RELEASED SEPTEMBER 28, 1992
8-1 — bonded indebtedness Art. VII, § 6 of La. Const. R.S. 39:2, R.S. 39:1365
State cannot sell general obligation bonds for maintenance projects.
Honorable Willie Crain State Senator District 33 Box 249 Rayville, LA 71269
Dear Senator Crain:
You requested the opinion of this office concerning an appropriation contained in last year's capital outlay act, Act No. 1013 of 1992, for the Fifth Louisiana Levee District as follows:
"Vegetative Maintenance on the Tensas River at Mill Bayou Channel and upper portion of the Tensas River above mile 61 (Madison/East Carroll)".
Your question is whether the State can issue twenty year general obligation bonds for the above-described project.
Article VII, § 6(A) of the Louisiana Constitution sets forth the purposes for which the State can issue general obligation bonds, which purposes include to "make capital improvements, but only in accordance with a comprehensive capital budget, which the legislature shall adopt." Article VII, § 6(B) then sets forth the manner in which the project must be described in the capital outlay act.
The term "capital outlay" is defined at R.S. 39:2(10) to mean "expenditures for acquiring lands, buildings, equipment or other permanent properties, or for their preservation or development or permanent improvement." (Emphasis supplied)
The undersigned was furnished with a copy of correspondence from Mr. Reynold Minsky of the Fifth Louisiana Levee District to Mr. Raymond Laborde, Commissioner of Administration. This letter states that the project sought to be funded is considered a "maintenance program."
The state cannot issue long term bonds for maintenance projects. As stated above, the project must be for a capital outlay which is defined to mean permanent in nature. Maintenance is not considered permanent, it is more in the nature of an operational cost, for which purpose general obligation bonds cannot be sold. R.S. 39:1365(2). R.S. 39:1365(11) requires that the final date of the maturity of bonds shall not exceed the expected life of the facilities to be constructed from the proceeds of the bonds.
In summary, it is the opinion of this office that "vegetative maintenance" by its very terms is not a capital outlay for which general obligation bonds of the State can be sold.
It should be noted that the Division of Administration apparently reached the same conclusion, for this project is not contained in the current capital outlay act, Act 1137 of 1992.
Trusting this adequately responds to your request, I remain,
Yours very truly,
RICHARD P. IEYOUB Attorney General
BY: MARTHA S. HESS Assistant Attorney General