FUNDS‑-AGRICULTURE‑-APPROPRIATIONS‑-LEGISLATURE‑-USE OF GRAIN AND HAY INSPECTION REVOLVING FUND
(1) The Grain and Hay Inspection Revolving Fund, established pursuant to RCW 22.09.500(1), may not be used for expenses not directly incurred by the Department of Agriculture's Division of Grain and Agricultural Chemicals (other than the five percent specifically authorized by statute for use in research and promotional work).
(2) A provision of the State's biennial operating budget, or supporting documents such as budget notes, may not authorize use of the Grain and Hay Inspection Revolving Fund in a manner inconsistent with the provisions of RCW 22.09.500.
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October 7, 1983
Honorable Eugene Prince
State Rep., 9th District
Thornton, Washington 99176
Cite as: AGO 1983 No. 20
By letter previously acknowledged you requested the opinion of this office regarding the Grain and Hay Inspection Revolving Fund (hereinafter Grain Fund) as administered by the Division of Grain and Agricultural Chemicals (hereinafter Grain Division) of the Department of Agriculture. Specifically, you asked:
"1. May the Fund be used for expenses not directly incurred by the Department's division of grain and agricultural chemicals (other than the 5% specifically authorized by statute for use in research and promotional work)?
"2. May the provision of the state's biennial operating budget, or supporting documents such as the enclosed budget notes, authorize the use of the Fund in a manner inconsistent with the provisions of RCW 22.09.500?
"3. Are there general overhead expenses of the Department that may legitimately be supported by the Fund [[Orig. Op. Page 2]] as expenses directly incurred by the division? What are the types of expenses that would qualify for such support?"
We answer your first two questions in the negative and your third as set forth in our analysis.
The statute in question, RCW 22.09.500(1), as it pertains to the Grain Fund currently provides as follows:
"(1) All moneys collected as warehouse license fees, fees for weighing, grading, and inspecting commodities and all other fees collected under the provisions of this chapter, except as provided in subsection (2) of this section, shall be deposited into the grain and hay inspection revolving fund, which is hereby established. The state treasurer is the custodian of the revolving fund. Disbursements from the revolving fund shall be on authorization of the director of the department of agriculture. The revolving fund is subject to the allotment procedure provided in chapter 43.88 RCW, but no appropriation is required for disbursements from the fund. Such fund shall be used for all expenses directly incurred by the division of grain and agricultural chemicals in carrying out the provisions of this chapter. The department may use so much of such fund not exceeding five percent thereof as the director of agriculture may determine necessary for research and promotional work, including rate studies, relating to wheat and wheat products." (Emphasis supplied)
This version of the statute stems from certain amendments contained in § 25, chapter 297, Laws of 1981. Set forth in bill form for ease of comprehension, that amendatory provision reads as follows:
"(1) All moneys collected as warehouse license fees, fees for weighing, grading, and inspecting commodities and all other fees collected under the provisions of this chapter, except as provided in subsection (2) of this section, shall be ((
paid)) deposited into the grain and [[Orig. Op. Page 3]] hay inspectionrevolving fund (( in the state treasury)), which is hereby established. The state treasurer is the custodian of the revolving fund. Disbursements from the revolving fund shall be on authorization of the director of the department of agriculture. The revolving fund is subject to the allotment procedure provided in chapter 43.88 RCW, but no appropriation is required for disbursements from the fund. Such fund shall be used for (( administrative))all expenses (( under this chapter and for the enforcement of all))directly incurred by the division of grain and agricultural chemicals in carrying out the provisions (( thereof))of this chapter. The department may use so much of such fund not exceeding five percent thereof as the director of agriculture may determine necessary for research and promotional work, including rate studies, relating to wheat and wheat products.
". . ."
At the time of this amendment to RCW 22.09.500(1), the Department of Agriculture was divided by statute into six divisions, one of which was the division of grain and agricultural chemicals‑-referred to herein simply as the Grain Division. RCW 43.23.010;1/ see also, RCW 43.23.100 and 43.23.110. In turn, the personnel and fiscal offices within the department's general administration division provide support services to the six statutory divisions. The personnel and fiscal offices, together with the director's staff and the department's legal services, have by longstanding practice been funded by the department's general fund appropriation. This has been true even though, for example, approximately one‑third of the department's employees work within the Grain Division and both the personnel and fiscal offices provide substantial services on behalf of the Grain Division.2/
[[Orig. Op. Page 4]]
During the 1983 legislative session, however, that longstanding practice was called into question by the House of Representatives Subcommittee on Appropriations. At the request of this committee, the department developed a methodology for charging certain identifiable overhead expenses directly to the Grain Fund and other dedicated funds administered by it. By letter dated February 21, 1983, copy enclosed, the department, however, stated its position to the effect that general administrative expenses of the department were not properly chargeable to the Grain Fund. In part, that letter said:
". . . [L]anguage contained in . . . RCW 22.09.500 does, in our opinion, preclude the use of funds retained in the . . . Grain and Hay Revolving Fund from being used to finance administrative and policy development activities above the program level."
The department thereby concluded that its general expenses of administration, policy development and legal counsel which are above the program level (even though they might in some way relate to the grain program) are of such a broad and general nature that they are more properly charged to the department's general fund appropriation.
The same letter continued, however, by noting that certain support service activities currently provided by the department's fiscal and personnel offices could be identified as directly incurred by the Grain Division.3/ The department reasoned that if the division were a separate entity it would be required by statute or rule to have systems within its organizational structure to accomplish these functions. The support services so identified were (1) budget, accounting and payroll management, (2) personnel [[Orig. Op. Page 5]] policy and procedures management, (3) purchasing policy and procedure management, and (4) forms and records control and retention.
Accordingly, while the department's letter called for none of its expenses for general administration, policy development or legal services to be chargeable to the Grain Fund, it did provide a formula for allocating the above referenced support services to the Grain Fund. Under that formula, as later refined by the House Appropriations Committee, $652,000 which originally was assessed to the department's general fund appropriation was to be assessed directly to the Grain Fund and other dedicated accounts of the department for the biennium.
Budget notes of both the House and Senate Appropriations Committees (copies of which are enclosed) show an incorporation of the department's formula in the appropriations bill. The budget as passed by the legislature for the department was in an amount of $652,000 less than the Governor's request for that agency. It thus appears clear that the legislature in the budget act accepted this approach, and based its biennial appropriation on the department's analysis.
We further understand, and have confirmed with the department, that it also has adopted that formula based upon its biennial appropriation and is charging the above referenced services to the appropriate dedicated fund. Given this background in the context of your inquiry, we thus view your basic question to be whether the department may properly charge these expenses to the Grain Fund consistent with RCW 22.09.500. In turn, a general statute and certain rules of statutory construction guide our analysis.
The statute is in chapter 43.09 RCW and it governs the relationship between governmental funds. We have reference to RCW 43.09.210 which provides, in relevant part, as follows:
". . . no department, public improvement, undertaking, institution, or public service industry shall benefit in any financial manner whatever by an appropriation or fund made for the support of another."
Moreover, the Washington Supreme Court has recently held this statute to be applicable to state agency funds as well as those of municipal corporations. State v. Grays Harbor County, 98 Wn.2d 606, ___ P.2d ___ (1983). The statute expresses a legislative policy requiring separate accounts to be maintained of all [[Orig. Op. Page 6]] governmental funds and expressly prohibits gratuitous transfers between departments or funds. AGO 1973 No. 18.
The primary rule of construction which here applies, in turn, tells us that the proper objective of all statutory construction is to ascertain and give effect to the legislature's intent where that intent is not made explicit in the statute itself. Anderson v. Seattle, 78 Wn.2d 201, 471 P.2d 87 (1970). In addition, however, legislative intent may be inferred from extrinsic evidence such as legislative history and the interpretation of the statute by officials charged with its administration. Whitehead v. DSHS, 92 Wn.2d 265, 595 P.2d (1979); Ropo, Inc. v. Seattle, 67 Wn.2d 574, 409 P.2d 148 (1965). And thirdly, the persuasive force of an agency's interpretation of its own statute is strengthened by legislative acquiesence [acquiescence] in such interpretation. White v. State, 49 Wn.2d 716, 306 P.2d 230 (1957).
Also to be noted is the proposition that an appropriations bill is not substantive law; nor can it change prior substantive law. Accord,Flanders v. Morris, 88 Wn.2d 183, 558 P.2d 769 (1977), in which the Court said:
"'. . . An appropriation bill is not a law in its ordinary defines no rights and punishes no wrongs. It is purelylex scripta. It is a means only to the enforcement of law, the maintenance of good order, and the life of the state government. Such bills pertain only to the administrative functions of government. . .' Quoting fromState ex rel. Blakeslee v. Clausen, 85 Wash. 260, 272, 148 P.28 (1915), at 177-178.
". . .
". . . Appropriations bills exist simply for the purpose of implementing general laws. As such, we hold that the general law cannot be suspended by provisions in appropriations bills which are in conflict." Flanders, at 187, 190.
TheFlanders Court did, however, recognize that the legislature may place conditions and limitations on the expenditures of moneys in an appropriations bill. But it held that to the extent such conditions or limitations have the effect of modifying or amending the general law, they are invalid. [[Orig. Op. Page 7]]
Against the foregoing backdrop we turn, now, to your three specific questions as above stated.
First you have asked whether the Grain Fund may be used for expenses not directly incurred by the department's division of grain and agricultural chemicals?
This question must be answered in the negative based upon the language of RCW 22.09.500,supra, which describes allowable expenses as those which are "directly incurred" by the Grain Division in carrying out the provisions of the act.
Next you have inquired as to whether a provision of the state's biennial operating budget, or supplementary documents such as the budget notes which you enclosed, may authorize the use of the Grain Fund in a manner inconsistent with the provisions of RCW 22.09.500.
This question must also be answered in the negative based uponFlanders v. Morris,supra. In Washington, an appropriations bill may not amend or modify previous existing law. Thus, an appropriations bill may not authorize the use of the Grain Fund in a manner inconsistent with RCW 22.09.500.
Finally, you have asked whether there exist any general overhead expenses of the department which may legitimately be supported by the Grain Fund as expenses directly incurred by the Grain Division.
Unfortunately, the answer to this question is not readily reached by reference to a case or statute. We are only able to respond by venturing our opinion as to how the courts would answer the question given the circumstances outlined above.
We believe that the courts would agree with the department's interpretation of RCW 22.09.500 to the effect that the Grain Fund may not be assessed for general administration, policy and legal expenses of the department. Even though some of these expenses may relate to the administration of the grain program, we do not believe they are the type of expenses which may be characterized as [[Orig. Op. Page 8]] "directly incurred" by the Grain Division. These types of general overhead expenses are properly charged to the department's general fund appropriation.
In our opinion, however, the courts would not in these circumstances agree that the Grain Fund may be assessed for that proportionate share of the costs of the personnel and fiscal offices which are expended for the benefit of the Grain Division. Our opinion in this regard is based upon the following analysis.
The department's longstanding practice has been to charge the support services provided by the personnel and fiscal offices to the department's general fund appropriation. That practice, long acquiesced in by the legislature, now has the force of law under the cases cited above and may not be changed without an amendment to RCW 22.09.500.
In this regard, we are certainly mindful of the 1981 amendment to RCW 22.09.500 in which the legislature changed the essential language describing allowable expenses for the Grain Fund from
". . . administrative expenses under this chapter and for the enforcement of all the provisions thereof. . . ."
". . . all expenses directly incurred by the division of grain and agricultural chemicals in carrying out the provisions of this chapter."
However, the same 1981 legislature which passed this amendment accompanied that action by a continuation in the funding pattern to the Department of Agriculture; that is, the 1981 legislature did not, based upon the amendment to RCW 22.09.500, increase, decrease or otherwise appreciably alter the department's general fund appropriation. Similarly, in 1981, the department did not alter its administrative practice of charging to the general fund the expenses of the personnel and fiscal offices, including those expenses incurred on behalf of the Grain Division. Thus, it appears that both the 1981 legislature and the Department of Agriculture regarded the 1981 amendment to RCW 22.09.500 as a confirmation of the department's longstanding interpretation and practice regarding that statute.4/
[[Orig. Op. Page 9]]
Given this sequence of events, we believe the courts would conclude that the 1981 amendment to RCW 22.09.500 did not constitute a substantive change to that statute, but rather simply a clarification of the legislature's original intent. While ordinarily new legislation is presumed to amend rather than clarify existing law, the courts also hold that such a presumption may be rebutted by a showing of contrary legislative intent. Overton v. Economic Assistance Authority, 96 Wn.2d 552, 637 P.2d 652 (1981);Johnson v. Morris, 87 Wn.2d 922, 557 P.2d 1299 (1976). We believe this presumption is rebutted by the circumstances described.
This result is consistent with Flanders v. Morris. The 1983 legislature's action through the budget bill of changing the department's appropriation may not, under that case, have the effect of modifying substantive law. The legislature certainly may amend RCW 22.09.500 to require the Grain Fund to share a larger proportion of Department services attributable to the Grain Program. The courts, however, have declared that such action must be by substantive legislation and may not be done simply through an appropriations bill.
This result is also consistent with RCW 43.09.210, supra. For the Grain Fund, without statutory change, now to be assessed for expenses previously charged to the department's general fund appropriation would constitute a violation of both the letter and spirit of that statute.
Finally, this result is also consistent with the 1981 amendatory language to RCW 22.09.500. That language authorizes as Grain Fund expenditures those expenses which are "directly incurred by the division of grain. . . . At that time, the Grain Division itself was a statutorily recognized entity apart from the department's personnel and fiscal offices. Thus, the very language of RCW 22.09.500, as amended, only authorizes the Grain Fund to be assessed expenses of the Grain Division itself, and does not provide for expenditures incurred by other department divisions.
[[Orig. Op. Page 10]]
We are not unmindful of the difficult position in which the Department of Agriculture is now placed. Having provided an alternative funding pattern for the department which the legislature adopted in the Budget Act, the department is now $652,000 short in its biennial appropriation. We also note, however, that the legislature certainly may rectify this situation with a supplemental appropriation in the 1984 session. And, of course, as indicated above, the legislature may certainly amend RCW 22.09.500 to provide for the Grain Fund to be assessed a larger proportion of department services which are attributable to the grain program.
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
Assistant Attorney General
*** FOOTNOTES ***
1/In 1983, the legislature amended RCW 43.23.010 so that it no longer establishes six specific department divisions, but instead grants authority to the director of the department to establish such administrative divisions as he deems necessary to efficiently manage the department. Section 3, chapter 248, Laws of 1983.
2/The Grain Division itself does not receive general fund appropriations and is instead supported by the fund established by RCW 22.09.500.
3/The department's letter may not be characterized as a recommendation to the legislature, but simply as a response to a legislative inquiry and the offering of one possible funding proposal. The letter concluded as follows:
"The agency's position relative to the operation of the funding support plan would be to establish initially a revolving fund from which all support service costs could be paid. The agency's position relative to the entire proposal must be non-committal due to the past reactions demonstrated by our agricultural clientele groups who pay into our various accounts."
4/Conversely, of course, if the 1981 legislature had taken the action which the 1983 legislature in fact took, thereby substantially reducing the department's general fund appropriation, and if the department had modified its internal funding pattern accordingly, such action would have been strong evidence that the legislature and the department intended for the 1981 amendment to RCW 22.09.500 to constitute a substantive change in the law.