JIM MAlTOX Attorney

General
Supreme Ccd Building P. 0. Box 1254S Auslln. TX. 76711~2543 51214752501 Telex 9101874.1367 Telecopier 512I475-0266

714 Jackson. Suite 7W Dallas, TX. 752024506 214ll4269)4

4824 Alberta Ave.. Suite 160 El Paso, TX. 79935.2793 OlY533as4

1001 Texas. Suite 700 Houston. TX. 77002.3111 71Y223.5886

806 Broadway. Suite 312 Lubbock, TX. 79401-3479 SO6n47.5238

4309 N. Tenth. Suite B HcAllen. TX. 78501-1685 51216824547

2130 Main Plaza, Suite 400 San Antonio, TX. 782052797 51m254181

An Equal OpPCWtUnitYl Afflrmstlva Action EmPlOYer 

# The Attorney General of Texas

HB:V 28. 1985

hr. RobertC. Laniw Chairman StateDepartment

o!l Highways and PublicTransportation Dewitt C. Greer Eigbway Bldg. 11th & Brazes Austin,

Texas 7awi Opinion No. m-321
Re: Whether intereston coustitutionallydedicated funds may be diverted to general revenue by statuteor by appropriations act rider
Dear hr. Lanier:
You ask two questionsregarding the appropriation

of interest

ou funds dedicated

by the conatitutiou to highwaypurposes. You do not Inquire about other: aourcea of tavanue for the atate highway fund. You first **ask:**1. C;vi intereston dedicated fundsbe divert.ed to gener,sl

revenueby appropriations act rider7 Article 2543d. V.T.C.S.. governsthe disposition of intereston time depositsof etate funds. Section1 of this statute providesas follow: Section 1. Interest received on account of

time deposits of moneys in funds and accounts in the charne'of the State Treasurer shall be allocated al; follows: To each constitutional fund there aball be credited the pro rata portion of the int&eat received due to such fund. The remainder DE the interestreceived. vith the exceution **of** that portion required by other statutesto be credited on a pro rata basis to protested tax payments,shall be credited to the GeneralRevenue Fund. Th,s

interestreceived

shall be allocated

on a aonthlgbasis. (Rupbasis added). This provision relplires that intereston constitutionally dedicated funds be allocated to the principal, and uot to the general revenue fund. AttorneyGmeral Opinion h-466 (1969)consideredthe application of article2543d,V.T.C.S..to a numberof funds in charge of the state treasurer. Three of the fundsderivedfrom former articleVII, section 17 of thf:Texas Constitution, vhich levied a tax to fund construction

at designatedinstitutions of highereducation. See Ten. S.J. Res. 4, 50th Leg., 1947 Tex. Gen. Laws 1184; Tex. ST Res.

p. 1469Pk. Robert C. Lanier - Page i! (.I&321) _- *

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24. 59th Leg., 1965 Tex. Gel. Laws 2197. Tbe opinion concludedthat those three funds were constitutional funds vithiu the meaning of article 2543d, V.T.C.S., awl interest received **on** account of time depositsthereon

vas to be credited to the fund.
It is well established that the legielature may not enact,amend, or reoeala nenerallaw by rmorooriation act rider. Tex. Const. art. III, 935; Moore v. Sheppard;,' 192 S.U.2d 559 (Tex. 1946); Linden v. E%r 49 s.w. 578 (Tex.-'ta99); Attorney General Opinions J?i-167 m-104 (1979): n-1:.41 (1972): V-1254, V-1253 (1951);G-552 .~.~ . . (1939). A ride; which attempted tom -appropriate

to general revenue interest received on account of time deposits of constitutionally dedicated funds would be isvalid as an attempt to amend or repeal article 2543d,V.T.C.S. Iu:ereston constitutionally dedicatedfunds may not be divertedto general revenueby appropriation act rider in contravention

of article2543d,

V.T.C.S. YOU next **ask:**

2. Is it perrlsaible to divert intereat by atatute on highway department constitutionally dedicated

funds to general**revenue?**
Article VIII, section l-a of the Texas Constitution dedicates revenuesreceivedfrommotor vehicle registration fees and motor fuel taxes to the provision, maintenance,

and policing

of public roadways. This constitutional provision

states in part: Sec. 7-a. Sub.ject to legislativeappropriaon county and wad district bonds or varrants voted or issued prior to January 2. 1939, and declaredeligibleprior to January 2, 1945, for payment out of the County and Road District Righway Fund uniier existing lav; provided, bowever, that one-f'curth (l/4) of such net revenue from the motor f,nrltax shall be allocated to the Avaflable School Fund.
. . . (Emphasis added).

p. 1470Hr. Robert C. Lanler - Page 1’ (JIG321)

The term “couatructing” in al:ticle

VIII, section7-a. does not Include merely the clearlq; and grading

of the roadbedand the pouringof the concrete, but includes ‘everything appropriate1.y connected with, and uecessarily incidental

!:oi the complete

accomzplishment’ of the general

purposefor vhich the fund exists. State v. City of Austin, 331 S.W.td 737, 746 (Tex. 1960) (cost of utility relocationnecessitated by improvementof federally-funded highways). ArticleVIII, section7. of the Texas Constitution prohibitsthe legislature from borrowing, or In any manner diverting from its purpose,any specialfund. %nstitutional funds can be transferred to the generalrevenuefund only by constitutional amendment. Carroll V. Williams,202 S.U. 504 (Tex. ‘1918) (county

funds).
In Lawson v. Baker, 221) S.W. 260 (Tex. Civ. App. - Austin 1920. writ ref‘d), the Austin Cclurtof Civil Appeals determlned that interest earned on a special fund created or recognizedby the conatitutlou

became part of tihat fund. A taxpayer

brought the suit to test the constitutionality of the State Depository Law enacted in 1919. Acts 1919, 36th Leg.,, ch. 145, at 266. The law provided that the intereston all funds deposited would become part of the general revenue. Id. at 269 (former article 2427 R.C.S.). The court stated as follows?

We think it is cle.ar that the interest earnedby deposit of speci;l:l funds is an increment that accrues to such special fund, and any attempt of the Legislature

to make such interest a part of the generalrwenr;:is futile. in the face of the constitutional

pn%isions creating or dedicating these funds to sprzial purposes. The broad language of the act would seem to make the interest upon all funds,

wt.ether

generalor special, become part of the general revenue,and this portion of the law, if so construed, would authorize

a diversion of the special funds from their constitutionalpurpose,

wcluld specially

violate section7, article8. and would be unconstitutional and void. (Emphasis

added).
Lawson v. Baker, supra, at 272. The court found that the statute could be upheld by a construction allocating

to constitutional

funds the interest earned thereon or by severing the unconstitutional portion. According to the opinion in Lawson V. Baker, the legislature lacks paver to enact a statute divertinginterest OD constitutionally

p. 1471Mr. Robert C. Lanier - Page 4 (JR-3211

dedicated funds to general rftvenue. The supreme courts of Missouri and Oregonhave each considerc!il the question

you **ask:** whetherinterest earned on a constitutionally d.adicated

highway fund must be credited to that fund. State Eiuhwa< Cowlsdon v, Sr&nhove~, 504 S.W.Zd 121 (Ho. 1973); Statev. Straub. 630 P.2d 229 (Or. 1965) (en bane). Each court relied on Lavson v. Bak M: to hold that the legislature couldnot enact a statute divertinn --- to the neneral fund the interest on the constitutional

highway fugd. We conclude that the legislaturelacks authority to enact a statute divertingto the general rwenue fund Interest on the motor vehicle fees and motor fuel taxes dedicated to highuay purposesby articleVIII, section7-a of the Texas Constitution.

Interest on constitutionally dedicated funds may not be divertedto general revenueby appropriation act ride>: in contravention of article 2543d. V.T.C.S. The legislature lacks authority to enact a statute diverting ,to the general revenue fund interest

on the motor vehicle fees and **motor** fuel taxes dedicated to highway purposes by article VIII. section

7-a c~f the Texas Constitution.

.I In MATTOX Attorney

General

of Texas TOM GREEN First Assistant

Attorney

Gen,r:cal
DAVID R. RICRARDS Executive

Assistant

Attorney (General ROBERT GRAY SpecialAssistant Attorney General RICK GILPIN Chairman,

OpinionCommittee Prepared

by SusanL. Garrison Assistant

Attorney

General

p. 1472. *

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. T Wt. RobertC. Lanier - Page 5 (J?I-321) I

APPROVED:

OPIRIONCOHMITTEE Rick Gilpin,Chairman Jon Bible Colio Carl Susan Garrison Tony Guillory Jim noellinger Jennifer

Riggs Nancy Sutton Bruce Youngblood

p. 1473