Ron. Robert S. Calvert

Comptroller of Public Accounts Austin, Texas Opinion No.+177
Re: Construction of Section 8(C) ofArticle 678f, Vernon's Civil Statutes,
< relating to the certi,ffcation by the Comptroller that acontract awarded by the State is not in excess of the amountavail- .DearMr. Calvert: able for such project.

follows : Your request for anopinion reads, in part, as

"The State Building Commission has awarded a contract for the 'construction of certain public works for a total contract price of twomillion eight hundred ninety-six thousand andone hundred dollars ($2,896,100.00), approximately one million dollars ofwhich is to be paid from funds appropriated by the Congress andalloted to the State of Texas under the CommunityHealth Centers Act (42 U.S. Code, sees. 2681-2687). Documents have .beenfurnished by the Dallas Regional Office, Department of Health, Education andWelfare, U. S. Government, which reflect that the Federal funds havebeen approved andobligated for the public ~works project. However, the funds have not been transferred to the State, andit is anticipated that the funds will be furnished to State authorities on aquarterly basis after the construction is started.
“Prior to the awardof the contract the proposed contract awardwas forwarded to the Comptroller for certification of available funds. In those instances in which sufficient State funds areavailable<forthe complete performance of a publicworks contract the Comptroller normally certifies on the contract award "that sufficient funds are available for the contract described

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c Eon. Robert S. Calvert, page 2, W-177) I

above.” However, in the instant case the Comptroller determined that funds appropriated by the State only in the amountof $1,849,536.24 were available for the project. Accordingly, the Comptroller certified that amountas~available, but noted on the proposed contract awardthat the Federal funds involved hadbeen obligated for.the project. "In light of the foregoing circumstances your opinion is respectfully requested on the following

‘a.

,’ ,

. . ‘! questions:

“b.

“C.

. "d. Prior to receipt of Federal funds

alloted andobligated for aState public works project, which together with State appropriations account for the project, maythe Comptroller execute anunqualified certification that sufficient funds are available for the project?

, If your answer to the foregoing question is in the negative, may a valid certification be executed by adding thereto aqualifying phrase such as “subject to the receipt of $1,004,360.00 in Federal. fundswhich have been obligated for the above project?" 'J Under the contraot described above, wherein the Comptroller certified a rtatea amountas available ana,the balance of the contract price is to be furnished from obligated Federal funds, maythe Comptroll’er makeprogress payments or pay anyother claim under the contract prior to receipt of Federal funds? Maythe Comptroller makeprogress payments or pay otherclaim pursuant to anawarded construction contract in respect to which nocertification of available funds has been madeby the Comptroller or in'respect to which the amount certified as available from State appropriations is less than the amount for which,the contract was awarded?” i

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Hon. Robert S. Calvert, page 3, (M-177)

Theapplicable provisions of Section 8(C) of Article 678f, Vernon's Civil Statutes, read as follows:

I

. . . Subject to the applicable provisions of other law respecting the awardof State contracts, the contract or contracts shall be awarded to the qualified bidder making the lowest and best bid; but no'contract shall be awardedfor a sumin excess of the amountwhich the Comptroller shall certify to be available for such project,

"

. . . . Section 49of Article III of the Constitution of Texas prov$des, in part:

"Nodebt shall be created by or onbehalf of the State, except

. . . .I (Exception not applicable.) Section 6of Article VIII Qfthe Constitution of Texas prohibits any appropriation 'of'money for aterm longer than twoyears.

Theleading cases concerning whether acontract creates obligations on behalf of the State in violation of Section 49of Article III of the Constitution of Texas are Charles Scribner's Sons v. Marrs, 114Tex. 11, 262 S.W.

of Control, 404S.W.Zd 810 (Tex.Sup. 1966). In Charles Scribner's Sons v. Marra, supra, the Court wasconsidering the validity of acontract for the purchase of certain books for aperiod of five years. The obligation of the contract wasnot to buy a fixed numberor amountof books but only somanyas needed by the schools of the State. TheCourt held, therefore, that since the contract did not makea charge on the future revenues of the State, nodebt was created nor wasSection 6 of Article VIII of the Constitution of Texas violated.

In Fort Worth Cavalry Club v. Sheppard, supra, the Court held a'lease contract for aperiod of five years void, since the adjutant general had the implied power to makea contract onlv within the amounts of the appropriation, and for the period of the appropriation.

In City of.Big Spring v. Board of Control, supra, the Court held that a contract whereby the city agreed to furnish water to the State at a fixed-rate "as-long as the State of Texas shall in good faith maintain andoperate
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Ron. Robert S. Calvert, page 4, (M-177)

said hospital on said site" did not create adebt.

In Nichols v. State, -32S.W. 452 (Tex.Civ.App. 1895, error ref.1 the State was held not liable under a

- contract entered into by the State involving anamount exceeding the amountavailable for such project, andthe legislature washeld to be without power to ratify the contract to the extent it exceeded the appropriation.

In view of the foregoing, it is our opinion that the purpose of Section 8(C) of Article 678f, supra, is to prevent the awarding of a contract which would attempt tocreateobligations in violation of Section 49of Article III of the Constitution of Texas. Section 8(C) of Article 678f is designed to enable agencies of the State to determine in advance of the awardof aparticular contract whether the obligation to be created by the award is payable out of monies available for such project. In this respect, the certification of the Comptroller with regard to contracts is similar to the certification of the Comptroller under the provisions of Section 49a of Article III of the Constitution of Texas relating to appropriations being.within the amountestimated to be available in the affected funds.

Acontract for the construction of certain public works payable out of State funds, appropriated by the Legislature, andout of Federal funds appropriated by the Conqress, andallocated to the State of Texas does not create adebt in violation of Section 49of Article III of the Con8titution of Texas whenthe amountof State funds appropriated by the Legislature, together with the amountof Federal funds approved andobligated for such project, is equal to or exceed the amountof the awarded contract. Under such circumstances, the Comptroller of Public Accounts is authorized to execute certificates provided in Section 8(C) of Article 678f. Under the facts stated in yourrequest, in answer to your questions (a) and (b), it is our opinion that you are authorized to make the certification provided in Section 8(C) of Article 678f, for the reason that the contract awarded is not in excess of the amountmadeavailable for such project.

.Zn~answer to your questions .(c) and (a), it is noted that moneycan only be drawn from the State Treasury pursuant to specific appropriations madeby the Legislature. Article VIII, Section 6, Texas Constitution. Therefore, the Comptroller does not have authority to pay out funds in the State Treasury except in pursuance to specific appropriations, and where obligated Federal funds are to be deposited in the State Treasury andwhich have been appropriated by the Legislature, progress payments payable from these funds maynot be made -853-Hon. Robert S. Calvert, page5, (M-177)

until such Federal funds have been received by the State. State funds appropriated by the Legislature, on the other hand, maybe expended by progress payments until the appropriation has been exhausted. SUMMARY -------. Acontract for the construction of certain public works payable out of State funds appropriatedby the Legislature andout of Federal funds appropriated by the Congress andallocated to the State of Texas does not create adebt in violation of Section 49of Article III of the Constitution of Texas whenthe amountof State funds,appropriated by the Legislature, together with the amount of Federal funds approved and obligated for such project, is equal to or exceed the amount of the awarded contract. Under suchcircumstances.the Corndroller of Public Accounts is providedin non'sCivil authorized to ekecute certificates

Section 8(C) of Article 678f, VerStatutes.

Prepared by John Reeves 

# w truly yours,

.C. MARTIN rney General of Texas

Assistant Attorney General APPROVED: OPINIONCOMMITTEE Hawthorne Phillips, Chairman‘ Kerns Taylor, Co-Chairman W.V. Geppert Harold Kennedy w. 0. Shultz Bill Allen .A. J. CARUBBI,JR. Staff Legal Assistant

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