## THEA'ITORNEY GENERAL OF TEXAS AUSTIN m.T-S

October 25, 1961
Honorable Weldon Holcomb Criminal District Attorney Smith County Tyler, Texas Dear Mr. Holcomb: Opinion No. WW-1174 Re: TimeWarrants and County Budgets.

You inform us that the Commissioners' Court of Smith County inaugurated proceedings onAugust 14, 1961, looking to the issuance of interest bearing time warrants in the amount of $2,500,000.00 for the purpose of evidencing indebtedness arising from claims and accounts to be incurred in connection with the planned construction and improvement of roads within the county and the acquisition of rights-of-way therefor.

You declare that the 1961 budget does not include the proposed expenditures under the program. Consequently, your questions are:

"1. May the Commissioners Court commence expenditure ofmonies forwhich timewarrants will be issued without havingbudgeted these items in thebudget for theyear 1961? "2. If the County may expend these funds through the remainder of theyear 1961,may thisbe done through a separate bookkeeping system or must itbe done by budget amendment?

'I 3. If itmay not be done by either of themeans requested in Question No. 2, will you please state as amatter of law how monies from this account canbe expended for theyear 1961?"Honorable Weldon Holcomb, page 2 (WW-1174)

Sections of theUniform Budget Law applicable to counties are Articles 689a-9, as amended, through 689a-12, V.C.S. A portion ofArticle 689a-11, V.C.S., declares:

When thebudget has been finally approved by the Commissioners' Court, thebudget, as approved by the Court shall be filedwith the Clerk of the County Court, and taxes levied only in accordance therewith, and no expenditure of the funds of the county shall thereafter be made except in strict compliance with thebudget as adopted by the Court. Except that emergency expenditures, in cases of grave public necessity, tomeet unusual and unforeseen conditions which could not, by reasonably diligent thought and attention, have been included in the original budget, may from time to timebe authorized by the Court as amendments to the original budget."
Article 6716-1, V.C.S., provides that expenditures of the County Road and Bridge Fund shall be 'I.. . strictly in accordance with annual budgeted appropriations II

. . . The timewarrants will issue under the provisions ofArticle 2368a. as amended, V.C.S. Section 1 thereof defines a timewarrant:

"The term 'timewarrant' as used in thisAct shall include anywarrant issued by a city or county not payable out of current funds."Honorable Weldon Holcomb, page 3 (WW-1174)

Section 8, same Article, provides: "It ishereby made the duty of all Commissioners' Courts . . .to levy, and have assessed and collected, taxes sufficient topay the interest as it accrues and theprincipal as itmatures on all

. . .timewarrants issued in accordance' with the provision of this Act . . ."
Section 7,Article XI, of our Constitution, declares: "Nodebt for any purpose shall ever

be incurred in any manner by any city or county unless provision ismade, at the time of creating the same for levying and collecting a sufficient tax to pay the interest thereon and provide at least 2% as a sinking fund."
The Supreme Court inMcNeil1 v. City ofWaco, 89 Tex. 83, 33 S.W. 322 (1895)defined a "debt".

"Anobligation binding the city to pay for amatter relating to its ordinary expenses, such payment being, in contemplation of the parties, not intended tobe made out of the current funds of theyear inwhich the expenditure ismade, or any funds onhand lawfully applicable thereto, would be a debt within themeaning of the Constitution."

In the instant case the timewarrants are dated September 1, 1961, and mature serially from 1964 through 1990. Theybear 4% interest per annum, payable onJuly 1, 1962, and semi-annually thereafter onJanuary 1 and July 1 in each year.Honorable Weldon Holcomb, page 4 (WW-1174)

The order of the Commissioners' Court authorized the creation of a debt and pledged to its eventual retirement Constitutional Road and Bridge Fund taxes tobe collected in the future. The timewarrants themselves arebut non-negotiable evidences of county indebtedness payable in the future tobe from time to time exchanged for a like amount of claims and accounts arising from the project as itsvarious aspects develop and contracts thereunder are performed. Lasater v. Lopez, 110 Tex. 179, 217 S.W. 373 (1919);Nacoqdoches County v. Lafferty, 61 S.W.2d 994 (Comm.App. 1933). In the sense of the Uniform Budget Law, the primary expenditure of county fundswill occur onJuly 1, 1962, the first interest payment date.

Under the facts and for the reasons announced we advise that it is our opinion that the county budget for theyear 1961 isnot involved in nor is it controlling of " this situation. Expressed in the alternative, the time warrant program isnot amatter for the 1961 budget,,but is a proper item for the 1962 budget.

This conclusion provides the answer for questions two (2)and three (3). SUMMARY

County funds will not be expended by the issuance of timewarrants during 1961: consequently, that year's budget isnot affected thereby.

Very truly yours,

GW-s WILL WILSON Attorney General of Tei10norable!Jeld.un IIolcomb,page 5 (WY-11741

APPROVED: OPINION COMMITTEE !J.V. Geppert, Chairman Arthur Sandlin J;>hnReeves KDbert Lewis Bab Shannon REVIIWED FOR THEATTORNE"IGENERAL By: Houghtz? Brownlee, Jr.