Hon. Larry 0. Cox 

Executive Director 

Board for Texas State Hospitals 

and Special Schools 

Austin, Texas opinion No. v-l363 

Re: Legality of comuiencing a 

construction project in this 

fiscal year to be paid partly 

from funds appropriated for 

the first yeai and partly 

from funds appropriated for 

Dear Mr. cox: 

the second year of the bienniun. 

Your request for an opinion is, in part, as 

follows:~ 

"We desire ihe opinion of your office regarding the legality of comendhg a construetion project in one ffscal year to be paid partially out of that year's appropriated funds,and 

@u-tially out:of fhe.:;'succeed~.;%isc~ ycar?js appropriated funds, both years being in the same biennium. 

"Section 26 of H.B. NO. 426, 52na Legislature, Regular Session, made an'appropriation of 

$5,COO,OOO.O0 for each fiscal year of the biennium ending August 31, 1953; to the State Hospitals and Special Schobls Butldm Fund. On 

the basis of Section 26, the Board for Texas 

State Hospitals and Special Schools set up an 

allocation for the first fiscal year bf $1,5OO,OOO.O0 

for repairs 6.M an allocation of $3,500,000.00 

for new constiwctioti. The Board has under contract or in the process of being contracted 

$1,138,500.00 for repairs and $3,200,000.00 for 

new construction, leaving a balance of $300,000.00 

in the new construction allocation. 

'The balance of $300,000.00~ for new construction is not sufficient to allow the Board 

to contract for a new project. 
- , 

Hon. Larry 0. Cox, page 2 (v-1363) 

"If it is legally possible, the Board 

would like to enter into a contract, during 

this fiscal year, for a project in excess of 

$300,000.00. The Board will make the sums 

allocation during the second fiscal year of 

the biennium, that is, $1,500,000.00 to repairs and $3,500,000.00 to new construction. 

"We do not think there is any question 

that we can legally encumber the balance of 

$3OO,OOO.OC during this fiscal year, even 

though the project will not be completed and 

paid for until the succeeding fiscal year. 

Nor do we think there is any question that 

we can legally contract and encumber at this 

time the funds that will be available to us 

in the second fiscal year of the biennium, 

so long as no payment is made until the beginning of the second fiscal year. Therefore, 

it logically follows that the Board may enter 

into a new construction contract in excess of 

the balance of $300,000.00 so long as we do 

not attempt to pay out more than $300,000.00 

during this fiscal year and the balance after 

this fiscal year. 

"It is the interpretation of the State 

Comptroller that .should an appropriationfor 

any particular building be insufficient in 

any one fiscal year, then the building cannot be built. 

?Should ws grant that the State Comptroller 

is correct in his interpretation of the law, we 

believe that such interpretation would not apply in our case due to the fact that our appropriation of $5,000,000.00 each fiscal year is 

not for any particular building but, as set out 

in Subsection B of Section 26 of~the aforesaid 

appropriation bill, '. . . for the purpose of 

architectural and engineering plans, constructing, repairing, and equipping such buildings as 

in the opinion of the Board are necessary to the 

proper care of those committed or to be committed to such hospitals and special schools according to law. . .I." 

We have been unable to find sny constitutional 

prohibition which would preclude the Board for Texas 

State Hospitals and Special Schools from entering into 
. - Hon. Larry 0. Cox, page 3 (v-1363) 

a construction contract in one fiscal year with partial funds 

of that year's appropriation and partial funds from the succeeding fiscal year's~appropriation if both years are in the 

same biennium. This method of expenditure would not be violative 

of Section 49, Article III, Constitution of Texas, prohibiting 

the creation of a debt by or on behalf of the State, since the 

obligation incurred by the contract would be payable out of 

appropriations, within the biennium~for which revenues have 

been provided. Charles Scribner's Sons v. Marrs, ll4 Tex. 11, 

&2&W. 722 (1924); Schmoldt v. Bolan, 80 P.2d 609 (Okra. SUP. 

. And since ~the contract would not call for an exoendit&e.of money beyond the amounts appropriate& for the current 

biennium, it would not violate Article VIII, Section 6. 

You have correctly stated that the balance of 

$300,000 in this year's appropriationmay legally be encunioered during this fiscal year, even though the project for which 

it is spent will not be completed md paid for until the succeeding fiscal year. In ~tt'y Gen. Op. o-2631 (1940), it was 

held that capital assets may be purchased out of a current appropriation, although the article purchased will not be delivered 

and paid for until after the close of the fiscal year. 

We a*lso agree with your statement that you msy legally encumber at‘this time the fun& which will be available to 

you in the second fiscal year of the biennium, so long as no 

payment is made until the beginning of the second fiscal year. 

Au opinion appearing in Reports and Opinions of the Att'y Cen., 

1914-1916, p. 695, held that a contract for the erection of a 

building atone of the State colleges could be made prior to 

the date on which the appropriation became available. The opinion stated: 

'The fact that this $l25,000.00 appropriated 

for the erection of a dormitory and dining room 

is notavailable until the 1st. day of September, 

1916, does not postpone the taking effect of this 

Act of the Legislature until that date. This Act 

is as much the law now as it will be subsequent 

to September 1, 1916, and the Board of Regents would 

bewarranted in letting the contract for the erection of said building at the present time or at 

any time after the enactment of-such law and prior 

to August 31, 1917, the expiration of the fiscal 

period for which appropriation is made. 

"Of course, as this $l25,000.00 is by express 

provision of the Act notavailable until September 1, 1916, no warrants could be drawn or .payments 
Hon. Larry O. COX, page 4 (v-1363) 

made out of same until that date." 

See Att'y Cen. Ops. O-2239 (1940), O-6011 (1944); 

and V-1139 (1950) for similar holdings. 

Inasmuch as your Board may now contract for ~expenditure of the $300,000 balance in the current appropriation, 

even though payment is not to be made until the succeeding 

fiscal year, snd inasmuch as it may also contract for construction to be paidfor out of the appropriation for the succeeding fiscal year, we must determine if there is any reason why 

portions of these two appropriations may not be expended on 

the same project. The question becomes one of legislative intent--whether the Legislature intended that the cost of each 

construction project must be paid completely out of a single 

year's~appropriation or whether it intended only that $5,OOO,OCvJ 

each year should be available for use by the Board on whatever 

projects it undertook. 

The State Hospitals and Special Schools Building 

Fund was created by House Bill 2, Acts 5lst leg., 1st C.S. 

1950, ch. 1, p. 1 (Art. 7047c-1, V.C.S.), which increased the 

tax on cigarettes and allocated to this fund a percentage of 

the net revenues from the tax, not to exceed $5,OOO,OOC for 

each fiscal year, through August 31, 1957. .House Bill 2 provided that the moneys appropriated to the Board from the Building Fund were to be used "for the purpose of constructing, repairing and equipping such buildings as in the opinion of the 

Board are necessary to the proper care of those committed or to 

be committed to such hospitals and spedal:schools according 

to l&w." 

The current appropriation bill, House Bill 426, Acts 

52nd Leg., R.S. 1951, ch. 499, p. 1228, likewise permits the 

Board.to use these funds for the construction of such buildings 

as in the opinion of the Board are necessary. Section 26(b), 

Article II of House Bill 426 reads: 

"All funds credited to the State Hospitals and 

Special SchoqJs Building Fund under this Article are 

hereby appropriated to the Board for Texas State 

Hospitals and Special Schools for the purpose of 

architectural and engineering plans, constructing, 

repairing, and equipping such buildings as in the 

opinion of the Board are necessary to the proper 

care of those committed or to be committed to such 

hospitals and special schools according to law. Provided, however~, the fees paid to an architect shall 

not exceed six per cent (6) for the plans, specifications and supervision of construction of said 
. - 

Hon. Larry 0. Cox, page 5 (v-1363) 

buildings and all constnxtion contracts made 

for, and the final acceptance in connection 

with such construction, other than the plans 

and specifications, shall be subject to the 

review and approval of the Board of Control. 

The Board may contract for, and pay for plans 

and specifications for sny contemplated constN&ionj even though the contract for such 

plans and specifications may be made in one 

(1) year and the contract for construction is 

entered into the following year." 

The Legislature has not designated that the appropriated funds be used for the construction of s$ecific 

buildings, nor has it limited the Board in the manher in 

which the funds are to be applied to the construction of 

such buildings as it deems necessary. The provision expresaly permitting the~Board to pay for plans and specifications 

for a contemplated construction out of a,different appropriation than the one from which construction costs are paid 

shows that the Legislature did not require each project to 

be financed completely out of the appropriation for a single 

fiscal year. On the contrary, we think the entire legislative history of the ,State Hospitals aud Special Schools 

Building Fund shows that the Board is authorized to apply 

the full amount of each appropriation to an.over-all program 

for the improvement of the facilities of the institutions 

under its jurisdiction and that each project need not be 

financed in whole out of a single year's appropriation. To 

hold that the $300,000 remaining in the current appropriation canuot be spent in the building program contemplated 

for the second year of the biennium would thwart the will 

and intention of the Legislature, that intention being clear- 

", ly to authorize the expenditure of $10,000,000 for such purposes within the biennium. 

The question you have presented IS to be diStinguished from that considered in Attorney General's Opinion 

O-7352 (1946). In that instance, the Legislature appropriatedto Stephen F. Austin State Teachers' College, for 

the year ending August 31, 1946, the sum of $24,000 "for 

steam tunnels and steam pipes for main buildings." There, 

the appropriation was for a specific improvement, and provided for the expenditure of a specific amount in the construction of that improvement. There, the intention of the 

Legislature was clearly to the effect that the $24,000 was 

all that should be spent for the improvement specifically' 

designated. In the question before usherein, the types of - ; 

buildings and the number of such constructions are not 
Hon. Larry 0. Cox, page 6 (v-1363) 

specifically designated in the appropriation. The reasoning 

of Opinion O-7352, which denied to the college the power to 

contract for anything less than a completed steam system to 

be paid for entirely out of the $24,000 appropriation, is not 

applicable to the present situation. 

In view of the foregoing discussion, it is our 

opinion that under the present facts the Board for State Hospitals and Special Schools may enter into a contract for a construction project to be paid forpartially out of the appropriation for the current fiscal year and partially out of the 

appropriation for the succeeding fiscal year, both years being: 

in the same biennium. 

Under the provisions.of its ,pqesent appropriations for:building construction and repairs, 

the Board for Texas State Hospitals and Special 

Schools may enter into a contract for a construction project to be paid for partially out of the 

appropriation for the current fiscal year apd 

partially out of the appropriation for the succeeding fiscal year, both years being in the same 

biennium. 

APPROVRD: Yours very truly, 

J. C., Davis, Jr. 

County Affairs Division 

Jesse P. Luton, Jr. 

ReviewingAssist~t 

Charles D. Mathews 

First Assistant 

BW:mh 

PRICE DANIEL 

Attorney General 

Assistant