Untitled Texas Attorney General Opinion

TIXEATPOWNEY GENERAL OF TEXAS k%USTIN. -XAS r8711 September 10, 1963 Honorable Robert S. Calvert Comptroller of Public Accounts Austin, Texas Opinion No. C-134 Re: Authority to execute a lease for a term beyond Dear Mr. Calvert: current appropriations. Your request for an opinion reads in part as fol- lows: “H.B. 1086, 58th Legislature reads as follows: “‘Section I. The Department of Public Safety, the Liquor Control Board, the Parks and Wildlife Commission gnd the Comptroller of Public Accounts are hereby authorized to enter jointly Into a contract of lease of land and a building thereon located. or to be locat- ed In El Paso County, to bemused by said agen- cies for reglbnal or district offices. The terms of the contract shall be agreed to by said agencies as one party to the contract, with each agency agreeing to pay a share of the rent or other consideration. Said agen- cies are authorized to execute a contract of lease for a term of twenty (20) years with an option to purchase at the end of the term for a consideration of Ten Dollars ($10); or said agencies may execute a contract of lease for any term of years leas twenty (20). n . l . “I will t‘hank you to advise me if the departments named In the above act have the authority to execute a contract for a term which exceeds the current appropriations.” -664- Hon. Robert S. Calvert, page 2 (C- 134) Section 49 of Article III of the Constitution of Texas provides : “No debt shall be created’by or on behalf of the State except . . .” (Excep- tion not applicable). Section 6 of Article VIII of the Constitution of Texas prohibits any approprlatlon of money for a term longer than two years. The leading cases pertinent to your Inquiry are Charles Scribnerls Sons v.Karrs, 114 Tex. 11, 262 S.W. 722 1924);r Fort Worth Cavalry Club v. Sheppard, 125 Tex. 339, A3 S.W. 2d bb0 (1935) I Lnarles Scrlbner's Sons v.Mar* supra, the Court was donsydering the validity of a contract forthe pur- chase of certain books for a period of five years. The obllga- tion of the contract was not to buy a fixed number OF amount of books but only so many as needed by the schools of the State. The Court held, therefore, that since the contract did not make a charge on the future revenues of the State, no debt was created nor was Section 6 of Article VIII of the Constitution of Texas violated. The case of Fort Worth Cavalry Club, su ra lease contract for a period of five years. &;U~Fv~:;l:d a that the contract was void since the adjutant general had the .; Implied power to make a contract .only within the amounts of the appropriation and the period of the appropriation. It was held In Attorney General’s Opinion O-6246 (1944) that the Board of Regents of the University of Texas was authoriz- ed to enter into a five year contract for fire Insurance and to pay all of the premium from current appropriation, stating: “The llmltatIon that no appropriation of money shall be made for a term longer than two years does not Imply a limitation on the power to make a contract for a greater time, where the contract does not require an appropriation beyond the two year period (38 Texas Jurlspru- dence, p. 845). With reference to the Insurance contract on the University Law Building, it is clear that no llablllty Is created against the State beyond the two year appropriation. II . . . -665- , Hon. Robert S. Calvert, Page 3 (C-134) "The Legislature has, time and time again, appropriated funds for buildings, lm- provements and supplies of all kinds, which lasted as Investments of the State far beyond the term of that particular two-year approprla- tlon. Appropriations have never been limited to those items where the benefits created by the appropriation would be exhausted by the end of the term of the two-year appropriation period. From an analysis of the cases herein cited, It appea5?s that the two-year limitation upon the power to contract has reference to the term of the obligation created against the Stat~ch contract, rather than to the period of time for which the benefits of the contract may extend In favor of the State." In Attorney General's Opinion v-1067 (1950), it was held that payment of rental on business machines did not violate~Sectlon 49 of Article III of the Constitution of Texas since such rental was to be paid out of current appro- priations. In view of the foregoln you are advised that while House Bill 1086. Acts of the 58'th Legislature, Chapter 422, page 1015, codified as Article 9783, note, Vernon's Civil Statutes, authorizes the Department of Public Safety, the Liquor Control Board, the Parks and Wildlife Commission and the Comptroller of Public Accounts to enter jointly into a contract for a term of twenty years, such contract must be payable out of current appropriations; otherwise such a con- tract would constitute the creation of a debt In violation of the provisions of Section 49 of Article III of the Constltu- tion of Texas. Therefore, if the proposed contract Is payable out of future revenues of the State rather than current appropriations, the same Is Invalid. In the event there are sufficient monies appropriated by the Legislature for the payment of the entire lease term contemplated by the contract, a contract leasing land by these agencies'for'a longer term than two years would be valid, If paid out of current revenues. SUMMARY Section 49 of Article III of the Constl- tutlon of Texas prohibits the creation of a -666- Hon. Robert S. Calvert, page 4 (C-134) debt by the State and any lease contract not payable out of current appropriations would be void. Yours very truly, WAGGONER CARR Attorney General Assistant JR:ms APPROVED: OPINIONCOMMITTEE W. V. Geppert, Chairman R. E. Richards Nicholas A. Irsfeld Bill Allen Paul Phy APPROVEDFOR THE ATTORNEY GENERAL By: Stanton Stone -667-