Attorney General: Mr. Marc S. Ryan, Office of Policy and Management, 2000-016 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

April 25, 2000

Mr. Marc S. Ryan
Secretary
Office of Policy and Management
450 Capitol Avenue
Hartford, Connecticut 06106

Dear Secretary Ryan:

You have asked this office for our opinion as to

the exact conditions under which the Waterbury Budget Advisory Council ceases to exist and whether Waterbury's positive fund balances for Fiscal Years 97, 98, and 99 trigger the sunset provisions. An interpretation of the method of dissolution (i.e., a vote of the WBAC members on dissolution) would also be welcomed.

Based upon the analysis that follows, the Waterbury Budget Advisory Council (hereinafter "WBAC" would cease to exist by operation of law when the operating funds of the City of Waterbury are in balance or have a surplus for three consecutive fiscal years. However, according to the information provided to you by letter dated April 20, 2000, Scully & Wolf, LLP, Certified Public Accountants retained by the Office of Policy & Management ("OPM") to assist OPM in this matter, have concluded that the results of operation in fiscal years 1997-1998 and 1998-1999 demonstrate that the City of Waterbury "has not met the thresholds of the legislation to enable dissolution of the Waterbury Budget Advisory Council."

According to the information supplied by the certified accountants, under generally accepted principles of accounting the City funds which comprise the "operating funds" of the City have not been "in balance" and have not shown "a surplus for three consecutive years," a statutory prerequisite for termination of the WBAC. 1996 Conn. Spec. Act No. 96-3(d). It is our opinion, therefore, that the Waterbury Budget Advisory Council may not be terminated but, instead, must remain in existence and fulfill its statutory duties set forth in 1996 Conn. Spec. Act No. 96-3.

I.

Our legal analysis begins with 1996 Conn. Spec. Act No. 96-3, "An Act Authorizing the City of Waterbury to Issue Certain Bonds"(the "Act"). This special act created the WBAC, a three member body. See Act, §3(a). The WBAC was granted various powers, duties and functions pertaining to the annual budget and financial plan of the City of Waterbury. See Act, §3(c). The WBAC is mandated to

review the budget with respect to determining whether budgeted expenditures are reasonable and accurate estimates of the expected expenditures of the city, and whether budgeted revenues are reasonable and accurate estimates of expected revenues, and if so, whether budgeted revenues are at least equal to budgeted expenditures.

Act, §3(a). The WBAC was established as an integral part of the process for deficit funding bonds and interim funding obligations issued in anticipation of deficit funding bonds issued under the Act by the City of Waterbury to balance its budget.

Section 3 of the Act describes the conditions under which the WBAC shall cease to operate and it plainly states:

(d) The budget advisory council shall remain in existence and exercise the powers, duties and functions granted to it by this act only until such time as the operating funds of the city shall have been in balance or with a surplus for three consecutive fiscal years in accordance with audits conducted on a generally accepted accounting principles basis, consistently applied.

(Emphasis added.)

The relevant provision, subsection (d) of section 3 of the Act, is clear on its face. It states that the WBAC "shall remain in existence" and exercise its powers "until such time as the operating funds of the city shall have been in balance or with a surplus for three consecutive fiscal years in accordance with audits conducted on a generally accepted accounting principles basis." Statutory language must be given its plain and ordinary meaning. West Hartford Interfaith Coalition, Inc. v. Town Council of Town of West Hartford, 228 Conn. 498, 508, 636 A.2d 1342 (1994). In construing a statutory provision the question is never what the legislature actually intended but what intention it expressed. Hartford Elec. Light Co. v. Water Resources Commission, 162 Conn. 89, 98, 291 A.2d 721 (1971).

The information you provided to this office by the certified accountants states that under "generally accepted accounting principles" the General Fund balances for the fiscal years ending June 30, 1999, 1998 and 1997 would show a deficit because of annual budgetary operations, inadequate funding of pension obligations and deficits in the City’s Self-Insurance Internal Service Fund. According to the accountants: "Although the General Fund reflects an undesignated fund balance during the years of our analysis, the adequate funding of employee pensions and health benefits would have created significant General Fund deficit balances for all periods."

The issue is whether the operating funds of the City ended any of the last three fiscal years in balance, with a surplus or out of balance (i.e., with a deficit). Our State Supreme Court has construed the term "surplus" in the context of municipal budgets as "any cash surplus remaining in the current expense fund at the beginning of the fiscal year." Caulfield v. Noble, 178 Conn. 81, 96, 420 A.2d 1160 (1979).

The information supplied to this Office shows that in fiscal years 97/98 and 98/99, "on a generally accepted accounting principles basis," the "operating funds" of the city have not been "in balance or with a surplus for three consecutive years" and the conditions for the expiration of the WBAC's existence have not occurred. 1996 Spec. Act No. 96-3. Under the statute and the Supreme Court’s interpretation of the term "surplus," this conclusion is unavoidable no matter how cogent might be the policy arguments to the contrary. The statutory prerequisites for terminating the Waterbury Budget Advisory Council simply have not been met.

II.

Your second question asks by what method the dissolution of the WBAC could be achieved. Once the conditions set forth under §3(d) of the Act are met, the WBAC would cease to exist by operation of law. The WBAC could undertake to memorialize its termination by the adoption of a resolution. Such adoption must comply with the procedures for the conduct of the WBAC's meetings and the exercise of its powers as provided in §3(b) of the Act. In particular, any such resolution may be adopted "by affirmative vote of a majority of its members." Act, §3(b).

We trust the foregoing answers your two questions.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

RB


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