E OENEY GENERAL 

OF -XAS 

AUSTIN ~~.TExAs 

January 17, 1962 

Honorable D. C. Greer 

State Highway Engineer 

Texas State Highway Department 

Austin, Texas 

Opinion No. WW-1243 

Re: Whether the Texas Highway 

Department has the authority to purchase steel 

for the manufacture of 

license plates 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 Department has the authority to purchase steel for 

the manufacture of license plates and certain other 

related questions, you mentioned that for many years 

the Texas Highway Department has obtained the license 

plates which it issues with vehicle registrations from 

the Department of Corrections. 

You further mentioned that because of the 

lack of storage space for the steel which goes into the 

plates, the Department of Corrections has had to let contracts for the purchase of steel which 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 steel prices, transportation costs, and 

the like prior to delivery. Also, in some instances, 

strikes have interfered with the delivery of steel 

necessitating the purchase of more expensive alumium 

with which to manufacture the license plates. 
Honorable D. C. Greer, page 2 (WW-1243) 

The Board of Control has previously suggested 

that extra storage space be 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 Legislature has appropriated funds for the 

cor::truction of a warehouse for such purposes which is now 

n,r ,zing completion. 

Your letter further mentioned that the Department of Corrections manufactures the plates on what approximates a vehicle registration year basis and receives their 

appropriation on a fiscal year basis. At the present time, 

the Department of Corrections has expended approximately 

one-half of their current appropriation on the manufacture 

of 1962 license plates which is now coming to a close. However, at the present time, the Department of Corrections not 

only does not have sufficient funds available to purchase a 

full year's supply of steel, to thereby take advantage of 

the financial savings which could be made by use of their 

increased storage capacity, but because of the unanticipated 

Increase in the number of license plates required by the 

passage of House Bill 1082, Acts of the 57th Legislature, 

Regular Session, 1961, Chapter 259, page 554, the Department 

of Corrections will not be able to purchase sufficient 

materials to sustain production of the 1963 license plates 

for the remainder of the fiscal year. 

Consequently, in order to insure that the production of 1963 license plates will not be jeopardized and 

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 Corrections have tentatively agreed 

on the following plan: 

"1 . The Department of Corrections will 

deduct from its funds which are currently 

available for the manufacture of license 

plates an amount necessary to buy the 

paint and other supplies needed 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 Department will requisition and purchase any additional steel 

necessary to produce the 1963 plates. 
Honorable D. C. Greer, page 3. (W-1243) 

“3 . The Highway Department will purchase 

from the Department of Corrections all the 

plates it can manufacture from its own 

steel at the price established as provided 

in the appropriation bill. 

“4 . The remainder of the plates will be 

manufactured by the Department of Corrections out of the Highway Department's 

steel for the same price, less the cost 

of the steel. 

“5. After the 1963 plates are manufactured, 

about the end of calendar year 1962, the Department of Corrections will have their 1962- 

1963 appropriation available to purchase a 

year's supply of steel and can go on into 

the manufacture of the 1964 plates on schedule." 

(Emphasis added) 

The Comptroller of Public Accounts has advised the 

Texas Highway Department that a warrant will not be prepared 

to pay for steel purchased 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 arrangement would in effect 

supplement the appropriations made to the Department of Corrections for the same purpose and thus would be in violation 

of certain provisions of Article III of Senate Bill 1, Acts 

of the 57th Legislature, First Called Session, 1961, set 

fort,h hereafter. 

In view of the position being taken by the Comptroller of Public Accounts you have requested our opinion upon 

the following questions: 

"1 . Does this Department have the authority 

to purchase steel for the manufacture of 

license plates and funds appropriated with 

which to pay for such steel? 

"2 . Do the two Departments have 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) 

appropriation to the Board of 

there is found the provision 

"It is the Intention of the Legislature that 

the sums appropriated hereinabove shall constitute the maximum amounts required to 

operate the Department of Corrections during 

the biennium beginning September 1, 1961, 

and that except-for the exchange of cottonseed for cottonseed meal and cake, and other 

products or by-products of agriculture, 

livestock or industrial production in excess of the quantities required forconsumption shall be sold, or disposed of 

through inter-agency contract, and the 

revenues accruing shall be deposited in 

the General Revenue 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." (Emphasis added) 

In the departmental appropriation to TexasHighway 

Department in Senate Bill 1, there is found the provision 

that: 

"In addition to the purposes specified 

in appropriation Item No. 13 above, any 

necessary amounts of the moneys thereby 

appropriated may be used in the Highway 

Department to reimburse the State Prison 

System for the cost of manufacturing motor 

vehicle license plates, and said Prison System shall be reimbursed as license plates 

are delivered and invoices are rendered 

to the Highway Department. At the time 

manufacture is started, the State Board 

of Control or its successor shall fix 

a price to be paid per license plate, 

and shall use as the basis for such 

price the costs of steel, paints, and 

other materials purchased, and the inmate maintenance cost per day, and 

overhead expense, and miscellaneous 
Honorable D. C. Greer, page 5. (W-1243) 

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

In Section 5 of Article III of Senate Bill 1, 

entitled Executive, Legislative and Administrative Departments and Agencies Special Provisions, the Legislature has provided that: 

"State moneys appropriated in this 

Article are to be construed as the 

maximum sums to be appropriated to 

and for the several purposes named 

herein; and the amounts are intended, 

to cover. and shall cover. the entire 

cost of the respective items and the 

same shall not 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 general provisions 

in Article V of this Act." (Emphasis 

added) 

Funds appropriated to the Texas Highway Department in Item No. 13 of the departmental appropriation 

found in Article III of Senate Bill 1, may be used by 

the Texas Highway Department for the purpose 0.f obtaining license plates. The pertinent limitations upon 

the use of these funds by the Te,xas Highway Department 

to obtain license plates from the Department of Corrections are twofold. First, the method of reimbursing 

the Department of Corrections for these license plates 

as set forth In Senate Bill 1, must be followed. Secondly, there must not be any arrangement which would, in 

effect, amount to a supplemental appropriation to the 

Department of Corrections. 

Under the tentative arrangement between the 

Texas Highway Department and the Department of Corrections, 

3he price paid by the Texas Highway Department for the 

steel furnished to the Department of Corrections would 

be deducted from the amounts reimbursed to the Department 

of Corrections by the Texas Highway Department for manufactune of the plates. Consequently, there would be no finan- 
Honorable D. C. Greer, page 6. (W-W- 1243) 

cial gain to the Department of Corrections, nor would the 

license plates 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 Corrections would not 

result in a supplemental appropriation to the Department 

of Corrections. 

In turn, the method of reimbursing the Department of Corrections for manufacture of the license plates 

would not be altered by the proposed arrangement for the 

reason that the price to be paid per license plate by the 

Texas Highway Department will be taking into account the 

price of the steel furnished by the Texas Highway Department. 

As to the authority of the Texas Highway Department to purchase the steel which is to be furnished to 

the Department of Corrections for the manufacturing of 

license plates, 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 contemplated and 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 Department has both the authority and the responsibility to issue license plates 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 Department may make expenditures from the 

funds appropriated to the Texas Highway Department by 

virtue of Item No. 13 of the departmental appropriation. 
. 

Honorable D. C. Greer, page 7 (NW-1243) 

Should the purchase of material for the manufacture of 

the license plates be necessary to Insure the availability of such license plates to the Texas Highway 

Department in the carrying out of its responsibility 

to furnish license plates, then we are of the opinion 

that the expenditure of .funds for the purchase of such 

steel would be,a proper, necessary and legitimate expenditure of funds appropriated to the Texas Highway 

Department by Item No. 13 of the departmental appropriation found in Article III of Senate Bill 1. The 

special provision contained in the departmental appropriation to the Texas Highway Department, quoted 

heretofore, dealing with reimbursement to the Department of Corrections for manufacture of license plates 

would not serves as a restriction upon the Texas Highway Departments as to the purchase of the steel or 

upon the furnishing of such steel to the Department of 

Corrections pursuant to the proposed agreement, as such 

special provision merely specifies the manner in which 

the Department of Corrections will be reimbursed for 

the license plates it manufactures. 

As we are of the opinion that the proposed 

agreement between the Texas Highway Department and 

Department of Corrections is not in violation with the 

provisions of Senate Bill 1, it follows that there is 

no prohibition against the Texas Highway Department and 

Department of Corrections entering into and carrying 

out the proposed a reement set forth heretofore. In 

turn, Article 4413 7 32), Vernonl~s Civil Statutes, the 

Interagency Cooperation Act, 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 Corrections and the Texas 

Highway Department, the TexdS 

Highway Department has the authiruty to purchase steel which will 
Honorable D. C. Greer, page 8. (WW-1243) 

be furnished the Department of 

Corrections for the manufacture of 

license plates for the Texas Hlghway Department. The purchase price 

of such steel could be paid from 

the funds appropriated to the Texas 

Highway Department In Item No. 13 

of the departmental appropriation 

to the Texas Highway Department 

found in Article III of Senate Bill 

1. 

The Department of Corrections and 

the Texas Highway Department have 

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.