E OENEY GENERAL
OF -XAS

AUSTIN ~~.TExAs

January 17, 1962

Honorable D. C. Greer State Highway Engineer Texas State Highway Department Austin, Texas OpinionNo. WW-1243

Re: Whether the Texas Highway Departmenthas the authority to purchase steel for the manufacture of licenseplates and whether appropriated funds are available for the purchase of such steel and related Dear Mr. Greer: questions.

In your letter requesting an opinion from this office on the question of whether the Texas Highway Departmenthas the authority to purchase steel for the manufacture of licenseplates and certain other related questions,you mentioned that for many years the Texas Highway Departmenthas obtained the license plates which it issueswith vehicle registrations from the Department of Corrections.

You further mentioned that because of the lack of storage space for the steelwhich goes into the plates, the Department of Correctionshas had to let contracts for the purchase of steelwhich called for monthly deliveries,and that the only bids which the suppliers would submit on this basis included escalator clauses which provided for raislng the bid prices in the event of increases in steelprices, transportation costs, and the likeprior to delivery. Also, in some instances, strikeshave interferedwith the delivery of steel necessitating the purchase of more expensive alumium with which to manufacturethe licenseplates.Honorable D. C. Greer,page 2 (WW-1243)

The Board of Controlhas previously suggested that extra storage spacebe built in order to obtain the savings that could be realized by taking delivery of a year's supply of steel at one time, and pursuant to such sug;eestion

the Legislaturehas appropriated funds for the cor::truction

of a warehouse for suchpurposeswhich is now n,r ,zing completion.

Your letter further mentioned that the Department of Correctionsmanufactures the plates on what approximates a vehicle registrationyear basis and receives their appropriation on a fiscal year basis. At the present time, the Department of Correctionshas expended approximately one-half of their current appropriation on the manufacture of 1962 licenseplates which is now coming to a close. However, at the present time, the Department of Correctionsnot only does not have sufficient funds available to purchase a full year's supply of steel, to thereby take advantage of the financial savingswhich couldbe made by use of their increased storage capacity, but because of the unanticipated Increase in the number of licenseplates required by the passage of House Bill 1082, Acts of the 57th Legislature, Regular Session, 1961, Chapter 259, page 554, the Department of Correctionswill not be able to purchase sufficient materials to sustainproduction of the 1963licenseplates for the remainder of the fiscal year.

Consequently, in order to insure that the production of 1963licenseplates will not be jeopardizedand to obtain for the State the savings that can be realized by the bulk purchase of steel, the Texas Highway Department and the Department of Correctionshave tentatively agreed
on the followingplan:

"1

. The Department of Correctionswill deduct from its fundswhich are currently available for the manufacture of license plates an amount necessary to buy the paint and other suppliesneeded to manufacture the plates and will then requisition and purchase the amount of steel which can be paid for with the remainder of such funds.

"2

. The Highway Departmentwill requisition and purchase any additional steel necessary to produce the 1963plates.Honorable D. C. Greer,page 3. (W-1243)

“3

. The Highway Departmentwill purchase from the Department of Correctionsall the plates it can manufacture from its own steel at the price established as provided in the appropriationbill.
“4

. The remainder of the plates will be manufacturedby the Department of Corrections out of the Highway Department's steel for the sameprice, less the cost of the steel.
“5. After the 1963plates are manufactured, about the end of calendaryear 1962, the Department of Correctionswill have their 1962- 1963appropriation available to purchase a year's supply of steel and can go on into the manufacture of the 1964plates on schedule." (Emphasisadded)

The Comptrollerof Public Accounts has advised the Texas Highway Department that a warrant will not be prepared to pay for steelpurchased by the Texas Highway Department to be used in the manner set forth in the tentative agreement between the Texas Highway Department and the Department of Corrections. The basis for the position of the Comptroller of Public Accounts is that such an arrangementwould in effect supplementthe appropriationsmade to the Department of Corrections for the samepurpose and thus would be in violation of certainprovisions of Article III of Senate Bill 1, Acts of the 57th Legislature,First Called Session, 1961, set fort,h hereafter.

Inview of the position being taken by the Comptroller of Public Accounts you have requested our opinion upon the following questions:

"1

. Does this Departmenthave the authority to purchase steel for the manufacture of licenseplates and funds appropriatedwith which to pay for such steel?

"2

. Do the two Departmentshave the authority to enter Into and carry out an agreement such
as the one outlined above?"Honorable D. C. Greer,page 4

In the departmental Corrections in Senate Bill 1, that: (WW-1243)

appropriationto the Board of there is found the provision

"It is the Intention of the Legislaturethat the 

### sumsappropriatedhereinabove shall constitute the maximum amounts required to operate the Department of Correctionsduring the biennium beginning September 1, 1961, and that except-for the exchange of cottonseed for cottonseedmeal and cake, and other products or by-products of agriculture, livestockor industrialproduction in excess of the quantities required forconsumption shallbe sold, or disposed of through inter-agency contract,and the
revenues accruing shallbe deposited in the GeneralRevenue Fund. Notwithstanding any other provisions of this Act, none of the revenues so deposited are reappropriated except as they shall apply to the sales of equipment, salvage,refunds and to recovered damage claims." (Emphasisadded)

In the departmentalappropriationto TexasHighway Department in Senate Bill 1, there is found the provision that:

"Inaddition to the purposes specified

in appropriation Item No. 13above, any necessary amounts of the moneys thereby appropriatedmay be used in the Highway Department to reimburse the State Prison System for the cost of manufacturingmotor vehicle licenseplates, and said Prison System shallbe reimbursed as licenseplates
are delivered and invoicesare rendered to the Highway Department. At the time manufacture is started, the State Board of Controlor its successor shall fix
a price to be paid per licenseplate, and shalluse as the basis for such price the costs of steel,paints, and other materialspurchased, and the inmate maintenance costper day, and overhead expense, and miscellaneousHonorable D. C. Greer,page 

### 5. (W-1243)

charges, and the amount of profit previously approved for suchwork."

In Section 

### 5 of Article III of Senate Bill 1, entitled Executive, Legislativeand AdministrativeDepartments and Agencies Special Provisions, the Legislaturehas provided that:

"Statemoneys appropriated in this Article are to be construedas the maximum sums to be appropriated to and for the severalpurposes named herein; and the amounts are intended, to cover. and shall cover. the entire cost of the respective items and the
same shallnot be supplemented from any other sources exdepting such Federal funds as are designated or estimated. No expenditures shall' be made, and no obligations incurred, by any department or agency except
as provided by the terms of this Article and by the generalprovisions in ArticleV of this Act." (Emphasis added)

Funds appropriated to the Texas Highway Department in Item No. 

### 13 of the departmentalappropriation found in Article III of Senate Bill 1, may be used by the Texas Highway Department for the purpose 0.fobtaining licenseplates. The pertinent limitationsupon the use of these funds by the Te,xas Highway Department to obtain licenseplates from the Department of Corrections are twofold. First, the method of reimbursing the Department of Corrections for these licenseplates
as set forth In Senate Bill 1, must be followed. Secondly, there must not be any arrangementwhich would, in effect, amount to a supplementalappropriationto the Department of Corrections.

Under the tentative arrangement between the Texas Highway Department and the Department of Corrections, 3heprice paid by the Texas Highway Department for the steel furnished to the Department of Correctionswould be deducted from the amounts reimbursed to the Department of Correctionsby the Texas Highway Department for manufactune of the plates. Consequently,therewould be no finan-Honorable D. C. Greer,page 

### 6. (W-W- 1243)

cial gain to the Department of Corrections,nor would the licenseplates be more costly for the Texas Highway Department to obtain. Therefore,we are of the opinion that the proposed arrangement between the Texas Highway Department and the Department of Correctionswould not result in a supplementalappropriation to the Department of Corrections.

In turn, the method of reimbursing the Department of Corrections for manufacture of the licenseplates would not be altered by the proposed arrangement for the
reason that the price to be paid per licenseplate by the Texas Highway Departmentwill be taking into account the price of the steel furnishedby the Texas Highway Department.

As to the authority of the Texas Highway Department to purchase the steelwhich is to be furnished to the Department of Corrections for the manufacturingof licenseplates, the funds made available to the Texas Highway Department in Item No. 

### 13 of the departmental appropriation to the Texas Highway Department are for the purpose of:

I!

. . . operating expenses involved in establishing,planning, constructing, and maintaining a system of State Highways as contemplatedand set forth in Chapter I, Title 

### 116,Revised Civil Statutes of 1925, and Chapter 

### 186,General Laws, Thirty-ninth Legislature, Regultr Session,and amendments thereto.

. . . The activities of the Texas Highway Department pursuant to Article 

### 6675a-13,under which the Texas Hlghway Departmenthas both the authority and the responsibility to issue licenseplates upon payment of the prescribed registration fee by applicants for motor vehicle registration,and being a provision found In Chapter I, Title 

### 1.16 of the Revised Civil Statutes of 1925, Is therefore a form of activity for which the Texas Highway Departmentmay make expenditures from the funds appropriated to the Texas Highway Departmentby virtue of ItemNo. 

### 13 of the departmentalappropriation..

Honorable D. C. Greer,page 

### 7 (NW-1243)

Should the purchase of material for the manufacture of the licenseplates be necessary to Insure the availability of such licenseplates to the Texas Highway Department in the carrying out of its responsibility to furnish licenseplates, then we are of the opinion that the expenditure of .fundsfor the purchase of such steelwould be,a proper, necessary and legitimateexpenditure of funds appropriated to the Texas Highway Departmentby Item No. 

### 13 of the departmentalappropriation found in Article III of Senate Bill 1. The specialprovision contained in the departmental appropriation to the Texas Highway Department, quoted heretofore, dealingwith reimbursement to the Department of Corrections for manufacture of licenseplates would not serves

as a restrictionupon the Texas Highway Departments

as to the purchase of the steel or upon the furnishing of such steel to the Department of Correctionspursuant to the proposed agreement, as such specialprovisionmerely specifiesthe manner in which the Department of Correctionswill be reimbursed for the licenseplates it manufactures.

As we are of the opinion that the proposed agreement between the Texas Highway Department and Department of Corrections is not in violationwith the provisions of Senate Bill 1, it follows that there is
no prohibition against the Texas Highway Department and Department of Correctionsentering into and carrying out the proposed a reement set forth heretofore. In turn, Article 

### 4413 32),Vernonl~sCivil Statutes,the 7 Interagency CooperationAct, would clearly authorize these agencies to enter into the type of agreement proposed as the terms thereof, under the proposed arrangement in the instant case, would not be in violation of the laws of this state, and particularly Senate Bill 1.

SUMMARY -------

Under the terms of the proposed agreement between the Department of Correctionsand the Texas Highway Department, the TexdS Highway Departmenthas the authiruty to purchase steelwhich willHonorable D. C. Greer,page 8. (WW-1243)

be furnished the Department of Corrections for the manufacture of licenseplates for the Texas Hlghway Department. The purchaseprice of such steel could be paid from the funds appropriated to the Texas Highway Department In Item No. 

### 13 of the departmentalappropriation to the Texas Highway Department found in Article III of Senate Bill 1.

The Department of Correctionsand the Texas Highway Departmenthave the authority to enter into and carry out the agreement set forth herein.

Yours very truly,

WILL WILSON Attorney General of Texas

PB:lg:zt Pat Bailey Assistant t

APPROVED:

OPINION COMMITTEE W. V. Geppert, Chairman

Elmer McVey Howard Mays Winston P. Crowder Bob Eric Shannon

REVIEWED FOR THE ATTORNEY GENERAL BY: Houghton Brownlee, Jr.