April 1. 1987
Honorable Bob Bullock Opinion No. ~~-666
Comptroller of Public Accounts
L.B.J. State Office Building RI?: Whether the Comptroller may
Austin, Texas 70774 certify an appropriations bill for
the next biennium if a deficit vi11
exist at the end of the current
biennium, and related questions
Dear Mr. Bullock:
The body of your March 10, 1987, letter requesting an opinion of
this office is reproduced here in its entirety:
For the first the since article III, sec. 49a.
Tex. Conat. was passed in 1943. Texas has borrowed
money through cash management notes. When the
notes are paid off on August 31, 1987. it is
estimated the state will be a billion dollars in
the red.
The Constitution intend8 Texas to operate on a
‘pay aa you go’ basis. Art. III, sec. 49 pro-
hibits the state from creating debt. If no action
Is taken by the Legislature to correct the current
situation, there will be a conflict with this
provision in this biennium. If the funds borrowed
from other accounts to pay off the cash management
notes are not replenished by August 31, 1987. the
state will enter the new biennium in the red.
It appeare to me the very purpoac for the in-
clusion of sec. 09a becomes meaningless if this
deficit is carried into the upcoming biennium.
Therefore, I hereby request your official opinion
on the following question:
May the Comptroller certify any Appropriation
Bill under Art. III. sec. 49a, Tex. Conat. for
the 198849 biennium if the Comptroller eatl-
mates and/or certifies that a deficit vi11
exist at 12:00 midnight, August 31, 1987, and
that sufficient revenues will not be available
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to retire that deficit prior to September 1,
1987?
Because of the importance of this question, I will
appreciate it if you will expedite your opinion.
If you desire, I and my staff will be available to
consult with you on this question at any time.
In order to properly address your question. it is first necessary
to establish the relationship betveen sections 49 and 49a of article
III, of the Texas Constitution, and to delineate the relative powers
of the Comptroller of Public Accounts and the Texas Legislature as
they are affected by section 49a.
Section 49 of article III has been a part of the Texas Conatitu-
tion since its adoption in 1876 and has never been amended. It reads:
Sec. 49. No debt shall be created by or on
behalf of the State, except CO supply casual
deficiencies of revenue, repel invasion. suppress
inaurrectlon, defend the State in war, or pay
existing debt; and the debt created to supply
deficiencies in the revenue, shall never exceed in
the aggregate at any one time two hundred thousand
dollars. (Emphasis added).
The term “casual deficiencies” is not defined by section 49, but
its meaning has never been unclear. The terms “debt ,I’ “deficiencies.”
and “casual” as used in article III, section 49 were discussed by
Attorney General Gerald Mann in Attorney General Opinion O-2118
(1940). The opinion, written for the Attorney General by then-
Assistant Attorney General Ocie Speer in the year before the section
49a amendment was proposed by the legislature, declared, in pertinent
part:
‘Debt’ signifies the pecuniary obligation of
one who voluntarily aaaumea a liability, or upon
vhom the law imposes a liability. In case, as
here, the State is sought to be charged as a
debtor. such debt may only be created through some
agency lavfully authorized to bind the State.
‘Deficiencies,’ as the word is here used.
pertains expressly to ‘the revenue.’ A deficiency
is a shortage or Inadequacy in a sum or fund, and
the revenue contemplated 18 that portion of the
public moneys appropriated by the Legislature to
the particular purpose as to vhich there is
claimed to be a deficiency.
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‘Casual deficiencies,’ in this connection,
means an unforeseen and unexpected deficiency --
an insufficiency or lack of funds to meet a aitua-
tion which unexpectedly develops and requires the
immediate attention at a time when the Legiala-
ture, the usual authority. is unable to act.
Levis v. Loaley, 19 S.E. 57; 92 Ga. 804; In re
IAlnuronriationa
- _.. of the General Aaaemblv. 22 Pac.
464, lj Cola. 316; LeFebre V. Callaghan (Ariz.)
263 Pac. 589.
The Mann opinion construed articles 4351 and 4351a. V.T.C.S.,
both of which remain in force. Artfcle 4351 permits the Governor to
approve “deficiency claims,” which approval will authorize (but not
compel) the Comptroller to issue “deficiency varranta” to pay the
claims. Article 4351a limits the amount of such deficlencv warrants
to $200,000 in the aggregate. See Fort Worth Cavalry Club V.
Sheppard. 83 S.W.2d 660 (Tex. 19%). Cf. Terre11 V. Middleton,
(concurring opinion), 191 S.W. 1138 (Tez 1917) (written before
article 4?Sla- was enacted). Attorney General Opinion O-2118 said
at 5:
There can be no casual deficiency of revenues,
such as we are considering, except vith respect to
those purposes for which there has been made a
specific appropriation. It is obvious. therefore,
that the Legislature did not intend to confer upon
the Governor authority to approve the issuance of
deficiency warrants to finance a project vhich the
Legislature considered, or might have considered,
during its session, and failed or refused to
appropriate money for.
Thus, shortly before section 49a was proposed as an amendment, It
was the opinion of this office that section 49 prohibited the creation
of debt to cure unexpected, unforeseen “casual deficiencies in the
revenue” in an amount greater than $200,000. Undoubtedly, the
drafters of the proposal to add section 49a to the constitution had
that situation in mind. Notwithstanding that construction of section
49, however, the section had proved (and was shortly to prove again)
unable to atop the flow of red ink.
The impotence of section 49 before the adoption of section 49a is
demonstrated by the case of King V. Sheppard, 157 S.W.2d 682 (Tex.
Civ. App. - Austin 1941, writ ref’d v.o.m.), decided a few months
after Attorney General Opinion O-2118 was issued. and a few months
before the voters adopted section 49s. In the King case, the
legislature had appropriated $1.500,000 from the General Revenue Fund
for expenditures related to the acquisition of Big Bend National Park.
The suit was one to enjoin the Comptroller from paying out the money
because, Inter alla. a deficit of approximately $27,000.000 existed in
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,
that fund. The Court, although observing that section 49 inhibited
the creation of a debt to supply revenue deficicnciea in excess of
$200,000, nevertheless declared:
It is stipulated that there la a deficit of
approximately S27,000,000 in the General Revenue
Fund. No shoving is made that the appropriation
exceeds the anticipated revenues for the year; and
the authorities hold that no debt is created
unless the appropriation is made or obligation is
created in excess of the reasonably anticipated
revenues for the year. (Citations omitted).
Furthermore, If it should be assumed that the
appropriations for the year are in excess of the
anticipated revenues for the year, the bill does
not provide which of the items should be excluded.
Obviously, the existence of the deficit alone
cannot render the Legislature powerless to make
appropriations for the operation of the govern-
ment. Nor does the fact that the Legislature has
permitted a large deficit to accumulate in this
particular fund prohibit it from making appropria-
tions for the current year operation of the
government.
King v. Sheppard, 157 S.W.2d at 685-86.
The Ineffectiveness of section 49 to prevent resort to deficit
spending was fhe result of its lack of an enforcement mechanism. As
indicated in Ping, no adequate shoving could be made that an appro-
priation exceeded the anticipated revenues for the year, or, es to
vhich items should be excluded if it did. The adoption of section 49a
in 1942 vaa designed to correct that situation. Cf. Johnson V.
Ferguaon. 55 S.W.2d 153 (Tax. Civ. App. - Austin 1932-it diam’d);
Fcrguaon V. Johnson. 57 S.W.Zd 372 (Tex. Civ. App. - Austin 1933, vrit
diam’d) .
Section 49a. of article III, of the Texas Constitution consists
of three paragraphs:
Sec. 49a. It shall be the duty of the Comp-
troller of Public Accounts In advance of each
Regular Session of the Legislature to prepare and
submit to the Governor and to the Legislature upon
its convening a statement under oath shoving fully
the financial condition of the State Treasury at
the close of the last fiscal period and an cati-
mate of the probable receipts and disbursements
for the then current fiscal year. There shall
also be contained in said statement an itemized
estimate of the anticipated revenue based on the
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lava then in effect that will be received by and
for the State from all sources shoving the fund
accounca to be credited during the succeeding
biennium and said statement shall contain such
other information as may be required by law.
Supplemental statements shall be submitted at any
Special Session of the Legislature and at such
other times as may be necessary to shov.probable
changes.
Prom and after January 1, 1945, save in the
case of emergency and imperative public necessity
and with a four-fifths vote of the total member-
ship of each House, no appropriation in excess of
the cash and anticipated revenue of the funds from
which such appropriation is to be made shall be
valid. From and after January 1, 1945, no bill
containing an appropriation shall be considered as
passed or be sent to the Governor for conaidera-
tion until and unless the Comptroller of Public
Accounts endorses his certificate thereon shoving
that the amount appropriated is within the amount
estimated to be available in the affected funds.
When .the Comptroller finds an appropriation bill
exceeds the estimated revenue he shall endorse
such finding thereon and return to the House in
which same originated. Such information shall be
immediately made known to both the House of
Representatives and the Senate and the necessary
steps shall be taken to bring such appropriation
to within the revenue, either by providing
additional revenue or reducing the appropriation.
For the purpose of financing the outstanding
obligations of the General Revenue Fund of the
State and placing its current accounts on a cash
basis the Legislature of the State of Texas is
hereby authorized to provide for the issuance,
sale. and retirement of serial bonds, equal in
principal to the total outstanding, valid, and
approved obligeciona owing by said fund on
September 1, 1943, provided such bonds shall not
draw interest in excess of two (2) per cent per
annum and shall mature within twenty (20) years
from date. (Emphasis added).
The purpose for the enactment of section 49a is discussed in 1
Braden, The ‘Constitution of the State of Texas: An Annotated and
Comparative Analysis 207 (1977). The explanation of section 49a notes
that:
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Honorable Bob Bullock - Page 6 (JH-666)
Section 49a was proposed in 1941 es a device
designed to atop deficit financing. The amendment
was adopted at the general election in 1942 by a
vote of 96,418 to 72,816. Four other amendments
voted upon at the same election were defeated.
. . . .
Texans say that their constitution embodies a
‘pay-as-you-go’ philosophy. When applied to the
prohibition on incurring debt, the expression is
not wholly accurate. Section 49 means in effect
that only the voters may put the state into debt.
Section 49a is the embodiment of a ‘pay-as-you-go’
philosophy. The section says, in effect, ‘Don’t
spend more than your income; don’t slip into debt
accidentally.’
Actually, Section 49 embodies the same phi-
losophy as far as the legislature is concerned.
That is. in order to reserve to the people the
decision on whether to go into debt, Section 49
forbids a casual deficit of more than $200,000.
Section 49a is an attempt to force the legislature
to obey the command of Section 49. It is the
addition of an enforcement device that is evidence
of devotion to ‘pay as you go’. . . .
The purpose and meaning of section 49a.vere also addressed by
Attorney General Mann shortly after the amendment was adopted. In
Attorney General Opinion O-5135 (1943), issued on March 27. 1943.
folloving adoption of the amendment the previous November, he answered
an inquiry from the Chairman of the State Affairs Committee of the
House of Representatives that read:
The import of this amendment 10 to place the
State on a cash basis. The language of the second
paragraph appears to restrict future appropria-
tions (after January 1, 1945) to cash on hand or
to revenue anticipated to be received during the
succeeding biennium. Paragraph three authorizes
the issuance of bonds ‘for the purpose of
financing the outstanding obligations of the
General Revenue Fund of the State and placing its
current accounts on a cash basis.’
Assuming ‘cash basis’. to mean that actual cash
shall be available some time within the succeeding
biennium to pay items of expense for which an
appropriation has been made, will you please
advise this committee whether or not the
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Honorable Bob Bullock - Page 7 (JM-666)
provisions of Article 3, section 49s mandatorily
require the State to operate on a ‘cash basis’
from and after January 1, 1945?
Responding, Attorney General Harm said in Attorney General
Opinion O-5135 at 4-5:
That the Legislature in submitting the amendment
(and the people in voting for it) intended that
the purpose was to place the State on a cash basis
is manifest from the language of the form of
ballot contained in the resolution (E.J.R. No. 1)
submitting the amendment, which form of ballot for
those in favor of the adoption of the amendment
reads as follows:
‘For the Amendment to the Constitution of the
State of Texas. requiring appropriation bills
passed by the Legislature to be presented to
and certified by the Comptroller as to avall-
able funds for payment thereof, limiting appro-
priations to the total of such available funds.
providing for issuance of bonds to pay off
State obligations outstanding September 1,
1943, and fixing the duties of the Legislature
and Comptroller of Public Accounts with re-
ference thereto.’
The opinion continued:
In construing a constitutional provision it
should be construed as it vaa understood by the
average voter vhen he cast his ballot for or
against it. Aa said by Judge Gaines, in Brady vs.
Brooks. 89 S.W. 1052, ‘The voters, as a rule. are
unlearned in law and. as persona of this class
would reasonably construe the Constitution upon
which they vote, such ought to be the construction
of the courts.’
Applying that rule to the meaning of Section
49a. Article 3, the voters evidently understood
that the purpose of the amendment was to limit the
authority of the Legislature to appropriate money
in excess of the cash and anticipated revenues.
or, in other vorda. the average voter understood
that its purpose vea to place the State on a cash
basis.
The language of the second paragraph of the
amendment is clear that no appropriation in excess
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.
of the cash and anticipated revenue of the funds
from which such appropriation is made shall be
valid. with one exception only, to wit,’ ‘. . .
save in case of emergency and imperative public
necessity and with a four-fifths vote of the
total membership of each house. . . .’ (Emphasis
added).
Several other Attorney General Opinions have also concluded that
the amendment mandatorily requires the state “to operate on a ‘cash
basis’ from and after January 1. 1945.” See Attorney General Opinions
O-6738A (1946); V-208 (1947); M-66 (1967),
Although a number of Attorney General Opinions have considered
the operation and effect of section 49a in the 45 years since its
adoption, the only case to come before the courts involving section
49a has been Texas Public Building Authority v. Psttox. 686 S.W.2d
924 (Tex. 1985). That case involved bonds the Attorney General had
refused to certify because, among other things, he considered them
part of a plan to finance state operations on a credit basis in
violation of section 49a. The Texas Supreme Court took a different
view, declaring:
We .next consider whether the Act and the bond
issuance violate article III, section 49s. That
aeition provides that no appropriation bill can
become law unless and until either the Comptroller
of Public Accounts certifies that .there will be
sufficient anticipated revenues to meet the
appropriation or the Legislature passes the bill
by a four-fifths majority of each house. Because
all future appropriationa for the payment of
rental by the Commission in accordance vlth the
lease agreement vi11 be subject to the procedures
outlined in article III. section 49a, neither the
Act nor the Lease Agreement constitutes a viola-
tion of this constitutional provision. In the
absence of sufficient appropriationa to pay future
rentals, the Authority has the right under the
Lease Agreement to terminate the lease. There
are, at present, some seven million dollars in the
State Lease Fund to pay rental fees as they
become due. The Attorney General cites us to no
authority supporting his assertions that the Act
or Lease Agreement violates article III. section
49a, and we are aariafied that this appropriation
and future appropriations to the State Lease Fund
have and will satisfy the procedural requirements
of article III, section 49a.
686 S.W.2d at 928.
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Honorable Bob Bullock - Page 9 (JM-666)
The Supreme Court held that, article III. section 49a was not
violated because the amount currently appropristed for the purposes of
the statute at issue was within the amount already available in the
affected fund from which such appropriation was to be made, and
because future appropriations would not be certified unless, at such
times, the fund contained sufficient moneys to satisfy the additional
appropriations.
The Attorney General had contended in the Building case
that the Act was inconsistent with the requirement in sections 49 end
49a that state government be operated on a “cash basis” as contrasted
with a “credit basis” fiscal policy and that the legislature created
the Texas Public Building Authority as a means to circumvent the
constitutional prohibition against deficit financing. In a time of
anticipated revenue shortages. the legislature hsd enacted article
bold, V.T.C.S.. for the purpose of financing future major construction
projects without appropriating the funds to pay for those projects.
The Supreme Court, in a unanimous vote, sanctioned this legislation.
Despite this office’s disagreement with the Court’s’interpreta-
tion of sections 49 and 49s. this office is not at liberty to ignore
the opinion of the Court and its leas than strict construction of
sections 49 and 49a in analyzing the question before us.
The constitutional provision added in 1942 does not. use the term
“debt.” Section 49a speaks. Instead, of “outstanding obligations” and
“placing its current revenues on a cash basis.” It introduces a new
element into the transactional equation: the Comptroller’s statements
and estimates.
The Comptroller of Public Accounts carried out his responsibility
under section 49a by submitting to the 69th Legislature, in advance of
its regular aeaaion in 1985, “an itemized estimate of the anticipated
revenues baaed on the lava then in effect that vi11 be received by and
for the State from all sources shoving the fund accounts to be
credited during the succeeding biennium.” The regular session of the
69th Legislature adopted, in conformity to the Comptroller’s revenue
estimates, a balanced budget. A combination of unforeseen circum-
stances, triggered in large measure by a sharp decline in oil prices
vhich began in late 1985 and resulted in a full-blow’ economic
recession in the statewide economy, produced a situation. unparalleled
in recent Texas history, in which it quickly became clear that the
original revenue estimates would fall considerably short of those
forecast at the beginning of 1985.
Article 49a requires the Comptroller to submit “supplemental
statements. . . . at any special session of the Legislature and at
such other times as may be necessary to ahov probable changes [in the
original revenue estimate] .” The duty to submit supplemental
statements co the Governor’ as the chief executive officer of the
state. is not limited to times when the legialsture is in session or
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Honorable Bob Bullock - Page 10 (JM-666)
1
to times immediately prior thereto. It is his duty to submit them
whenever, in his opinion, it is necessary to show “probable changes.”
Attorney General Mann noted in Attorney General Opinion O-5135
(1943) at 5. that “Section 49s imposes a duty upon the Comptroller
vhich requires no legislation to make it effective.” See also
Attorney General Opinion H-66 (1967). The section is self-enacting.
In our opinion, the legislature cannot control by statute the times or
method utilized by the Comptroller to determfne the condition of the
treasury or whether an appropriation bill exceeds the anticipated
revenue of the fund from which the appropriation la to be paid,
although that officer may be subject to mandamus in the event he
should fail to perform his duty as contemplated by the constitution.
Jernigan v. Finley, 38 S.W. 24 (Tex. 1896). Cf. V.T.C.S. art. 4393-1,
53.043(k); Jeaaen Associates. Inc. V. Bullox 531 S.W.2d 593, 602
(Tex. 1976).
In Attorney General Opinion w-640 (1959), Attorney General Will
Wilson considered the constitutionality of a bill that, among other
things, attempted to control the Comptroller’s estimates of the
outstanding but undiaburaed appropriations to be expected at the end
of a biennium. The opinion concluded, “Insofar as this bill attempts
to make estimates it is unconstitutional as a legislative invasion of
the duties of the comptroller.”
The bill at issue there, with the offending provision “making
estimates” deleted. became article 4348a. V.T.C.S.. still extant. The
remainder of the bill, in the form it was considered by Attorney
General Wilson, was characterized as an instruction to the Comptroller
“to use the cash accounting basis” and was pronounced constitutional
inasmuch as, according to the opinion:
Reading Section 49s of Article III from its four
corners, it is our opinion that this constitutional
provision contemplates that the Comptroller’ in
making his estimate for certification of bills, uee
the cash accounting method.
Thus, article 4348a. V.T.C.S.. is to be read not as a leglalativc
mandate defining the power of the Comptroller under section 49a with
respect to certifications or estimates made for that purpose. but,
rather, as a direction that he conform to the requirements of section
49a itself by using the cash accounting method in arriving at his
estimates for that purpose.
The Comptroller fulfilled his constitutional duty under article
49a by revising his revenue estimates dovnvard. beginning in early
1986 and continuing throughout the year. Prior to and during the
first and second called sessions of the 69th Legislature. he advised
the governor and the legislature of an anticipated shortfall of
substantial proportions for the current biennium. Nevertheless, the
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legislature adjourned the special session in September. 1986. oith the
knovledge that expenditures would in all probability substantially
exceed revenues. Prior to and during this, the 70th Session of the
Legislature, the Comptroller again advised the Governor and the
Legislature of an anticipated shortfall of substantial proportions.
It has never been assumed, however, that no deficit could ever
occur in the accounts of the state after the adoption of section 49a
or, if one did occur, that it could not be carried forvard to the next
fiscal period. In fact, the third paragraph of section 49a. speaking
in 1942, contemplated the existence of s deficit in the General
Revenue Fund as of September 1, 1943. To retire the expected deficit,
It authorized the sale of bonds in an amount equal to the actual
deficit on that date, but without assurance that the bonds could be
sold (on the basis permitted) in time to eliminate the shortage before
January 1. 1945, the date “from and after” which the accounts of the
state were to be put on a cash basis.
That possibility was also addressed -by Attorney General Mann in
Attorney General Opinl& O=S13S 71943)’ to Chairman Manford of the
House State Affairs Comsittec. The Chairman posed, to him the
following:
If, hovever, the State is required to go on a
‘cash basis’ from and after January 1, 1945 the
question arises as to the future status of out-
standing and unpaid warrants as compared with that
of warrants issued after that date: Paragraph one
of the amendment above quoted required [sic] the
Comptroller in advance of each Session of the
Legislature to estimate funds that will be avail-
able for appropriation during such Session and for
the succeeding biennium. Our question is will the
Comptroller be required to take into consideration
the total outstanding unpaid warrants in deter-
mining the net amount of cash that will be
available for appropriation for the succeeding
biennium? In other words, till the net amount
available for appropriation be the gross antici-
pated revenue for the succeeding biennium less
the total amount of varrants outstanding and
unpaid that were issued prior to the date of such
estimate?
For example. assume that on January 1. 1945
the General Fund Revenue anticipated for the
succeeding biennium together with cash on hand
totals $36,000,000.00. and that the total warrants
then outstanding amount to $26,000,000:D0. would
the Comptroller be required to deduct the unpaid
warrants before certifying the amount of cash that
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Honorable Bob Bullock - Page 12 (JM-666)
would be available. to wit: $10,000,000.00. or
could he disregard all previously issued warrants
and certify $36.000,000.00 as the net amount
available for appropriation?
The answer given by Attorney General Plans demonstrated his
contemporaneous understanding of the amendment’s effect:
In reply to your second question us think the
Comptroller vi11 necessarily have to take into
consideration the total outstanding warrants in
determining the net amount of cash that will be
available for appropriation; otherwise, it would
be impossible to place the State on a cash basis.
If the aotlcipated revenues for the biennium
beginning January 1, 1945, should be estimated at
$36,000,000 and the Legislature should appropriate
$36,000,000 (sic] the outstanding warrants would
necessarily have to be paid in the order of their
registration and at the end of the biennium there
would be outstanding approximately the same amount
of warrants as in the beginning, -and the State
would not be on a cash basis. The financial
situation would not be changed.
As originally drafted. Attorney General Opinion O-5135 contained
an additional paragraph which concluded that unless, prior to that
date, the legislature enacted legislation to refund obligations owing
byhc General Revenue Fund on September 1. 1943, it could not be
done. The paragraph was deleted before the opfnion was issued. A
memorandum dated March 26. 1943 in the file recowsending the deletion
observed. Inter alia:
~a a practical matter it is impossible for the
Legislature during the present session (unless it
lasts until after September 1st) ‘to enact
necessary legislation,’ because no one knows, or
can knov, now the azsount of deficiency in the
general fund on September 1. 1943. The falling
off in State revenue and the rate of expenditures
betveen now and then will determine that.
The effect of revenue shortfalls on appropriation bills certified
by the Comptroller as being within estimated revenues anticipated, to
be available for their payment was considered by Attorney General
Grover Sellers in Attorney General Opinion Nor. O-6497 and O-6497A
(1945). These questions were posed:
Should the appropriation by the legislature be
within the Comptroller’s estimate as filed under
oath vlth the Governor. and if it subsequently
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Honorable Bob Bullock - Page 13 (J?4-666)
should develop that for some unforeseen cause the
sources of revenue should diminish to the point
that it would not meet the appropriation, would
the deficit thus created be a legal obligation
upon the State?
Should the appropriation be within the [Clomp-
troller’s estimate and it should subsequently
[develop] that the revenue fails to meet the
appropriation, should the [CJomptroller issue
varrsnts to meet the appropriation even though the
revenue is exhausted and vould such warrants be
paid vhen sufficient revenue is secured to meet
such warrants?
Attorney General Sellers ansvered each of the above questions in
the af f innative, indicating his belief that after bills have become
law. a deficit occurring as a result of conditions not anticipated by
the Comptroller’s estimate at the time they were certified vi11 not
affect their validity, although the miscalculation may require the
issuance of deficiency warrants.
A 1986 publication of your office noted:
An article on the pay-as-you-go amendment
published in the 1940’s. just after it was
adopted, said that if estimates changed after
appropriations were certified -- the current
situation -- the appropriations apparently vould
still be valid.
What makes ‘pay as you go’ work is the fact
that before each nev biennium. a new revenue
estimate is rolled out. In making this new
estimate, the Comptroller takes expected revenues
in the upcoming NO years and adds sny expected
surplus from the preceding budgLt period or
subtracts any deficit.
Interfund Borrowing In Texas State Finances, 6 (Peb. 19861.
We believe this procedure is the proper one for determining vhat
amount of appropriations, if any, the Comptroller may properly certify
under article III, section 49a. of the Texas Constitution for the
1988-89 biennfum. If the Comptroller estimates or ccrtifics that a
deficit of one billion dollars in the General Revenue Fund will exist
et 12:00 midnight, August 31. 1987, but anticipates the receipt in
that fund of twenty billion dollars in unencumbered revenue during the
1988-89 biennium. there vi11 be nineteen billion dollars for use
and certification during the biennium available according to that
estimate.
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If. on the other hand, the Comptroller estimates that a deficit
will exist in that fund at 12:00 midnight on August 31, 1987. vhich
exceeds anticipated unencumbered revenues during the succeeding
biennium. no funds will be available for certification. Thus, in our
opinion, there is no constitutional provision which forbids carrying
an expected deficit forward to the next fiscal period. Cf. Attorney
General Opinion VW-102 (1957) [“Section 49(a) does nt prohibit
deficit financing”. ]
I believe a caveat is in order. The Comptroller has carried out
his constitutional responsibility of advising the Governor and
Legislature of anticipated revenue shortfalls. The Texas Constitution
Imposes upon each member of the legislature a duty to refrain from
engaging in deficit financing. Failure of the legislature to prevent
deficit financing could cause the kind of financial problems that the
people spoke out against with the passage of sections 49 and 49a of
article III of the Texas Constitution. While I may be powerless to
prevent this deficit financing. I feel it is my duty not to yield our
constitutional heritage of a balanced budget vithout registering my
protest.
SUMMARY
Sections 49 and 49a of article III, of the
Texas Constitution are related. Neither ‘section
expressly forbids carrying forward a deficit from
one fiscal period to another. If a deficit is
carried forward from one biennium to another, the
deficit should be deducted from expected revenues
for the new biennium in determining what funds are
available during the new biennium for appropriation
and certification under section 49a.
zzb
MATTOX
Attorney General of Texas
JACK RIGHTOWER
First Assistant Attorney General
MARY KELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKJXY
Special Assistant Attorney General
p. 3051
c