JIM MATTOX 

Attorney General 

Supreme Oourl Building 

P. 0. BOX 12548 

Austin, TX. 78711. 2549 

512i4752W1 

Telex 9101874.1367 

Telecopier 51214750258 

714 Jackson. Suite 700 

Dallas. TX. 75202-4506 

2141742.9944 

4824 Alberta Ave.. Suite 150 

El Paso, TX. 79905.2793 

915/533-34&l 

1001 Texas. Suite 700 

=-mston, TX. 77002-3111 

p 223-5888 

806 Broadway. Suite 312 

Lubbock, TX. 79401.3479 

8081747.5239 

4309 N. Tenth, Suite 8 

McAllen, TX. 78501.1685 

5121682.4547 

200 Main Plaza, Suite 400 

San Antonio, TX. 782052797 

51212254191 

An Equal Opportunity/ 

Affirmative Action Employer 

The Attorney General of Texas 

August 8,~ 1986 

Eonorable Richard Hmdorf 

Criminal District Attorney 

Anderson County Cowthouse 

Palestine, Texas i5801 

Opinion No. x4-530 

Re: Whether Anderson County may 

expend surplus money from road bonds 

and from its workmen’s compensation 

account to build a jail 

Dear Mr. Handorf: 

You ask whether Anderson County may spend certain county funds 

for the construction of a new jail. Your first question is whether 

Anderson County may spend $1.4 million in surplus from an issuance of 

road bonds. You explain that in 1969 the voters of Anderson County 

voted to issue $7.30,000 in road bonds pursuant to article 752a, 

V.T.C.S.. repealed ‘2:~ Acts 1983, 68th Leg., ch. 

time of that bond e:lection article 752a provided: 

i88, at 1526. At the 

1. The original version of article 752a was adopted in 1926. 

Acts 1926, 39th Leg., ch. 16, at 23. In 1955 the legislature adopted 

two separate amended versions of article 752a. Acts 1955, 54th Leg., 

ch. 113, at 393, and Acts 1955. 54th Leg., ch. 69 at 348. Both 

versions appeared :.n Vernon’s Texas Civil Statutes. The version of 

article 752a set Out in the text of this opinion is the version that 

appeared in chapter 113. The first paragraph of the other version was 

essentially the same except that it did not contain the words “or for 

any other lawful permanent improvement.” 

Both versions passed the Senate on the same day. After that, the 

chapter 113 version, which is the version set out in the text of this 

opinion. passed the ‘House later than the other version. Therefore, to 

the extent that the .versions are inconsistent, the chapter 113 version 

controls. See Wr:&;ht V. Broeter. 196 S.W.2d 82, 85 (Tex. 1946) 

-- 

(later-enacted statute controls). 

p. 2440 
Ronorable Richard Handorf - Page 2 (JM-530) 

Any county, 0:: any political subdivision of a 

county, or any road district that has been or may 

hereafter be created by any General or Special 

Law, is hereby authorized to issue bonds for the 

purpose of the construction, maintenance and 

operation of macirdamized, graveled or paved roads 

and turnpikes, or in aid thereof, in any amount 

not to exceed one-fourth of the assessed valuation 

of the real prope-rty of such county or political 

subdivision or ::oad district, and to levy and 

collect ad valorem taxes to pay the interest on 

such bonds and urovide a sinkinK fund for the 

redemption therec’f. Such bonds shall be issued in 

the manner hd!reinaf ter provided, and as 

contemplated and-authorized by Section 52, of 

Article 3, of the-Constitution of this State. The 

term ‘Political S;bdivision.’ as used in this Act, 

shall be construed to mean any commissioners 

precinct or any justice precinct of a county. now 

or hereafter to be created and established. 

Provided, when tl?! principal and all interest on 

said bonds are fully paid. in the event there is 

any surplus remarning in the sinking fund, said 

remaining surplur-not used in the full payment of 

the principal ancc interest on said bond or bonds 

may be used by 1:h.e county, political subdivision 

of the county, or-any local district th at has been 

or may hereafter be created by any General or 

Special Law for ?he purpose of the construction, 

maintenance, ar;i operation of macadamiaed, 

groveled or pavei roads and turnpikes or in the 

aid thereof or for any other 1: awful permanent 

improvement as may be determined by the 

Commissioners Cou;t of any county or the officials 

of any political-subdivision of a county or any 

said road districi,. (Emphasis added). 

Acts 1955, 39th Leg., ch. 113, 51. at 393. 

The election order for the 1969 bond election stated that the 

voters would be voting on the following proposition: 

WHETHER or not the bonds of said Anderson 

County, Texas, shall be issued in the amount of 

SEVEN HUNDRED FIFIY THOUSAND DOLLARS ($750.000). 

to bear interest st a rate not to exceed the maximum prescribed by law at the time of issuance, 

and to mature scr’ially over a period of not to 

p. 2441 
Honorable Richard Handorf - Page 3 m-530) 

exceed TWELVE (12) years from the date thereof, thereof, in 

conformity conformity with the Constitution Constitution and laws of the 

State of Texas, Farticularly Farticularly Section Section 52 of Article Article 

III of the Const:Ltution, Const:Ltution, as amended, amended, for the purpose of the construction, construction, maintenance maintenance and operation of macadamiw?d, macadamiw?d, graveled graveled or paved roads and 

turnpikes turnpikes or in aid thereof, thereof, in Anderson Anderson County, County, 

Texas ; and shall ad valorem valorem taxes be levied on all 

taxable property in said County subject to taxation for the purpose of paying the interest on 

said bonds and t> provide a sinking fund for the 

redemption therecf at maturity. (Emphasis added). 

You also sent us a copy of a “Proposed Election Hand-out.” That 

handout states: 

Proceeds of the bond issue will be used to 

finance the County’s participation in Right-Of-Way 

and fencing of 98 miles of U.S. and State highways. The State of Texas shares equally with the 

county in the purchase of R-O-W and fencing of the 

same. This 98 md,les of R-O-W and fencing involves 

20 projects along State Highways #155, 1294 and 

819 and U.S. Hdghways #79, #84, #287 and Loop 

8256. 

You inform us that the projects described in that handout were not all 

completed. You do not inf>:m us who issued the handout, when it was 

issued, or how it was distributed. 

You also provide the following information: 

The $75O,OOO.(KZ voted in the Bond Election was 

eventually spent: on right of way costs but 

. . . due to the increased amount of state participation the money was not used for a considerable 

length of time and it accumulated a tremendous 

amount of interer,t. The interest and principal of 

the Bond Electior. have been totally paid off. 

You ask whether Anderson County may spend the surplus money on 

the construction of a ni%w jail. We conclude that it may not. 

Standing alone, the language in article 752a that says that surplus 

from bonds may be used fol, any lawful permanent improvement might be 

read to allow a county to spend such surplus for any permanent 

improvement for which a ccNu,nty could lawfully spend money. However, 

that language must be read in context. Article 752a provides that 

bonds issued thereunder “shall be issued . . . as contemplated and 

p. 2442 
Honorable Richard Handorf - Page 4 (JM-530) 

authorized by section 52, article 3, of the Constitution of this 

State." That constitutional provision authorizes the legislature to 

authorize counties to issue t'onds for the following purposes only: 

(1) The improvement of rivers, creeks, and 

streams to prevent overflows, and to permit of 

navigation thereof, or irrigation thereof, or in 

aid of such purposes. 

(2) The construction and maintenance of pools, 

lakes, reservoirs, dams, canals and waterways for 

the purposes of irrigation, drainage or navigation, or in aid thereof. 

(3) The construction, maintenance and operation 

of macadamised, :graveled or paved roads and 

turnpikes, or in aid thereof. 

Because article 752a is based on article III, section 52, of the 

constitution, we think that the type of permanent improvements for 

which surplus from bonds x&y be spent is limited to the purposes for 

which article III, section ,52, allows counties to issue bonds. See 

State ex rel Childress v. School Trustees of Shelby County, 239 S.Wx 

777, 781 (Tex. 1951) (all :E:ctions of a bill should be read so as to 

present a harmonious whole). Also, we think that a narrow reading of 

article 752a makes sense in light of the well-established rule that 

proceeds of bonds must be spent for purposes for which they were 

voted. Lewis v. City of F>rt Worth, 89 S.W.2d 975. 978 (Tex. 1936). 

As a practical matter, ths?l:e may often be some surplus after bond 

proceeds have been spent i'clr the purposes for which the bonds were 

issued and the bonds have been retired. See Madeley v. Trustees of 

Conroe Independent School District, 130. S.W.2d 929, 934 (Tex. Cl". 

ADD. - Beaumont 1939. writ;lism'd judamt car.). But we do not think 

that article 752a should br read so broadly that it would potentially 

permit political subdivisic~ns to attempt to circumvent the expressed 

will of the voters in order to maintain a surplus for use on projects 

on which the voters have not voted. 

In regard to the use 'J!E bond proceeds we also note that when an 

election order or pledge does not specify projects for which bond 

proceeds are to be used, the governing body of the entity issuing the 

bonds is left free to exercise its discretion in expending the funds. 

Hudson v. San Antonio Independent School District, 95 S.W.2d 673, 674 

(Tex. 1936). In such casec, however, the governing body must not act 

unreasonably or arbitrarily. Lewis v. City of Fort Worth, 89 S.W.2d 

975, 978 (Tex. 1936). Also, when voters have relied on orders 

pledging that bond proceeds will be used on certain projects, the 

governing body of the entity issuing the bonds may not arbitrarily 

ignore or repudiate those pledges. Hudson v. San Antonio Independent 

p. 2443 
,- 

Honorable Richard Handorf - Page 5 ml-530) 

School District, 95 S.W.2d 673 (Tex. 1936). We express no opinion 

about the nature of the elezction handout you provided to us, but we 

call your attention to thlz following language in a 1982 Court of 

Appeals case: 

Although it is the general rule, relied upon by 

appellees. that a (contract or agreement made by a 

public agency like appellee School District is 

valid and binding only when adopted by a resolution or order at a meeting of the governing body 

and entered in it!3 minutes, we have found no authority expressly holding that a statement to the 

.voters designating a particular site to be purchased with the proceeds of a bond issue, made by 

a governing body with the power of site selection, 

under the circusstances and for the deliberate 

purpose and the effect alleged here by appellant, 

must be adopted at: a meeting entered in the minutes of the govening body before it can officially become and be relied upon by the voters as part 

of the proposition submitted in the bond proposal. 

Devorsky v. La Vega Independent School District, 635 S.W.2d 904, 909 

(Tex. APP. - Waco 1982, no writ); See also Inverness Forest 

Improvement District v. Har’dy Street Investors, 541 S.W.2d 454. 460 

(Tex. Civ. App. - Houston [ist Dist.] 1976, writ ref’d n.r.e.) (letter 

by directors of improvement Idistrict represented and pledged to voters 

that bond proceeds would b#e used for certain projects even though 

letter was not official action of the board). But see Garcia v. Duval 

County, 354 S.W.2d 237, 240 (Tex. Civ. App. - San Antonio 1962, writ 

ref’d n.r.e.). 

Your second question is whether Anderson County can spend 

approximately $800,000 thal: was set aside from its general fund and 

its road and bridge fund for payment of worker’s compensation claims. 

You explain that from 1972 through 1984 Anderson County chose to be 

self-insured for purposes of worker’s compensation. In 1972 the 

statute governing worker’ s compensation for county employees was 

codified as article 8309c. V.T.C.S. Section 16 of article 8309c 

provided as follows: 

Sec. 16. The county is hereby authorized to 

set aside from available appropriations, other 

than itemized salary appropriations, an amount not 

to exceed five per cent (5%) of the annual 

employee payroll of the county for the payment of 

all costs * adn.inistrative expenses, charges, 

benefits, 1nsuranc.e and awards authorized by this 

Act. 

p. 2444 
Honorable Richard Handorf - ‘Page 6 (JM-530) 

The amount ao :set aside shall be set up in a 

separate account in the records of the county, 

which account shall show the disbursements authorized by this Act: provided the amount so set aside 

shall not exceed five per cent (5X) of the annual 

employee payroll at any one time. A statement of 

the amount set cls’ide for the disbursements from 

said account shall be included in an annual report 

made to the County Treasurer and the Commissioners 

Court. 

Article 8309c was repealed in 1973. Acts 1973, 63rd Leg., ch. 88, at 

200. It was replaced by article 8309h, which contains ~essentially the 

same provision: 

(a) The political subdivision is hereby 

authorized to set aside from available appropriations, other than itemized salary appropriations, 

an amount sufficient for the payment of all costs, 

administrative expenses, charges, benefits, insurance, attorney fees, and awards authorized by this 

article. 

(b) The amount so set aside shall be set up in 

a separate account in the records of the political 

subdivision, which account shall show the disbursements authorized by this article. A statement of the amount set aside for the disbursements 

from the account shall be included in an annual 

report made to the political subdivision treasurer 

and the duly and legally constituted governing 

body of the political subdivision. 

V.T.C.S. art. 8309h. 07. 

As background to your question, we note that all county 

expenditures lawfully authorized to be made by a county must be paid 

out of a county’s general fund unless there is some law that makes 

such expenditures a charge against a special fund. Bexar County v. 

Mann. 157 S.W.Zd 134 (Tex. 1941). Therefore, expenditures made out of 

themoney set aside pursuant to article 8309c or 8309h should have 

come from the county’s general fund. However, a county may 

consolidate its four constitutional funds or it may transfer money 

into its general fund frown its road and bridge fund. See Attorney 

General Opinion MU-516 (198:!) (discussion of county fundsand article 

VIII, section 9, of the Texas Constitution). Consequently, it was not 

improper for Anderson County to set aside money from its road and 

bridge fund for worker’s ccmpensation purposes. 

-, 

p. 2445 
Honorable Richard Eandorf - I?age 7 (JM-530) 

You explain that since 1984 Anderson County has not been 

self-insured but has paitl premiums to the Texas Association of 

Counties. Over $800,000 remains in the account set aside pursuant to 

articles 8309c and 8309h. You explain that the county auditor has 

suggested that a certain amount be set aside for expenses that might 

arise in connection with claims that arose before 1984. You ask 

whether Anderson County may spend the remaining money on the 

construction of a jail. Wo conclude that Anderson County may do so. 

The money in question was :aerely "set aside" in a special account to 

be used for worker's compensation costs, if needed. There was no 

requirement that all the money set aside actually be spent on worker's 

compensation, nor any guar'antee that the money set aside would be 

sufficient to meet the county's worker's compensation costs. The 

statutes merely allowed the county to set aside a reserve for 

potential costs. Once the purpose for the special account no longer 

exists, we see no impedim~?nt to returning the unused money to the 

county's general fund. Therefore, Anderson County may spend that 

money for any proper county purpose. See V.T.C.S. art. 2351(7) 

(counties have authority to 'build jails). - 

SUMMARY 

Anderson County may not spend surplus from an 

issuance of road 'bonds on the construction of a 

new jail. Anderson County may spend on the 

construction of a new jail money set aside for 

worker's compensation purposes but no longer 

needed for such purposes. 

Very truly you J k, k 

JIM MATTOX 

Attorney General of Texas 

JACK RIGHTOWER 

First Assistant Attorney General 

MARY KELLER 

Executive Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Sarah Woelk 

Assistant Attorney General 

p. 2446