The Honorable Henry Morgan Prosecuting Attorney Judicial District 9-E 205 South Washington Murfreesboro, Arkansas 71958

Dear Mr. Morgan:

This is in response to your request for an opinion regarding the disposition of interest proceeds generated from a Pike County sales tax. You indicate that the sales tax was enacted by county voters and the revenues designated for solid waste disposal purposes. Specifically, you inquire as to whether the interest proceeds, generated from the sales tax revenues, may be utilized for county general purposes. In my opinion, the answer to your question is "no."

Without a copy of the ballot title or other information regarding the sales tax at issue, I will assume that the tax was levied under A.C.A. §26-74-307 (Cum. Supp. 1993), which provides for the call of an election for a countywide sales tax by the county quorum court. Arkansas Code Annotated § 26-74-308 (Cum. Supp. 1993) governs the form of the ballot in such an election and provides in relevant part:

The ballot may also indicate designated uses of the revenues derived from the sales tax and, if the tax is approved, the proceeds shall only be used for the designated purposes.

A.C.A. § 26-74-308(c) (Emphasis added.) If the sales tax was levied or designated for the specific purpose of funding solid waste disposal, the well settled rule is that the proceeds may only be used for that purpose. See cases cited in Op Att'y Gen. 94-228, attached, and Article16, § 11 of the Arkansas Constitution.

This office has further opined, based on decisions by the Arkansas Supreme Court, that unless there is a statutory provision lawfully separating the interest from the revenue principal, the interest on public funds becomes an accretion thereto and may only be used for the purpose for which the principal may be used. See Op. Att'y Gen. 91-005, attached. Although, as noted in the aforementioned opinion, a question remains as to whether the interest on special taxes may be lawfully separated from the principal, it is not necessary to reach this issue as our research has revealed no statutes purporting to do so. We therefore conclude that the interest from the Pike County sales tax revenues cannot be lawfully diverted from the intended funding of solid waste disposal for county general purposes.

The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Sarah L. James.

Sincerely,

WINSTON BRYANT Attorney General

WB:SLJ/cyh