State Budget Commission v. Lebus

CourtUnited States State Supreme Court (Kentucky)
Writing for the CourtJudge Richardson
Citation244 Ky. 700
PartiesState Budget Commission et al. v. Lebus et al.
Decision Date24 June 1932

15. Constitutional Law. Court cannot hold state bond issue constitutional because of expediency or to meet temporary condition, if bonds were issued without power (Constitution, secs. 49, 50).

16. States. Statute providing for $14,000,000 bond issue, without submission to voters, to pay auditor's warrants drawn against legal appropriations and indorsed by state treasurer as interest bearing, held unconstitutional; such warrants not being "debt" within Constitution (Acts 1932, Senate Bill No. 454; Ky. Stats., secs. 143, 4688a-2; Constitution, secs. 49, 50, 171; Ky. Stats., secs. 143, 4688-2).

Acts 1932, Senate Bill No. 454, providing for issuance and sale of such bonds by State Budget Commission, in amount of $14,000,000, was unconstitutional, since such warrants, drawn by auditor under Ky. Stats., sec. 143, against legal appropriations, and indorsed by state treasurer, as provided by section 4688a-2, though there were not sufficient funds for their payment, were not "debt," within meaning of proviso of (Constitution, sec. 50, which authorizes General Assembly to borrow money to pay any part of the "debt" of the state without submission to people, and without making provision, in the act authorizing such debt, for a tax to discharge debt so contracted or interest thereon; Legislature being authorized to provide for payment of such warrants by levying tax under Constitution, sec. 171, or submit bond issue to voters under section 50.

Appeal from Franklin Circuit Court.

BAILEY P. WOOTTON, Attorney General, and FRANCIS M. BURKE and S.H. BROWN, Assistant Attorneys General, for appellants.




When the General Assembly convened on the first Tuesday in January, 1932, there were in existence auditor's warrants, indorsed by the state treasurer as interest bearing, aggregating more than $13,000,000. By Senate Bill No. 454, adopted by the General Assembly at its 1932 session, and approved by the Governor, these warrants were recognized as debts of the commonwealth, and their payment was provided for by the issuance and sale of bonds by the State Budget Commission, to the amount of $14,000,000.

A suit was filed in the Franklin circuit court, by certain taxpayers against the members of the State Budget Commission, wherein it was alleged that the Senate Bill violated sections 49 and 50 of the State Constitution, and was void. The circuit court entered a judgment declaring the act void. The State Budget Commission appeals.

It is insisted by the taxpayers that warrants drawn by the auditor under section 143, Ky. Stats., against legal appropriations, indorsed by the state treasurer as provided by section 4688a-2, Ky. Statutes, are not "debts" within the meaning of sections 49 and 50 of the Constitution. The State Budget Commission contends they constitute debts within the meaning of these sections, and that the General Assembly was within its constitutional rights when it adopted Senate Bill 454, authorizing the issuance and sale of bonds without submitting the question of their issuance and sale to the people at a general election.

The vital questions presented by this appeal are not ones of first impression with this court. However, we shall so consider and dispose of them. To consider and dispose of them we are required to do so in the light of sections 49 and 50 of the Constitution. It is essential to view sections 49 and 50 in connection with other related sections and also certain sections of the statutes enacted in pursuance thereof.

Section 49 reads:

"The general assembly may contract debts to meet casual deficits or failures in the revenue; but such debts, direct or contingent, singly or in the aggregate, shall not at any time exceed five hundred thousand dollars ($500,000.00), and the moneys arising from loans creating such debts shall be applied only to the purpose or purposes for which they were obtained, or to repay such debts: Provided, The general assembly may contract debts to repel invasion, suppress insurrection, or, if hostilities are threatened, provide for the public defense."

Section 50 is in this language:

"No act of the general assembly shall authorize any debt to be contracted on behalf of the Commonwealth except for the purposes mentioned in sec. 49, unless provision be made therein to levy and collect an annual tax sufficient to pay the interest stipulated, and to discharge the debt within thirty years; nor shall such act take effect until it shall have been submitted to the people at a general election, and shall have received a majority of all the votes cast for and against it: Provided, The general assembly may contract debts by borrowing money to pay any part of the debt of the state, without submission to the people, and without making provision in the act authorizing the same for a tax to discharge the debt so contracted, or the interest...

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1 cases
  • Shaw v. Fox
    • United States
    • United States State Supreme Court (Kentucky)
    • December 6, 1932
    ...... operation is confined within territorial limits other than whole state", or any popularly constituted class or locality therein. .        \xC2"...State Racing Commission v. Latonia Agricultural Ass'n, 136 Ky. 174, 123 S.W. 681, 25 L.R.A. (N.S.) ...State Budget Commission v. Lebus, 244 Ky. 700, 51 S.W. (2d) 965. Our Constitution does ......

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