Opinion Number
|

Lead Opinion

Dear Ms. Wooten:

We are in receipt of your request for an Attorney General's Opinion regarding a proposed amendment to the Charter of the City of New Iberia. You have asked whether the city is in compliance with R.S. 33:1181 and whether the amendment is consistent with the constitution and laws of the United States and the State of Louisiana. The proposed amendment will affect Section 9 of the Charter of the City of New Iberia, relative to the automobile expense allowance for the mayor, trustee elected at large (mayor pro tempore), and the trustees elected from districts.

LSA-R.S. 33:1181 provides:

When a municipality existing prior to July 29, 1898, and having a population of two hundred thousand or less, which has not come under the provisions of Part I of Chapter 2 of this Title [the Lawrason Act], desires to amend its charter, the same may be done in this way: The municipal governing body may prepare, in writing, the desired amendments, have the same published for three weeks in a newspaper published in the municipality, if there be one, and if none, then by posting for said time in at least three public places therein; the proposed amendments shall then be submitted to the governor, who shall submit them to the Attorney General for his opinion. If the Attorney General is of the opinion that the proposed amendments are consistent with the constitution and laws of the United States and of this state, including Part I of Chapter 2 of this Title, the Governor shall approve the proposed amendments.

The proposed amendment is Ordinance No. 98-557, which amends Section 9 of the charter, relative to the automobile expense allowance for the Mayor, Trustee elected at large (Mayor Pro Tempore) and Trustees elected from districts, allowing the allowance to be fixed either in the annual budget ordinance, or by separate ordinance (versus being changed by amendment to the charter). The proposed amendment does not change the salary of these officials. The ordinance was adopted by a majority vote on January 19, 1999. An affidavit of publication from the DailyIberian indicates that the ordinance was advertised in the issues of January 29, 1999, February 5, 1999 and February 12, 1999. The city clerk's letter on May 13, 1999, states that no opposition or objection was filed as to the ordinance.

We do not find any law which is in conflict with this proposal. Although this is not, per se, an increase in compensation, it has been and remains our opinion that "[i]n the absence of adequate documentation to substantiate the payment [car expense allowance] as a legitimate reimbursement for business expenses, the expense allowance is presumed to constitute compensation from which taxes must be withheld." Otherwise, "[t]he receipt of additional compensation (i.e., a travel allowance without adequate documentation of business expenses) would constitute a bonus or donation prohibited by Article VII, Section 14." Attorney General Opinion No. 97-25, copy enclosed herein.

Therefore, it is the opinion of this office that the City of New Iberia has complied with the provisions of R.S. 33:1181 and that the proposed amendment [Ordinance No. 98-557] to the special charter of the City of New Iberia complies with the constitution and laws of the United States and the State of Louisiana, including the Lawrason Act. The city is responsible for obtaining Section 5 approval under the provisions of the 1965 Voting Rights Act, 42 U.S.C. § 1973, and is responsible for filing the amendment with the Secretary of State, pursuant to LSA-R.S.33:1181.1.

Trusting this adequately responds to your request, we remain

Yours very truly,

RICHARD P. IEYOUB ATTORNEY GENERAL

By: ANGIE ROGERS LAPLACE Assistant Attorney General

RPI:ARL

Enclosures

STATE OF LOUISIANA One American Place DEPARTMENT OF JUSTICE 301 Main Street, Suite 600 CIVIL DIVISION P.O. Box 94005 BATON ROUGE TEL.:(504)342-7013 70804-9005 FAX.:(504)342-2090

RICHARD P. IEYOUB ATTORNEY GENERAL

OPINION NUMBER 97-25
February 24, 1997
4: Assessors 70: Motor Vehicles 90-A-2: Public Funds: Loans, Pledges, or Grants Article VII, Section 14 of the 1974 Louisiana Constitution R.S. 47:1907 and 1908

Assessor may receive monthly travel allowance in lieu of purchasing or leasing an automobile. The allowance may be paid out of the expense fund authorized by R.S. 47:1908. In the event travel expenses are not adequately documented or travel expenses are not incurred in a given month, the payment must be considered additional compensation from which taxes must be withheld. If the assessors' salary is already at its maximum pursuant to R.S.47:1907, any additional compensation (e.g., undocumented travel allowance) would constitute a bonus or donation in violation of the Louisiana Constitution.

Honorable Carroll D. Elzey Assessor-Elect, Sabine Parish 4247 Plainview Road Florien, LA 71429





Addendum

Dear Mr. Elzey:

You have requested an opinion of the Attorney General regarding the option of your receiving a vehicle allowance in lieu of purchasing or leasing a vehicle. If such an allowance is permissible, you ask our recommendation as to the amount thereof.

In answer to your first question, we refer you to R.S.47:1907 and 1908 which enumerate the salary and expense allowances, respectively, of the individual assessors. This office has previously opined that a parish assessor may purchase an automobile for official use and pay for same out of the expense fund so long as the expenses related thereto, along with other expenses, do not exceed the maximum allowance authorized by R.S. 47:1908. Opinions of the Atty. Gen. 1948-50, p. 22 and 1944-46, p. 23.

A further review of these provisions reveals no legal impediment for the payment of an automobile allowance, in lieu of the purchase and/or rental of a motor vehicle. We focus now on your second inquiry, to-wit: the amount of the allowance.

We draw your attention to R.S. 47:1907 which establishes a maximum salary comprised of a base amount predicated on population and a seven percent supplement conditioned upon certification under the Assessors' Professional Certification Program. We also draw your attention to Article VII, Section 14 of the 1974 Louisiana Constitution which provides, in pertinent part, the following:

"Section 14. (A) Prohibited uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. . . ."

The provisions discussed above must also be examined in light of Section 62 of the Internal Revenue Code, enacted in 1989. It provides that, to the extent adequate documentation is maintained to support travel expenses, the Internal Revenue Service does not require the payments to be reported as compensation or income. Conversely, in the absence of adequate documentation to substantiate *Page 2 the payment as a legitimate reimbursement for business expenses, the expense allowance is presumed to constitute compensation from which taxes must be withheld. This is critical if your current salary is at or near the maximum set by statute.

Assuming you are already drawing your maximum salary, the receipt of additional compensation (i.e., a travel allowance without adequate documentation of business expenses) would constitute a bonus or donation prohibited by Article VII, Section 14.

For example, if your salary is at its maximum and you receive a $250 allowance for a given month in which you incurred no travel expenses, the allowance would constitute additional compensation in violation of Article VII, Section 14. Under this same scenario, if you actually incurred $200 in adequately documented legitimate travel expenses, only the excess (i.e., $50) constitutes a prohibited bonus or donation. In the above examples, if the unsupported allowance, or a portion thereof, when added to your salary, does not exceed your statutory maximum, same would not constitute a donation or bonus, but merely additional compensation for tax purposes.

To obviate the aforementioned statutory, constitutional and tax issues, we recommend that vehicle expenses be adequately documented and reflected on your financial records. You may wish to contact the Office of the Legislative Auditor in this regard. The number in Baton Rouge is (504)-339-3800.

In conclusion, it is the opinion of this office that you may receive a travel expense allowance pursuant to R.S. 47:1908 in lieu of your purchasing and/or leasing an automobile. The allowance, along with your other expenses, should not aggregate more than is allowed in Section 1908. To the extent travel expenses for a given month are not adequately documented or incurred, the allowance must be reported as additional income from which taxes must be withheld. This additional income, along with the salary authorized by statute, should not exceed the maximum established in R.S. 47:1907. In accord are Attorney General Opinion Nos. 94-244 and 92-857.

Trusting this adequately responds to your inquiries, I am

Very truly yours,

RICHARD P. IEYOUB ATTORNEY GENERAL

By:ROBERT E. HARROUN, III Assistant Attorney General

RPI/Rob3/cla