Untitled Texas Attorney General Opinion ( 1946 )

HEA~JTORNEY GENERAL
OFTEXAS
GROVER SRDDRRS
A=rrORNncY GENEHAI.
Honorable John R. Shook
Criminal District Attorney
Bexar County
San Antonio, Texas
Dear Sir: Opinion NO. O-7054
Re: Authorltg of county to issue
time warrants for maintenance
and operating expenses of county
hospital.
We have your letter of July 6, 1946, in which you
request an opinion from this department on the following
question in behalf of the Bexar County Commissioners' Court:
"AZ to whether or not said Court is empowered
under.the law to authorize the issuance of General Fund
Time Warrants for the purpose of maintaining and operat-
ing the Robert B. Green Memorial Hospital, San Antonio,
Texas."
Attached to your opinion request is a letter from
the County Judge of Bexar County, setting forth the background
of this reouezt, and from which letter we quote in part as
followz: - -
"The (hospital) appropriation as made in the 1946
Bexar County budget will practically be exhausted In its
entirety not later than September 15th next. Unless it
will be possible for the Commissioners' Court to provide
funds by and through the issuance of General Fund Time
Warrants for its continued operation and maintenance
after said date to December 31zt, the end of the fiscal
year, the Board of Managers of said Hospital will be
faced with no alternative other than to close this
institution."
In answering your question, we will consider first
the general power of a county to issue time warrants.
Prior to 1903 there was no provision in our statutes
for the issuance of bonds, and the courts held that counties
had the implied authority to issue time warrants for the con-
struction of permanent improvements. Stratton v. Commissioners'
Honorable John R. Shook, page 2 O-7054
Court of Kinney County, 137 S.W. 1170; Cowan et al v. Dupree
et al, 139 S.W. 887; Commissioners' Court of Floyd County et
al v. Nichols et al, 142 S.W. 37; Allen v. Abernathy et al,
151 S.W. 348.
Some time after these decisions the Legislature
authorized the issuance of bonds for courthouses, jails,
public roads, etc.
Later, in the case of Lazater v. Lopez, 217 S.W.
373, the Supreme Court held that it was within the discretion
of the Commissioners' Court whether they issued time warrants
or bonds for the construction of permanent improvements. In
this opinion Judge Phillips deals at length with the consti-
tutional and legislative enactments which gave the commiz-
zioners' courts authority to issue both warrants and bonds.
In the more recent case of Adams v. McGill, 146 S.W.
(2d) 332, in which this department intervened, the court held
that under .a statute authorizing a county to provide for an-
nual exhibitions of horticultural and agricultural products,
the county had the implied power to issue time warrants pay-
able over a period of years for improvements to livestock and
agricultural buildings.
The general rule, as stated in Adams v. McGill
(supra), that the county may issue time~warrantz in payment
for improvements which it is expressly authorized to con-
struct, is, we believe, extended by the Su reme Court in the
case of Bexar County v. Mann, 157 S.W. (2dP 134, to authorize
the issuance of time warrants In payment for debts created by
a county in accomplishment of any object for which it is
authorized by law to expend money.
In the Bexar County case (supra) the county had en-
tered into a contract to purchase voting machines and had lz-
sued bonds therefor chargeable against the general~fund, pur-
suant to Art. 2997a, V.A.C.S., which authorized such purchase
and such bonds but which statute did not expressly provide
that such bonds were to be charged against the county general
fund. This department, the respondent in that case, conten-
ded that the constitutional twenty-five-cent general fund tax
should be applied only to the payment of the ordinary or cur-
rent operating expense of a county and that such expense does
not embrace or contemplate the payment of bonds or time war-
rants and the interest thereon, being confined to the payment
of officers' salaries, purchasing of supplies, caring for
paupers and providing for the actual and necessary day-to-day
expenses. We contended that if a county can appropriate part
of this tax for a series of future years, it can pledge all
of it and thus deprive itself of the revenues to pay current
Honorable John R. Shook, page 3 O-7054
operating expenses, and that pledging the current Income for
the payment of bonds or warrants and interest theron beyond
the current year would be subversive of the structure of the
county government itself. Judge Critz overruled our conten-.
tion in that case, holding:
"In our opinion, our decisions have already settled
it as the law of this State that the general fund tax of
twenty-five cents, authorized to be levied by counties
for 'county purposes' by Section 9 of Article VIII of our
Constitution, can be pledged for the payment of obliga-
tions or bonds, the maturities of which extend beyond the
current fiscal year for which said tax was levied. It
follows that the statute under consideration here, which
authorizes bonds to be issued payable over a series of
years out of a county's general fund tax, does not violate
the above constitutional provision. Cazz County v. Wil-
barger County,,25 Tex. Civ. App. 52, 60 S.W. 988, writ
refused; Hidalgo County v. Haney, Tex. Civ. App., 67 S.W.
(2a) 409.
II
.
. . The only question here involved is the power
of the commissioners' court to charge the twenty-five cents
tax authorized by Section 9 of Article VIII of our Con-
ztltution with obligations payable beyond the current year
for which such ,taxis levied; and as to that power no
difference can exist between warrants and bonds running
beyond the current year. The only material difference
between warrants and bonds is that warrants are not ne-
gotiable, while bonds are.
"In Hidalgo County v. Haney, zupra, the San Antonio
Court of Civil Appeals had before it for decision the
validity of $30,000 in county warrants payable out of the
twenty-five cents general fund of the county, running over
a number of gears, issued by Hldalgo County for tick
eradication purposes by authority of Section 5 of H.B.
;0,,~77, Ch. 53, Gen. Laws, 41st Leg. 1929, 1st called
p. 128, Article 1525o, Section 5, Vernon's Penal
Code;'lg36. We shall not attempt a full discussion of
this opinion. It is sufficient to zag that it upholds
the power of the Legislature to provide for the issuance
of the warrants just described.
(I
. . . When we approach this case as an original
queztlon, we are una'bleto find any words in the consti-
tutional provizion involved which limit the power of a
county to levy taxes thereunder for the current year only.
The constitutional provision Itself simply llmitz the
power to 'county purposes'.
Honorable John R. Shook, page 4 O-7054
Nothing is said about the current year, and certainly the
declzionz of this State have declined to read that provision
into it. The only provision in our Constitution which limits
the power to levy the twenty-five cents tax authorized by
the constitutional provision under discussion for debts pay-
able beyond the current year, is Section 7 of Article XI,
which provides: 'But no debt for any purpose shall ever be
incurred in any manner by any. . . . county unless provision
IS made, at the time of creating the same, for levying and
collecting a sufficient tax to pa the interest thereon and
provide at least two per cent (2%Y as a sinking fund.' This
last-mentioned constitutional provision has been complied
with in the order authorizing the issuance of these bonds."
We believe it is therefore established by the a-
bove decision that a county has the authority not only to
issue time warrants for permanent improvements but also to
pledge ltz general fund for the issuance of time warrants to
pay for any pmllc purpose of the county authorized by law,
provided such expenditure does not come or fall under any
purpose for which a special fund has been provided, such as
permanent improvements.'
In 1913 the Legislature of Texas authorized the
establishment of county hospitals and provided for the elec-
tion for the issuance of bonds for the cost of the erection
of same, and provided for their operation and maintenance
from general fund taxes. This act has been brought forward
in Vernon's Annotated Civil Statutes as Articles 4478 to 4495
and Article 4437a.
In the case of Seydler et al v. Border et al, 150
S.W. (2d 72, the Galveston Court of Civil Appeals held that
Article 478 was constitutional and that the same authorized
counties to issue bonds for the construction and equipment
of county hospitals. The court also held that the issuance
of bonds for the construction and maintenance of hospitals by
county units for the care of the sick constituted "public
purpose" as distinguished from a private purpose.
It is our understanding that the Robert B. Green
Hospital Is a county hospital and has been duly and legally
established under the authority of Articles 4478 to 4495,
V.A.C.S.
Accordingly, we answer your question in the affirm-
ative, holding that the Commissioners' Court of Bexar County
has, subject to the express restrictions imposed by the
Constitution and General Laws, power to issue time warrants
for the payment of expenses Incurred in the operation and
- -.-.
,
Honorable John R. Shook, page 5 Q-7054
maintenance of the county hospital, the same being 'a county
public purpose", pledging therefore its general fund, provided
that the applicable regulations relating to the issuance of
such warrants are strictly observed.
We do not believe that our previous opinion No.
O-6819, to which you refer in your letter, attempts to answer
the specU'ic question raised herein, but if any part of such
previous opinion 1s Inconsistent with the above answer, than
such part of opinion No. O-6819 Is expressly overruled.
In your letter from which we quote as follows, you
make a further request:
ow , in the event you hold that time warrants may
"Ii
be Issued under the circumstances set out In Judge Ander-
son's letter, then will you answer for us the following
questions:
"1 . Can such time warrants be issued after a budget
has been formulated and approved by the Commissioners'
Court, In which said budget the Robert B. Green Hospital
and the Tuberculosis Control Board had had budgeted for
their use the sum of 194 on the $100 valuation when the
maximum amount provided for such Institutions by the
Hospital Law is 20# on the $100 valuation?
"2 . Can such time warrants be Issued when the is-
suance of same, the expenditure of such money, Fncreases
the total amount of the budget for the year 1946 by the
sum sought to be issued?
“3 . Can the budget at this time be amended so as
to provide additional funds for the Robert B. Green Hos-
pital when such amendment would increase the amount spent
during the calendar year 1946 in an amount of $75,000
over and above the amount of cash on hand at the beginning
of the year, and the anticipated revenues for the current
year, as set up in the 1946 budget?
'Because of the urgent nature of Judge Anderson's
letter, we would appreciate your expediting the delivery
of your opln%on as much as possible."
Your first two questions apparently assume that the
1946 budget controls the issuance of time warrants; in other
words, that the 1946 budget must have made provision for the
issuance In 1946 of time warrants In order for such warrants
to be valid.
c
Honorable John R. Shook, page 6 O-7054
We believe the correct view is that the budget is
prepared and adopted as a basis for levy for taxes and in
contemplation of expendrtures for a particular fiscal year,
such expenditures being based on such taxes. Thus any ex-
penditure of funds pursuant to such budget would involve
only...those
obligations to be paid during the particular
', fiscal year covered by such budget, and such expenditure
woulCrbe classified as a current expenditure.
The issuance of time warrants is one of the methods
authorized for the payment of-a debt against a county, and
the term "debt" refers to obligations to be satisfied out of
future revenuesderived from tax levies, as distinct from
obligations to be satisfied out of current revenues.
In view of the fact that the budget contemplates
only"expenditures out of current revenues for the current
fiscal year, and since time warrants when issued constitute
a debt, and therefore involve only future levies to be ae-
rived from taxation, then the matter of the issuance of time
warrants during a current fiscal year would have no relation
to the current year's budget. Of course, adequate provision
must be made in the budget for future years, and a tax levy
for the purpose of providing funds for the payment of such
debt service must be made.
Your third question is answered in the negative.
Certainly the budget cannot provide for the expenditure of
more funds than exist in the amount of cash on hand at the
beginning of the year plus the anticipated revenues for the
current year. It is to be noted, however, that the issuance
of time warrants In 1946 will not operate to amend the 1946
budget, as pointed out in our above answer to your first two
questions.
Trusting that we have fully answered all your
questions we are
Very truly yours
ATTORNEY GENERAL OF TEXAS
WNB:fb:wc
By s/W. N. Blanton
APPROVED AUG 12, 1946 W . N . Blanton' iz!
s/Carlos C. Ashley Assiitant
*FIRST ASSISTANT
ATTORNEY GENERAL
Approved Opinion Committee By s/BWB Chairman