April 24, 1990

Honorable Carlos Valdez Opinion **NO.** JM-1165 Nueces County Attorney Nueces County Courthouse Re: Whether consultant to 901 Leopard, Room 206 private corporation that conCorpus Christi, Texas 78401 tracts with the state receives compensation "directly
or indirectly" from state funds within article XVI, section 40, of the Texas Constitution (RQ-1872)

Dear Mr. Valdez:

You request advice about the application of article XVI, section 40, ofthe Texas Constitution toa consultant contract entered into by the mayor ofCorpus Christi. YOU inform us that themayor, working as an independent contractor, contracted with aprivate corporation that provides services toretarded people. Through contracts with either the State of Texas or with private individuals, the corporation receives revenues from the state **or** private individuals. These revenues are comingled and used to pay business expenses including fees paid to independent contractors such asthemayor.

you also state that themayor was not anemployee of the corporation. She never received asalary orany other benefit paid toemployees, but was strictly aconsultant who contracted onanhourly **basis as** needed. Earlier this year, she terminated her contract with the corporation.

Article XVI, section 40, ofthe Texas Constitution prohibits individuals from holding more than two civil offices of emolument, with certain exceptions. The provision that is relevant to your question, however, applies to state employees and certain other persons compensated directly or indirectly by the state. This provision states as follows:

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State employees or other individuals who receive all or part of their compensation either directly or indirectly from funds of the State ofTexas and who are not State officers, shall not bebarred from serving as members of the governing bodies of school districts, cities, towns, or other local governmental districts; provided, however, that such State employees orother individuals shall receive no salary for serving as members of such governing bodies.

Tex. Const. art. XVI, 540.

Youwish to know whether this language applies to an independent contractor who contracts with aprivate entity that receives part of its revenues under contract with the State ofTexas. An individual who receives compensation "directly or indirectly from funds ofthe State of Texas . . .shall receive no salaryI8for serving as amember ofthe governing body ofacity.

The present language ofarticle XVI, section 40, was adopted in 1972. The amendment was proposed by Senate Joint Resolution 29of the 62d Legislative Session. S.J.R. 29, Acts 1971, 62d Leg., at 4133. The following portion of the title of the resolution describes the provision under consideration:

permitting State employees or certain other individuals, who are not State officers, to serve as members of the governing body of school districts, cities, ortowns, or other local governmental districts without forfeiting their salary for their State employment.
This portion of the 1972 amendment was aresponse to Bovett v. Calvert, 467 S.W.Zd 205 (Tex. Civ. App. - Austin 1971, writ ref'd n.r.e.), s, 405 U.S. 1035 (l-2), which interpreted the text ofarticle XVI, section 33, ofthe Texas Constitution that was repealed in 1972.
w G. Braden, The Constitution ofthe State ofTexas: An Annotated and Comparative Analysis (2d. 1977). Article XVI, section 33, formerly provided that the state would not pay salary orcompensation to any agent, officer or appointee who held any other office orposition ofhonor, trust, or profit under the state. & H.J.R. 27,Acts 1967, 60th

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## -cf., at 2989. Bovett v. Calvert held that employees of Texas A &MUniversity could serve ona city council but could not receive astate salary from the university while doing so. The proposal which amended section 40of article XVI in 1972 also amended section 33. a S.J.R. 29, Acts 1971, 62d Deg., at 4133. The effect ofthe 1972 amendment,
as indicated by its title, was that persons compensated by state funds who held local offices could receive their state salary, but could not receive compensation for the local office.

The repealed version of article XVI, section 33, applied topublic officers and employees atthe stat& and local level. Viewed in this historical context, the provision that was designed tocorrect the Bovett v. Calvert result should apply within the same parameters as former section 33 -- that is, topublic officers and employees. Article XVI, **section 40,**  deals primarily with state and local officers. Inthis context, it isreasonable to read the provision you inquire about as applying to state and local employees, incontrast toofficers, and not reaching
an independent contractor who may provide goods or services inexchange forpayment, some ofwhich istraceable to state funds. The scope ofthe provision isreflected in its language:

State employees or other individuals who

receive [compensation from state funds] . . . who are not State officers . . . . (Emphasis added.)

Tex. Const.art. XVI, §40. We construe the provision you inquire about asapplying to state employees and employees of local government, for example, school teachers, but not to independent contractors. m Attorney General Opinion MW-230 (1980); see also Attorney General Opinion JM-118 (1983) (teacher paid from federal funds who received state retirement benefits).

Aprior opinion ofthis office construing the repealed language ofarticle XVI, section 33, supports our conclusion. Attorney General Opinion V-303 (1947) considered whether that provision barred anemployee of the State Highway Department from working asan independent contractor for a school district. The relevant language of that constitutional provision read as follows:

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The accounting officers of this State shall neither draw nor pay awarrant upon the Treasury in favor ofany person for salary or compensation asagent, officer of appointee, who holds atthe same time any other office
orposition ofhonor, trust, orprofit under this State. . . .
H.J.R. 27,Acts 1967, 60th Leg., at 2989.

The opinion stated that aperson holding an "office or position ofhonor, trust orprofit" inaschool district, would be holding it "under this State." An independent contractor, however, was not an agent or employee of the school district. See also Attorney General Opinion MW-129 (1980) (an independent contractor isnot an employee for purposes ofthe Open Meetings Act). Thus, apredecessor of the relevant provision inarticle XVI, section 40, did not reach someone who was an independent contractor of a school district. Themayor ofCorpus Christi was an independent contractor ofaprivate corporation that contracts with the State of Texas --amuch more remote relationship with a public entity than that discussed in Attorney General Opinion V-303. Finally, Attorney General Opinion JM-782 (1987) also lends support to our construction of this provision. It construed the language ofarticle III, section 18, of the Texas Constitution that bars members ofthe legislature from being "interested, either directly or indirectly, in any contract with the State, orany county thereof, authorized by any law passed during the term forwhich hewas elected." The legislator wished tobe employed by atransit system that received state-administered federal grant funds. The transit system was operated by a nonprofit corporation established by political subdivisions to receive and administer federal grant funds under various federal programs. We stated that the legislator as employee of the transit system would have nodirect or indirect interest in any contract with the state. His interest inany contract with the state was too remote tobe an indirect interest under section 18ofarticle III. Accordingly, article XVI, section 40, does not prohibit themayor ofCorpus Christi from contracting asan independent contractor with a private corporation that receives state funds under contract with the state. Inview‘of our

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answer to your first question, we need not answer your second question.

SUMMARY

An individual who contracts asan independent contractor with a private corporation that receives state funds under contract with the state does not receive all orpart ofhis "compensation either directly or indirectly from funds of the State of Texas" within article XVI, section 40, ofthe Texas Constitution. The individual may serve asamember ofthe governing body ofaschool district, city, town, or other local governmental district and receive salary for that service.

JIM MATTOX. Attorney General ofTexas

P MARY KELLER

First Assistant Attorney General

JUDGE ZOLLIE STEAKLHY Special Assistant Attorney General

RENEA HICKS Special Assistant Attorney General

RICK GILPIN Chairman, Opinion Committee
Prepared by Susan L.Garrison Assistant Attorney General

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