Opinion ID: 895305
Heading Depth: 3
Heading Rank: 4

Heading: Debt in Violation of Article XI, Section 5, Texas Constitution

Text: In an effort to negate contractual intent behind the Ordinances, the City argues that it could not have intended to be contractually bound by the Ordinances, because doing so would create a debt in violation of Article XI, Section 5, of the Texas Constitution. Our Constitution ordains that “no debt shall ever be created by any city, unless at the same time provision be made to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least two per cent. thereon.” Tex. Const . art. XI, § 5. But we long ago noted that this prohibition does not extend to “that class of pecuniary obligations in good faith intended to be, and lawfully, payable out of either the current revenues for the year of the contract or any other fund within the immediate control” of the municipality. McNeill v. City of Waco , 33 S.W. 322, 323–24 (Tex. 1895). In practice, municipal contract expenses can be covered with current revenues. Cf. Mun. Admin. Servs. Inc. v. City of Beaumont , 969 S.W.2d 31, 39 (Tex. App.—Texarkana 1998, no pet.). Therefore, Article XI, Section 5 does not necessarily preclude an ordinance-based contract.