. 

The Attorney General of Texas 

JIM MATTOX 

Attorney General 

my 31, 1985 

supreme Court BUlldhlQ 

P. 0. Box 12549 

Austin. TX. 79711. 2548 

5121475-2591 

Telex 9101574.1367 

Telecopier 5t 21475-0255 

714 Jackson. Suite 700 

Dallas. TX. 75202-4505 

2141742.8944 

4824 AIberIa Ave., Suite 180 

El Paso, TX. 789052793 

915l533.3494 

Eonorable William I?, Robby 

Lieutenant Goverao,r of Texas 

P. 0. Box 12068, C,q?itol Station 

Austin, Texaa 781’11 

Honorable Gib Lewis. Speaker 

Texas Rouee of Repr'esentatives 

P. 0. Box 2910 

Austin, Texas 787 69 

Bonorable Grant JOnaB, Chairman 

Senate Finance Committee 

Texas State Senate 

P. 0. Box 12068, Cepitol Station 

Austin, Texas 78711 

Opinion No. J'M-323 

Re: Whether interest on nonconstitutional funds in state 

highvay fund may be appropriated 

for general revenue purposes 

1001 Texas. Suite 700 

Houston. TX. 77002.311 ,l 

71312236996 

006 Broadway. Suite 312 

Lubbock. TX. 79401.3479 

505/747-5239 

Eonorable Jim Rudd, Chairman 

Rouse Appropriaticns Committee 

Texas Rouse of Representatives 

P. 0. Box 2910 

Auetin, Texas 7t769 

Gentlemen: 

4309 N. Tenth. Suite B You ask whether interest on non-constitutional funds in the state 

McAllen. TX. 79501-1595 highway fund may be appropriated for general revenue purposes by rider 

51215S2-4547 to the General Applwopriations Act. 

200 Main Plaza. Suite 400 Article VIII, section 7-a. of the Texas Constitution dedicates to 

San Antonio. TX. 782052797 highway purposes 

51212254191 

all net revenues remaining after peymsnt of 811 

An Equal Opportunity/ 

Attirmrtive Action Employer 

refunds allowed by law and expenses of collection 

derived :Erom motor vehicle registration fees, and 

all taxlra, except gross production and ad valorem 

taxes, on motor fuels and lubricants used to 

propel wtor vehicles over public roadways. . . . 

The interest on the motor vehicle registration fees and fuel taxes 

dedicated to highcap purposes by article VIII, section 7-a. must also 

be used for highuay purposes. A diversion of that interest to other 

ournoses vould vialate article VIII. section 7 of the Texas ConstituS~.~~~ 

tion. Lavson' V. baker. 220 S.W. 260 (Tex. Civ. App. - Austin 1920. 

vrit ref'd); see ,?m.T.C.S. art. 2543d. 

--- 

p. 1477 
Bonorable William P. Robby 

Ronorable Gib Lawis 

gonorable Grant JOneB 

Ronorable Jim Rudd 

Page 2 (JM-323) 

. 

Article VIII, section 7-a. of the TeXBB Constitution does ‘not 

actually establish a state highway fund , or refer to the fund by name. 

T’he fund was created by statutes which predate the adoption of article 

VIII, section 7-a. in 194(i., See Tex. A.J.Res. 49. 49th Leg., 1945 

Tex. Gen. Laws 1049. Art:Lcle6694, V.T.C.S., which derives from a 

1917 statute, provides that 

[a]11 funds coming into the hands of the Commission derived :Erom the registration fees or 

other sources prcvided for in this subdivision, es 

collected, shall be deposited with the State 

Treasurer to the credit of a special fund designated as ‘The Sta,te Highway Fund’. . . . 

Acts 1917, 35th Leg., ch. ‘l!)O, 423, at 424. Sections 153.503 through 

153.505 of the Texas Tax Code allocate motor fuel taxes to the state 

highvay fund. These provtsions are the current codification of 

statutes enacted in 1941. Acts 1941. 47th Leg., ch. 184. art. XVII, 

525 at 330. The approval of article VIII, section 7-a. in 1946 gave 

constitutional status to d.edications of funds already required by 

statute. 

There are statutory tledications of monies to the state highway 

fund vhich do not have constitutional status. Article 6673a, 

V.T.C.S., requires funds ilerived from the sale of excess land to be 

placed in the state highwy fund. Federal aid money and county aid 

money is deposited in the !state treasury to the credit of the state 

highway fund. V.T.C.S. erl:. 6674e. Article 6674f. V.T.C.S.. provides 

for certain transfers of general revenue to the state highway fund. 

The state highway fund therefore is not a constitutional fund in 

its entirety. It consists of funds dedicated to highvay purposes by 

the constitution as veil 81) funds statutorily required to be placed in 

the highway fund. It thus can be described as a collection of constitutional and non-constitc,tional funds. Only the constitutionally 

dedicated registration fees and motor vehicle fuel taxes are subject 

to the rule that Interest must be spent for constitutionally 

authorized purposes. See ‘I.T.C.S. art. 2543d; Lawson v. Baker, supra. 

The interest on statefunds dedicated by statute to highway purposes 

may be legally severed and placed in the general revenue fund. See 

Gulf Insurance Co. v. Jamek, 185 S.W.2d 966 (Tex. 1945) (article VIII. 

section 7, of Texas Conetitution applies only to special funds created 

by the constitution, not by statutes); Attorney General Opinion w-338 

(1981); see also Bra206 Rbrer Conservation & RBClBBiBtiOn District V. 

HcCrav. 91 S.W.2dmji. 1936) (article VIII, sectlon 7, of the 

Texas Constitution does no,t apply to general revenue funds). 

Article 2543d. V.T.C.S., severs the interest from the principal 

of non-constitutional funds placed in state depositories. 

p. 1478 
Rooorable William P. Bobby 

Honorable Gib Leuie 

lionorable Grant Jones 

Ronorable Jim Rudd 

Page 3 (JM-323) 

Section 1. hterest received on account of 

time depositB of ‘mneye in funds and accounte in 

the charge of the State TreeSUrer shall be allocated es fOllW6: To each constitutional fund 

there shall be credited the pro rata portion of 

the interest rece,lved due to such fund. The remainder of the iwerest received, with the exception of that powion required by other statutes to 

be credited on a pro rsta basis to protested tax 

payments, shall be credited to the General Revenue 

Fund. The intewst received shall be allocated on 

a monthly beBiB. 

. 

Interest on constitutional funds must be credited to the constitutional fund and interest on trust funds must be credited to the trust 

fund. See Attorney Genewl Opinions J&306 (1984); MW-82 (1979); 

E-1040 (1977); M-468 (196’):). Attorney General Opinion M-468 (1969) 

held that certain federal. grant funds vere trust funds, end that 

interest on them could not be transferred to general revenue but 

remained part of the trust fund. 

Article 2543d, V.T.C.S., placed In the general revenue fund 

interest on certain monies in the state highway fund, &, those 

which are neither truBt funds nor constitutionelly dedicated revenues. 

The legislature may appropriate by rider interest vhich article 2543d. 

V.T.C.S., placed in the general revenue fund, so long as the rider is 

not inconsistent with general lav. The validity of’ a particular rider 

depends on its only appr’opriatlng funds or limiting an item of 

appropriation. Sea Tex. Ctmst. ert. III. s35; JeBBeU ABBOCietBB, Inc. 

v. Bullock, 531=.2d 593 (Tex. 1975); Moore v. Sheppard, 192 S.W.2d 

559 (Tex. 1946). 

SUMMARY 

Interest earned on non-constitutional funds in 

the state highuay fund may be appropriated for 

general revenue purposes. 

Very J truly yours, 

A 

JIM UATTOX 

Attorney General of Texas 

TOU GREEN 

First Assistant Attortiey General 

p. 1479 
Aonorsble William P. Robby 

Honorable Gib Levis 

Ronorable Grant Jones 

Honorable Jim Rudd 

Page 4 (a-323) 

DAVID R. RICE&S 

EXeCUtiVe ABBiBtaUt Attorrwy &Ueral 

ROBWT GRAY 

Special Assistant Attorney General 

RICR GILPIN 

Chairman, Opinion Cownittelr 

Prepared by Susan L. Gerrilwn 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Rick Gilpia. Chairman 

Colin Carl 

SuBan GerriBon 

Tony Guillory 

Jim Hoellinger 

Jennifer Riggs 

Nancy Sutton 

Bruce Youngblood 

p. 1480