.
d1.X PLvrrox July 27, 1990
*.l"l.o~NEY
DESERAL
Honorable George Pierce Opinion WO. JM-1194
Chairman
Committee on Urban Affairs Re: Authority of a munici-
Texas House of Representatives pality to advance compensa-
P. 0. Box 2910 tion to an employee
Austin, Texas 78768-2910 (RQ-1924)
Dear Representative Pierce:
You ask:
May a municipality advance compensation in
the form of cash or other property to
employees to be fully earned within one year
on terms agreeable to the municipality?
Given such a general question, we are, of course,
limited to a general answer. However, while we cannot fully
and finally answer your question, we can say with a fair
degree of certainty that a court would disapprove of such an
expenditure of public funds.
Cities generally have control over their finances. See
Local Gov't Code 85 101.002 (type A cities), 101.022 (home
rule cities). Cities also have control over the compensa-
tion and conditions of employment of their employees. See
Bvrd v. Citv of Dallas, 6 S.W.2d 738 (Tex. 1928). However,
a city's expenditure of public funds is subject to constitu-
tional restrictions.
The Texas Constitution is replete with provisions that
prohibit the grant of public funds and the lending of public
credit to private individuals or organizations. Specifi-
cally, article III, section 52(a) reads:
Except as otherwise provided by this sec-
tion, the Legislature shall have no power to
authorize any county, city, town or other
political corporation or subdivision of the
State to lend its credit or to grant public
money or thing of value in aid of, or to
any individual, association or corporation
whatsoever, or to become a stockholder in
P. 6304
Honorable George Pierce - Page 2 (JM-1194)
such corporation, association or company.
However, this section does not prohibit the
use of public funds or credit for the payment
of nremiums on nonassessable life, health, or
accident insurance policies and annuity
contracts issued by a mutual insurance
company authorized to do business in this
State.
Tex. Con&. art. III, § 52(a); see also & 55 50 (prohibi-
tion on the lending of the credit of the state), 51
(prohibition on the grant of public moneys to individuals
and corporations); j& art. VIII, § 3 (levy of taxes for
public purposes only); id. art. XI, 5 3 (prohibition on
political subdivisions' subscribing to private capital, and
appropriation or loaning of credit to same): ia. art. XVI,
§ 6 (prohibition on appropriation for private purposes).
But see Tex. Const. art. III, §§ 52-a (allowing grants of
public money for economic development), 52(e) (allowing
political subdivisions to invest funds as authorized by
law).
One constitutional scholar has analyzed the meaning of
the term "lend its credit" found in section 52(a) and the
variations of the term found in other constitutional
provisions as follows:
Section 50 states that the legislature may
not 'give' the credit of the state to
anybody, 'lend* the credit of the state to
anybody, or 'pledge' the credit of the state
for anybody. . . . This is an involved and
somewhat imprecise way of saying that the
state mav not aid anvbodv bv lendina him
money.
1 G. Braden, The Constitution of the State of Texas: An
Annotated and Comnarative Analvsis 225 (1977) (emphasis
added); see also Brazoria Countv v. Perry, 537 S.W.2d 89
(Tex. Civ. APP- - Houston [lst Dist.] 1976, no writ):
Attorney General Opinion JM-533 (1986). An advance of
salary is clearly a loan and, thus, a lending of credit
within the constitutional prohibition.
While the language found in section 52(a) only denies
the legislature the power to authorize a political sub-
division to "lend its credit," cases decided thereunder
and other constitutional analyses make it clear that
the constitutional prohibition also applies indirectly
to political subdivisions. See, e.a., Storrie v. Houston
Cite St. Rv. Co., 46 S.W. 796 (Tex. 1898); Braden, sunra:
p. 6305
l
Honorable George Pierce - Page 3 (JM-1194)
(I
.
Willatt, Constitutional Restrictions on Use of Public Money
and Public Credit, 38 Tex. Bar J. 413 (May 1975).
The constitutional provisions cited above signify that
the law generally abhors the expenditure of public funds for
private purposes. In Brazoria C&zuntv v. Perry, sunra, the
court addressed article III, section 52, and succinctly
restated the rule as follows:
The clear purpose of this constitutional
provision is to prevent the gratuitous
application of funds to private use. [Cita-
tions omitted.] The Constitution does not,
however, invalidate an expenditure which
incidentally benefits a private interest if
it is made for the direct accomplishment
of a legitimate public purpose.
537 S.W.2d at 90-91; see also Barrinaton v. Cokinos 338
S.W.Zd 133, 140 (Tex. 1960); podson V. rshall 118 i.W.2d
621 (Tex. Civ. App. - Waco 1938, writ dismjd); Attorney
General Opinions JM-1146 (1990); JM-551, JM-431 (1986);
MW-89 (1979); WW-790 (1960).
The requirement stated in the Brazoria County case that
the expenditure must be made "for the direct accomplishment
of a legitimate public purpose" leads us to doubt that a
court would approve the salary advance about which you ask.
Your unadorned question offers no implicit public purpose;
however, the determination of a public purpose and the
establishment of a cuid nro QUO are legislative functions.
See, e.a., Youna v. City of Houston, 756 S.W.2d 813, 814
(Tex. App. - Houston [lst Dist.] 1988, writ denied); Dodson,
sunra; Attorney General Opinions JM-1146 (1990); MW-373
(1981).
SUMMARY
A city may not ordinarily advance salary
to its employees.
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
p. 6306
L
Honorable George Pierce - Page 4 (JM-1194)
.
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOUIE STEAKLEY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Karen C. Gladney
Assistant Attorney General
P. 6307
Untitled Texas Attorney General Opinion
Combined Opinion