.

THEATTORNEYGENEEAL

OF TEXAS

GERALD C. MANN

April 25, 1939

Honorable Geo. H. Sheppard Comptrollers

of PublicAccounts Austin, Texas OpinionNo. o-162 Dear Sir: Re: Is the sum of $10,471.95, representinggross receipts taxes accruing against a gas utility under Art. 6060,V~CS, during the State's fiscal year endingAug. 31, 1938, and paidunder protest during such year underArt. 7057b,VACS, but not transferred or placed in Gas Utilities Fund until the terminationof protest suit during the fiscal year endingAug. 31, 1939, subject to warrants drawn against such fund,under appropriations for the Attorney General's Department and Railroad Commission for the fiscal year endingAugust 31, 1939.

We have for answer your inquiry of April 18, 1939, concerning your authority to issuewarrants against certain moneys in the Gas Utilities Fund, created by Article 6060, as amended, Vernon's Annotated Civil Statutes,under appropriations for the Attorney General's Departmentand the Railroad Commission for the fiscal year endingAugust 31, 1939,when it appears that such moneys came into the Gas Utilities Fund under the following circumstances:

During the fiscal year 1937-1938, endingAugust 31, the sum of $10,471.95was paidunder protest according to the1938,

terms and provisions of Article 7057b,Vernon's Annotated Civil Statutes,by the Lone Star Gas Company, a "GasUtility" as defined by Article 6050, Subdivision 2, Vernon's Civil Statutes. This payment represented the gross receipts tax of one-fourth of one percent of the gross income receivedby said companyfrom all business done within the State of Texas during such period. This tax is leviedby Article 6060, as amended,Vernon's Annotated Civil Statutes,which provides that the proceeds of such tax shall go. .

Hon. Geo. H. Sheppard, April '25, 1939, Page 2, o-162

to constitute the Gas Utilities Fund. A suit was duly and timely filed by suchgas utility to recover the taxes so paid under protext,under Article 7057b,Vernon'sAnnotated Civil Statutes, but upon appeal to the Court of CivilAppeals for the Third Supreme Judicial District from an adverse judgmentof the trial court, said cause was dismissed, and the taxes which had been thereby protestedbecame,under Article 7057b,Vernon's Annotated Civil Statutes, subject to transfer into the fund inwhich they would have gone originally except for such protest and suito But the date when this transer into the Gas Utilities Fund became possiblewas during the fiscal year endingAugust 31, 1939.
Article 6060, Revised Civil Statutes, 1925, as amended by Acts, Regular Sesslon, 42nd Legislature, Chapter 73, page 111, levies a gross receipts tax of one-fourth of one per cent of the gross income receivedby defined gas utilities, from all business done within the State, and provides that such taxes shall be paid into the State Treasury at Austin on a quarterly basis?,In a fund to be designated and known as the "GasUtilities Fund. It is further provided that such Fund shallbe used for enforcingthe provisions of Articles 6050 to 6066, Inclusive,Vernon's Annotated Civil Statutes, known as the "GasUtilities Act."

Article 6066, as amended by Acts, Regular Session, 42nd Legislature, Chapter 190, page 319, limits enforcementexpenditures out of such Gas Utilities Fund as follows:

"The salary and expenses of the expert and his assistant and the salaries,wages, fees, and expenses of every other person employed or appointedby the Commissionunder the provisions of this subdivision, and all other expenses, costs, and charges, tncluding witness fees and mileage incurredby or'under authority of the Commission or a Commissioner In administering and enforcing the provisions of this subdivisionor in exercisingany power or authority hereunder, shallbe paid out of the Gas Utilities Fund provided for by Article 6060, as amended by H.B. No. 547, Acts of the Regular Session of the 42nd Legislature,by the State Treasurer on warrants of the Comptroller on orders
or vouchers approved by the Commission or Chairman thereof. The entireamount derived from the tax imposed by Article 6060, as ,amended,shallbe used for the purposes of enforcingthe provisions of ,the preceding Articles 6050, et seq. Any surplus remaining in this fund after paying all such salaries and expensesas may be contracted to be paid and incurred and such as may be reasonably estimatedby the Commission for itsuse shallbe paid over to the General Revenue Fund. -

Hon. Geo. H. Sheppard, April 25, 1939, Page 3, O-162

on September First of each year, beginnIng September 1 1932. Provided, that not more than Seventy Thousand ($70,000.00)Dollars shall ever be spent in any one Calendar year.”
Chapter 504, p. 1362, General and Special Laws,Regular Session, 45th Legislature,being the departmental appropriation bill for the fFsca1 years endingAugust 31, 1938, and August 1939, specificallyappropriates out of the Gas Utilities Fund31,

for each of suchyears, the sum of $18,250.00 to theAttorney General's Department for the enforcementof the Gas Utilities Act, (p. 1372), and the sum of $50,170.00 for salaries, expenses etc. of the Gas Utilities Division of the Railroad Commission, (P. 1474).

It is our opinion,and you are accordingly advised, that when proper vouchers are presented to you by the Attorney General'sDepartment and the Railroad Commissionunder the foregoing departmental appropriationbill for the fiscal year endingAugust 31, 1939,you may lawfully issuewarrantsupon same, to be paid out of~angmoneys in the Gas Utilities Fund, createdby Article 6060, as amended Vernon's Annotated Civil Statutes including said sum of $10,471.95,transferred or to be transfhrred to said fund during the current fiscal year endingAugust 31, 1939. Our conclusion is groundedupon the proposition that all moneys which, under governing statutes,come Into the Gas Utilities Fund during any given fiscal year, may be used to pay warrants drawn against such Fund under appropriationsfor that particular fiscal year.

But by your inquiryyou make the point that the $10,471.95 in question represented taxesdue and payable to the State under Article 6060,Vernon's Annotated Civil Statutes, during the fiscal year endedAugust 31, 1938, and consequently such specific sum of money is not chargeablewith salariesand expenses incident to the enforcement of the Gas Utilities Act during the fiscal year endingAugust 31, 1939, and that warrants cannot be drawn against such fund for such salariesand expenses.

This positionwould be tenable if the $10,471.95 involved in your inquiry had been actually paid Into the Gas Utilities Fund during the fiscal year endedAugust 31, 1938, but such is not the case here. The effect of the payment of this particular $10,471.95under the protestprovided by Article 7057b,Vernon's Annotated Civil Statutes,was to place such fund or sum ofmoney in a SuspenseAccount in the State Treasury rather than into the Gas Utilities Fund. As long as this particular sum of money occupied this status of suspense, it belonged neither to the State of Texas claiming such tax, nor to the aggrieved gas utility, claiming,by written protest, that it did not owe such tax. An elaborate system of bookkeepingby the State Issetup by SectionHon. Geo. H. Sheppard,April 25, 1939, page 4, o-162

3 of said Article 7057b,Vernon's Annotated Civil Statutes, for segregating suchprotested tax payments from either the General Fund or any of the Special Funds in the State Treasury.

Perforce of these statutoryprovisions this particular
sum of $10,471.95would not come into the Gas Utilities Fund during the year such taxes were claimed to be due and payable, i. e. 1938, and, in fact,would not be allocated to suchFund until
8UCh time as Itwas finally determined, at the end of the litigation provided and requiredby Article 7057b,Vernon's Annotated Civil Statutes, that such moneys properly belonged to the State of Texas as a part of its lawful revenues. If, on the other hand, the protesting taxpayer should prevail in a suitbrought within 90 days, in the form and manner requiredby the Protest Statute, then such moneys or funds would never find their way into the Gas Utilities Fund but would be paid out of the SuspenseFund of the Treasury to such taxpayer, togetherwith earned interest thereon. An appeal Is contemplatedby the Protest Statute to ultimately determine the status of and title to such protested tax payments,
as between the State and the taxpayer, and thltlcould concefvably result in such tax paymen,ts being kept in the SuspenseAccount of the Treasury and out of the I;as UtilitiesFund for several yearss Surely it was not the Intent of the legislature that the Gas Utllltles Fund shouldbe denied the advantage of gross receipts taxes leviedby Article 6060,Vernon's Annotated Civil Statutes,merely because the protestinggas utility elects to put such fund into a state of suspense,pending a determination of it8 rights. If and when such tax payment is, by a court of competent jurisdiction,adjudged to be a part of the revenues of the State, there is nothing In the Protest Statute, or in any other statutewhich we have found, which would prevent suchmoneys being considered a part of the Gas Utilities Fund, subject to warrant drawn on that Fund, for necessary expenses incurred In the enforcementof the Gas Utilities Act during the same fiscal year In which 8UCh moneys were finally allocated to the Gas Utilities Fund. In fact, Section 4 of the Protest Statute provides that "if suit 18 not brought within ,thetime and within the manner herein provided, or in the event it finally be determined in such suit that the sums of money so paid or any portion thereof. togetherwith thepro rata interest earned thereon,belong to*the-State, then and-in that event, it shallbe the duty of the State Treasurer to transfer such money from the susoense Iof the State by placing the portion rfbelonging to the State in such fund by the issuance of a depO8it warrant. ' (Emphasisours)

Under the foregoing, it became the plain statutory duty of the State Treasurer,when the gas utility in question abandoned its appeal in the Court of CivilAppeals, from a judgment ln favor of the State in the Di8tPiCt Court of TravisCounty, to forthwith transfer the sum of $10,&71.95 out of the SuspenseAccount Into.. -

Hon. Geo. H

.Sheppard,Aprll 25, 1939, Page 5, o-162

the Gas Utilities Fund, where Itwould become subject to warrants drawn by you under appropriations for the year during which such
sum of money came in.to saidGas Utilities Fund.

It would foliow as a corollary from this conclusion that you would have no lawfu~l author~ity

to issuewarrants against any sum or sums of money placed in the SuspenseAccount of the Treasuryby a protest payment of taxes under Article 7057b,Vernon's Annotated Civil Statutes,because suchmoneys are not in the Gas Utilities Fund or any otherFund subject to warrant, until the time of their transfer from this SuspenseAccount, in accordance with the terms of Set, +ion 4,Article 7057b,Vernon's Annotated Civil Statutes, hereinabovequoted. Consequently, the opinion directed to you under date of June 8, 1938, by a former Attorney General, holding to the contrary, is, of necessity, overruled.

Yours very truly,

ATTORNEY

GENERALOFTEXAS

PMN :N:wc
APPROVED a/Gerald C. Mann ATTORNEY

GENERALOFTEXAS . By a/Pat M. Neff, Pat M:Xeff
, Asetstant Jr.

Jr.