OR OP 8283 2007-02-01

Can the Oregon State Lottery use lottery revenues to run a debt-collection program for the courts, or could another agency just reimburse the Lottery for the cost?

Short answer: No on the first; yes on the second, but with a strict prepayment rule. The 2007 AG opinion concluded that Article XV, section 4 of the Oregon Constitution restricted lottery revenues to administering the Lottery itself, paying prizes, and the three dedicated purposes (jobs/economic development, public education, parks/fish and wildlife habitats). Lottery staff could provide debt-collection services to the State Court Administrator under HB 2320 (2007) only if the SCA paid in advance; otherwise lottery funds would be tied up financing a non-lottery activity, which the constitution prohibits.
Currency note: this opinion is from 2007
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.
Disclaimer: This is an official Oregon Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Oregon attorney for advice on your specific situation.

Plain-English summary

HB 2320 (2007) would have required the Oregon State Lottery (OSL) to help the Oregon Judicial Department collect delinquent court debts. Before paying out a prize over $600, OSL would have to check the winner's name and Social Security number against a database of court debtors. If the winner was in the database, OSL would notify the State Court Administrator (SCA) and hold the prize for up to 30 days to allow garnishment. OSL would also have to set up an automated data-exchange system with the SCA to identify those debtors. The bill did not require the SCA to reimburse OSL for the cost of running the program, and OSL could not estimate the cost in advance, but expected it to be significant.

OSL asked the AG three questions, all about Article XV, section 4 of the Oregon Constitution (the 1984 ballot measure that created the State Lottery and locked down what lottery revenues could be used for).

Question 1: Could OSL use lottery revenues to run the HB 2320 debt-collection program? No. Article XV, section 4(3) restricts lottery proceeds to the costs of administering the Lottery and paying prizes (subsection (4)(d)) and the three dedicated purposes named in subsection (3): job creation, economic development, public education, and "restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats." Collecting court debts for another agency is none of those. The Oregon Supreme Court held in Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551, 567 (1994), that "administering and operating" the Lottery means the costs of "the internal implementation and management of the lottery" itself; that does not stretch to collecting another agency's debts.

Question 2: Could another agency reimburse OSL so the Lottery could provide the services? Yes, with limits. Article XV, section 4(4)(d) says: "The State Lottery shall operate as a self-supporting revenue-raising agency of state government and no appropriations, loans, or other transfers of state funds shall be made to it. The State Lottery shall pay all prizes and all of its expenses out of the revenues it receives from the sale of tickets or shares to the public." OSL asked whether "no transfers of state funds shall be made to it" forbade an interagency payment.

The AG read "transfers" in context. Appropriations and loans were the listed categories; the catchall "other transfers" was best read alongside those examples — appropriations and loans both fund Lottery operations, so under the ejusdem generis maxim, "other transfers" most likely meant any other vehicle for moving state money into Lottery operations. An interagency payment for services rendered would not fund Lottery operations; it would only cover the cost of non-Lottery activities. The "self-supporting" requirement in the same sentence confirmed that reading: it required Lottery proceeds to cover Lottery expenses, but said nothing about non-Lottery work.

The AG also noted a practical absurdity in the alternative reading. Article XV already prohibits using lottery revenues to fund non-Lottery activities. If "no transfers" also prohibited receiving non-lottery state funds, the only operational effect would be a complete ban on OSL doing any non-Lottery work, regardless of funding. There was no indication the voters meant that.

Question 3: Did the timing of the reimbursement matter? Yes — it had to be prepaid. The AG followed an earlier opinion (48 Op Atty Gen 345 (1997)) about ODOT using Highway Funds for non-highway programs. Even though revenues from the non-highway programs were going to be used to repay the Highway Fund, the temporary use of dedicated funds was itself a constitutional diversion. The Oregon Supreme Court cases cited in that opinion — State ex rel Sprague v. Straub, Rogers v. Lane County, Automobile Club of Oregon v. State of Oregon — established that you can't dip into a constitutionally dedicated fund and then repay it later; the dipping itself is the violation.

So the AG concluded that the SCA had to pay OSL in advance. Otherwise lottery proceeds would temporarily finance the costs of a non-Lottery program, which Article XV did not allow.

The opinion was honest about uncertainty on Question 2, calling its conclusion "not without doubt." The text of "no transfers" could be read more strictly. But the structure of section 4(4)(d), the absurd-result reading, and the history of how Article XV was sold to voters in 1984 (focused on lottery proceeds being used for the dedicated purposes, not on isolating OSL from all other state agencies) all pushed toward allowing the interagency model with prepayment.

Currency note

This opinion was issued in 2007. 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.

Article XV, section 4 was later amended by initiative (most notably the 2010 Measure 76, which made the parks-and-fish-and-wildlife dedication permanent and revised the dedicated-purpose language). HB 2320 (2007) and any successor enactments may have changed the operational details. Anyone relying on this opinion to structure an interagency arrangement involving the Lottery should check the current Article XV text, current statutes, and any later AG opinions or court decisions on lottery-fund use.

Background and statutory framework

Article XV, section 4 is the constitutional charter of the Oregon State Lottery. The voters enacted it through the initiative process in 1984. The opinion treated the methodology for interpreting an initiated constitutional provision as essentially the same as the methodology for interpreting a statute (Stranahan v. Fred Meyer, Inc., 331 Or 38, 61 (2000)): start with text, then context, with the goal of discerning the intent of the voters (Roseburg School Dist. v. City of Roseburg, 316 Or 374, 378 (1993)). Context for an initiated provision includes related ballot measures voted on at the same election, related constitutional provisions then in effect, and case law interpreting them. Ecumenical Ministries, 318 Or at 560 n 8.

Section 4(3) provided in relevant part: "All proceeds from the State Lottery, including interest, but excluding costs of administration and payment of prizes, shall be used for any of the following purposes: creating jobs, furthering economic development, financing public education in Oregon or restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats."

Section 4(4)(d) created the Oregon State Lottery Fund "for the purpose of administering and operating the Commission and the State Lottery," declared the Lottery "a self-supporting revenue-raising agency," prohibited "appropriations, loans, or other transfers of state funds * * * to it," and required the Lottery to pay prizes and expenses "out of the revenues it receives from the sale of tickets or shares."

Ecumenical Ministries held that "administering and operating" the Lottery encompasses the costs of "internal implementation and management of the lottery" itself. The AG read that holding as foreclosing the use of lottery proceeds to fund services for other agencies; collecting court debts is not lottery management.

For Question 2, the AG analyzed the "no appropriations, loans, or other transfers of state funds shall be made to it" clause. An interagency payment is neither an appropriation nor a loan, so the clause's reach turned on "other transfers." The AG worked through Webster's senses of "transfer" (a conveyance of right, title, or interest; an act of transferring) and concluded that the most natural meaning, in context, was the passing of money to OSL. The ejusdem generis maxim instructed reading "other transfers" alongside the named examples: appropriations and loans, both of which fund Lottery operations. An agency's payment to cover the cost of debt-collection services would not fund Lottery operations.

Two contextual signals reinforced the reading. The first was the "self-supporting" requirement immediately preceding the clause: it required Lottery proceeds to cover Lottery expenses, again pointing at funding of Lottery operations rather than at isolating OSL from other agencies. The second was the immediately following sentence requiring OSL to pay "all of its expenses" with State Lottery proceeds — same point, framed positively.

The AG also reviewed the 1984 ballot title, explanatory statement, and Voters' Pamphlet arguments and "found nothing that helps answer this question." The contemporaneous record was about how lottery proceeds would be spent, not about whether OSL could provide services to other agencies for compensation.

The closer was a structural absurd-result point. Article XV unquestionably bars OSL from using lottery funds for non-lottery activities. So if "no transfers" also bars OSL from receiving non-lottery state funds, the practical result is a total ban on OSL doing any non-lottery work, regardless of funding. There was no indication the voters meant that. The AG's resolution: the "no transfers" language closes off any pathway for moving non-lottery state funds into Lottery operations. It does not bar an agency from paying OSL for non-lottery services if the payment fully covers OSL's costs.

Question 3 brought in the dedicated-fund-diversion doctrine. The 1997 AG opinion (48 Op Atty Gen 345) had addressed ODOT's use of Highway Funds to launch non-highway programs whose revenues were earmarked to repay the Fund. The opinion concluded that even temporary use of dedicated Highway Funds for non-highway purposes was a constitutional diversion. The Supreme Court cases cited there (State ex rel Sprague v. Straub, Rogers v. Lane County, Automobile Club of Oregon v. State of Oregon) established that the constitutional dedication is to the dedicated purposes, and any other use — temporary or not — is a violation. Applying that doctrine to Article XV, section 4 produced the prepayment requirement: SCA had to pay OSL in advance, before lottery proceeds were spent on debt-collection program costs.

Common questions

Q: At the time of this opinion, could lottery profits have funded a court debt-collection program?
A: No. Article XV, section 4(3) restricted lottery proceeds to the costs of running the Lottery, paying prizes, and the constitutionally dedicated purposes (jobs, economic development, public education, parks and fish and wildlife habitats). Court debt collection was none of those.

Q: Could the Judicial Department reimburse the Lottery for staff time and computer costs?
A: Yes, under the AG's reading of "no transfers of state funds." The opinion concluded that "transfers" was best read as money flowing into Lottery operations, not as any payment OSL might receive. An interagency payment that fully covered the cost of non-Lottery services did not violate Article XV.

Q: Did the timing matter?
A: Yes. The AG followed the dedicated-fund-diversion line of cases and concluded that the SCA had to pay OSL in advance. Otherwise lottery proceeds would temporarily underwrite a non-lottery program, which the constitution did not allow even with later repayment.

Q: How sure was the AG about Question 2?
A: The opinion explicitly said "while not without doubt." The text of "no transfers" can be read more broadly, and the AG noted that the Voters' Pamphlet did not help one way or the other. The reasoning depended on context, ejusdem generis, and the absurd-result point.

Q: What did Article XV, section 4 actually say lottery proceeds could be used for?
A: Section 4(3) named four dedicated purposes: creating jobs, furthering economic development, financing public education in Oregon, and "restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats." Section 4(4)(d) added the cost of administering and operating the Commission and the Lottery, plus paying prizes.

Q: What case set the rule that you can't even temporarily divert dedicated funds?
A: State ex rel Sprague v. Straub, 240 Or 272 (1965), Rogers v. Lane County, 307 Or 534 (1989), and Automobile Club of Oregon v. State of Oregon, 314 Or 479 (1992). The 1997 AG opinion (48 Op Atty Gen 345) collected and applied them in the Highway Fund context. The 2007 opinion extended the same logic to the Lottery Fund.

Q: What did Ecumenical Ministries say "administering and operating" meant?
A: That the phrase covered the "expense" or "costs" of "the internal implementation and management of the lottery." 318 Or at 567. The AG used that to rule out a reading in which lottery operating costs could include collecting another agency's debts.

Citations and references

Constitutional and statutory provisions:

  • Or. Const. art. XV, § 4 (State Lottery)
  • Or. Const. art. XV, § 4(3) (dedicated purposes)
  • Or. Const. art. XV, § 4(4)(d) (Lottery Fund; self-supporting; no transfers)
  • ORS 174.010 (statutory construction)
  • ORS 182.112 (state takes title to property in name of state)
  • ORS 283.110(1) (interagency agreements: benefiting agency covers costs)
  • ORS 461.715 (existing child-support data-match system at the Lottery)
  • HB 2320 (2007), § 5 (proposed extension to court debts)

Cases:

  • Roseburg School Dist. v. City of Roseburg, 316 Or 374 (1993), method for interpreting initiated provisions
  • Stranahan v. Fred Meyer, Inc., 331 Or 38 (2000), context for initiated constitutional provisions
  • Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551 (1994), "administering and operating" the Lottery
  • PGE v. BOLI, 317 Or 606 (1993), Oregon statutory construction methodology
  • LaGrande/Astoria v. PERB, 284 Or 173 (1978), ballot-record materials as interpretive aids
  • State ex rel Sprague v. Straub, 240 Or 272 (1965); Rogers v. Lane County, 307 Or 534 (1989); Automobile Club of Oregon v. State of Oregon, 314 Or 479 (1992), constitutional dedication and prohibition on diversion
  • 48 Op Atty Gen 345 (1997), Highway Fund non-highway program reimbursement (the no-temporary-diversion principle)

Source

Original opinion text

February 1, 2007

No. 8283

FIRST QUESTION PRESENTED

Does Article XV, section 4, of the Oregon Constitution permit the expenditure of Oregon State Lottery revenues to provide debt collection services to other state agencies?

ANSWER GIVEN

No. Article XV, section 4, restricts the use of revenues to certain specified purposes, which do not include providing debt collection services to other agencies.

SECOND QUESTION PRESENTED

May staff and other resources of the Oregon State Lottery provide debt collection services to other state agencies if other than revenues are used to pay for those resources?

ANSWER GIVEN

Yes.

THIRD QUESTION PRESENTED

Must the Oregon State Lottery be paid in advance for its costs in providing the debt collection services?

ANSWER GIVEN

Yes.

DISCUSSION

Section 5 of HB 2320 (2007) amends ORS 461.715 to facilitate the collection of debts owing to the judicial branch of state government. Among other provisions, the bill would require the following of the Oregon State Lottery (OSL): Before paying out any portion of a prize that exceeds $600, OSL would check the winner's name and social security number against a computer database of debtors who are delinquent on debts owing to a state court or other arm of the Judicial Department. If a winner turns up in the database, OSL would notify the debtor and the State Court Administrator (SCA) and hold the prize for up to 30 days to allow the SCA to serve a notice of garnishment. In addition, OSL would establish and operate a data match system using automated data exchanges with the SCA to identify the delinquent debtors. HB 2320 does not require the SCA or any other revenue source to pay OSL for its expenses in administrating this program. We understand that OSL is unable to estimate those costs at this time, but it appears those costs would be significant.

To answer your questions, we must construe and apply Article XV, section 4, of the Oregon Constitution, which was approved in 1984 through the initiative process. The objective in interpreting constitutional provisions adopted by that means "is to discern the intent of the voters." See Roseburg School Dist. v. City of Roseburg, 316 Or 374, 378, 851 P2d 595 (1993). To do so, we are to apply essentially the same method of analysis that the Oregon Supreme Court applies in the construction of a statute. Stranahan v. Fred Meyer, Inc., 331 Or 38, 61, 11 P3d 228 (2000); Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551, 560, 871 P2d 106 (1994).

Accordingly, we start with Article XV, section 4's text and context, with text being the best evidence of the people's intent. PGE v. Bureau of Labor and Industries (PGE), 317 Or 606, 610, 859 P2d 1143 (1993). In interpreting text, we consider statutory and judicial rules of construction "that bear directly on how to read the text," such as "not to insert what has been omitted, or to omit what has been inserted," and to give words of common usage their "plain, natural and ordinary meaning" ("plain meaning"). Id. at 611; ORS 174.010. We also consider any relevant case law that has interpreted that text. Stranahan, 331 Or at 61. The context of a constitutional provision approved by the initiative includes related ballot measures before the people at the same election; related constitutional provisions that were in effect at that time; and case law interpreting those provisions. Id. at 62 n 15; Ecumenical Ministries, 318 Or at 560 n 8. If the people's intent is clear from text and context, the analysis ends there. The Supreme Court, however, has cautioned against ending analysis of an initiated measure without considering its history. Stranahan, 331 Or at 64.

The history of an initiated constitutional provision includes information that was available to the people at the time they approved the measure and that discloses their understanding of it. Ecumenical Ministries, 318 Or at 560 n 8. That information includes the ballot title, explanatory statement, and arguments for and against the measure included in the Voters' Pamphlet, as well as contemporaneous news reports and editorials on the measure. Id. The relevance of particular information depends on its objectivity and the degree to which it reveals the people's understanding. Stranahan, 331 Or at 65 (citing LaGrande/Astoria v. PERB, 284 Or 173, 184 n 8, 586 P2d 765 (1978)).

  1. Debt Collections Services Funded by Lottery Revenues

Your first question is whether Article XV, section 4, would permit the use of state resources that are funded by lottery revenues to carry on the program required by HB 2320. Article XV, section 4, subsections (3) and (4)(d) provide in relevant part:

(3) * * * All proceeds from the State Lottery, including interest, but excluding costs of administration and payment of prizes, shall be used for any of the following purposes: creating jobs, furthering economic development, financing public education in Oregon or restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats.


(4) There is hereby created within the General Fund the Oregon State Lottery Fund which is continuously appropriated for the purpose of administering and operating the Commission and the State Lottery. * * *.

(Emphases added.)

Thus, lottery proceeds may be used for only three purposes: (1) the costs of administering and operating the Commission and OSL; (2) the payment of prizes; and (3) economic development, public education and the restoration and protection of specified outdoor resources. The last two purposes unquestionably do not include the collection of debts owed to other state agencies. As to the first, Ecumenical Ministries holds that the phrase "administering and operating" concerns "the 'expense' or 'costs' of the internal implementation and management of the lottery." Ecumenical Ministries, 318 Or at 567. That almost certainly does not include collecting debts owed to other state agencies. We conclude that a program of that nature is not an OSL administrative function and may not be funded with OSL proceeds.

  1. Debt Collection Services Funded by other than Lottery Revenues

Agreements by which one agency provides services for the benefit of another agency ordinarily require that the benefiting agency cover the costs of the agency providing the services. See ORS 283.110(1). Your second question is whether OSL could administer a debt collection program consistent with Article XV, section 4, if another agency paid the collection program costs.

The constitutional provision that is potentially relevant to that question is also in Article XV, section 4(4)(d) and includes some of the language quoted in connection with your first question:

(4) There is hereby created within the General Fund the Oregon State Lottery Fund which is continuously appropriated for the purpose of administering and operating the Commission and the State Lottery. The State Lottery shall operate as a self-supporting revenue-raising agency of state government and no appropriations, loans, or other transfers of state funds shall be made to it. The State Lottery shall pay all prizes and all of its expenses out of the revenues it receives from the sale of tickets or shares to the public * * *. (Emphasis added.)

Article XV, section 4(4)(d) authorizes OSL to use lottery revenues to pay the costs of administering and operating the lottery. The answer to your question depends on whether the phrase "no appropriations, loans, or other transfers of state funds shall be made to it" was intended only to prohibit OSL's receipt of other state money to administer and operate the lottery or was intended more broadly to prohibit OSL's receipt of other state money for any purpose, including payment under an interagency agreement for performing activities that are not administering or operating the lottery.

To determine the meaning of that clause, we begin with its text and context, giving words of common usage their plain meaning. PGE, 317 Or at 611. One agency's payment to another agency for services rendered or to be rendered is neither an "appropriation" nor a "loan," so only "other transfers of state funds" could apply. The term "transfer" is used as a noun and is a word of common usage. The senses of the word that come closest to fitting the circumstances here are:

1 a : the conveyance of right, title, or interest in either real or personal property from one person to another by sale, gift, or other process b : the removal or acquisition of property by mere delivery with intent of the parties involved to transfer the title * * * 2 : an act, process or instance of transferring : TRANSFERENCE * * *.

WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY at 2427 (unabridged 2002). "Transferring", as used in definition 2, is a form of the verb "transfer." The senses of the verb that are potentially most applicable to the circumstances here are:

[1] c : to cause to pass from one person or thing to another : TRANSMIT * * * * * * 2 : to make over or negotiate the possession or control of (a right, title, or property) by legal process usu. for a consideration : CONVEY ." Id.

The senses most closely tailored to transfers of money contemplate a change in ownership, but the ownership of state funds is vested in the state regardless of their appropriation, loan or other conveyance to individual agencies. See, e.g., ORS 182.112 (agency acquiring interest in property takes title in name of state). Therefore, we would not expect the people to have understood "transfers" to necessarily entail a change in ownership.

The prohibited "transfers" are "other" than "appropriations" and "loans." According to the interpretative maxim ejusdem generis, when a law lists specific classes of things and also refers to them in general, the general statement only applies to the same kind of things as those specifically listed. That maxim suggests that the people would have understood "other transfers" to be similar in kind to appropriations and loans. It seems to us that the salient characteristic common to appropriations and loans is that they provide funds that OSL could expend to operate the State Lottery. By contrast, another agency's payments for debt collection services would provide no money for lottery operations, but merely cover the costs of non-lottery operations. Application of the maxim to Article XV, Section 4(4)(d) thus suggests that the constitutional provision would allow OSL to administer a debt collection program if the costs of the program were paid by another agency from non-lottery funds.

The meaning of "transfers" that best applies to the circumstances is general, namely, the passing of money. The relationship between "transfers," appropriations and loans that is implied by "other" suggests that the people intended for no other state money to be made available to operate the lottery.

Regarding context, the language at issue is the second clause in a sentence comprised of two clauses. The first clause specifies: "The State Lottery shall operate as a self-supporting revenue-raising agency of state government * * *." (Emphasis added.) Requiring that the lottery be "self-supporting" is yet another way to mandate that only lottery proceeds be used to pay the cost of the program, i.e., prizes and proper administrative expenses. The two clauses are joined by "and", which implies a connection between the self-supporting requirement and the prohibition on other state fund transfers. See WEBSTER'S at 80. The sentence that follows the language at issue also seems to be concerned solely with ensuring that OSL be self-supporting, because it requires that OSL pay "all of its expenses" with State Lottery proceeds (emphasis added). Neither provision imposes or implies any restriction on the payment of expenses that are not properly chargeable to lottery operations.

The context of "no appropriations, loans, or other transfers of state funds shall be made to it" suggests that the people's only concern was that costs properly chargeable to the Lottery be paid with Lottery proceeds and not with any other state funds. Moreover, the connection between the self-supporting requirement and the prohibition on other fund transfers that is implied by joining them in a single sentence is obvious if the latter were intended to prohibit OSL from receiving other state money to administer and operate the lottery. On the other hand, any connection between the self-supporting requirement and prohibiting OSL from using other state funds for non-lottery functions would seem tenuous at best.

We have also reviewed the measure's ballot title, explanatory statement, and the arguments for and against the measure that were included in the Voters' Pamphlet. We find nothing that helps answer this question.

In sum, the people would likely have understood the term "transfers" to have its most general meaning, namely, the movement of state funds to OSL. All other provisions of Article XV, section 4(4)(d)'s text, and its context, would have tended to cause the people to read the language at issue as a prohibition on using other than lottery proceeds to administer and operate the lottery.

Moreover, an absolute prohibition on receiving any other state funds would have been an obscure way to prohibit OSL from providing services under interagency agreements, which would have been such a prohibition's real significance. That is, for present purposes and disregarding Article XV for the moment, the universe of activities in which a lottery agency might potentially engage may be sorted into two types: (1) lottery activities; and (2) non-lottery activities. The universe of uses to which OSL might put other state funds may likewise be sorted into two types: (1) paying for OSL to engage in lottery activities; and (2) paying for the OSL to engage in non-lottery activities. Article XV prohibits OSL from using lottery funds for non-lottery activities, which means OSL could engage in those activities only if they were paid for with other state funds. At a minimum, Article XV unquestionably prohibits OSL from receiving other state funds to pay for lottery activities, which means other state funds would have no value to OSL unless they could be used to pay for non-lottery activities. Thus, the sole practical result of a total ban on the receipt of other funds would be a prohibition on the use of OSL staff or other resources for non-lottery activities regardless of funding. We think it is unlikely that the people intended that meaning.

For those reasons, and while not without doubt, we conclude that the staff and other resources of OSL may provide debt collection services to another state agency if the cost is fully paid with other than lottery revenues.

  1. Must Lottery be paid in advance for its costs in providing the Debt Collection Services?

Finally, you ask if it makes a difference for purposes of Article XV, section 4, whether the SCA pays OSL in advance or not until after lottery proceeds have first been used to pay the salaries and other expenses of a debt collection program.

The analysis is not unique to Article XV, but is common to all state funds that are constitutionally dedicated to a specific purpose or purposes. We applied the applicable principle in 48 Op Atty Gen 345 (1997). The Oregon Department of Transportation (ODOT) had used constitutionally dedicated Highway Funds to pay for the start-up costs and ongoing ODOT administrative expenses of two programs that did not come within the scope of the constitutional dedication. Revenue generated by the programs was to be used to repay the start-up costs and administrative expenses.

In reliance on State ex rel Sprague v. Straub, 240 Or 272, 400 P2d 229, 401 P2d 29 (1965), Rogers v. Lane County, 307 Or 534, 771 P2d 254 (1989) and Automobile Club of Oregon v. State of Oregon, 314 Or 479, 840 P2d 674 (1992), we concluded that dedicated Highway Funds could not be used to finance the costs of administering a non-highway program even though the Fund was to be repaid:

The use of Highway Funds to pay for a nonhighway program, i.e., a program generating revenue for a nonhighway purpose, is a diversion of funds from the constitutionally allowable uses. 48 Op Atty Gen at 348.

We conclude that the SCA would need to pay OSL in advance for the cost of the services that would be required by HB 2320 to avoid an unconstitutional diversion of lottery funds.

HARDY MYERS
Attorney General
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