- - - - - - - - - - - - -
October 20, 1970
Honorable Norwood Cunningham
State Representative ‑ Thirtieth District
780 Alvord Avenue
Kent, Washington 98031
Cite as: AGLO 1970 No. 136
By letter previously acknowledged, you requested our opinion concerning two questions which we paraphrase as follows:
1. Can a city use the one‑half cent per gallon motor vehicle fuel tax distributable to it under RCW 82.36.020 (5) to finance the new construction or reconstruction of local arterials which do not conform to state design standards?
2. Can a city pledge this one‑half cent per gallon motor vehicle fuel tax to secure or be used to amortize general bond indebtedness incurred by a city for the purpose of improving its arterials?
In our opinion the subject fuel tax revenues1/cannot be used to construct or improve a city's arterial streets unless the work is done in accordance with the state design standards or in accordance with a deviation from such standards approved by the assistant state director of highways for state aid. However, if the new construction or reconstruction work does comply with the state standards or with such an approved deviation, these revenues which are allocated to a city may be used to liquidate a general bond indebtedness incurred in improving its arterials.
[[Orig. Op. Page 2]]
RCW 82.36.020 (5) provides for distribution to the cities and towns of one‑half cent out of a nine cent per gallon motor vehicle fuel tax imposed by the statute for the purpose of constructing, improving or repairing arterial highways or of liquidating any municipal indebtedness arising from such work. The statute does not attempt to dictate to the municipalities the manner in which their arterial projects are to be designed. However, there is other legislation which monitors new construction and reconstruction work on local arterials.
Chapter 35.78 RCW provides for a committee which is authorized to promulgate and adopt state design standards for major and secondary arterial streets. This legislation further states in RCW 35.78.040 that:
The governing body of the several municipalities shall apply the uniform design standards so adopted to all new construction on major arterial and secondary arterial streets, and to reconstruction of old such streets as far as practicable. No deviation from such design standards as to such streets shall be made without approval of the assistant state director of highways for state aid.
In view of the above cited statute it is evident that the cities must comply with the state design standards regardless of the source of funds used to finance new construction, or reconstruction work so far as practicable. Since RCW 82.36.020 (5) does not attempt to exclude RCW 35.78.040 from its operation, the broad scope of RCW 35.78.040 would encompass the new construction or reconstruction of local arterials funded with a city's one‑half cent per gallon gas tax revenues.
RCW 35.37.040 and 35.37.050 authorize cities to contract indebtedness or borrow money for municipal purposes on the general credit of the municipality. Thus, it is not necessary for the city to pledge any specific fund for the payment of general indebtedness bonds. However, some specific funds can be pledged to guarantee payment of the bonds if the city has such control over the funds so as to insure their continued collection. RCW 35.92.080 grants to a city the privilege to pledge the revenue of a public utility to pay general indebtedness bonds issued to construct or improve the facility. However, the statute states that:
. . . Such pledge of revenue shall constitute a binding obligation, according to its terms, to continue the collection of such revenue so long as such bonds or any of them are outstanding, . . .
[[Orig. Op. Page 3]]
Likewise under RCW 35.67.110, a city may pledge the income from a sewage system to pay general indebtedness bonds the proceeds of which are used to purchase, acquire or construct the system. However, the statute incorporates the same condition as cited above in RCW 35.92.080.
Unlike the revenue from a municipal utility, a city's claim to the one‑half cent per gallon gas tax revenues is dependent entirely upon the will of the state legislature. The legislature can terminate the distribution of this tax at will notwithstanding the city's most earnest plea. Consequently, a city can offer no guarantee that this stream of income will continue to flow during the life of any of its bonds.
In those instances where a special fund is pledged to pay general indebtedness bonds, there is explicit legislative authority allowing it. Moreover, those statutes require the continuation of the collection of the money pledged. As to the one‑half cent gas tax, there is no legislative sanction to pledge it and no city is able to insure its continuous collection and distribution. Thus, it is evident that this fund is not legally capable of being pledged in the manner apparently contemplated by your second question.
However, once the subject one‑half cent per gallon gas tax money has been allocated to a city, it may be used for the purpose of retiring the general bond issue authorized to finance the arterial project. RCW 82.36.020 (5) states in part:
. . . That the funds allocated to a city or town which are attributable to such one‑half cent of the additional tax imposed by this 1961 amendatory act shall be used exclusively for the construction, improvement and repair of arterial highways as that term is defined in RCW 46.04.030, or for the payment of any municipal indebtedness which may be incurred after June 12, 1963 in the construction, improvement and repair of arterial highways as that term is defined in RCW 46.04.030. . . .
Thus, although these funds may not be "pledged", RCW 82.36.020 (5) makes it clear that the monies allocated to a city under its provisions may be used to pay the general bond indebtedness incurred in improving city arterials.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN W. ATTRIDGE
Assistant Attorney General
*** FOOTNOTES ***
1/These revenues should not be confused with the 5/8 of one cent per gallon motor vehicle fuel excise tax revenues which are provided for under subsection (3) of RCW 82.36.020. The latter revenues are payable into the urban arterial trust account created by § 14, chapter 83, Laws of 1967, Ex. Sess. (RCW 47.26.080), and are distributable to cities and towns for the construction and improvement of their arterial streets only in accordance with the approval of proposed projects by the urban arterial board (see RCW 47.26.120); it is our understanding that your present questions, relating to the uses which a city might make of its one‑half cent per gallon motor vehicle fuel excise tax revenues distributable to it under RCW 82.36.020 (5), were precipitated by a decision by the particular city in question not to attempt to conform its proposed project to the standards specified by the urban arterial board as conditions for the funding of the project out of moneys distributable from the urban arterial trust account.