THE ATJTORNEY GENERAL OF TEXAS

Hon. Leroy Jeffers, Chairman The Board of Regents University of Texas Esperson Building Houston 2, Texas OpinionNo. WW-121

Re: Interpretation of SeCtions 17 and 18 ofArt. VII of the Constitution of Texas a5 they relate Hon. M. T. Harrlngton, Chancellor to the authority of the Texas A. & M. College Systam Board of Director5 of the College Station, Texas Agricultural and MechaniGentlemen: 61 College of Texas to Issue bonds'or note5 thereunder prior and subsequent to their repeal as of January 1, 1958.

Your request for an opinion presents the following questions:

1.Are the Boar~dof Director5 of the Agricultural and Mechanical College of Texas and the Board of Regents of the University of Texas authorized to issuebond5 or notes pursuant to Section 17 of Article VII of the Constitution of Texas on behalf of Prairie View Agricultural and MechanicalCollege of Texas, Tarleton State College andArlington State College for purposes described ther.ein payable after January 1, 1958from proceeds of taxes levied by said Section of the Constitutionduring or before the calendar year 1957? 2. If the answer to the first question is in the negative,will the Board be authorized to issue on behalf of such institutions bonds or notes after January, 1958, pursuant to Section 18 ofArticle VII of the Constitution for purposes described therein and use for payment of the principal of and the interest on such bond5 or note5 the proceeds of taxes leviedby Section 17 ofArticle VII of the Constitution during or before the calendar year 19577Hon. Leroy Jeffers

Hon. M. T. Harrington - Page 2 (WW-121)

Article VII, Section 

### 17, of the Constitution ofTexas (ratified by the electorate in 1947) authorized the issuance ofbonds or notesby designatedState institutionsof higher learning to acquire, constructand initially equip buildings or other permanent improvements. The obligation5 to be issued are to be secured by a pledge of the State ad valorem tax of 5k per one hundred dollars'valuationas apportioned to the various institutions. The Constitution states that the tax is to be levied for thirty years; requires that this time shallbe divided into three ten-year periods;and prohibit5 the pledge of the tax proceeds to the payment of obligationsexcept within the ten-year period in which such bonds are issued. The first ten-year period comes to a close on Decembe,r

### 31, 1957.

In November of 

### 1956,this constitutionalprovisionwas amended, with the provision that the amendment is to "becomeoperative or effective so as to supersede or repeal the former provision5 on January 1, 

### 1958",which is the beginning of the second ten-year period originallyprescribed.
The two constitutionalprovisions (adopted in 

### 1947and 1956) are substantiallythe same, except a5 to the institutionswho are eligible recipients of the proceeds of the ad valorem tax. Four schools are eliminated from participation in the proceeds of the future tax leviesby the amendment which is to become operative on January 1, 

### 1958,namely: PrairieView Agricultural and Mechanical College at PrairieView, Tarleton State College at Stephenvllle,Arlington State College atArlington and Texas Western College of the University of Texas at El Paso. Simultaneouslywith this change inArticle VII, Section 17, of the Constitution, these four institutions,as a part of the Texas Agricultural and Mechanical College and the University of Texas, were given the authority to issuebonds Secured solelyby a pledge of the revenue5 of the PermanentUniversity Fund by the change in the provisions of Article VII, Section 18, of the Constitution.
Your first question is whether these four institutionsmay, after January 1, 1958, issuebonds or notes under the provisions of Article VII, Section 

### 17, of the Constitution, and provide that such obli ations years 194 8 will be payable from taxes levied during the

-1957which are not collecteduntil after January 31, 1957.
Your first question is answered In the negative for the following reasons:Hon. Leroy Jeffers

Hon. M. T. Harrlngton - Page 

### 3 (WW-121)

(1) On January 1, 

### 1958,therewill be no authority, under ArticleVII, Section 

### 17,as amended, for these partlcular Institutions to Issue obligations of any type. It is fundamental that the power to issuenegotiable bonds or notes must be implicitand express.

(2) If operationunder the 1947 amendmentwere per

### mitted,the obligations -; by constitutionalrequirement -- would mature not later thanDecember 31, 1957,which date would be prior to the date of their proposed issuance. Attorney General Opinion

### m-176 (1955).
Your second question iswhether these instltutlons,after January 1, 

### 1958;may issuebonds or notes under the provisions of Article VII, Section 

### 18,of the Constitution,and use the money receivedafter December 31, 1957, from taxes leviedduring the years 1948-57, inclusive, to pay such obligations.
The stating of your question assumes that the four institutions will be entitled to receive a portion of"themoney collected afterDecember 31, 1957, from the leviesmade under the 1947 amendment which added ArticleVII, Section 

### 17, to our Constitution in its present form. t

Two prior opinions of this office,

### m-176 (1955') and MS-221 (1955), considered the constitutionalprovision-whereinitstates:

"Fun&sraised from saidFive 

### (5#)Cents tax levy for the ten-yearperiod beginning January 1, 1948, are hereby allocated to the following institutions

. O

.and in the following proportions

. . O't Those prior opinions take the view that the Constltutlon itself, by the employment of the above language,makes the allocation for the first ten-year prior. We adhere to this view. 2 ,:. The provislonwhich becomes effectiveand operative on Jan$&ry 1, 1958, reads, in part: :

"Nor shall the provislons of this amendment $ affect in any way the prior allocation of the revenue for the ten-year period beginning January 1, 1948, as heretofore authorizedbye ;! the provisions of Section 

### 17, of ArticleVII, ': of this Constitutionas adoptedAugust 23, 1947."Hon. Leroy Jeffers

Hon. M. T. Harrfngton - Page 4 (WW-121)

Thus, It 1s clear that your basic assumption is a correct one, the only questionbeing, what dispositionmay be made of such money when received,bythe institutions? First, all bonds or notes issuedduring the first ten-year periodmust be paid as required by the old and new constitutional provlslons and by the contract rights of the holder of the obligations. Second, the Constitution requires that the tax moneys may be used only to pay the principal and interest on bonds or notes. Attorney General OpinionsV-798, V-799(1949). Institutions have previouslybeen cautionednot to issuebonds or notes in excess of the Comptroller of PublicAccounts' estimate of available funds since the validity of such instrumentsnecessarily depends upon adequate provisionhavina been made to nav the obligation. Cit; ofAthens v. Moodg -115 Tex. 247 (i9!?6), 280 S.W. 514, Owasso Board of Education ;. Short, 89 Okla. 2, 213 UP.857(1923). Attorney General OpinionMS-176 (1955).
In Attorney General OpinionMS-176(1955), the distinctionwas drawn between the right to pledge taxes to the ligations to become due prior to January 1, f? yment of ob195 , and the paver to use the funds collected after that date where such funds were obtained from the tax levies for the years 1.948-1957(whether delinquent or current collections)and stated:

"Afterpayment of notes or bonds issued during the initialperiod, any surplus thereafterremaininn mav be used bv the respective institutions"duringthe"succeeding periods for the purpose originally authorized." This opinion (MS-176)and Attorney General OpinionV-798 (1949) are, despite the subsequentamendment to the Constitution, controlling as to the use of the fundsfor the institutions included in both the 1947 and 1956 amendments to Article VII,' Section 17, of the Constitution of Texas, but do not control as to Section 18, as amended in 1956.
As to these four institutions,however,you will note that Article VII, Section 18, of the Constitution (asamended in 1956) reads, in part:Han, Leroy Jeffers

Han, M, TO Rarrington - Page 5 (WW-121)

"Anybonds issued hereunder shall be payable solely out of the income from the PermanentUniversity Fund."

It is, tlonal people qulres of course, necessary to construe all of the constituprovisions together in arriving at the intent of the in adopting such provisions. The Constitutionrethat the moneys allocated to these four institutions

. . - _ __ shall remaln In force ana effect,yet, have, in effect, prohibited the use of such tax proceeds to pay obligations issued under the provisions of eitherArticle VII, Sections 

### 17 or 

### 18, if all outstanding obligationshave been paid. If it had been intendedthat suchmoneys could not be expended, then there would havebeen no necessity to preserve the previous allocation to these four institutions.
You are, therefore, respectfullyadvised that the tax moneys allocated to these four institutionsby the 1947 amendment to Article VII, Section 

### 17, of the Constitution of Texas, may be used for acquiring, constructingand initially equipping buildings or other permanent improvementsat such institutionswithout the issuance of bonds or notes under eitherArticle VII, Sections 17 or 

### 18,

SUMMARY

The Board of Directors of theAgricultural and Mechanical College of Texas and the Board of Regents of theUniversity of Texas, for and on behalf of PrairieViewAgricultural and Mechanical College at PrairieView, Tarleton State College at Stephenville,Arlington State,

College at Arlington, and Texas Western College of the University of Texas at El Pasomay not issuebonds or notes underArticle VII, Section 

### 17, of the Constitution. Nor may bonds or notes issued underArticle VII, Section 

### 18, of the Con,- stitution,be paid from t,axeslevied during the years 

### 1948-1957but not collecteduntil ;;t;;epnuary 1, 

### 1958. Such tax moneys may

,without the issuance ofbonds or notes, for the purpose of acquiring,. -

-- -1

Hon. Leroy JePPers Hon. M. T. Harrlngton - Page 

### 6 (w-121)

constructing,and initiallyequlpping buildings or other permanent improvements at such institutions.

Very truly yours,
WILL WILSON Attorney General

BY - mAssistant APPROVED:
OPINION COMMITTEE:
H. Grady Chandler, Chairman Marietta McGregor Payne
R. E. Fletcher Edvin Horner

REVIEWED FOR THE ATTORNEY GENERAL BY: Geo. P. Blackburn