You have asked for my review of and opinion concerning an accounting practice, identified in the course of auditing the Department of Transportation ("DOT"), of re-applying, rather than lapsing, appropriated state funds contractually obligated for Local Assistance Road Projects ("LARP") which remain unexpended after satisfaction of the obligation in a subsequent fiscal year. The re-applied state general funds are being used as a substitute fund source for other LARP contracts for which motor fuel tax appropriations were previously committed. It is my understanding that you will direct DOT, in the future, not to interchange contractually obligated state general funds and motor fuel tax funds as they become deobligated in subsequent fiscal years, except in situations [*2] requiring correction of accounting or other errors. Based on a review of the Georgia Constitution and statutes, your directive is justified.

Under Ga. Const. 1983, Art. III, Sec. IX, Para. IV(c) and O.C.G.A. § 45-12-89, all appropriated state funds remaining unexpended and not contractually obligated, other than those mandated by the Constitution to be appropriated for specific purposes (e.g., motor fuel tax funds, Ga. Const. 1983, Art. III, Sec. IX, Para. VI), lapse and cease to be available at the expiration of the general appropriations Act for that fiscal year. See 1971 Op. Att'y Gen. 71-198.

These provisions require that any unexpended state fund appropriations obligated for a road contract be lapsed once the legal obligation under such contract is satisfied in a subsequent fiscal year; such funds may not be allocated in place of expended motor fuel tax moneys or be used to replace unexpended motor fuel tax funds held in reserve on pending contracts. n1 Code Sections 32-2-2(2), 32-5-20 and 32-5-21, governing DOT's authority to control and supervise appropriated public road funds, including the State Public Transportation Fund, must be read in conjunction with [*3] the Constitutional and statutory provisions governing lapse of deobligated state appropriations. Further, the constitutional mandate requiring lapsing of such state funds as they become contractually deobligated in subsequent fiscal years applies, regardless of the subject matter of the contract (e.g., no legal distinction between road contracts and airport contracts).

n1 1979 Op. Att'y Gen. U79-26, which concludes that funds in reserves may not be appropriated in fiscal years subsequent to those in which the reserves were created as long as the obligation against such reserves remains outstanding, should not be read as allowing appropriated state funds deobligated in a subsequent fiscal year to be applied to other contracts.

Therefore, it is my official opinion that appropriated state funds which become deobligated during a subsequent fiscal year are subject to lapse, and may not be applied to contracts for which motor fuel tax appropriations were previously committed.

Prepared by:


Senior Assistant Attorney General