Court Opinion

ID: 4136859
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:18:21.849766+00
Date Added: 2024-06-11T14:36:35.854902
License: Public Domain

THE    ATJTORNEY           GENERAL
                        OF     TEXAS

Hon. Leroy Jeffers, Chairman      Opinion No. WW-121
The Board of Regents
University of Texas               Re: Interpretation of SeC-
Esperson Building                     tions 17 and 18 of Art.
Houston 2, Texas                      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 Mechani-
                                      61 College of Texas to
                                      Issue bonds'or note5
                                      thereunder prior and sub-
                                      sequent to their repeal
Gentlemen:                            as of January 1, 1958.

Your request for an opinion presents the following questions:
                1. Are the Boar~d of Director5 of the
           Agricultural and Mechanical College of Texas
           and the Board of Regents of the University
           of Texas authorized to issue bond5 or notes
           pursuant to Section 17 of Article VII of the
           Constitution of Texas on behalf of Prairie
           View Agricultural and Mechanical College of
           Texas, Tarleton State College and Arlington
           State College for purposes described ther.ein
           payable after January 1, 1958 from proceeds
           of taxes levied by said Section of the Con-
           stitution during or before the calendar year
           1957?
               2. If the answer to the first question
           is in the negative, will the Board be author-
           ized to issue on behalf of such institutions
           bonds or notes after January, 1958, pursuant
           to Section 18 of Article VII of the Constitu-
           tion for purposes described therein and use
           for payment of the principal of and the inter-
           est on such bond5 or note5 the proceeds of
           taxes levied by Section 17 of Article VII of
           the Constitution during or before the calendar
           year 19577
Hon. Leroy Jeffers
Hon. M. T. Harrington - Page 2 (WW-121)

Article VII, Section 17, of the Constitution of Texas (ratified
by the electorate in 1947) authorized the issuance of bonds or
notes by designated State institutions of higher learning to
acquire, construct and initially equip buildings or other perma-
nent improvements. The obligation5 to be issued are to be se-
cured by a pledge of the State ad valorem tax of 5k per one
hundred dollars' valuation as apportioned to the various insti-
tutions. The Constitution states that the tax is to be levied
for thirty years; requires that this time shall be divided into
three ten-year periods; and prohibit5 the pledge of the tax pro-
ceeds to the payment of obligations except within the ten-year
period in which such bonds are issued. The first ten-year period
comes to a close on Decembe,r31, 1957.
In November of 1956, this constitutional provision was amended,
with the provision that the amendment is to "become operative 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 originally prescribed.
The two constitutional provisions (adopted in 1947 and 1956)
are substantially the same, except a5 to the institutions who
are eligible recipients of the proceeds of the ad valorem tax.
Four schools are eliminated from participation in the proceeds
of the future tax levies by the amendment which is to become
operative on January 1, 1958, namely: Prairie View Agricultural
and Mechanical College at Prairie View, Tarleton State College
at Stephenvllle, Arlington State College at Arlington and Texas
Western College of the University of Texas at El Paso.
Simultaneously with this change in Article 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 issue bonds Secured solely by
a pledge of the revenue5 of the Permanent University Fund by the
change in the provisions of Article VII, Section 18, of the Con-
stitution.
Your first question is whether these four institutions may, after
January 1, 1958,   issue bonds or notes under the provisions of
Article VII, Section 17, of the Constitution, and provide that
such obli ations will be payable from taxes levied during the
years 194 8 -1957 which are not collected until after January 31,
1957.
Your first question is answered In the negative for the follow-
ing reasons:
Hon. Leroy Jeffers
Hon. M. T. Harrlngton - Page 3 (WW-121)

        (1) On January  1, 1958, there will be no authority,
under Article VII, Section 17, as amended, for these partlcu-
lar Institutions to Issue obligations of any type. It is
fundamental that the power to issue negotiable bonds or notes
must be implicit and express.
        (2)   If operation under the 1947 amendment were per-
mitted, the obligations -; by constitutional requirement --
would mature not later than December 31, 1957, which date would
be prior to the date of their proposed issuance. Attorney Gen-
eral Opinion m-176 (1955).
Your second question is whether these instltutlons, after Janu-
ary 1, 1958; may issue bonds or notes under the provisions of
Article VII, Section  18, of the Constitution, and use the money
receivedafter December 31, 1957, from taxes levied during 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"the money collected af-
ter December 31, 1957, from the levies made under the 1947 amend-
ment which added Article VII, 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 constitutional provision-wherein itstates:
        "Fun&s raised from said Five (5#) Cents tax
        levy for the ten-year period beginning Janu-
        ary 1, 1948, are hereby allocated to the fol-
        lowing 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 provislon which becomes effective and 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 authorized bye     ;!
        the provisions of Section 17, of Article VII,      ':
        of this Constitution as adopted August 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 question being, what disposition may be made of such
money when received,bythe institutions?
First, all bonds or notes issued during the first ten-year
period must be paid as required by the old and new constitu-
tional 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 Opinions V-798, V-799(1949). Institutions
have previously been cautioned not to issue bonds or notes in
excess of the Comptroller of Public Accounts' estimate of avail-
able funds since the validity of such instruments necessarily
depends upon adequate provision havina been made to nav the
obligation. Cit; of Athens 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 Opinion MS-176 (1955).
In Attorney General Opinion MS-176(1955), the distinction was
drawn between the right to pledge taxes to the   yment of ob-
ligations to become due prior to January 1, 195f?
                                                , 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:
           "After payment of notes or bonds issued
           during the initial period, any surplus
           thereafter remaininn mav be used bv the
           respective institutions"during the"suc-
           ceeding periods for the purpose originally
           authorized."
This opinion (MS-176) and Attorney General Opinion V-798 (1949)
are, despite the subsequent amendment to the Constitution, con-
trolling as to the use of the fundsfor the institutions in-
cluded 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 (as amended in
1956) reads, in part:
Han, Leroy Jeffers
Han, M, TO Rarrington - Page 5 (WW-121)

           "Any bonds issued hereunder shall be
           payable solely out of the income from
           the Permanent University Fund."
It is, of course, necessary to construe all of the constitu-
tlonal provisions together in arriving at the intent of the
people in adopting such provisions. The Constitution re-
qulres that
          . the
             . moneys
                -      allocated
                        _ __     to these four institutions
shall remaln In force ana effect, yet, have, in effect, pro-
hibited the use of such tax proceeds to pay obligations is-
sued under the provisions of either Article VII, Sections 17
or 18, if all outstanding obligations have been paid. If it
had been intended that such moneys could not be expended, then
there would have been no necessity to preserve the previous
allocation to these four institutions.
You are, therefore, respectfully advised that the tax moneys
allocated to these four institutions by the 1947 amendment to
Article VII, Section 17, of the Constitution of Texas, may be
used for acquiring, constructing and initially equipping build-
ings or other permanent improvements at such institutions with-
out the issuance of bonds or notes under either Article VII,
Sections 17 or 18,

                           SUMMARY

           The Board of Directors of the Agricultural
           and Mechanical College of Texas and the
           Board of Regents of the University of Texas,
           for and on behalf of Prairie View Agricul-
           tural and Mechanical College at Prairie View,
           Tarleton State College at Stephenville, Ar-
           lington State,College at Arlington, and
           Texas Western College of the University of
           Texas at El Paso may not issue bonds or notes
           under Article VII, Section 17, of the Con-
           stitution. Nor may bonds or notes issued
           under Article VII, Section 18, of the Con,-
           stitution, be paid from t,axeslevied during
           the years 1948-1957 but not collected until
           ;;t;;epnuary 1, 1958. Such tax moneys may
                  , without the issuance of bonds or
           notes, for the purpose of acquiring,
                                                         .   -

                                                                 --   -1

Hon. Leroy JePPers
Hon. M. T. Harrlngton - Page 6 (w-121)

            constructing, and initially equlpping
            buildings or other permanent improve-
            ments at such institutions.

                                     Very truly yours,
                                     WILL WILSON
                                     Attorney General

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

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