.



# The Attorney General ofTexas

JIMMATTOX AttorneyGeneral my 31, 1985

supreme

Court BUlldhlQ P.0. Box12549 Austin.TX. 79711.2548 5121475-2591 Telex 9101574.1367 Telecopier 5t21475-0255

714Jackson. Suite700 Dallas.TX. 75202-4505 2141742.8944

4824AIberIa Ave.,Suite 180 ElPaso,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. Box2910 Austin, Texas 78769 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 maybe appropriated for general revenue purposes

1001Texas.Suite700 Houston.TX.77002.311,l 71312236996

006Broadway.Suite312 Lubbock.TX. 79401.3479 505/747-5239 Eonorable JimRudd, Chairman Rouse Appropriaticns Committee Texas Rouse of Representatives P. 0. Box2910 Auetin, Texas 7t769 Gentlemen:

4309N.Tenth.Suite B Youaskwhether interest onnon-constitutional funds in the state McAllen.TX.79501-1595 highway fund maybe appropriated for general revenue purposes by rider 51215S2-4547 to the General Applwopriations Act.

200MainPlaza.Suite400 Article VIII, section 7-a. of the Texas Constitution dedicates to SanAntonio.TX. 782052797 highway purposes 51212254191 all net revenues remaining after peymsnt **of** 811
AnEqualOpportunity/ Attirmrtive Action Employer refunds allowed by law and expenses of collection derived :Erommotor vehicle registration fees, and all taxlra, except gross production and advalorem 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 7of 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. 1477Bonorable William P. Robby Ronorable Gib Lawis gonorable Grant JOneB Ronorable JimRudd 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’hefund wascreated 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 :Eromthe 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 HighwayFund’

. . . . 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 asveil 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; Lawsonv. Baker, supra. The interest on statefunds dedicated by statute to highway purposes maybe legally severed and placed in the general revenue fund. See Gulf Insurance Co. v. Jamek, 185S.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. 1478Rooorable William P. Bobby Honorable GibLeuie lionorable Grant Jones Ronorable JimRudd 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. Theintewst received shall be allocated on amonthly 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. Thelegislature mayappropriate 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. Thevalidity of ’ aparticular rider depends on its only appr’opriatlng funds or limiting an item of appropriation. SeaTex. Ctmst. ert. III. s35; JeBBeUABBOCietBB, Inc. v. Bullock, 531=.2d 593 (Tex. 1975); Moore v. Sheppard, 192S.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 

# Jtruly yours,

A JIM UATTOX Attorney General of Texas TOUGREEN First Assistant Attortiey General

p. 1479Aonorsble William P. Robby Honorable Gib Levis Ronorable Grant Jones Honorable JimRudd Page 4 (a-323)

DAVIDR. RICE&S EXeCUtiVe ABBiBtaUt **Attorrwy** &Ueral
ROBWTGRAY Special **Assistant Attorney**  General
RICRGILPIN Chairman, Opinion Cownittelr Prepared by SusanL. Gerrilwn Assistant **Attorney** General
APPROVED: OPINIONCOMMITTEE
Rick Gilpia. Chairman Colin Carl SuBan GerriBon TonyGuillory JimHoellinger Jennifer Riggs **Nancy** Sutton Bruce Youngblood

p. 1480