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Hon. Dorsey B. Hardeman, Chairman

State Affairs Committee Senate of the State of Texas Austin; Texas OpinionNO. ww 640

Dear Senator Hardeman: Re: Constitutionalityof H.B. 5, 56th Leg., relating to certification from the Comptroller required by Art. III, Set; &a of the Constitution.

In your letter of May 27, 1959, you advised that the Senate State Affairs Committee, 56th Legislature, First Called Session,has referred House Bill 5 to this office for an opinion on its constitutionality.

Section 1 of House Bill 5 provides as .follows:

“In preparing the financial statements and certificationsrequired by ,~: Article III, Section 49a of the State Constitution, the Comptroller of Public Accounts shall report and consider an estimate of the probable receipts and disbursements as of August 3lst for the then current fiscalyear.
"Thewords 'probablereceipts' shall
mean knd include all suchmoneys estimated by the Comptroller to be received by the State through August 31st of the then current fiscalyear; and his financial statements shall show~the fund or funds to which such receipts are to be credited.

"Thewords 'probabledisbursements' shallmean, and the Comptroller shall consider and report under such term, only those payments estimated to be made and warrants which will be issued by the State through August 31st of the then current fiscal year..,

Hon. Dorsey B. Hardeman,page 2 (~-640)

"In addition thereto, for the information of the Governorand the Legislature the Comptrollershall list other outstanding appropriationswhich may exist after the end of the then current fiscalyear, but they shallnot be deducted from the cash condition of the Treasury or the anticipatedexthe biennium for the purpose of certification. In estimating and certifyingcash funds to be available for the next biennium, these outstandingbut undlsbursedappropriations of each biennium shallbe offset by the estimated total of outstandingbut undisbursed appropriationsof the succeeding biennium.

"It is the Legislative intent that the Comptroller'sreports, estimates,and certifications of available funds In each instance shallbe based upon the actual or estimated cash condition of the State Treasury and that outstandingand undisbursed appropriations at the end of each biennium shall be considered
as probable disbursementsof the succeeding biennium in the samemanner that earned but uncollected income of a'current biennium is considered in probable receipts of the succeeding biennium. The provisions of this Act shall be immediatelyeffectiveand the Comptroller shall revisehis current report and estimates in accordance therewith." (Emphasisadded)

Section @a, Article III of the Texas ConStltutiOn, provides in part as follows:

"It shallbe the duty of the Comptroller of PublicAccounts In advance of each Regular Session of the Legislature to prepare and submit to the Governorand to the Legislature upon its conveninga statementunder oath showing fully the financial condition of the State Treasury at the close of the last fiscal period and an estimate of the probable receipts

-.~-- and disbursements for the then current fiscal -- SYJ??E- ----There shall also be contained in said statementan itemized estimates of the anticipated ~ FeEuxsed on the lawsenineffect that -. ~.--~ will be receivedby-and for the State from aEou%-es showing the fund accounts to be __~~_~I_ -.-. -.-.. credited during the succeedingbiennium andHon. Dorsey B. Hardeman,page 3 (~~-640)

said statement shall contain such other informationas may be required by law, Supplemental statements shall be submitted at any Special Session of the Legislature and at such other times as may be necessary to showprobable changes.

"Fromand after January 1, 1945, save in the case of emergency and imperative public necessity and with a four-fifths vote of the totalmembership of each House,
no appropriation in excess of the cash and anticipatedvenue of the funds fromwhich such aoorouriation is to be ma= shall be valid.‘*

From and after January 1, 1945, no bill containing an appropriati~on shall beg consideredas passed or be sent to then Governor for considerationuntil and unless

~ the Comptroller of Public Accounts endorses his certificatethereonshowing that the amount appropriated is within the amount estimated to be available in the affected funds. When the Comptroller finds an appropriation bill exceeds the estimated revenue he shall endorse such finding thereon and return to the House in which same originated. Such information shallbe immediatelymade known to both the House of Representatives and the Senate and the necessary steps shall be taken to bring such appropriation to within the revenue either by providing additional revenue or reducing the appropriation.

"For the purpose of financing the outstanding'obligationsof the GeneralRevenue Fund of the State and placing its current accounts on a cash basis the Legislature of the State of Texas is hereby authorized to provide for the issuance, sale, and retirement of serialbonds, equal in principal to the total outstanding,valid and approved obligations owing by said fund on September 1, 1943,provided such bonds shall not draw interest in excess of two (2)per cent per annum and shallmature within twenty years from.date. (20) Added Nov. 3, 1942.' (Emphasisadded)Hon. Dorsey B. Hardeman,page 4 (~~-640)

From the foregoing it is seen that Section@a of Article III requires of the Comptroller two different types of duties. First,he is required to prepare for the Governorand the Legislaturea financial report of the condition of the State Treasury and to prepare an "estimate"which is to show the Information specified in the Constitution,and other suchmatters as the Legislaturemay require. Insofaras House Bill 5 is a specificationof the form and content of those reports, it does not violate the Constitution. Certainly the Legislaturemay require any information that it desires, and itmay require that information to be shown in any manner that it desires, regardless of whether the Comptrollerbelieves such is necessary to an accurate accountingprocedure.
Second, the Comptroller is to certify that the amount appropriated in any bill~iswithin the amount estimated to be available in the affected funds.

The Comptroller'sdetermination of the availability of funds appropriated is not required by the Constitutionto be based on his financial report of the State Treasury prepared for the Governor and the Legislature or his "estimate'. The word "estimated"
as used in connectionwith the certification to be made by the Comptrollernecessarily refers to a finding or opinion of the Comptroller separateand apart from the "estimate"ulhichis referred to in the first paragraph of~Section@a. That Yestimate" -- the document prepared and published by the Comptrollerat the beginning of each legislative session -- relates to the contemplatedrevenues to be receivedby the State during the succeedingbiennium under the statutes in existenceat the time the Legislaturemeets. The Comptrollercould not determine the availability of subsequentlyappropriated funds based upon that "estimate" alone, because it would not necessarily take all anticipateddisbursements into account, and would not be based upon revenue and other billspassed at the
same legislative sessionbefore a bill containing an appropriationwas sent to him for certification. In this connection,we point out that statutesmay be passed which affect the availability of funds to be appropriated,but which are not revenue bills and which do not contain an appropriation. (SeeAttorney General's OpinionsWW-102 (1957),and ~~-632 (1959), copies of which are attached). The "estimate"prepared for the Governor and the Legislaturemight not. ‘

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Hon. Dorsey B. Hardeman,page 5 (~~-640)

have taken such bills into account. Patently the question of availabilitydemands a considerationby the Comptroller of factswhich are not or may not be reflected in thepre-legislative session "estimate". I Of course, the Comptroller of Public Accounts, in making his "estimate"as to the amount of money that will be available in the affected funds, in certifying
an appropriationbill or returning it to the,House in which same originated, should by virtue of the mandate of Section @a of Article III of the Constitution, take into consideration every element that bears upon the amount of funds that will be available, Including an estimate of the amount of funds thatwill not be expended under the appropriations for the present biennium, as well as an estimate of the amount of funds that will not be disbursed by virtue of appropriations made for the next biennium.

The Constitutiondoes not expressly,providewhether the general accounting method should be on a cash or accrual basis, but there is some language in Section @a of Article III,Texas Constitution,which would
seem to require the accounting to be on a cash basis. It is our opinion that the Legislaturemay direct the Comptroller to employ a cash accounting basis as supplemental to and inaid of the constitutionalprovisions and we do not pass upon whether the Legislature could require the use of an accrual accounting basis. In Hamilton v. Deland, 198 N.W. 843, the rule was stated
as follows:

"While legislationmay not be necessary to effectuate the constitutionalprovision and
none may be validly enacted that Is In conflictwith it, it does not follow that legislation supplemental to and In aid of the constitutionalprovision may not be enacted. This, I think, is settledby the text-writers and adjudicated cases."

In support of this rule the Court quoted from Corpus Juris; Ruling Case Law and the 7th Edition of Cooley's Constitutional Limitations...

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Hon. Dorsey B. Rardeman,page 6 (W-640)

H. B. No. 5 In effect Instructsthe Comptroller to use the cash accounting basis, as it provides that outstandingappropriationswhich may exist after the end of the then fiscalyear shouldnot be deducted from the cash conditionof the Treasury or the antlcipated revenue of the next biennium for the purpose of certification. This we believe to be constitutional. However, the bill now provides that the outstanding but undisbursedappropriationsof each biennium shall be offset by the estimated total of outstandingbut undisbursedappropriationsof the succeedingbiennium. This we believe to be unconstitutional.
Reading Section&a of Article III from its four corners, it is our opinion that this constitutlonal provision contemplatesthat the Comptroller,in making his estimate for certificationof bills, use the cash accountingmethod. The use of the underscored language in the ConstitutionalAmendment,as quoted above, strengthensour opinion that the amendment in question contemplatesthat the accounting'.method to be.employed by the ComptrollerInmaking his estimates shouldbe on the cash basis.

In H; B. No. 5 It appears that the Legislature Is estimating that the outstandingbut undisbursed appropriations at the end of each bienniumwill be in the
same amounts as it states that one will offset the other. However, Section &a of Article III of the Constitution provides that the Comptrollerwill make the estimates. Insofaras this bill attempts to make estimates it is unconstitutionalas a legislative invasion of the duties of the Comptroller. However, if a severabilityclause is added, the remainder of the billwill stand,as it does not conflictwith Section &a of Article III of the Constitutionbut is supplementalto and In aid of the Constitutionalprovisions.

Other than the questions treated above,we find
no constitutionalquestions raised by House Bill 5.

SUMMARY

House Bill No. 5 is a constitutionalbill except Insofaras it attempts to make estimates as to outstandingbut undisbursed appropriations. For that reason as present-Hon. Dorsey 5. Hardeman,page 7 (IN-W-640)

ly drafted it is unconstitutional. If
a severability clause be added, the remainder will be effective,as the bill is complete and workable after eliminating the unconstitutionalprovision.

Very truly yours

WILL WILSON Attorney General of Texas

APPROVED:

OPINION COMMITTEE:
George P. Blackburn, Chairman

Martin DeStefano

Joe Osborn

Mrs. Marietta Payne

REVIEWED FOR THE ATTORNEY GENERAL

By: W. V. Geppert