Untitled Texas Attorney General Opinion ( 2004 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
October 21,2004
The Honorable Mike Stafford Opinion No. GA-0262
Harris County Attorney
1019 Congress, 15th Floor Re: Deposit and administration of crime control
Houston, Texas 77002 and prevention district’s funds under chapter 363
of the Local Government Code (RQ-0219-GA)
Dear Mr. Stafford:
On behalf of City of South Houston councilman Al Thiel, you ask three questions about the
deposit and administration of crime control and prevention district (“district”) funds under chapter
363 of the Local Government Code.’
In a resolution dated October 7,2003, the City of South Houston directed the city’s crime
control and prevention district to deposit “all funds received by it in the City’s treasury by depositing
the same to the City’s accounts in the Moody National Bank.” CITY OF SOUTH HOUSTON, TEX.,
Resolution No. 2003-l 5R (Oct. 7,2003). Noting that the crime control and prevention district had
“deposited its funds in an account in the Laredo National Bank and not in the City Treasury,” the city
resolved “[tlhat the Crime Control and Prevention District comply with Section 363.208 [of the
Local Government Code] and take immediate steps to deposit all of its funds, including such funds
that may be received in the future, in the City Treasury by depositing the same in the City’s pooled
cash account with Moody National Bank and such funds to be withdrawn only for expenditures
authorized in the District’s budget.” Id.
Given these circumstances, you ask first whether, under section 363.208(a), the political
subdivision that created a district (the “creating political subdivision”) may “deposit district funds
in a ‘pooled cash account.“’ Request Letter, supra note 1, at 1; see TEX. Lot. GOV’T CODE ANN.
5 363.208 (Vernon 1999). You ask second whether the creating political subdivision may exercise
any control over district funds, under sections 363.153 and 363.208(a). See Request Letter, supra
note 1, at 1; TEX. LOC. GOV’T CODE ANN. $5 363.153, .208(a) (Vernon 1999). And you ask third
whether, consistently with section 363.205(e), the creating political subdivision’s governing body
may amend a proposed budget, submitted by the district board, that the political subdivision rejected
without “the involvement and approval of’ the district board. Memorandum Brief attached to
Request Letter, supra note 1, at 4; see TEX. Lot. GOV’T CODE ANN. 5 363.205(e) (Vernon 1999).
‘See Letter fromHonorable Mike Stafford, Harris County Attorney, to Honorable Greg Abbott, Texas Attorney
General (May 3,2004) (on file with the Opinion Committee, also availableof http://www.oag.state.tx.us) [hereinafier
Request Letter].
The Honorable Mike Stafford - Page 2 (GA-0262)
Chapter 363, the Crime Control and Prevention District Act, see TEX. LoC. GOV’T CODE
ANN. 5 363.001 (Vernon 1999), authorizes certain political subdivisions-a “county with a
population of more than 130,000” or a “municipality that is partially or wholly located in a county
with a population of more than 5,000,” id. $ 363.051(a) (Vernon Supp. 2004hto create crime
control and prevention districts. A majority of the creating political subdivision’s governing body
must propose the creation of a district, and “a majority of the qualified voters of the proposed district
voting at an election called and held for that purpose” must approve the governing body’s proposal
for a district to be created. Id. $5 363.051(a), ,053 (Vernon 1999 & Supp. 2004). At the same
election, the voters must approve the collection ofa sales tax to fund the district. See id. $8 363.053,
.055(a), .058 (Vernon 1999 & Supp. 2004).
Once approved by the electorate, a board of seven district residents, whom the creating
political subdivision’s governing body has appointed, governs the district. See id. 5 363.101(a)
(VemonSupp. 2004);seealso id. 5s 363.052(a), .I015 (Vernon 1999 & Supp. 2004). District funds
may be used to “finance all the costs of a crime control and prevention program, including the costs
for personnel, administration, expansion, and capital expenditures.” Id. 5 363.15 l(a) (Vernon 1999).
A crime control and prevention program may include
. police and law enforcement related programs, such as “a multijurisdiction
crime analysis center,” “home security inspection programs,” and “a drug and
chemical disposal center,” id. 5 363.151(b)(l), (5), (10);
. community-related crime prevention strategies, such as “block watch
programs” and “senior citizen anticrime networks,” id. 5 363.15 l(c)(l), (5);
. specific treatment and prevention programs, such as “work incentive
programs, ” “street gang intervention centers,” and “additional parole
officers,” id. $363,151(d)(4), (9), (27);
. court and prosecution services, such as “community arbitration and mediation
centers” and “a criminal court administrator,” id. 3 363.15 l(e)(2), (6); and
. “additional jails, jailers, guards, and other necessary staff,” id. 9 363.151(f).
In general, under section 363.153, the district board “shall manage, control, and administer”
district funds, although the creating subdivision’s governing body is required to review the district’s
budget, as we will discuss below. See id. 5 363.153; infra at 3 (discussing the creating political
subdivision’s governing body’s authority to approve the budget). Section 363.203 requires a district
board to propose an annual budget and, under section 363.204, to hold a public hearing on the
proposed annual budget. See TEX. Lot. GOV’T CODE ANN. $5 363.203(a), .204(a) (Vernon 1999).
The board must adopt a budget “[nlot later than the 80th day before the date each fiscal year begins”
and must submit the adopted budget to the creating political subdivision’s governing body “[nlot
later than the 10th day after the date the budget is adopted.” Id. § 363.204(d)-(e). Then, under
The Honorable Mike Stafford - Page 3 (GA-0262)
section 363.205, the creating political subdivision’s governing body must, “[n]ot later than the 45th
day before the date each fiscal year begins, hold a public hearing on the budget adopted by the
board and submitted to the governing body.” Id. 5 363.205(a). Section 363.205 articulates in further
detail the subsequent budget approval process:
(d) Not later than the 30th day before the date the fiscal year
begins, the governing body shall approve or reject the budget
submitted by the board. The governing body may not amend the
budget.
(e) If the governing body rejects the budget submitted by the
board, the governing body and fhe board shall meet and together
amend and approve the budget before the beginning ofthe fiscal year.
(0 The budget may be amended after the beginning of the
fiscal year on approval by the board and the governing body.
Id. 5 363.205(d)-(f). Once adopted, the district may spend its money“only for an expense included
in the annual budget or an amendment to it.” Id. 5 363.206(a) (Vernon Supp. 2004).
Section 363.208 requires the board to “deposit district funds in a special account in the
treasury of the” creating political subdivision. Id. 5 363.208(a) (Vernon 1999). “District funds,”
other than those invested consistently with statute, “shall be deposited as received in the treasury of
the political subdivision and must remain on deposit.” Id. 5 363.208(b).
You ask first whether, consistently wifh section 363.208, a creating political subdivision may
deposit district funds in a commingled “pooled cash account.” Request Letter, supra note 1, at 1.
You have indicated that you use the term “pooled cash account,” which is not statutorily defined, to
refer to the city’s general revenue fund?
Section 363.208 requires the district board, not the creating political subdivision, to deposit
its funds in a special account in the creating political subdivision’s treasury. See TEX. LOC. GOV’T
CODE ANN. 5 363.208(a) (Vernon 1999). We consequently assume you to ask whether a creating
political subdivision may order a district to deposit district funds in the subdivision’s general revenue
fund.
Chapter 363 does not define the phrase “special account.” See id. 9 363.001. A court
construes an undefined statutory term “according to common usage,” unless the term has
“acquired a technical or particular meaning,” in which case the term must be construed consistently
with the technical or particular meaning. TEX. GOV’T CODE ANN. § 311.011 (Vernon 1998). The
phrase “special account” refers, in the world of banking, to an account established for a particular
purpose that the bank keeps separate from its general funds, so that monies in the fund are disbursed
in kind. See Happy Cattle Feeders, Inc. v. First Nat’1 Bank in Canyon, 618 S.W.2d 424,426-27
‘see Telephone conversation with T. Scott Petty, Assistant Harris County Attorney (July 16,2004).
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(Tex. Civ. App.-Amarillo 1981, writ ref d n.r.e.); HBL Indus. Y. Chase Manhattan Bank, 45 B.R.
865, 868 (S.D.N.Y. 1985); see also State Y. Howard, 908 S.W.2d 602, 604 (Tex. App.-Amarillo
1995, no writ) (stating that courts are obligated to construe “words or phrases having technical or
particular meaning, such as terms of art or science, in accordance with their technical meaning”).
In 1970 the Texas Supreme Court distinguished between a special account, or “special deposit,” and
a general account, or “general deposit”:
When money or its equivalent is deposited in a bank without
any special agreement, the law implies that it is to be mingled with
the other funds of the bank, the relation of debtor and creditor is
created between the bank and the depositor, and the deposit is
general. . When, on the other hand, money or its equivalent is so
deposited with an accompanying agreement that the identical thing
deposited shall be returned, or that the same shall be paid out for a
specific purpose, the relation thus created is a special deposit.
Hudnall Y. Tyler Bank & Trust Co., 458 S.W.2d 183, 186 (Tex. 1970) (quoting McBride v. Amer.
Ry. &Lighting Co., 127 SW. 229 (Tex. Civ. App. 1910, no writ)); accord Lee Y. Gutierrez, 876
S.W.2d 382,385 (Tex. App.-Austin 1994, writ denied) (quoting Hudnall). According to the court,
a depositor who gives a bank “the right to commingle his deposit with other funds owned by the
bank creates only a general deposit.” Hudnall, 458 S.W.2d at 186 (citing Security Nat? Bank
Savings & Trust Co. y. Moberly, 101 S.W.2d 33 (MO. 1936)).
By statute, special accounts for county funds are to be kept separate from a county’s general
revenue funds. Section 113.021(b) of the Local Government Code, pertaining to the duties of a
county treasurer, directs the treasurer to deposit “fees, commissions, funds, and other” county funds
collected by a county officer in a special fund in the county depository. TEX. Lot. GOV’T CODE
ANN. 9 113.021(a)-(b) (Vernon 1999). Money deposited in such a “special fund account shall be
kept separate from other treasury funds.” State v. $50,600.&I, 800 S.W.2d 872,881 (Tex. App.-San
Antonio 1990, writ denied). Similarly, although recognizances, bail bonds, fines, forfeitures,
judgments, jury fees, and other receivables collected under chapter 103 of the Code of Criminal
Procedure are to be deposited into the county treasury, the money is to be deposited “in a special
fund for the [local] community supervision and corrections department.” TEX. CODE GRIM.
PROC. ANN. art. 103.004(a),(d) (V emon Supp. 2004). We have not found a similar express directive
for municipal funds.
Previous opinions of this office also suggest that a special account typically is kept separate
from general accounts. Attorney General Opinion DM-398, for example, addressed whether a tax
assessor-collector may deposit the dealer’s motor vehicle inventory escrow account in a special
account. See Tex. Att’y Gen. Gp. No. DM-398 (1996) at 1. Finding the requisite statutory authority,
the opinion states that the assessor-collector may “separate these funds [from other county funds]
in a special account.” Id. at 2. Attorney General Letter Opinion 92-7 similarly concludes that
records management and preservation fees should be deposited in a special account, separate from
a county’s general revenue funds, to avoid “a commingling of funds.” Tex. Att’y Gen. LO-92-7,
at 2; see also Tex. Att’y Gen. Gp. No. JM-530 (1986) at 6-7 (distinguishing between a general fund
and a special fund).
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We accordingly conclude, to answer your first question, that district funds may not be placed
in the creating political subdivision’s general revenue mnd. Commingling district funds with other
City funds is not permitted, even assuming that the City of South Houston’s records completely
account for the use of district funds separately from other funds.3 See Tex. Att’y Gen. LO-92-7,
at 2 (indicating that a special fund requirement avoids the commingling of funds). While the funds
must be deposited in the subdivision’s depository, the funds must be deposited in a special account
separate from the general revenue fund.
YouasknextwhetherLocalGovemmentCodesections363.153 and363.208(a)conflictwith
respect to the amount of control the creating political subdivision exercises over district funds. See
Request Letter, supva note 1, at 1. Section 363.153 provides a district board with authority to
“manage, control, and administer district funds,” except to the extent the board must work with the
creating political subdivision’s governing body on the budget. TEX. Lot. GOV’T CODE ANN.
5 363.153 (Vernon 1999). Section 363.208(a), as we have just made clear, requires the district to
deposit its funds in a special account in the creating political subdivision’s depository. See id.
5 363.208(a); see supra at 3.
To avery limited extent, section 363.208(a) plainlyrestricts a district board’s broad authority
under section 363.153 to “manage, control, and administer district funds.” Id. 5 363.153 (Vernon
1999). Under section 363.208, a district board is not free to deposit the funds in an account or bank
of its choosing, but must instead comply with section 363.208(a). Where a general statute conflicts
irreconcilably with a special provision, so that both cannot be fully effectuated, “the special .
provision prevails as an exception to the general provision, unless the general provision is the later
enactment.” TEX. GOV’T CODE ANN. 4 311.026 (Vernon 1998). Here, section 363.208 is a special
statute relating only to the choice of a depository, while section 363.153 defines a district board’s
authority over district funds generally. In addition, sections 363.153 and 363.208 were enacted
simultaneously in 1989, both being part of a single bill. See Act of May 29, 1989, 71st Leg., R.S.,
ch. 664, 5 1, sets. 5.02,6.10(a), 1989 Tex. Gen. Laws 2181, 2187, 2189.
We accordingly construe section 363.208(a) as a narrow exception to the reach ofthe district
board’s general authority under section 363.153. A court should, if possible, construe statutes to
harmonize with each other. La Sara Grain Co. v. First Nat ‘1Bank of Mercedes, 673 S.W.2d 558,
565 (Tex.1984). In this way, we harmonize the statutes, and both are effectuated. See TEX. GOV’T
CODE ANN. 5 3 11.021(2) (Vernon 1998) (stating that the legislature intends an entire statute to be
effective).
YOU finally ask whether a creating political subdivision’s governing body may amend and
pass the district’s budget without district approval. See Request Letter, sup-a note 1, at 1. You
inform us that your questions concern a budget that the district board had accepted but that the
political subdivision rejected before the fiscal year commenced! Under section 363.205, a
‘See Letter from Thomas F. Lay, City of South Houston Attorney, to Honorable Greg Abbott, Texas Attorney
General, at 1 (Sept. 20,2004) (averring that the City “records each department as a separate account”).
‘See Telephone conversation with T. Scott Petty, Assistant Harris County Attorney (July 21, 2004).
The Honorable Mike Stafford - Page 6 (GA-0262)
subdivision’s governing body must approve or reject the budget submitted by the district board
without amending the budget. See TEX. Lot. GOV’T CODEANN. 5 363.205 (Vernon 1999). Ifthe
governing body rejects the budget, the governing body and the district board must meet and amend
the budget together. See id. 5 363.205(e). The two entities must likewise approve the budget
together before the beginning of the fiscal year. See id.
Consequently, under section 363.205(e)‘s plain language, a creating political subdivision’s
governing body may not amend and pass the district’s budget without district approval.
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SUMMARY
Under section 363.208(a) ofthe Local Government Code, the
funds of a crime control and prevention district (a “district”) must be
placed in a special account, separate from the creating political
subdivision’s general fund, in the creating political subdivision’s
depository. To the extent section 363.208(a) conflicts with section
363.153, which generally requires a board to “manage, control, and
administer district funds,” section 363.208(a) creates a specific
exception to the reach of the district board’s general authority under
section 363.153. Finally, under section 363.205(e)‘s plain language,
a creating political subdivision’s governing body may not amend and
pass the district’s budget without district approval.
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee