opinion left that factual determination to the water district's board of commissioners.

Q: Could surplus money support another water-well bond fund? A: The AG said it appeared permissible if refunds were impractical and the two bond purposes were substantially similar, as the district represented.

Background and statutory framework

The district described surplus taxes in the Johnson Bayou general-obligation-bond fund and another sinking fund for a Hackberry water-well site. The letter relied on a line of earlier AG opinions that preferred practical pro-rata refunds and allowed a similar-purpose use when refunds were not practical. The date stamp is incomplete in the OCR extract, so the exact issue date is left blank.

Citations and references

Authorities in the opinion: Earlier Louisiana Attorney General Opinions 02-0221, 93-294, 89-444, and 81-1353, among others.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/03-0112

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

One American Place
DEPARTMENT OF JUSTICE
301 Main Street,-Suite 600
CIVIl DIVISION
P.O. Box 94005
BATON ROUGE
TEL.: (22.5) 342-7013
FAX: (225).~42-2090
RICHARD P. IEYOUB
70804-9005
ATTORNEY GENERAL

APR 2 2003
OPINION NUMBER 03-0112

Mr. Cecil R. Sanner
8-1 BONDED INDEBTEDNESS
District Attorney
Thirty-Eighth Judicial District Surplus in bond sinking fund should be refunded
Cameron Parish
to taxpayers on a pro rata basis, if practical.
North Courthouse Square
P. O. Box 280
Cameron, LA 70631

Dear Mr. Sanner:

You requested the opinion of this office regarding Cameron Parish Waterworks District No.
10 (the "District") which will have excess revenues in their sinking fund which services general obligation bond debt issued in 1977 in connection with Johnson Bayou improvements. You advised that the District has approximately $30,000 to $35,000 in excess revenues as well as an additional $30,000 which represents protested tax funds for the year 2001. The District has an additional sinking fund in connection with debt issued for a water well site at Hackberry, Louisiana.

Your questions pertain to the purposes for which the excess revenues may be used. As you noted in your request, it has long been the opinion of the Attorney General that surplus funds, attributable to general obligation bonds, should be, if practicable, returned on a pro- rata basis to the taxpayer. If the expenses of a pro rata return make such an alternative impractical, the excess or surplus funds should be used for a purpose similar to that for which the bonds were issued. Op.Atty.Gen. Nos. 02-0221, 93-294, 93-211, 89-444, 88- 566, 88-430, 88-281, 83-707, 81-1353, 75-1034.

Your questions are: Is it "practicable" to refund the excess funds on a pro-rata basis tothe taxpayers of Cameron Parish? If so, are we dealing with only those funds collected in the last taxable year or are we dealing with a refund to all landowners who paid taxes since the general obligation bonds were issued in 1977?

We recognized in Op.Atty.Gen. Nos. 89-444, 81-1353 and 74-805 that in some instances a pro rata return is not practicable, for example, when the expenses involved in the return would amount to a larger sum than the amount to be returned. When a return is practicable, however, such pro rata return should be made to every tax payer possible beginning with the last year’s tax roll and going back to each previous year in order.

Page 2

Mr. Cecil R. Sanner
OPINION NUMBER 03-0112
Page -2-

Amounts refundable that cannot be refunded for whatever reason should be set aside according to year. This process should be followed until funds are exhausted. We do not have, and are not seeking to obtain, the information to determine if, in this particular instance, it is practicable to refund the excess funds on a pro-rata basis. Such a factual determination should properly be made by the District’s Board of Commissioners.

If, as you suggest, a refund would be a tremendous burden on the District, it may not be practicable for the District to refund the excess revenues. In that event, the excess revenues should be used for any purpose similar to the purpose for which the bonds were issued. Based upon your representation that the purposes of both sinking funds and bond issues are substantially the same, it would appear that it would be permissible, in the event the District was unable to make a refund of the excess revenues, to transfer the excess funds from the Johnson Bayou sinking fund to the sinking fund for the Hackberry water well site.

Trusting this adequately responds to your request, we remain

Yours very truly,

RICHARD P. IEYOUB
Attorney General

~neral

RPI/MSH