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. Robert C. Laniw 

Chairman 

State Department o!l Highways 

and Public Transportation 

Dewitt C. Greer Eigbway Bldg. 

11th & Brazes 

Austin, Texas 7awi 

Opinion No. m-321 

Re: Whether interest on coustitutionally dedicated funds may be 

diverted to general revenue by 

statute or by appropriations act 

rider 

Dear hr. Lanier: 

You ask two questions regarding the appropriation of interest ou 

funds dedicated by the conatitutiou to highway purposes. You do not 

Inquire about other: aourcea of tavanue for the atate highway fund. 

You first ask: 

1. C;vi interest on dedicated funds be divert.ed 

to gener,sl revenue by appropriations act rider7 

Article 2543d. V.T.C.S.. governs the disposition of interest on 

time deposits of etate funds. Section 1 of this statute provides as 

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 interest received. vith the exceution of that portion required by other statutes to 

be credited on a pro rata basis to protested tax 

payments, shall be credited to the General Revenue 

Fund. Th,s interest received shall be allocated on 

a aonthlg basis. (Rupbasis added). 

This provision relplires that interest on constitutionally dedicated 

funds be allocated to the principal, and uot to the general revenue 

fund. Attorney Gmeral Opinion h-466 (1969) considered the application of article 2543d, V.T.C.S.. to a number of funds in charge of the 

state treasurer. Three of the funds derived from former article VII, 

section 17 of thf: Texas Constitution, vhich levied a tax to fund 

construction at designated institutions of higher education. See Ten. 

S.J. Res. 4, 50th Leg., 1947 Tex. Gen. Laws 1184; Tex. ST Res. 

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

_- * . 

. t 

24. 59th Leg., 1965 Tex. Gel. Laws 2197. Tbe opinion concluded that 

those three funds were constitutional funds vithiu the meaning of 

article 2543d, V.T.C.S., awl interest received on account of time 

deposits thereon vas to be credited to the fund. 

It is well established that the legielature may not enact, amend, 

or reoeal a neneral law 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:erest on constitutionally dedicated funds 

may not be diverted to general revenue by appropriation act rider in 

contravention of article 2543d, 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 

revenues received from motor 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 legislative appropriaon county and wad district bonds or varrants 

voted or issued prior to January 2. 1939, and 

declared eligible prior 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,nrl tax shall be allocated to the 

Avaflable School Fund. . . . (Emphasis added). 

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

The term “couatructing” in al:ticle VIII, section 7-a. does not Include 

merely the clearlq; and grading of the roadbed and 

the pouring of the concrete, but includes ‘everything appropriate1.y connected with, and uecessarily incidental !:oi the complete accomzplishment’ 

of the general purpose for vhich the fund exists. 

State v. City of Austin, 331 S.W.td 737, 746 (Tex. 1960) (cost of 

utility relocation necessitated by improvement of federally-funded 

highways). 

Article VIII, section 7. of the Texas Constitution prohibits the 

legislature from borrowing, or In any manner diverting from its 

purpose, any special fund. %nstitutional funds can be transferred to 

the general revenue fund 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 Cclurt of Civil Appeals determlned that 

interest earned on a special fund created or recognized by 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 interest on 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 earned by 

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 general rwenr;: 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 general or 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 constitutional purpose, wcluld specially violate section 7, 

article 8. 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 diverting interest OD constitutionally 

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

dedicated funds to general rftvenue. The supreme courts of Missouri 

and Oregon have each considerc!il the question you ask: whether interest 

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); State v. Straub. 630 P.2d 229 (Or. 1965) (en bane). Each 

court relied on Lavson v. Bak M: to hold that the legislature could not 

enact a statute divertinn 

--- 

to the neneral fund the interest on the 

constitutional highway fugd. 

We conclude that the legislature lacks authority to enact a 

statute diverting to the general rwenue fund Interest on the motor 

vehicle fees and motor fuel taxes dedicated to highuay purposes by 

article VIII, section 7-a of the Texas Constitution. 

Interest on constitutionally dedicated funds 

may not be diverted to general revenue by 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 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Susan L. Garrison 

Assistant Attorney General 

p. 1472 
. * 

.’ . 

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

I 

APPROVED: 

OPIRION COHMITTEE 

Rick Gilpin, Chairman 

Jon Bible 

Colio Carl 

Susan Garrison 

Tony Guillory 

Jim noellinger 

Jennifer Riggs 

Nancy Sutton 

Bruce Youngblood 

p. 1473