DOJ: News Release

McGrath: County’s Long-Term Lease Agreement Does Not Require Voter Approval

HELENA – In an opinion released today, Montana Attorney General Mike McGrath held that a lease-purchase agreement that includes a non-appropriation clause does not require voter approval.

Valley County Attorney Kenneth Oster requested the opinion, asking about a lease-purchase agreement for the county to establish a detention center. The agreement would include a “non-appropriation” clause, so if the county did not appropriate funds to cover payments, the agreement would terminate.

State law has limitations on county debts, including one that says counties may not incur “indebtedness or liability” for a single purpose for an amount greater than $500,000 without voter approval.

McGrath held that a long-term agreement like the one Oster described “does not constitute indebtedness or liability” because the county government has no obligation to make payments until it has appropriated funds for the current fiscal year, and would not be obligated to make payments in future years. Similarly, since the agreement is not indebtedness or liability, it does not require voter approval.

Opinions of the attorney general carry the weight of law unless a court overturns them or the legislature modifies the laws involved.

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