EAYTOWNEY GENE
OlF?!%XAS
AUSTIN 11. TEXAS
October 10, 1961
Honorable Brandon Bickett Opinion NO. WW-11.62
County Attorney
Blanc0 County Re: Whether it is legal for a
Johnson City, Texas county to purchase rights
of way and build fences on
State and Federal highways
and farm to market roads
out of the county highway
sinking fund and the
county's five cent special
Dear Sir: sinking fund.
,We refer to your inquiry of September 13, 1961, which
is as follows:
"Whether it is legal for a county to purchase
right of ways and build fences on State and Federal
highways and farm to market roads out of the county
highway sinking fund and the county's five cent
special sinking fund."
In a subsequent letter dated September 19, 1961, you
supplied the following information:
Blanc0 County Warrants for both funds
were,lssued in 1955 in the amount of $lO,OOO.OO.
As of this date they are paid down to $4,000.00.
The next warrant becomes due April 1, 1962. The
principal and all interest is currently paid to
date."
The answer to your request requires a reading of Article
7520, Vernoll'sCivil Statutes, as amended by Acts 1955, Page 303,
Chapter 113, Sec. 1, which Is in part as follows:
"Any county, or any political subdivision of
a county, or any road district that has been or
may hereafter be created by any Qeneral or Special
Law, is hereby authorized to issue bonds for the
purpose of the construction, maintenance and oper-
ation of macadamlzed, graveled or paved roads and
turnpikes, or in aid thereof, in any amount not to
Honorable Brandon Bickett, page 2. (WW-1162)
exceed one-fourth of the assessed valuation of the
real property of such county or political subdivi-
sion or road district, and to levy and collect ad
valorem taxes to pay the interest on such bonds and
provide a sinking fund for the redemption thereof.
Such bonds shall be issued in the manner herein-
after provided, and as contemplated and authorized
by Section 52, of Article 3 of the Constitution of
this State. . . . Provided when the principal and
all interest on said bonds are fully paid/in the
event there is any surplus remaining in the sinking
fund, said remaining surplus not used in the full
payment of the principal and interest on said bond
or bonds may be used by the county, . . .'
It is clear that the Legislature intended that no
additional expenditure shall be made out of the sinking funds
created under this statute, except for the retirement of the
bonds (and/or time warrants issued on the indebtedness,) until
the complete amount of principal and interest has been fully
paid. Where all bonds and interest thereon have not been paid,
the fund may not be used for any other purpose.
We further refer you to Attorney General's Opinion
No. 0-6075 (1944) which reads in part as follows:
II
. . . said funds, . . . cannot be used for
any purpose except to pay the interest on outstand-
ing bonds or for redeeming same, or for the invest-
ment in securities as provided by law. Until all
outstanding bonds and interest thereon are fully
paid from the funds, it retains its identity as a
'sinking fund,' the county treasurer could not honor
a draft against said sinking fund . . . for any pur-
pose except to pay interest on outstanding bonds, or
for redeeming same, or for investment in securities
as authorized by law. . . .'
Thus, we are of the opinion that it would not be legal
for a county to purchase rights of way and build fences on State
and Federal highways and farm to market roads out of the county
highway sinking fund and the county's five cent special school
fund under the statute. So long as there remains any outstand-
ing principal or interest, the fund may not be diverted for any
purpose.
Honorable Brandon Blckett, page 3. (WW-1162)
SUMMARY
A county cannot make expenditures out of
county sinking funds falling under Article
752A, Vernon's Civil Statutes, for any pur-
pose except for the retirement of bonds or
time warrants until the full amount of all
principal and interest on the bonds or time
warrants has been paid.
Very truly yours,
EBS:dhs:zt
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
W. Ray Scruggs
Bob Shannon
Martin DeStefano
John Steinberger
REVIEWED FOR THE ATTORNEY GENERAL
BY: Houghton Brownlee, Jr.