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 constructionproject 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 secondyear 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 samebiennium.

"Section26 of H.B. NO. 426, 52na Legislature,Regular Session,made an'appropriationof $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 constructionallocation.

'Thebalance of $300,000.00~ for new construction is not sufficientto allow the Board to contract for a new project.- ,

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

"If it is legallypossible, the Board would like to enter into a contract,during this fiscalyear, 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, $1,500,000.00to repairs and $3,500,000.00to new construction.

"We do not think there is any question that we can legally encumber the balance of $3OO,OOO.OC during this fiscalyear, even though the projectwill not be completedand paid for until the succeedingfiscal year. Nor do we think there is any question that

we can legally contractand 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 ismade until the beginning of the second fiscal year. Therefore, it logically follows that the Board may enter into a new constructioncontract 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 fiscalyear and the balance after this fiscalyear.

"It is the interpretationof the State Comptrollerthat .should an appropriationfor any particularbuildingbe insufficient in
any one fiscal year, then the building cannot be built.

?Should ws grant that the State Comptroller is correct in his interpretationof the law, we believe that such interpretationwould not apply in our case due to the fact that our appropriation of $5,000,000.00each fiscal year is not for any particularbuildingbut, as set out in SubsectionB of Section 26 of~the aforesaid appropriationbill, '.

. . for the purpose of architecturaland engineeringplans,constructing, repairing,and equipping such buildings as in the opinion of the Board are necessary to the proper care of those committedor to be committed to such hospitalsand special schools according to law.

. .I."

We have been unable to find sny constitutional prohibitionwhich would preclude the Board forTexas State Hospitals and Special Schools from entering into. - Hon. Larry 0. Cox, page 3 (v-1363)

a constructioncontract in one fiscal year with partial funds of that year's appropriationand partial funds from the succeeding fiscal year's~appropriationifboth years are in the

samebiennium. This method of expenditurewould not be violative of Section 49, Article III, Constitution ofTexas, prohibiting the creation of a debt by or on behalf of the State, sincethe obligation incurredby the contractwould be payable out of appropriations,within the biennium~for which revenueshave been provided. Charles Scribner's Sons v. Marrs, ll4Tex. 11, &2&W. 722 (1924); Schmoldt v. Bolan, 80 P.2d 609 (Okra. SUP.

. And since~thecontractwould not call for an exoendit&e.of money beyond the amounts appropriate& for the current biennium, it would not violateArticle VIII, Section 6.

You have correctly stated that the balance of $300,000 in this year's appropriationmay legallybe encunioered during this fiscal year, even though the project for which it is spentwill not be completedmd paid for until the succeeding fiscal year. In ~tt'y Gen. Op. o-2631 (1940), it was held that capitalassets 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 youmsy 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 opinionappearing inReports 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 couldbe made prior to the date on which the appropriationbecame available. The opinion stated:

'The fact that this $l25,000.00 appropriated for the erection of a dormitoryand dining room is notavailable until the 1st. day of September, 1916, does not postpone the taking effect of this Act of the Legislatureuntil that date. This Act is as much the law now as itwill be subsequent to September 1, 1916, and the Board of Regents would bewarranted in letting the contract for the erection of saidbuilding 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 couldbe drawn or .paymentsHon. 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 similarholdings.

Inasmuchas your Board may now contract for ~expenditure of the $300,000balance in the currentappropriation,

even though payment is not to be made until the succeeding fiscal year, snd inasmuchas itmay also contract for construction to be paidfor out of the appropriationfor the succeeding fiscal year, we must determine if there is any reason why portions of these two appropriationsmay not be expended on the sameproject. The questionbecomes one of legislative intent--whether the Legislature intendedthat the cost of each constructionproject mustbe paid completely out of a single year's~appropriationor whether it intendedonly that $5,OOO,OCvJ each year shouldbe available for use by the Board on whatever projects it undertook.

The State Hospitalsand Special SchoolsBuilding Fund was createdby 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 cigarettesand allocatedto this fund a percentage of the net revenues from the tax, not to exceed $5,OOO,OOC for each fiscal year, throughAugust 31, 1957. .HouseBill 2 provided that the moneys appropriatedto the Board from the BuildingFund were to be used "forthe purpose of constructing,repairing and equipping suchbuildings as in the opinion of the Board are necessary to the proper care of those committed or to be committed to such hospitalsand spedal:schools according to l&w."

The currentappropriationbill, House Bill 426, Acts 52nd Leg., R.S. 1951, ch. 499, p. 1228, likewisepermits the Board.to use these funds for the constructionof suchbuildings

as in the opinion of the Board are necessary. Section 26(b), Article II of House Bill 426 reads:

"All funds creditedto the State Hospitals and Special SchoqJs BuildingFund under this Article are hereby appropriatedto the Board for Texas State Hospitals and Special Schools for the purpose of architectural and engineeringplans, constructing, repairing, and equipping suchbuildings as in the opinion of the Board are necessary to the proper
care of those committedor to be committed to such hospitals and special schoolsaccording to law. Provided, however~,

the fees paid to an architect shall not exceed six per cent (6) for the plans, specifications and supervisionof construction of said. - Hon. Larry 0. Cox, page 5 (v-1363)

buildings and all constnxtion contractsmade for, and the final acceptance in connection with such construction,other than the plans and specifications,shallbe subject to the review and approval of the Board of Control. The Board may contract for, and pay for plans and specificationsfor sny contemplatedconstN&ionj even though the contract for such plans and specificationsmay be made in one (1) year and the contract for construction is entered into the followingyear."

The Legislaturehas not designated that the appropriated fundsbe 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 constructionof suchbuildings as it deems necessary. The provision expresaly permitting the~Board to pay forplans and specifications for a contemplatedconstructionout 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 ,StateHospitalsaud Special Schools Building Fund shows that the Board is authorized to apply the full amount of each appropriationto an.over-all program for the improvementof the facilities of the institutions under its jurisdictionand that each project need not be financed in whole out of a singleyear's appropriation. To hold that the $300,000 remaining in the current appropriation canuotbe spent in the buildingprogram contemplated for the secondyear of the bienniumwould thwart the will and intentionof the Legislature,that intentionbeing clear- ", ly to authorize the expenditure of $10,000,000 for suchpurposes within the biennium.

The question you have presented IS to be diStinguished from that considered inAttorney General's Opinion O-7352 (1946). In that instance,the Legislature appropriatedto Stephen F. Austin State Teachers' College, for the year endingAugust 31, 1946, the sum of $24,000 "for steam tunnels and steampipes for main buildings." There, the appropriationwas for a specific improvement,and provided for the expenditure of a specificamount in the construction of that improvement. There, the intention of the Legislaturewas clearly to the effect that the $24,000 was all that shouldbe spent for the improvement specifically' designated. In the questionbefore usherein, the types of -; buildings and the number of such constructionsare notHon. Larry 0. Cox, page 6 (v-1363)

specificallydesignated 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 applicableto the present situation.

In view of the foregoingdiscussion, it is our opinion that under the present facts the Board for State Hospitals and Special Schoolsmay enter into a contract for a constructionproject to be paid forpartially out of the appropriation for the current fiscal year and partially out of the appropriation for the succeedingfiscalyear, both years being: in the samebiennium.

Under the provisions.of its ,pqesentappropriations for:buildingconstructionand repairs, the Board forTexas State Hospitals and Special Schoolsmay 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 fiscalyear, both years being in the same biennium.

APPROVRD: Yours very truly,

J. C., Davis, Jr. CountyAffairs Division

Jesse P. Luton, Jr. ReviewingAssist~t

Charles D. Mathews First Assistant

BW:mh PRICE DANIEL Attorney General

Assistant