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Division of Bond Finance v. Smathers

Supreme Court of Florida
337 So. 2d 805 (1976)
ELI5:

Rule of Law:

Under the Florida Constitution, proceeds from the sale of state general obligation bonds, which pledge the full faith and credit of the state, may only be used to finance or refinance the cost of state capital projects.


Facts:

  • The Florida Legislature passed a General Appropriations Act, Chapter 76-285, Laws of Florida.
  • The Act contained a proviso under Item 853 stating that proceeds from future sales of general obligation bonds for environmentally endangered lands must first be used to repay monies expended for debt service from the Land Acquisition Trust Fund.
  • The Governor received a 'Letter of Intent' from legislative committees advising that the proviso had been included as a result of a drafting error.
  • The Governor vetoed the proviso but remained concerned about the veto's validity, as the Constitution prohibits vetoing a qualification on an appropriation without vetoing the appropriation itself.
  • This legal uncertainty jeopardized the state's Environmentally Endangered Lands Bond Program and cooperative land acquisition agreements with the federal government.

Procedural Posture:

  • The Division of Bond Finance, the Governor, and the State Treasurer filed an original petition for a writ of mandamus in the Supreme Court of Florida.
  • The petition was filed against the Secretary of State, the Executive Director of the Department of Natural Resources, and the Department of Natural Resources.
  • Petitioners requested the court to command the Secretary of State to expunge the allegedly unconstitutional proviso from the official records of the appropriations act.
  • The Supreme Court of Florida exercised its discretion to hear the case as an original proceeding due to the immediate adverse effect the dispute was having on the functions of state government.

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Issue:

Does a legislative proviso in a general appropriations act that directs proceeds from general obligation bonds to be used for repaying monies from a separate trust fund, rather than for financing a capital project, violate Article VII, Section 11(a) of the Florida Constitution?


Opinions:

Majority - Boyd, J.

Yes, the legislative proviso violates Article VII, Section 11(a) of the Florida Constitution. This constitutional provision explicitly states that state bonds pledging the full faith and credit of the state may be issued 'only to finance or refinance the cost of state capital projects.' The proviso at issue mandates that the bond proceeds be used for a different purpose—repaying debt service from another fund. Because this diverts the funds from their constitutionally required purpose, the proviso is unconstitutional on its face. The court found it unnecessary to address the validity of the Governor's veto, as the underlying proviso was void.



Analysis:

This decision reinforces the principle of constitutional supremacy over legislative appropriations, specifically in the context of state debt. It establishes a bright-line rule that the legislature cannot redirect proceeds from general obligation bonds to purposes other than capital projects, no matter how the redirection is framed. The ruling provides fiscal certainty and protects the integrity of voter-approved bond initiatives by ensuring that funds are used for their intended purpose. The court's exercise of original jurisdiction also underscores its role in resolving critical disputes that threaten the immediate functioning of state government.

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