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### E ATTORNEY GENERAL QP TEXAS

PRICE DANIEL ATTORNEY

GENERAL AUwrIN 11. TEXAS April,lg, 1947

Ron. Houier

D. Eck CountyAuditor' Fayette County La Grange, Texas
Dear Sir: Oplnlon No. V-157
Re: Disposltlon of road dlstrict,sinklng funds.

We have received your letter of March 22, 1947; inwhich you state that severalroad dlstricts~inFayette County have been created and have issued bonds, and that subsequent thereto all of said obligationshave been assumed by the State under the Road Bond Assumptlotl Act (Article6674q,Vernon's Civil Statutes). You state that these district&now have balances in their respective slnkMg funds, and in connection therewith you request the opinion of this depattment upon the following questions:

"1

. May the CommissionersCourt spend this money for the purpose of acquiring : right of way? "2" If your answer is In the affirmative, may they pay for same directly from Sinking Funds and give proper accounting therefor? "3

. If question 1 is negatively answered, then may the CommissionersCourt use such balances to fulfill Intentwhich district was created. If so, must warrants issued in payment for services and supplfesbe paid directly from Sinking Fund accounts or must balances be transferredback to Construction Fund?" The road districts were created and the bonds were issued under the authority of Sectibn 52 of Article XII, Constitution of Texas, and Articles 752a, et seq.,Vernon's Civil Statutes. Said constitutionaland statutoryprovisions authoriie the issuance of bonds by road districts for the purpose of "the construction,maintenance, and operatlon of,macadamixedbgraveled br paved roads and turnpikes, OF fn aid thereof and the levying of a tax In payment thereof.. ~..

Hon. Homer D. Eck, p&e ,2, V-157"~:

.;,: '.: ,~

It is settled law that money8 ,in a sinking fund " may be ,daedfor ,no'otherpurpose thaiithe one for which itwas created. 30Tex. Jur, 457.

Article 752k provides that ‘uponthe i.ssua~nce, of ,"

bonds the commlssioners':courtshall levy an.ad valorem j' tax suff~icient

to pay the bonds at mat&irlty. Article 752n provides that the tax,collector shall collect said taxes and'pag them to theecounty treasurer. Article 7520 provides that the county treasurer is the custodian of such fundso<thathe shalldeposit them with the county depository in the same manner as county.fUndsare deposited, andthat he'shallpromp,tly pay the interestand principal as it becomes due outof such founds.

,Artlole839 of,

Vertionk CivFl Statutesprov1de.s that the~'county

treas,urer

shall not honor or pay any draft upon the interest.aiui slnklng~.fund

except for the purpose of paying the intereston such bonds,~ or redeeming '.~ '~%~ .,::. the same,,

OP for investme,nt in ,securitlesas~providedby law. '~. .~ therefore, for,egolng 'ItIs clear, therefore,under the for,egolng statutes 'thatthe moneys in a sinking fund~may:beused statutes 'thatthe sinking ~may:be

purpose ~paJlngthe interest, on and prinonly for the purpose of~paJlng interest, cipal of the ,bonds~ forwhich.the sinking fund was created, ,bonds~ sinking created, inve,stment securities provided or for inve,stment in securitiesas provided by law. ,Youstate that the,,bonds~of the various road,

dLstricts ,haveall'been assumed~by the State under the Road Bond Assumptfon,Act. ,Therefore,we will have to determine whether this fact changes the princlple,of law announced above., Section 8 of sa'idAct (Article6674s:8,) provides,
. in part as follows: ;, 9..

t,.,o 0 r It'ls hereby, declared that,

all eligible indebtednes's;'as' herein defined, shall Gl remain indebtednessof the,respective'cbuntles or deffned road d~stricta,Vh~ich issued It9and said countf,es.or

defined road ,dfstrictsshall remain liable on's'aid~,indebtednessaccordlng to Its terms and tenor;' and l.t

is not tbe,purpose or intention of this Act; or any partthbreof, to,obligate the State,o,f Texas, directly.or indlrectlg,or contingently, for the papment.of any such obllgations,or that the State o.f Tex,as should assume the~paynient of sa~ld~obllgatlons, Andythfs Act is not tom be construed,,as

obligating :~ the State of Texas to,, the, holders ~ofany,.ofsaid obligations to make any P.&sent ofthe same, OP

‘-* c

. *Hon. Homer D, Edk, 'page3, V-157

any part thereof, nor shall such holders have any rights to,enforce ,theappropriation of. any of the moneys ,hereinabove provided for, nor shall any provision hereof const1tute.a contract on the.part of the State to make money available to any county for the construction of additional lateral roads ,.:
. .I' Moreover, the 'recent~ constitutionalamendment (Article,vIII,Sec. 7-a), which provldes.for funds to carry out the ,termsof the Act, provides in part as follows:

"Subject 'Q legislativeappronriation,allocatlone direction, all net revenues . . . . shall be used for the sole purpose'of rlghts-ofway, constructlng;,aLalntainfng, andpolic,ing

such public roadways, end for,tbe administration of such law,sas may be prescribed by the Legislature pertaining to the supervision of traffic and safety on such roads; and for the pawent of the principal e,interest on county and road dGt=t bonds OP

-v and Road District HIghwaY fund utxler exlsti *; provided; however, t'th (1 such net revenues e.O O eNothinn contained here- & shall& construed= authorizing thepledging of the State's credit for 9 purnose? mzsis added)~-
We see that the debt remains tha~tof the county OP road dfstrict. It is also evident that the funds to, carry out the terms of the Road Bond Assumptlon Act must be appropria,ted

every two years before such fundswill be avaflable. It is eoncelvable thatthe Legislaturemay fail to make an approprfation or that the appropriated funds may not be sufficient to meet all commitments. It is our oplnlon that neither the constitutlonalamendment nor the act Itself changes the principle announced above relative to sfnklng funds.

Your attention Is directed to an Act of the Fortyeighth Legislature (Ch. 116, pO 198) which amended Article 752a to include the followfngprovislon:

(I ame.o*Providedwhen~the principal and all interest on said bonds are~fully paid, in the event there is any surplus remafnlng in the sinking fund, said remaining surplus not used in the\

Hon. Homer D. Eck, page 4,V%15$

full 'paymentof~the principal and interest on'said bond orbonds,,maybe used by the county, polL.tihal subdivision of the county, or any local district .thathas ,beenor may hereafter be created by any general .o~r

special law for the purpose of the constructi,on,

maintenance, and operati.on of macadamized,graveled or paved roads and turnpikes or in the aid thereof as may:be determined by the Corn- : missioners C~ourtof any county or the officials of any political subdivision of a county or any said road &istrPct."
We answer your first question in the negative, " which renders unnecessary an answer to your seCond questlon. We answer your third quest?.on by saying that the,~ surplusmoneys in the respectrve sinking funds can be used for no purpose others than the payment of Interest on and principal of the obligations forwhich the fundswere created

,for for investment In securities as provLded by law. However, when all principal of and interest on the bonds are fully paid, th~ensurplusmoneys in the slnklng~fundmay be used for the purposes authorized by.Article 752a, as amended, and It Is our opinion that in this instance the statutewould authorize drawing the warrants directly against the sinkIngfun&.

SUMMARY

Surplus moneys in a sinking fund of a road district may not be used to purchase rights-of,- way, even though the bonds forwhich the fund was created have been totallgassumed by the State under the Road Bond Assumption A:ct. The moneys in such sinking fund may be used only to pay the principal ofand interest on the obligations for which the fundwas created, or for investment In securities as provided by law. However, if a surplus remains in a sinking fund after all principal of and interest on the bonds for which the fund was created have been fully paid, then said surplusmay be disposed of in accordance with the provisi'ons of Article 752a, Vernon's Civil Statutes, as amended.

,: . ..

Hon. Homer D. Eck, page 5, V-157

Velag tpu1g gouIY3,
ATTORNEY GFZJ'ERAL

OF TEXAS

By s/GeorgeW. Sparks George W. S@arks.

Assistant
GWS :s:mrj:wc

APPROVED APR. 23, 1947 s/PriceDanfel ATTORNEYGENERAL