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AGO 1950 No. 353 - October 03, 1950
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Smith Troy | 1941-1952 | Attorney General of Washington

INVESTMENT OF COUNTY FUNDS IN U.S. TREASURY BILLS

1. The hospital fund, the T.B. hospital fund and the bridge fund may be invested in 90-day Treasury bills under section 1, chapter 209, Laws of 1937 (Rem. Rev. Stat. Supp. 5646-11).

2. The interest from such investments may not be credited to the current expense fund.

                                                                  - - - - - - - - - - - - -

                                                                 October 3, 1950

Honorable Joe L. Johnson
Prosecuting Attorney, Cowlitz County
Court House
Kelso, Washington                                                                                                              Cite as:  AGO 49-51 No. 353

Dear Sir:

            We are in receipt of your letter of June 13, 1950, wherein you inquired as to the legality of investing certain county funds.  The funds in question, all of which were raised by special levy, are: hospital building fund, $34,000.00; T.B. hospital fund, $18,000.00; bridge fund, $302,000.00.

            Your first inquiry is whether or not these funds may be invested in 90-day Treasury bills, and your second inquiry is that if the funds may be so invested would it be possible to put the interest from such investments into the current expense fund.

            The conclusions reached may be summarized as follows:

            1. The hospital fund, the T.B. hospital fund, and the bridge fund may be invested in 90-day United States Treasury bills under section 1, chapter 209, Laws of 1937 (Rem. Rev. Stat. Supp. 5646-11).

             [[Orig. Op. Page 2]]

            2. The interest from such investments may not be credited to the current expense fund.

                                                                     ANALYSIS

            The legislative authority given a county to invest its funds may be found in chapter 209, Laws of 1937 (Rem. Rev. Stat. Supp. 5646-11, wherein it is provided:

            "Whenever it shall appear to any county treasurer, or to any city treasurer in the State of Washington, that there is in such county or city treasury, inactive county or city funds, or funds in excess of the current needs of such county or city, such treasurer shall call the matter to the attention of the county or city finance committee and such committee may by order duly entered, authorize such city or county treasurer to invest such inactive or excess funds in the funds of the United States government:  Provided, That before any such order is entered, an application to invest in any of the funds hereinafter described is made to and approved by, the state finance committee:  Provided, further, That this act shall not apply to class A counties or to cities having a population in excess of one hundred thousand (100,000)."

            From the facts as stated there is no indication that the funds in question, the hospital building fund, the T.B. hospital fund, and the bridge fund are other than county funds, subject to investment under the above quoted statutory provision.

            In an opinion by this office on February 3, 1950, to the State Finance Committee, it was held that United States Treasury bills were eligible as an investment by the Committee of money received from the sale of war veterans  [[Orig. Op. Page 3]] compensation bonds in accordance with chapter 91, Laws of 1935.  While it is true that this statute provides for investments in "certificates, notes, or bonds of the United States," and the investment of county funds is limited to "bonds of the United States government," the term "bills" is not enumerated among the investments to be made by the State Finance Committee.  For this reason, the conclusion of the opinion is applicable and controlling, and 90-day Treasury bills are qualified for investment of county funds.

            "Specific authority is contained in chapter 91, Laws of 1935, to invest in 'certificates, notes or bonds of the United States.'  United States Treasury bills are obligations of the United States Treasury issued for periods of ninety days.  The authority for their issuance is section 754, Title 31, of the United States Code [[U.S.C.]].  They are general obligations of the United States Treasury and differ from bonds, notes and certificates only in the length of time for which they are issued.  Subsection (c) of section 754, Title 31, U. S. Code [[U.S.C.]], provides:

            'Wherever the words "bonds and notes of the United States," or "bonds and notes of the Government of the United States," or "bonds or notes of the United States" are used in the Federal Reserve Act, they shall be held to include certificates of indebtedness and Treasury bills issued hereunder.'

            "It will be seen that the federal government treats treasury bills in exactly the same manner as bonds or notes.  In actual fact treasury bills are bonds of the United States in the generic sense.  Webster's New Inter-National [[International]]Dictionary defines bonds as follows:

            'A writing under seal by which a person binds himself to pay a certain sum on or before a future day appointed.  * * * Such an instrument  [[Orig. Op. Page 4]] made by a government or a corporation as an evidence of debt, usually for the purpose of borrowing money; hence, loosely, any interest-bearing certificate issued by a government or corporation especially when a date is set for the payment of the principal.  * * *'

            "In our opinion United States Treasury bills are eligible investments for the funds above mentioned."

            Section 1, chapter 85, Laws of 1945 (5634-1 Rem. Supp. 1945), places a limitation on funds to be credited to the current expense fund of a county.

            "Every county shall maintain a current expense fund to which shall be credited all taxes levied for that purpose and all fees collected, fines assessed and forfeitures adjudged in the county the proceeds of which have not been specifically allocated to any other purpose."

            Since interest on investments of inactive or excess county funds is not included thereunder, the interest on the investment of the hospital fund, the T.B. hospital fund, and the bridge fund may not be placed in the current expense fund, but must remain in the special funds.

Very truly yours,

SMITH TROY
Attorney General

BARBARA L. OHNICK
Assistant Attorney General

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