This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
COUNTIES -- Powers and Duties (deposit and investment of E911 surcharge moneys)
MUNICIPAL FUNDS -- Accounting (crediting interest earned on investment of E911 surcharge moneys); (need to establish separate bank account for E911 surcharge moneys) -- Deposits and Investments (disposition of interest on investment of E911 surcharge moneys); (of E911 surcharge moneys)
COUNTY LAW, §307: Emergency 911 (E911) System surcharge moneys need not be segregated in a separate bank account. Interest earned on the investment of E911 surcharge moneys may be credited to the general fund and used for any lawful county purpose.
You ask whether a county must segregate Emergency 911 (E911) System surcharge moneys in a "separate account". You also ask whether interest earned on such surcharge moneys must be retained and used exclusively for the same purposes for which the surcharge moneys may be used. We assume for purposes of this opinion that the county's charter does not address these issues.
Article 6 of the County Law (§300 et seq.) contains provisions relative to surcharges for enhanced emergency telephone systems. Section 307 of the County Law provides that:
All surcharge monies remitted to the municipality by a service supplier and all other monies dedicated to the payment of surcharge costs ... shall be expended ... only for payment of system costs.... The municipality shall separately account for and keep adequate books and records of the amount and source of all such revenues and of the amount and object or purpose of all expenditures thereof (emphasis added).
This Office has expressed the opinion that, if separate bank accounts are not specifically required by State or local legislation, moneys in various funds held by a municipality may be deposited in a single bank account (see 1991 Opns St Comp No. 91-57, p 158). Therefore, since section 307 of the County Law does not expressly require a separate bank account for the E911 surcharge revenues, the requirement therein to "separately account" therefor does not require physical segregation of such moneys in a separate bank account. Although a separate bank account is not required, however, the surcharge revenue must be separately accounted for on the books and records of the county and expended only for those purposes authorized within article 6.
As to whether the interest earned on the investment of E911 system surcharge moneys must be retained and used for the E911 system costs, we note that there is no requirement in article 6 that interest earned be credited only to the separate account. Moreover, we are aware of no general statutory requirement that interest earned on moneys in a dedicated account be credited to that account (cf. General Municipal Law, §§6-c, 6-d, providing that interest or capital gains realized from the investment of moneys in a capital reserve fund or repair reserve fund, respectively, shall accrue to and become a part of such fund; Local Finance Law, §165.00[b], restricting the use of interest earned on the investment of the proceeds of certain obligations). In our opinion, therefore, in the absence of a statutory requirement restricting the use of interest earnings, interest earned from investing the moneys in a dedicated account generally may be used in the same manner as other revenues within the fund in which the account is included.
We note that this conclusion is consistent with generally accepted accounting principles which provide for the crediting of interest to the fund from which the investment was made. Also, since statutes creating dedicated accounts do not generally require that cash actually be received and segregated prior to making expenditures for the specified purposes, expenditures for those purposes generally may be made in the first instance from other moneys within the fund. Since interest is not generally charged against the dedicated account for these expenditures (cf. General Municipal Law, §9-a, relative to inter-fund advances between funds raised from different tax bases), it follows that interest earned on the investment of the dedicated account need not be credited to that account.
Accordingly, since article 6 contains no requirement that the interest earned on surcharge moneys be used only for the same purposes as the surcharge moneys, it is our opinion that the interest may be credited to the general fund and used for any lawful county purpose.
December 31, 1992
Robert A. Smith, Esq., County Attorney
County of Rensselaer