Dear Mr. Haik:
You requested an Attorney General's opinion regarding the payment of benefits for retired City of New Iberia Employees. In speaking with representatives of the Mayor's office, we were informed that the City wants to pay for health insurance for retired City employees. You question whether the City may pay for retired City of New Iberia employee benefits with the proceeds of certain taxes.
The first tax is a one-percent sales and use tax levied by the City of New Iberia Sales and Use Tax of 1960, which provides in part:
General Ordinance No. 50
AN ORDINANCE LEVYING A TAX OF ONE (1) PER CENTUM OF THE SALE AT RETAIL, THE USE, THE LEASE OR RENTAL, THE CONSUMPTION AND STORAGE FOR USE OR CONSUMPTION OF TANGIBLE PERSONAL PROPERTY AND ON SALES OF SERVICES IN THE CITY OF NEW IBERIA, LOUISIANA, ALL AS HEREIN DEFINED AND AS DEFINED BY TITLE 47, SECTION 47:301 THROUGH 47:317 OF THE REVISED STATUTES OF 1950 OF THE STATE OF LOUISIANA, AS AMENDED, AND AS HEREIN LIMITED, WITH THE REVENUES DERIVED FROM SAID SALES AND USE TAX TO BE DEDICATED AND USED FOR THE PURPOSE OF THE SUPPORT AND MAINTENANCE OF THE POLICE AND FIRE DEPARTMENTS, THE CONSTRUCTION AND IMPROVEMENT OF STREETS, BRIDGES, OR SEWERAGE AND FOR ANY WORK OF PERMANENT PUBLIC IMPROVEMENT IN THE CITY OF NEW IBERIA, LOUSIANA, TITLE TO WHICH SHALL BE IN THE PUBLIC; DEFINING THE TERMS "TANGIBLE PERSONAL PROPERTY," "DEALERS", "SALE", "RETAIL SALES", "SALES PRICES", "COST PRICE", "LEASE OR RENTAL", "STORAGE", *Page 2 "USE", "SALES OF SERVICES", AND OTHER TERMS USED HEREIN; LEVYING AND PROVIDING FOR THE ASSESSMENT, COLLECTION, PAYMENT, AND DEDICATION OF SUCH TAX; PROVIDING FOR AN ADEQUATE REMEDY AT LAW: DEFINING VIOLATIONS OF THE PROVISIONS OF THIS ORDINANCE AND PRESCRIBING PENALTIES THEREFOR; PROVIDING FOR RULES AND REGULATIONS FOR THE ENFORCEMENT OF THE PROVISIONS OF THIS ORDINANCE AND THE COLLECTION OF THE TAX LEVIED THEREBY; PROVIDING THAT ANY PART OF THIS ORDINANCE WHICH MAY BE HELD INVALID OR UNCONSTITUTIONAL SHALL NOT EFFECT OR IMPAIR ANY OTHER PART THEREOF; AND REPEALING ALL ORDINANCES AS MAY BE IN CONFLICT HEREWITH.
The tax levied under this ordinance is dedicated to the maintenance and support of the police and fire departments, as well as other uses. The ordinance does not restrict how the police and fire departments use the proceeds of the tax. Therefore, those departments can use the funds for any departmental expenses. The payment of health insurance benefits for retired police and fire department employees would be valid expenses of the departments.
The prohibition on donations of public funds under Art. VII, Sec. 14 of the Louisiana Constitution does not apply to the contribution of public funds to insurance programs for the benefit of public employees. Also, R.S. 33:5151 provides any municipality may make contracts of insurance with any insurance company legally authorized to do business in this state insuring their employees under policies of group insurance covering hospitalization, and may agree to match the payments of the employees for the premiums. It is further provided the section shall not be construed to limit the contribution of a local governmental subdivision toward the payment of premiums for accident and health protection for its employees.
This office has recognized that under this provision the political subdivision may pay 100% of the insurance premium for its employees, Attorney General's Opinion Nos. 92-547, 91-209 and 90-430, and that the term "employee" includes a former employee now retired so that it would be legal for a public agency to pay medical insurance premiums for retired public employees, Attorney General's Opinion Nos. 90-131 and 88-578A. However, it was observed past payments may not be reimbursed and the insurance contract must be in existence before the payments are authorized. Therefore, the proceeds from the City of New Iberia Sales and Use Tax of 1960 may be used to pay benefits for retired police and fire department employees. However, the proceeds from this tax may not be used to pay benefits for other retired City employees.
The other three taxes at issue were levied pursuant to tax propositions approved by the voters. La.R.S. 39:704 indicates that the proceeds of any special tax shall constitute a trust fund to be used exclusively for the objects and purposes for which the tax was levied. Additionally, the jurisprudence of this state provides that special tax *Page 3 authorizations must be strictly construed. Police Jury of the Parish ofAcadia v. All Taxpayers, et al., 95-145 (La.App. 3rd Cir. 3/29/95),653 So. 2d 94, rehearing denied; Hemler v. Richland Parish School Board,76 So. 585 (La. 1917); Watkins v. Ouachita Parish School Board, 136 So. 591 (La. 1931); Hodnett v. Monroe City School Board, 277 So. 2d 598 (La.App. 2nd Cir. 1972) and Brock V. St. James Parish Council, 407 So. 2d 1265 (La.App. 4th Cir. 1981), writ denied.
This office has consistently opined that the use of the proceeds of a sales and use tax adopted at an election in the State of Louisiana must be used in accordance with the will of the electorate, as set forth in the proposition approved by the voters. R.S. 39:704; R.S. 33:2714; R.S.33:2723. In accord: Attorney General's Opinion Nos. 04-0267, 03-0157, 01-269, 98-421, 98-287, 96-246, 95-145, 94-540, 94-346, 93-424, 93-47 and 92-50.
The three tax propositions approved by the voters provided as follows:
CITY OF NEW IBERIA ¼% SALES TAX PROPOSITION
SUMMARY: AUTHORITY TO LEVY A ¼% SALES AND USE TAX TO BE DEDICATED AND EXPENDED SOLELY FOR THE PAUPOSE OF INCREASING AND SUPPLEMENTING THE SALARIES AND BENEFITS OF FIREMEN.
Shall the City of New Iberia, State of Louisiana (the "City") under the provisions of Article VI, Section 29 of the Constitution of the State of Louisiana of 1974, and other constitutional and statutory authority, be authorized to levy and collect and adopt an ordinance providing for such levy and collection, a tax of one-fourth of one percent (1/4 %) (the "Tax") upon the sale at retail, the use, the lease or rental, the consumption and storage for use or consumption of tangible personal property and on sales of services in the City, all as presently defined in La.R.S. 47:301 through 47:317, with the avails or proceeds of the Tax (after paying the reasonable and necessary expenses of collection and administering the Tax), to be dedicated and expended solely for the purpose of increasing and supplementing the salaries and benefits of firemen?
The proceeds of this tax were dedicated solely for the purpose of increasing and supplementing the salaries and benefits of firemen.
PROPOSITION NO. 1
Shall the City of New Iberia, State of Louisiana (the "City"), under the provisions of Article VI, Section 29(B) of the Constitution of the State of Louisiana of 1974 and other constitutional and statutory authority *Page 4 supplemental thereto, be authorized to levy and collect, and adopt an ordinance providing for such levy and collection, a tax of one-fourth of one percent (1/4 %) (the "Tax") upon the sale at retail, the use, the lease or rental, the consumption, and storage for use or consumption, of tangible personal property and on sales of services in the City, all as presently defined in La.R.S. 47:301 through La.R.S. 47:317, inclusive, with the proceeds of the Tax (after paying reasonable and necessary costs and expenses of collecting and administering the Tax) to be dedicated and used solely for the purpose of supplementing the cost of salaries of City employees, including employee benefits?
The proceeds of this tax were dedicated solely for the purpose of supplementing the cost of salaries of City employees, including employee benefits.
*Page 5PROPOSITION (TAX CONTINUATION)
SUMMARY: AUTHORITY TO LEVY A ¼% SALES AND USE TAX IN THE CITY OF NEW IBERIA FOR: FIRST: FOR SUPPLEMENTING OTHER SALES TAX REVENUES OF THE CITY TO PAY THE COST OF SOLID WASTE COLLECTION AND DISPOSAL, INCLUDING THE COST OF THE CITY'S RECYCLING PROGRAM; AND SECOND: THE REMAINING PROCEEDS OF THE TAX TO BE EXPENDED FOR THE PURPOSE OF PAYING THE COST OF THE SALARIES OF CITY EMPLOYEES, INCLUDING THE PAYMENT OF EMPLOYEE BENEFITS.
Shall the City of New Iberia, State of Louisiana (the "City") under the provisions of Article VI, Section 29 of the Constitution of the State of Louisiana of 1974, and other constitutional and statutory authority, be authorized to continue to levy and collect and adopt an ordinance providing for such levy and collection, a tax of one-fourth of one percent (1/4 %) (the "Tax") upon the sale at retail, the use, the lease or rental, the consumption and storage for use or consumption of tangible personal property and on sales of services in the City, all as presently defined in La.R.S. 47:301 through 47:317, with the avails or proceeds of the Tax (after paying the reasonable and necessary expenses of collecting and administering the Tax) to be dedicated and used as follows:
First: for supplementing other sales tax revenues of the city to pay the cost of solid waste collection and disposal, including the cost of the City's recycling program; and
Second: The remaining proceeds of the Tax to be expended for the purpose of paying the cost of the salaries of City employees, including the payment of employee benefits?
The proceeds of this tax were dedicated first, to pay the cost of solid waste collection and disposal, including the cost of the City's recycling program, with the remaining proceeds dedicated to paying the cost of the salaries of City employees, including the payment of employee benefits.
We note that La.R.S. 42:808 and R.S. 17:1223 currently define the term "employee" to include a retiree or former employee now retired. Based upon these definitions, our office has concluded that retired public employees were included within the authorized uses of public funds contemplated by the exceptions in Art. VII, Sec. 14B. Attorney General's Opinion Nos. 90-131 and 88-578A. Applying the same analysis to the three tax propositions, it is our opinion that the terms "firemen" and "employees" include retired firemen and retired employees. Therefore, the taxes dedicated to increasing and supplementing the salaries and benefits of firemen may be used to pay benefits for retired firemen; the taxes dedicated to the cost of salaries of City employees, including employee benefits, may be used to pay benefits for retired city employees.
Trusting this adequately responds to your request, we remain
Yours very truly,
CHARLES C. FOTI, JR.
ATTORNEY GENERAL
BY:_____________________________
KENNETH L. ROCHE, III
Assistant Attorney General
CCF, JR/KLR, III/crt