Untitled Texas Attorney General Opinion

The Attorney General of Texas
JIM MATTOX August 8,~ 1986
Attorney General
Supreme Oourl Building Eonorable Richard Hmdorf Opinion No. x4-530
P. 0. BOX 12548
Austin, TX. 78711. 2549
Criminal District Attorney
512i4752W1 Anderson County Cowthouse Re: Whether Anderson County may
Telex 9101874.1367 Palestine, Texas i5801 expend surplus money from road bonds
Telecopier 51214750258 and from its workmen’s compensation
account to build a jail
714 Jackson. Suite 700
Dallas. TX. 75202-4506 Dear Mr. Handorf:
2141742.9944
You ask whether Anderson County may spend certain county funds
for the construction of a new jail. Your first question is whether
4824 Alberta Ave.. Suite 150
El Paso, TX. 79905.2793 Anderson County may spend $1.4 million in surplus from an issuance of
915/533-34&l road bonds. You explain that in 1969 the voters of Anderson County
voted to issue $7.30,000 in road bonds pursuant to article 752a,
V.T.C.S.. repealed ‘2:~ Acts 1983, 68th Leg., ch. i88, at 1526. At the
1001 Texas. Suite 700 time of that bond e:lection article 752a provided:
=-mston, TX. 77002-3111
p 223-5888
806 Broadway. Suite 312
Lubbock, TX. 79401.3479 1. The original version of article 752a was adopted in 1926.
8081747.5239
Acts 1926, 39th Leg., ch. 16, at 23. In 1955 the legislature adopted
two separate amended versions of article 752a. Acts 1955, 54th Leg.,
4309 N. Tenth, Suite 8 ch. 113, at 393, and Acts 1955. 54th Leg., ch. 69 at 348. Both
McAllen, TX. 78501.1685 versions appeared :.n Vernon’s Texas Civil Statutes. The version of
5121682.4547
article 752a set Out in the text of this opinion is the version that
appeared in chapter 113. The first paragraph of the other version was
200 Main Plaza, Suite 400 essentially the same except that it did not contain the words “or for
San Antonio, TX. 782052797 any other lawful permanent improvement.”
51212254191
Both versions passed the Senate on the same day. After that, the
An Equal Opportunity/
chapter 113 version, which is the version set out in the text of this
Affirmative Action Employer opinion. passed the ‘House later than the other version. Therefore, to
the extent that the .versions are inconsistent, the chapter 113 version
controls. See Wr:&;ht V. Broeter.
-- 196 S.W.2d 82, 85 (Tex. 1946)
(later-enacted statute controls).
p. 2440
Ronorable Richard Handorf - Page 2 (JM-530)
Any county, 0:: any political subdivision of a
county, or any road district that has been or may
hereafter be created by any General or Special
Law, is hereby authorized to issue bonds for the
purpose of the construction, maintenance and
operation of macirdamized, graveled or paved roads
and turnpikes, or in aid thereof, in any amount
not to exceed one-fourth of the assessed valuation
of the real prope-rty of such county or political
subdivision or ::oad district, and to levy and
collect ad valorem taxes to pay the interest on
such bonds and urovide a sinkinK fund for the
redemption therec’f. Such bonds shall be issued in
the manner hd!reinaf ter provided, and as
contemplated and-authorized by Section 52, of
Article 3, of the-Constitution of this State. The
term ‘Political S;bdivision.’ as used in this Act,
shall be construed to mean any commissioners
precinct or any justice precinct of a county. now
or hereafter to be created and established.
Provided, when tl?! principal and all interest on
said bonds are fully paid. in the event there is
any surplus remarning in the sinking fund, said
remaining surplur-not used in the full payment of
the principal ancc interest on said bond or bonds
may be used by 1:h.e county, political subdivision
of the county, or-any local district th at has been
or may hereafter be created by any General or
Special Law for ?he purpose of the construction,
maintenance, ar;i operation of macadamiaed,
groveled or pavei roads and turnpikes or in the
aid thereof or for any other 1:awful permanent
improvement as may be determined by the
Commissioners Cou;t of any county or the officials
of any political-subdivision of a county or any
said road districi,. (Emphasis added).
Acts 1955, 39th Leg., ch. 113, 51. at 393.
The election order for the 1969 bond election stated that the
voters would be voting on the following proposition:
WHETHER or not the bonds of said Anderson
County, Texas, shall be issued in the amount of
SEVEN HUNDREDFIFIY THOUSANDDOLLARS ($750.000).
to bear interest st a rate not to exceed the max-
imum prescribed by law at the time of issuance,
and to mature scr’ially over a period of not to
p. 2441
Honorable Richard Handorf - Page 3 m-530)
exceed TWELVE (12) years from the date thereof, in
conformity with the Constitution and laws of the
State of Texas, Farticularly Section 52 of Article
III of the Const:Ltution, as amended, for the pur-
pose of the construction, maintenance and opera-
tion of macadamiw?d, graveled or paved roads and
turnpikes or in aid thereof, in Anderson County,
Texas ; and shall ad valorem taxes be levied on all
taxable property in said County subject to taxa-
tion for the purpose of paying the interest on
said bonds and t> provide a sinking fund for the
redemption therecf at maturity. (Emphasis added).
You also sent us a copy of a “Proposed Election Hand-out.” That
handout states:
Proceeds of the bond issue will be used to
finance the County’s participation in Right-Of-Way
and fencing of 98 miles of U.S. and State high-
ways. The State of Texas shares equally with the
county in the purchase of R-O-W and fencing of the
same. This 98 md,les of R-O-W and fencing involves
20 projects along State Highways #155, 1294 and
819 and U.S. Hdghways #79, #84, #287 and Loop
8256.
You inform us that the projects described in that handout were not all
completed. You do not inf>:m us who issued the handout, when it was
issued, or how it was distributed.
You also provide the following information:
The $75O,OOO.(KZ voted in the Bond Election was
eventually spent: on right of way costs but
. . . due to the increased amount of state parti-
cipation the money was not used for a considerable
length of time and it accumulated a tremendous
amount of interer,t. The interest and principal of
the Bond Electior. have been totally paid off.
You ask whether Anderson County may spend the surplus money on
the construction of a ni%w jail. We conclude that it may not.
Standing alone, the language in article 752a that says that surplus
from bonds may be used fol, any lawful permanent improvement might be
read to allow a county to spend such surplus for any permanent
improvement for which a ccNu,nty could lawfully spend money. However,
that language must be read in context. Article 752a provides that
bonds issued thereunder “shall be issued . . . as contemplated and
p. 2442
Honorable Richard Handorf - Page 4 (JM-530)
authorized by section 52, article 3, of the Constitution of this
State." That constitutional provision authorizes the legislature to
authorize counties to issue t'onds for the following purposes only:
(1) The improvement of rivers, creeks, and
streams to prevent overflows, and to permit of
navigation thereof, or irrigation thereof, or in
aid of such purposes.
(2) The construction and maintenance of pools,
lakes, reservoirs, dams, canals and waterways for
the purposes of irrigation, drainage or naviga-
tion, or in aid thereof.
(3) The construction, maintenance and operation
of macadamised, :graveled or paved roads and
turnpikes, or in aid thereof.
Because article 752a is based on article III, section 52, of the
constitution, we think that the type of permanent improvements for
which surplus from bonds x&y be spent is limited to the purposes for
which article III, section ,52, allows counties to issue bonds. See
State ex rel Childress v. School Trustees of Shelby County, 239 S.Wx
777, 781 (Tex. 1951) (all :E:ctions of a bill should be read so as to
present a harmonious whole). Also, we think that a narrow reading of
article 752a makes sense in light of the well-established rule that
proceeds of bonds must be spent for purposes for which they were
voted. Lewis v. City of F>rt Worth, 89 S.W.2d 975. 978 (Tex. 1936).
As a practical matter, ths?l:e may often be some surplus after bond
proceeds have been spent i'clr the purposes for which the bonds were
issued and the bonds have been retired. See Madeley v. Trustees of
Conroe Independent School District, 130. S.W.2d 929, 934 (Tex. Cl".
ADD. - Beaumont 1939. writ;lism'd judamt car.). But we do not think
that article 752a should br read so broadly that it would potentially
permit political subdivisic~ns to attempt to circumvent the expressed
will of the voters in order to maintain a surplus for use on projects
on which the voters have not voted.
In regard to the use 'J!E bond proceeds we also note that when an
election order or pledge does not specify projects for which bond
proceeds are to be used, the governing body of the entity issuing the
bonds is left free to exercise its discretion in expending the funds.
Hudson v. San Antonio Independent School District, 95 S.W.2d 673, 674
(Tex. 1936). In such casec, however, the governing body must not act
unreasonably or arbitrarily. Lewis v. City of Fort Worth, 89 S.W.2d
975, 978 (Tex. 1936). Also, when voters have relied on orders
pledging that bond proceeds will be used on certain projects, the
governing body of the entity issuing the bonds may not arbitrarily
ignore or repudiate those pledges. Hudson v. San Antonio Independent
p. 2443
Honorable Richard Handorf - Page 5 ml-530)
,-
School District, 95 S.W.2d 673 (Tex. 1936). We express no opinion
about the nature of the elezction handout you provided to us, but we
call your attention to thlz following language in a 1982 Court of
Appeals case:
Although it is the general rule, relied upon by
appellees. that a (contract or agreement made by a
public agency like appellee School District is
valid and binding only when adopted by a resolu-
tion or order at a meeting of the governing body
and entered in it!3 minutes, we have found no auth-
ority expressly holding that a statement to the
.voters designating a particular site to be pur-
chased with the proceeds of a bond issue, made by
a governing body with the power of site selection,
under the circusstances and for the deliberate
purpose and the effect alleged here by appellant,
must be adopted at: a meeting entered in the min-
utes of the govening body before it can official-
ly become and be relied upon by the voters as part
of the proposition submitted in the bond proposal.
Devorsky v. La Vega Independent School District, 635 S.W.2d 904, 909
(Tex. APP. - Waco 1982, no writ); See also Inverness Forest
Improvement District v. Har’dy Street Investors, 541 S.W.2d 454. 460
(Tex. Civ. App. - Houston [ist Dist.] 1976, writ ref’d n.r.e.) (letter
by directors of improvement Idistrict represented and pledged to voters
that bond proceeds would b#e used for certain projects even though
letter was not official action of the board). But see Garcia v. Duval
County, 354 S.W.2d 237, 240 (Tex. Civ. App. - San Antonio 1962, writ
ref’d n.r.e.).
Your second question is whether Anderson County can spend
approximately $800,000 thal: was set aside from its general fund and
its road and bridge fund for payment of worker’s compensation claims.
You explain that from 1972 through 1984 Anderson County chose to be
self-insured for purposes of worker’s compensation. In 1972 the
statute governing worker’ s compensation for county employees was
codified as article 8309c. V.T.C.S. Section 16 of article 8309c
provided as follows:
Sec. 16. The county is hereby authorized to
set aside from available appropriations, other
than itemized salary appropriations, an amount not
to exceed five per cent (5%) of the annual
employee payroll of the county for the payment of
all costs * adn.inistrative expenses, charges,
benefits, 1nsuranc.e and awards authorized by this
Act.
p. 2444
Honorable Richard Handorf - ‘Page 6 (JM-530)
-,
The amount ao :set aside shall be set up in a
separate account in the records of the county,
which account shall show the disbursements author-
ized by this Act: provided the amount so set aside
shall not exceed five per cent (5X) of the annual
employee payroll at any one time. A statement of
the amount set cls’ide for the disbursements from
said account shall be included in an annual report
made to the County Treasurer and the Commissioners
Court.
Article 8309c was repealed in 1973. Acts 1973, 63rd Leg., ch. 88, at
200. It was replaced by article 8309h, which contains ~essentially the
same provision:
(a) The political subdivision is hereby
authorized to set aside from available appropri-
ations, other than itemized salary appropriations,
an amount sufficient for the payment of all costs,
administrative expenses, charges, benefits, insur-
ance, attorney fees, and awards authorized by this
article.
(b) The amount so set aside shall be set up in
a separate account in the records of the political
subdivision, which account shall show the dis-
bursements authorized by this article. A state-
ment of the amount set aside for the disbursements
from the account shall be included in an annual
report made to the political subdivision treasurer
and the duly and legally constituted governing
body of the political subdivision.
V.T.C.S. art. 8309h. 07.
As background to your question, we note that all county
expenditures lawfully authorized to be made by a county must be paid
out of a county’s general fund unless there is some law that makes
such expenditures a charge against a special fund. Bexar County v.
Mann. 157 S.W.Zd 134 (Tex. 1941). Therefore, expenditures made out of
themoney set aside pursuant to article 8309c or 8309h should have
come from the county’s general fund. However, a county may
consolidate its four constitutional funds or it may transfer money
into its general fund frown its road and bridge fund. See Attorney
General Opinion MU-516 (198:!) (discussion of county fundsand article
VIII, section 9, of the Texas Constitution). Consequently, it was not
improper for Anderson County to set aside money from its road and
bridge fund for worker’s ccmpensation purposes.
p. 2445
Honorable Richard Eandorf - I?age 7 (JM-530)
You explain that since 1984 Anderson County has not been
self-insured but has paitl premiums to the Texas Association of
Counties. Over $800,000 remains in the account set aside pursuant to
articles 8309c and 8309h. You explain that the county auditor has
suggested that a certain amount be set aside for expenses that might
arise in connection with claims that arose before 1984. You ask
whether Anderson County may spend the remaining money on the
construction of a jail. Wo conclude that Anderson County may do so.
The money in question was :aerely "set aside" in a special account to
be used for worker's compensation costs, if needed. There was no
requirement that all the money set aside actually be spent on worker's
compensation, nor any guar'antee that the money set aside would be
sufficient to meet the county's worker's compensation costs. The
statutes merely allowed the county to set aside a reserve for
potential costs. Once the purpose for the special account no longer
exists, we see no impedim~?nt to returning the unused money to the
county's general fund. Therefore, Anderson County may spend that
money for any proper county purpose. See V.T.C.S. art. 2351(7)
(counties have authority to 'build jails). -
SUMMARY
Anderson County may not spend surplus from an
issuance of road 'bonds on the construction of a
new jail. Anderson County may spend on the
construction of a new jail money set aside for
worker's compensation purposes but no longer
needed for such purposes.
J k
Very truly you
k,
JIM MATTOX
Attorney General of Texas
JACK RIGHTOWER
First Assistant Attorney General
MARY KELLER
Executive Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General
p. 2446