OPINION OF THE COURT
WATSON, J.
On June 30, 1927, the board of direct-tors of the Elephant Butte irrigation district met to “estimate and determine the amount of funds required to meet the obligations and needs of the district for the ensuing-year.” Laws 1921, c. 39, § 3. The estimates made would require a tax upon the lands within the district subject thereto, amounting to $1.70 per acre for item 3 of the section just cited (“the portion of the expenses of operation and maintenance of the irrigation and'drainage systems to be collected by tax assessment and levy * * *”), and a further tax of 15 cents per acre for item 4 of that section (“current and miscellaneous expenses, other than as above specified, and necessary to defray the expenses of maintaining the organization of the district and carrying out the purposes of this act”), which latter item the statute provides “shall not aggregate more than 20 cents per acre.”
Numerous owners of lands within the district, alleging the invalidity of various items in the budget, and that, if those items were excluded, available funds would be sufficient for the purposes of the district for the ensuing year (1928), sought to enjoin the proposed tax levies. Plaintiffs have appealed from the overruling of the greater portion of their contentions.
The principal controversy grows out of the fact that the board included, on the “obligations and needs” side of “item 3,” called “operation and maintenance fund,” the sum of $205,000, estimated by it as the cost of operating and maintaining- the irrigation and drainage system in 1928; it being the contention of appellants that such cost was not an “obligation” or “need” of the district for 1928; that contention being based upon the claim that the district would not be called upon actually to pay out the money until 1929.
Under a contract made in 1918 between the district, acting through its board of directors, and the United States government, acting through the Secretary of the Interior, the government undertook to continue the operation of the Rio Grande reclamation project, “subject, however, to appropriation for such maintenance and operation work being made by Congress,” and the district agreed to repay, annually, to the government, as rent, such part of the cost of operation and maintenance incurred by the government as should be apportioned to the New Mexico portion of the lands served, plus 10 per cent. The date for the pa)'ment of such rent is specified both in the contract and in the Reclamation Extension Act of August 13, 1914 (38 Stat. 686, § 6), as a date to be fixed by the Secretary of the Interior. The $205,000, to which objection is made, is the board’s estimate of the amount of such rent for the year 1928.
In March, 1927, pursuant to a practice of some years’ standing, the Secretary of the Interior promulgated his “public notice,” estimating the amount of the rental for 1927 at $195,000, and requiring that the same be paid in two equal installments, March 1, 1928, and September 1, 1928, with three months’ grace as to each payment. Up to the time this suit was commenced no “public qotice” had been given by the Secretary as to the rental for 1928.
Upon these facts appellants have contended that the amount estimated to cover the cost to be incurred in 1928 had not become “obligations and needs” of the district, and was not a “payment to accrue” during said year. The statute of New Mexico under which the board derives its powers is chapter 20 of the Laws of 1919, as amended by chapter 39 of the Laws of 1921. Appellants contend that the proposed levy is violative of that statute. The board contends that its estimate was, if not required by the statute, at least within the discretionary powers given it by the statute, and, to sustain the exercise of such discretion, points to this finding of the trial court:
“That the board of directors entered into negotiations with the Secretary of the Interior with the view of entering into a new contract for the repayment to the United States of the construction charges due the United States, which contract would, in the opinion of the board, be advantageous to the laud owners of the district; that the board is advised and believes that under the law in order to enter into a new construction contract that the district must be in the financial position to pay the operation and maintenance costs in advance.”
Appellants rely particularly upon two statutory expressions. The one is found in section 21 as amended, and requires that the board meet annually and “estimate and determine the amount of funds required to meet the obligations and needs of the district for the ensuing year.” The other is found in section 13, as amended, and makes it “the duty of the board of directors to' include as part of any levy or assessment now provided for by law, an amount sufficient to meet each year all payments accruing under the terms of any such contract.” Both are of general application to all estimates and tax levies.
As we understand appellants’ contention, it is that these expressions are so restrictive as to exclude from the board’s estimates and from the resulting tax levies any amount, unless the board is prepared to show that it will actually and surely be required for disbursement during that year. In view of the court’s finding, appellants are also driven to the position that the opinion of the board that such disbursement will probably be required is not a sufficient showing. If such was the intention of the Legislature, it results that, whenever owners of lands within the district see fit to challenge estimates of the board by injunction suit, the burden will rest upon the board to show each item as a positive “need” or an unescapable “obligation.” We do not think that this district could operate practically or successfully under any such land owner surveillance or court dictation, and we therefore greatly doubt, at the outset, the intention of the Legislature to impose it.
In construing this statute, in view of the. large discretionary powers conferred upon the board (Laws 1921, c. 39, § 2) and without which the corporation could not successfully operate, we do not think we are bound to that strictness which applies when determining the powers of municipal corporations. See Crawford v. Imperial Irrigation Dist., 200 Cal. 318, 253 P. 726.
The amount in question is clearly an “obligation” and a “need” for 1928 in the sense that it is on account of and growing out of the necessary operations of 1928. That meaning is present in the statutory expression. To exclude it is strict construction. It is a payment which, under the terms of the contract, may or may not “accrue” in 1928. In the opinion of the board, entertained when it made the estimate, if it was to succeed in its important negotiations for extension of time for repayment of construction costs, it must be prepared to have repayment of 1928 operation expense accrue during 1928.
If it be thought that the foregoing statutory expressions are so definite, considered apart from others and from surrounding circumstances, that a reasonably liberal construction is not sufficient to resolve the question in appellees’ favor, there are other aids to construction to which appellees call attention and which have convinced us.
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OPINION OF THE COURT
WATSON, J.
On June 30, 1927, the board of direct-tors of the Elephant Butte irrigation district met to “estimate and determine the amount of funds required to meet the obligations and needs of the district for the ensuing-year.” Laws 1921, c. 39, § 3. The estimates made would require a tax upon the lands within the district subject thereto, amounting to $1.70 per acre for item 3 of the section just cited (“the portion of the expenses of operation and maintenance of the irrigation and'drainage systems to be collected by tax assessment and levy * * *”), and a further tax of 15 cents per acre for item 4 of that section (“current and miscellaneous expenses, other than as above specified, and necessary to defray the expenses of maintaining the organization of the district and carrying out the purposes of this act”), which latter item the statute provides “shall not aggregate more than 20 cents per acre.”
Numerous owners of lands within the district, alleging the invalidity of various items in the budget, and that, if those items were excluded, available funds would be sufficient for the purposes of the district for the ensuing year (1928), sought to enjoin the proposed tax levies. Plaintiffs have appealed from the overruling of the greater portion of their contentions.
The principal controversy grows out of the fact that the board included, on the “obligations and needs” side of “item 3,” called “operation and maintenance fund,” the sum of $205,000, estimated by it as the cost of operating and maintaining- the irrigation and drainage system in 1928; it being the contention of appellants that such cost was not an “obligation” or “need” of the district for 1928; that contention being based upon the claim that the district would not be called upon actually to pay out the money until 1929.
Under a contract made in 1918 between the district, acting through its board of directors, and the United States government, acting through the Secretary of the Interior, the government undertook to continue the operation of the Rio Grande reclamation project, “subject, however, to appropriation for such maintenance and operation work being made by Congress,” and the district agreed to repay, annually, to the government, as rent, such part of the cost of operation and maintenance incurred by the government as should be apportioned to the New Mexico portion of the lands served, plus 10 per cent. The date for the pa)'ment of such rent is specified both in the contract and in the Reclamation Extension Act of August 13, 1914 (38 Stat. 686, § 6), as a date to be fixed by the Secretary of the Interior. The $205,000, to which objection is made, is the board’s estimate of the amount of such rent for the year 1928.
In March, 1927, pursuant to a practice of some years’ standing, the Secretary of the Interior promulgated his “public notice,” estimating the amount of the rental for 1927 at $195,000, and requiring that the same be paid in two equal installments, March 1, 1928, and September 1, 1928, with three months’ grace as to each payment. Up to the time this suit was commenced no “public qotice” had been given by the Secretary as to the rental for 1928.
Upon these facts appellants have contended that the amount estimated to cover the cost to be incurred in 1928 had not become “obligations and needs” of the district, and was not a “payment to accrue” during said year. The statute of New Mexico under which the board derives its powers is chapter 20 of the Laws of 1919, as amended by chapter 39 of the Laws of 1921. Appellants contend that the proposed levy is violative of that statute. The board contends that its estimate was, if not required by the statute, at least within the discretionary powers given it by the statute, and, to sustain the exercise of such discretion, points to this finding of the trial court:
“That the board of directors entered into negotiations with the Secretary of the Interior with the view of entering into a new contract for the repayment to the United States of the construction charges due the United States, which contract would, in the opinion of the board, be advantageous to the laud owners of the district; that the board is advised and believes that under the law in order to enter into a new construction contract that the district must be in the financial position to pay the operation and maintenance costs in advance.”
Appellants rely particularly upon two statutory expressions. The one is found in section 21 as amended, and requires that the board meet annually and “estimate and determine the amount of funds required to meet the obligations and needs of the district for the ensuing year.” The other is found in section 13, as amended, and makes it “the duty of the board of directors to' include as part of any levy or assessment now provided for by law, an amount sufficient to meet each year all payments accruing under the terms of any such contract.” Both are of general application to all estimates and tax levies.
As we understand appellants’ contention, it is that these expressions are so restrictive as to exclude from the board’s estimates and from the resulting tax levies any amount, unless the board is prepared to show that it will actually and surely be required for disbursement during that year. In view of the court’s finding, appellants are also driven to the position that the opinion of the board that such disbursement will probably be required is not a sufficient showing. If such was the intention of the Legislature, it results that, whenever owners of lands within the district see fit to challenge estimates of the board by injunction suit, the burden will rest upon the board to show each item as a positive “need” or an unescapable “obligation.” We do not think that this district could operate practically or successfully under any such land owner surveillance or court dictation, and we therefore greatly doubt, at the outset, the intention of the Legislature to impose it.
In construing this statute, in view of the. large discretionary powers conferred upon the board (Laws 1921, c. 39, § 2) and without which the corporation could not successfully operate, we do not think we are bound to that strictness which applies when determining the powers of municipal corporations. See Crawford v. Imperial Irrigation Dist., 200 Cal. 318, 253 P. 726.
The amount in question is clearly an “obligation” and a “need” for 1928 in the sense that it is on account of and growing out of the necessary operations of 1928. That meaning is present in the statutory expression. To exclude it is strict construction. It is a payment which, under the terms of the contract, may or may not “accrue” in 1928. In the opinion of the board, entertained when it made the estimate, if it was to succeed in its important negotiations for extension of time for repayment of construction costs, it must be prepared to have repayment of 1928 operation expense accrue during 1928.
If it be thought that the foregoing statutory expressions are so definite, considered apart from others and from surrounding circumstances, that a reasonably liberal construction is not sufficient to resolve the question in appellees’ favor, there are other aids to construction to which appellees call attention and which have convinced us.
The expression “obligations and needs of the district for the ensuing year” has, as above mentioned, general application to all estimates. When stating specifically what is to be included in item 3, the expression is varied. The board is required to include therein its estimate “for such operation and maintenance costs for the ensuing year.” Again, in the same section, certain credits and exemptions are required to be taken into consideration by the board “in determining the amount of money required to meet obligations, maintenance, operating and current: expenses * * * for the ensuing year.” Certainly the questioned estimate comes within these expressions.
Time of payment is a matter not expressly directed by the Legislature. It could not control it, since it had no authority over Congress or the Reclamation Service. It necessarily left it to the board to make the best terms it could, seeing to it that it was clothed with the powers necessary to meet such requirements as were reasonably to be anticipated.
Section 21, which we have been considering, permits the board, under certain conditions, to exempt lands within the district from taxation. At the meeting at which it is to make its estimates, such exemptions are to be claimed, and, in so far as allowed, to be taken into consideration. The date of the meeting is to be fixed by standing order of the board not later than July 1. Clearly the exemptions to be taken into consideration by the board at its meeting of June 30, 1927, were because of the situation of those lands in 1928. They were to be exempted from the' 1927 tax roll. What connection is there between exemptions for 1928 and operating expenses for 1927? If only 1927 expense and cost can go on the 1927 tax roll, why should 1928 exemptions be considered in estimating the amount necessary to be levied?
Another consideration is even more convincing. In 1920 and 1921 the costs of operation were actually repaid to the government currently. There is no finding to this effect, but the fact appears of record, is called to our attention by appellees, and not disputed by appellants. It must be, therefore, that the Legislature, in 1919 and 1921, contemplated a system of current payments. The statute must be construed as having authorized the board to place in its 1921 estimate, to be collected as taxes in the latter part of 1921 and in 1922, the costs and expenses of the 1922 operations. No change has occurred in the law, yet it is now claimed that the board may not estimate and levy in 1927 the costs and expenses of 1928 operations. This contention is based upon the evident fact that some time between 1921 and *the present a concession was made by the Reclamation Service, enabling the district to postpone payment. A practice has grown up under which the district has been able to operate without money in hand to meet the expenses; but it is a mere concession — a mere practice. The statute does not contemplate it. The contract does not require it. Neither the Secretary of the Interior nor the board is bound by it, and Congress might at any time render its continuance impossible.
The board has evidently at some time taken advantage of this concession to dispense with the tax levy which the statute contemplated. As the trial court found, it fears longer to rely upon that concession and deems it necessary to be prepared for a withdrawal of it. It merely seeks to restore the former condition, a restoration which became inevitable when the original decision was made, in reliance on the concession, to omit a tax levy for the year. That decision involved an arrearage in operating expense and cost. We do not understand that government operation and maintenance is to be relied upon as a permanent policy. If not, the arrearage must some day develop into a deficit, requiring the levy in one year of the operating costs for two. We cannot doubt the power of the board to restore the situation. It might, perhaps as logically, be contended that it failed in its statutory duty when it made the original decision; but, considering the broad powers and discretion of the board, we think that both decisions are within them.
We conclude, therefore, that it was within the discretion of the board, as a matter of business policy, to determine whether it would pay its operating expenses currently, or whether it would! take advantage of the privilege, which the present policy of the Reclamation Service extends, to lag one year behind. Particularly in this case, whei-e the board deems it reasonably probable that the concession is to be withdrawn, we think the court without power to interfere.
Appellants further object to item 3 of the budget because it includes an estimate of $5,000 for “hydroelectric development” and $5,000 for “defense of water supply.” As we understand, appellants do not question the 'power of the board to make preliminary research and investigation with a view to the ultimate establishment of hydroelectric plants, nor its power to take necessary steps for the protection of its.water supply and rights, as against past or future encroachment. The point made is that expenditures for those purposes are not properly within the purposes expressed in item 3.
Counsel for appellees urge that the words “operation and maintenance” are broad, of an indefinite meaning, and should be liberally construed. They cite Nampa & Meridian Irrigation Dist. v. Bond (D. C.) 283 F. 569; Id. (C. C. A.) 288 F. 541; Id., 268 U. S. 50, 45 S. Ct. 383, 69 L. Ed. 843. That case was different. The question there was whether a certain imposition was for construction or for operation and maintenance. In the case at bar the question is whether these expenditures come within item 3 or item 4. These two items represent two funds authorized by the Legislature, both of which are expense funds. Item 3, however, is strictly limited as (;o its purpose. The money, “when collected, shall be applied to the cost of operating and maintaining of the irrigation and drainage systems.” Item 4 is strictly limited as to the amount. The tax, therefore, may. not exceed 20 cents per acre. If this were a mere question of accounting or of bookkeeping, it would be of little importance; but it is not. It seems plain that item 4 is .the legislative provision for expenditures such as these. To allow them to be included in item 3 would be to circumvent the statutory limitation upon the amount of tax which may be levied for such purposes. We think, therefore, that this contention of appellants should have been sustained.
To item 4, the “general fund,” appellants object that on the “obligations and needs” side it includes estimates aggregating $4,900 for unauthorized purposes, and that on the “sources of revenue” side it excludes certain cash on hand. The contention is that, if the former were excluded and the latter included, it would appear that available resources were sufficient for the expenses of the ensuing year from that fund, so that no tax should be levied. As to the $4,900 of estimates, the trial court ruled in appellants’ favor, and that matter is not before us.
The cash which the board excluded from the “sources of revenue” side is $10,000 which had been set aside by the board in 1926 as a building fund, and some $8,200 turned over to the district from the permanent reservoirs for irrigation purposes and the improvement of Rio Grande trust funds, pursuant to chapter 57 of the Laws of 1905. We do not doubt the power of the board to establish a building fund. Laws 1921, c. 39, § 2.
The purposes expressed in chapter 57, supra, are. generally to pay the expense of organizing the Elephant Butte Water Users’ Association and of making a contract with tbe United States for the construction of the Elephant Butte dam and reservoir. These purposes have long since been accomplished. A further purpose is the improviment of the Rio Grande in New Mexico and the increasing of its surface flow. If this sum was properly payable to the district for such purpose, it would seem that it would be thé duty of the district to reserve and use it for that purpose, and that it would not be properly included as a source of revenue available for general current expenses. So we find no error in the judgment, except with respect to the two estimates aggregating $10,000 improperly included in item 3, but properly to have been included in item 4, subject to the statutory limitation as to the amount of levy. This error requires a reversal of the judgment, but does not require a new trial.
The cause will be remanded, with direction to the district court to modify the judgment in conformity with the views herein expressed.
It is so ordered.
BICKLEY, J., concurs.