1975, May, Pg. 857. Attorney General's Opinions.

4 Colo.Law. 857

Colorado Lawyer

1975.

1975, May, Pg. 857.

Attorney General's Opinions

857Vol. 4, No. 5, Pg. 857Attorney General's OpinionsOpinion of March 13, 1975Mr. Sam Brown State Treasurer 140 State Capitol Building Denver, Colorado 80203 Dear Mr. Brown: You have requested my opinion on the following:Question: Is the interest paid on funds retained from partial payments by the Highway Department to contractors required by law to be credited to the general fund?

Conclusion: Yes.

Analysis: C.R.S. 1973, § 24-36-114, requires that:All interest derived from the deposit and investment of state moneys shall be credited to the general fund unless otherwise expressly provided by law.

Since there is no law "expressly providing" for interest on these funds to be credited elsewhere, the issue is whether such funds are "state moneys" within the scope of the statute.

It is appropriate first to review the facts concerning the establishment and nature of the "retainage." Pursuant to a standard contract, the Highway Department makes partial payments to the contractors as work on specific projects progresses. At the end of each month the State Engineer estimates the value of the work performed and materials purchased to determine the amount of the partial payment. The Department then deducts from the monthly partial payment "amounts considered to be necessary to protect the interest of the State," and retains "this money until after completion of the entire contract." The usual deduction is 10 percent of the estimate up to a total of 5 percent of the total amount due under the contract. There are no statutory requirements for such "retainage," and it is not in lieu of the bond required by statute. The primary reasons for the "retainage" are to insure that the entire project is completed, to insure that the work is performed to the required standard, and to protect against overpayments. Thus the contract provides that final payment will not be made until two conditions are met: (1) The Engineer gives a written notice of final acceptance after determining by inspection that "all construction provided for and contemplated by the contract is found completed to his satisfaction," and (2) The Engineer prepares a final estimate of the amount due after considering all deductions and claims.

In determining whether the retainage funds...