HEA~JTORNEY GENERAL
OFTEXAS

GROVER SRDDRRS

A=rrORNncY GENEHAI.

Honorable John R. Shook CriminalDistrict Attorney Bexar County San Antonio, Texas

Dear Sir: OpinionNO. O-7054 Re: Authorltg of county to issue timewarrants formaintenance and operating expenses of county hospital.

We have your letter of July 6, 1946, inwhich you request an opinion from this department on the following question in behalf of the Bexar County Commissioners'Court:

"AZ to whether or not said Court is empowered under.the law to authorize the issuance of General Fund Time Warrants for the purpose of maintaining and operating the Robert B. Green MemorialHospital, San Antonio, Texas."
Attached to your opinion request is a letter from the County Judge of Bexar County, setting forth the background of this reouezt, and from which letterwe quote in part as followz: - -

"The (hospital)appropriation as made in the 1946 Bexar County budget will practically be exhausted In its entiretynot later than September 15th next. Unless it will be possible for the Commissioners'Court to provide funds by and through the issuance of General Fund Time Warrants for its continued operation and maintenance after saiddate to December 31zt, the end of the fiscal year, the Board of Managers of saidHospital will be facedwith no alternative other than to close this institution."

In answering your question,we will consider first the general power of a county to issue timewarrants.

Prior to 1903 therewas no provision in our statutes for the issuance of bonds, and the courts held that counties had the impliedauthority to issue timewarrants for the construction of permanent improvements. Stratton v. Commissioners'Honorable John R. Shook, page 2 O-7054

Court ofKinney County, 137 S.W. 1170; Cowan et al v. Dupree et al, 139 S.W. 887; Commissioners'Court of Floyd County et al v. Nichols et al, 151 S.W. 348. 142 S.W. 37; Allen v. Abernathy et al,

Some time after these decisions the Legislature authorized the issuance of bonds for courthouses, jails, public roads, etc.

Later, in the case of Lazater v. Lopez, 217 S.W. 373, the Supreme Court held that itwas within the discretion of the Commissioners'Courtwhether they issued timewarrants or bonds for the construction of permanent improvements. In this opinion Judge Phillipsdeals at lengthwith the constitutional and legislative enactmentswhich gave the commizzioners' courts authority to issueboth warrants and bonds.

In themore recent case of Adams v. McGill, 146 S.W. (2d) 332, inwhich this department intervened,the court held that under .astatuteauthorizing a county to provide for annual exhibitions of horticulturaland agriculturalproducts, the county had the impliedpower to issue time warrants payable over a period of years for improvementsto livestockand agriculturalbuildings.

The general rule, as stated inAdams v. McGill (supra),that the countymay issue time~warrantz in payment for improvementswhich it is expresslyauthorized to construct, is,we believe, extendedby the Su reme Court in the case of Bexar County v. Mann, 157 S.W. (2d P 134, to authorize the issuanceof timewarrants Inpayment for debts createdby a county in accomplishment of any object for which it is authorizedby law to expendmoney.

In the Bexar County case (supra) the county had entered into a contract to purchase voting machines and had lzsuedbonds therefor chargeableagainst the general~fund,pursuant to Art. 2997a,V.A.C.S., which authorized suchpurchase and such bonds but which statutedid not expresslyprovide that suchbonds were to be charged against the county general fund. This department, the respondent in that case, contended that the constitutional twenty-five-centgeneral fund tax shouldbe applied only to the payment of the ordinary or current operating expense of a county and that such expensedoes not embrace or contemplate the payment of bonds or time warrants and the interest thereon,being confined to the payment of officers' salaries,purchasing of supplies, caring for paupers and providing for the actual and necessaryday-to-day expenses. We contended that if a county can appropriatepart of this tax for a series of future years, it can pledge all of it and thus deprive itself of the revenues to pay currentHonorable John R. Shook, page 3 O-7054

operating expenses,and that pledging the current Income for the payment of bonds or warrants and interest theronbeyond the current yearwould be subversive of the structure of the county government itself. Judge Critz overruled our conten-. tion in that case, holding:

"In our opinion, our decisions have already settled it as the law of this State that the general fund tax of twenty-five cents, authorized to be levied by counties for 'countypurposes'by Section 9 of ArticleVIII of our Constitution,can be pledged for the payment of obligations or bonds, the maturities of which extendbeyond the current fiscal year for which said tax was levied. It follows that the statuteunder considerationhere,which authorizesbonds to be issued payable over a series of years out of a county's general fund tax, does not violate the above constitutionalprovision. Cazz County v. Wilbarger County,,

25 Tex. Civ.App. 52, 60 S.W. 988,writ refused;Hidalgo County v. Haney, Tex. Civ. App., 67 S.W. (2a) 409.

II

. . . The only question here involved is the power of the commissioners'court to charge the twenty-five cents tax authorizedby Section 9 of ArticleVIII of our Conztltutionwith obligationspayable beyond the current year for which such ,taxis levied; and as to that power no difference can exist betweenwarrants and bonds running beyond the current year. The onlymaterial difference betweenwarrants and bonds is that warrants are not negotiable,while bonds are.
"InHidalgo County v. Haney, zupra, the San Antonio Court of Civil Appeals had before it for decision the validity of $30,000 in county warrants payable out of the twenty-five cents general fund of the county, running over a number of gears, issuedby Hldalgo County for tick eradicationpurposesby authority of Section 5 of H.B. ;0,,~77, Ch. 53, Gen. Laws, 41st Leg. 1929, 1st called

p. 128, Code;'lg36. Article 1525o, Section 5, Vernon's Penal

We shall not attempt a full discussion of this opinion. It

is sufficient to zag that it upholds the power of the Legislature to provide for the issuance of the warrants justdescribed. (I

. . .When we approach this case as an original queztlon,we are una'bleto find any words in the constitutional provizion involvedwhich limit the power of a county to levy taxes thereunder for the currentyear only. The constitutionalprovision Itself simply llmitz the power to 'countypurposes'.Honorable John R. Shook, page 4 O-7054

Nothing is said about the current year, and certainly the declzionz of this State have declined to read that provision into it. The only provision in our Constitutionwhich limits the power to levy the twenty-five cents tax authorizedby the constitutionalprovisionunder discussion for debts payable beyond the current year, is Section 7 of Article XI, which provides: 'Butno debt for any purpose shall everbe incurred in any manner by any. . . .countyunless provision
IS made, at the time of creating the same, for levying and collectinga sufficient tax to pa the interestthereon and provide at least two per cent (2% Y as a sinking fund.' This last-mentionedconstitutionalprovision has been complied with in the order authorizing the issuance of these bonds."

We believe it is therefore establishedby the above decision that a county has the authority not only to issue timewarrants for permanent improvementsbut also to pledge ltz general fund for the issuance of timewarrants to pay for any pmllc purpose of the county authorizedby law, provided such expendituredoes not come or fall under any purpose for which a special fund has been provided, such as permanent improvements.'

In 1913 the Legislature of Texas authorized the establishmentof county hospitals and provided for the election for the issuance of bonds for the cost of the erection of same, and provided for their operationand maintenance from general fund taxes. This act has been brought forward inVernon's Annotated Civil Statutes as Articles 4478 to 4495 and Article 4437a.

In the case of Seydler et al v. Border et al, 150 S.W. (2d 72, the Galveston Court of CivilAppeals held that Article 478 was constitutionaland that the same authorized counties to issuebonds for the constructionand equipment of county hospitals. The court also held that the issuance of bonds for the constructionand maintenance of hospitalsby countyunits for the care of the sick constituted "public purpose" as distinguished from a private purpose.

It is our understanding that the Robert B. Green Hospital Is a county hospital and has been duly and legally establishedunder the authority of Articles 4478 to 4495, V.A.C.S. Accordingly,we answer your question in the affirmative, holding that the Commissioners'Court of Bexar County has, subject to the express restrictions imposedby the Constitutionand General Laws, power to issue timewarrants for the payment of expenses Incurred in the operationand- -.-.

,

Honorable John R. Shook,page 5 Q-7054

maintenance of the county hospital, the samebeing 'a county public purpose",pledging therefore itsgeneral fund, provided that the applicable regulations relating to the issuance of suchwarrants are strictly observed.

We do not believe that our previous opinionNo. O-6819, to which you refer in your letter, attempts to answer the specU'icquestion raised herein,but if any part of such previous opinion 1s Inconsistentwith the above answer, than suchpart of opinionNo. O-6819 Is expressly overruled.

In your letter from which we quote as follows, you make a furtherrequest:

"Ii ow, in the eventyou hold that time warrants may be Issued under the circumstances set out In Judge Anderson's letter, thenwill you answer for us the following questions:
"1

. Can such timewarrants be issuedafter a budget has been formulatedand approvedby the Commissioners' Court, In which saidbudget the Robert B. Green Hospital and the Tuberculosis ControlBoard had had budgeted for their use the sum of 194 on the $100 valuationwhen the maximum amount provided for such Institutionsby the Hospital Law is 20# on the $100valuation?
"2

. Can such time warrants be Issuedwhen the issuance of same, the expenditureof suchmoney, Fncreases the total amount of the budget for the year 1946 by the sum sought to be issued?

“3

. Can the budget at this time be amended so as to provide additional funds for the Robert B. Green Hospital when such amendmentwould increase the amount spent during the calendar year 1946 in an amount of $75,000 over and above the amount of cash on hand at the beginning of the year, and the anticipatedrevenues for the current year, as set up in the 1946 budget?

'Becauseof the urgent nature of Judge Anderson's letter,we would appreciate your expediting the delivery of your opln%on as much as possible."

Your first two questions apparently assume that the 1946 budget controls the issuance of time warrants; in other words, that the 1946 budget must havemade provision for the issuance In 1946 of timewarrants In order for suchwarrants to be valid.Honorable John R. Shook, page 6 O-7054 c

We believe the correctview is that the budget is prepared and adopted as a basis for levy for taxes and in contemplationof expendrtures for a particular fiscal year, such expendituresbeing based on such taxes. Thus any expenditure of funds pursuant to such budgetwould involve only...those

obligationsto be paid during the particular ',fiscal year coveredby such budget, and such expenditure woulCr be classifiedas a current expenditure.
The issuance of timewarrants is one of the methods authorized for the payment of-a debt against a county, and the term "debt"refers to obligations to be satisfied out of future revenuesderived from tax levies, as distinct from obligations to be satisfied out of current revenues.

In view of the fact that the budget contemplates only"expendituresout of current revenues for the current fiscalyear, and since time warrants when issued constitute a debt, and therefore involve only future levies to be aerived from taxation, then the matter of the issuance of time warrants during a current fiscal year would have no relation to the currentyear's budget. Of course, adequate provision must be made in the budget for future years, and a tax levy for the purpose of providing funds for the payment of such debt servicemust be made.

Your third question is answered in the negative. Certainly the budget cannot provide for the expenditureof more funds than exist in the amount of cash on hand at the beginning of the year plus the anticipatedrevenues for the currentyear. It is to be noted, however, that the issuance of time warrants In 1946 will not operate to amend the 1946 budget, as pointed out in our above answer to your first two questions.

Trusting thatwe have fully answered all your questionswe are

WNB:fb:wc
APPROVEDAUG 12, 1946 s/Carlos C. Ashley *FIRSTASSISTANT ATTORNEYGENERAL Very truly yours ATTORNEY GENERAL OF TEXAS By s/W.N. Blanton W N Blanton' iz!

. . Assiitant

Approved Opinion CommitteeBy s/BWB Chairman