Untitled Texas Attorney General Opinion

THE ATTORNEY GENERAL
OF TEXAS

August 25, 1988

JIM MATF~x
ATTORNEY ORNERAI.

Honorable Jim Hightower Opinion No. JR-946
Commissioner of Agriculture
P. 0. Box 12847 Re: Authority of the legisla-
Austin, Texas 78711 ture to transfer funds from the
Produce Recovery Fund Board
into the General Revenue Fund
(RQ-1377)

Dear Mr. Hightower:

An act of the 69th Legislature provided for the trans-
fer of $337,348 from the Produce Recovery Fund (hereinafter
"the fund") to the General Revenue Fund at the end of the
1986-1987 fiscal year. Acts 1986; 69th Leg., 3d C.S., ch.
16 (hereinafter "S.B. 6"). You ask whether the legislature
had authority to make such transfer.

The Produce Recovery Fund is a "special trust fund"
established by Acts 1977, 65th Legislature, chapter 386 (now
chapter 103 of the Agriculture Code) for the payment of
claims against commission merchants and retailers licensed
by the Department of Agriculture to "handleV* vegetables and
citrus fruit under chapters 101 and 102 of the code. The
fund provisions replaced a prior requirement that licensees
be bonded. The fund * maintained "with the state
treasurer" and "administeizd by the department, without
appropriation." License renewal fees and late license
renewal fees under sections lp1.008 and 102.008, fees levied
against licensees specifically for the fund under section
103.001, and fifty percent of penalties assessed under
sections 101.020, 102.021 and 103.013, go into the -fund.
Interest earned on such money stays in the fund. Section
103.002(e). Section 103.009 provides that if the department
pays from the fund a claim against a licensee, the licensee
shall reimburse the fund on a schedule to be determined by
rule of the department. Section 103.002(d) provides that no

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Honorable Jim Hightower - Page 2 (JR-946)

more than ten percent of the fund may be
eYended
year for administration of the claims process. in any

According to information given in your request, the
$337,348 dollars transferred from the fund by S.B. 6 was
part-of an approximate $525,000 surplus remaining in the
fund at the end of the 1986-1987 fiscal year. Section
103.008 provides in subsection (e):

Payments from the fund during a fiscal
year may not exceed the amount of money
deposited into the fund during that fiscal
year, except that surplus funds remaining at
the end of each fiscal year are available for
the payment of claims during any succeeding
year.

Section 1 of Senate Bill 6, however, provided in part
that "this Act supersedes' any law restricting the
expenditure of [the transferred funds] to a particular
purpose."

The Produce Recovery Fund is not a Qconstitutional
fund," and is thus not subject to the provision of Texas
Constitution article VIII, section 7 that "[t]he legislature
shall not have power to borrow, or in any manner divert from
its purpose, any special fund that may, or ought to, come
into the Treasury." Gulf Ins. Co. v. James, 185 S.W.Zd 966
(Tex. 1945); Brazes River Conservation and Reclamation
pistrict v. McGraw, 91 S.W.2d 665 (Tex. 1936).

Your request letter and the letter we have received
from the Comptroller*s office in connection with your
request both suggest that resolution of the question whether
the Produce Recovery Fund is in fact a "trust fund" should
be dispositive of your question as to the propriety of the
Legislature's diversion of the $337,348 from the fund to the
General Revenue Fund.

However, as Attorney General Opinion JM-539 (~1986)
stated:

[E]ven in the case of a statutory trust fund,
the Texas Supreme Court has ruled that, so

1. You do not ask, and we do not address, any question
as to the constitutionality of the Produce Recovery Fund.

p. 4773
 Honorable Jim Hightower - Page 3 (JM-946)

C

lona as no vested riaht is imnaired. an
amendment that serves to alter or reduce a
benefit heretofore aranted bv statute is
mssible. (Emphasis added.)

CL v of Dallas v. Tram 101 S.W.2d 1009 (Tex. 1937).
Es&& Woods v. Reu I 218 A.W.2d 437 (Tex. 1949): Board
g
Pension Board of the Pension Svstem for the Citv of Houston,
449 S.W.2d 33 (Tex. 1970); Devon v. Citv of San Antonio, 443
S.W.2d 598 (Tex. Civ. App. - Waco 1969, writ ref'd); and
Attorney General Letter Advisory No. 5 (1973).

Clearly, no vested rights will have been impaired by
the S.B. 6 diversion unless and until the fund is actually
depleted, and then only to the extent that the fund's
depletion and consequent insufficiency for meeting claims6iz
attributable to the diversion of fund moneys by S.B. .
Your request letter indicates, however, that the fund is
still viable, having a balance of approximately $141,600 as
of Warch 8, 1988, the date of your request.

Neither your request nor the comptroller's letter
discuss whether any vested rights have been or will be
impaired by the S.B. 6 diversion.

Given the highly speculative nature of any argument
that actual claimants* rights might eventually be impaired
by virtue of the S.B. 6 transfer, we decline to hypothesize
circumstances under which such impairments might occur or to
rule whether the S.B. 6 transfer was unlawful as a result of
such at present only potential impairments of vested rights.

You also ask:

If the legislature does have the authority
to make such a transfer, and the Fund is
depleted, what is the Board's responsibility
as to the awarding of payment on valid
claims?

2. h'ven apart from the operation of S.B. 6, there is
no guarantee under the statutory scheme of chapter 103 that
the fund will not be depleted. See the discussion below of
your second question.

p. 4774
Honorable Jim Hightower - Page 4 (JM-946)

The board you refer to is the Produce Recovery Board,
which has the duty of advising the department on "all
matters relating to the fund" and of conducting hearings on
disputed claims. Sections 103.003 et sea.

We have difficulty discerning any lesml issues
presented by your second question. Particularly under the
circumstances assumed by your question, that the S.B. 6
transfer was lawful -- i.e. that no vested rights have been
or will be impaired -- we do not believe that the board's
legal "responsibilities@' are altered by virtue of the S.B. 6
transfer.

Even apart from the operation of S.B. 6, there is no
guarantee under the statutory scheme of chapter 103 that the
fund will not be depleted. Your request letter ind,icates,
for example, that for the fiscal year 1987-1988 up to the
date of your letter (March 1, 1988) $47‘422.75 had come into
the fund while $99,396.05 had been paid out. It is obvious
that such a revenue shortfall vis a vis expenditures is not
the result of the diversion of funds under S.B. 6, but is a
result, rather, of the statutory scheme of chapter 103 which
makes no provision to assure that the fund has sufficient
revenues to meet claims and administrative expenses.

The Department of Agriculture acting on the advice of
the board appears to have broad rule making authority under
section 103.004 for confronting. such cash flow difficulties
by reducing the amounts paid out in claims under section
103.008. The latter section generally only sets ceilings on
such payouts on claims. Amounts or percentages of claims to
be paid out could, we think, be reduced by administrative
rule.

Also, the department may seek, via its rule making
authority under section 103.009 and perhaps by more diligent
efforts generally, to increase the amounts obtained in
reimbursements under that section.

Whether appropriations should be made to replenish the
fund if depleted is of course a matter within the purview of
the legislature.

The transfer of $337,348 from the
Produce Recovery Fund to the General Revenue
Fund by operation of Senate Bill 6, 3rd
Called Session, 69th legislature, was lawful
so long as it did not impair any vested

p. 4775
Honorable Jim Hightower - Pag.e 5 :UM-946)

rights. The transfer might result in
impairment of vested rights of certain
claimants, if the transfer results in
depletion of the Produce Recovery Fund such
that their claims cannot be paid. That any
vested rights will be-impaired is, however,
only a hypothetical possibility since the
fund is at present still viable.

S.B. 6 did not alter the legal respons-
ibility of the Produce Recovery Board in
administering the fund.

Whether appropriations should be made to
replenish the fund if depleted, is of course
a matter within the purview of the legisla-
ture.

JIM MATTOX
Attorney General of Texas

MARYEELLER
First Assistant Attorney General

Lou MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAELEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by William Walker
Assistant Attorney General

p. 4776