Court Opinion

ID: 4130937
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:10:07.878303+00
Date Added: 2024-06-11T14:33:15.208766
License: Public Domain

The Attorney             General of Texas
JIM MATTOX                                             August    8,~ 1986
Attorney General

Supreme Oourl Building         Eonorable  Richard Hmdorf                    Opinion   No.   x4-530
P. 0. BOX 12548
Austin, TX. 78711. 2549
                               Criminal District  Attorney
512i4752W1                     Anderson County Cowthouse                    Re:    Whether  Anderson  County    may
Telex 9101874.1367             Palestine,  Texas   i5801                    expend surplus money from road bonds
Telecopier 51214750258                                                      and from its workmen’s   compensation
                                                                            account to build a jail
714 Jackson. Suite 700
Dallas. TX. 75202-4506         Dear Mr. Handorf:
2141742.9944
                                     You ask whether Anderson          County may spend certain       county  funds
                               for the construction        of a new jail.       Your first   question    is whether
4824 Alberta Ave.. Suite 150
El Paso, TX. 79905.2793        Anderson County may spend $1.4 million            in surplus  from an issuance     of
915/533-34&l                   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    repealed   ‘2:~ Acts 1983, 68th Leg.,      ch. i88, at 1526.     At the
 1001 Texas. Suite 700         time of that bond e:lection       article   752a provided:
 =-mston, TX. 77002-3111
p    223-5888

806 Broadway. Suite 312
Lubbock, TX. 79401.3479                1.   The original     version    of article     752a was adopted      in 1926.
8081747.5239
                               Acts 1926, 39th Leg.,        ch. 16, at 23.        In 1955 the legislature       adopted
                               two separate     amended versions       of article    752a.    Acts 1955, 54th Leg.,
4309 N. Tenth, Suite 8         ch.    113,   at 393,     and Acts     1955.  54th Leg.,      ch.   69 at 348.      Both
McAllen, TX. 78501.1685        versions     appeared   :.n Vernon’s     Texas Civil     Statutes.      The version    of
5121682.4547
                               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
200 Main Plaza, Suite 400      essentially     the same except       that it did not contain        the words “or for
San Antonio, TX. 782052797     any other lawful permanent improvement.”
51212254191
                                      Both versions    passed the Senate on the same day.          After   that,   the
 An Equal Opportunity/
                               chapter    113 version,    which is the version       set out in the text of this
 Affirmative Action Employer   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 HUNDREDFIFIY THOUSANDDOLLARS ($750.000).
               to bear interest   st a rate not to exceed the max-
               imum 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,                in
            conformity      with the Constitution         and laws of the
            State of Texas, Farticularly           Section   52 of Article
            III of the Const:Ltution,         as amended, for the pur-
            pose of the construction,           maintenance      and opera-
            tion of macadamiw?d,         graveled     or paved roads and
            turnpikes      or in aid thereof,        in Anderson County,
            Texas ; and shall ad valorem taxes be levied             on all
            taxable     property    in said County subject         to taxa-
            tion    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 high-
            ways.    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 parti-
            cipation    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 naviga-
              tion,    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 resolu-
                  tion or order        at a meeting of the governing                body
                  and entered      in it!3 minutes,        we have found no auth-
                  ority    expressly      holding      that a statement           to the
                 .voters     designating        a particular       site      to be pur-
                  chased 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 min-
                  utes of the govening            body before       it can official-
                   ly 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   author-
             ized 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       appropri-
             ations,    other than itemized     salary appropriations,
             an amount sufficient       for the payment of all costs,
             administrative      expenses,  charges,    benefits,    insur-
             ance, 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 dis-
             bursements   authorized      by this article.        A state-
             ment 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.

                                                       J k
                                                         Very    truly   you

                                                                 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