Hon. Larry 0. Cox
Executive Director
Board for Texas State Hospitals
and Special Schools
Austin, Texas opinion No. v-l363
Re: Legality of comuiencinga
construction project in this
fiscal year to be paid partly
from funds appropriated for
the first yeai and partly
from funds appropriated for
the second year of the bien-
Dear Mr. cox: niun.
Your request for an opinion is, in part, as
follows:~
"We desire ihe opinion of your office re-
garding the legality of comendhg a construe-
tion project in one ffscal year to be paid par-
tially out of that year's appropriated funds,and
@u-tially out:of fhe.:;'succeed~.;%isc~ycar?jsappro-
priated funds, both years being in the same bi-
ennium.
"Section 26 of H.B. NO. 426, 52na Legisla-
ture, Regular Session, made an'appropriation of
$5,COO,OOO.O0 for each fiscal year of the bien-
nium ending August 31, 1953; to the State Hos-
pitals and Special Schobls Butldm Fund. On
the basis of Section 26, the Board for Texas
State Hospitals and Special Schools set up an
allocation for the first fiscal year bf $1,5OO,OOO.O0
for repairs 6.M an allocation of $3,500,000.00
for new constiwctioti. The Board has under con-
tract or in the process of being contracted
$1,138,500.00 for repairs and $3,200,000.00 for
new construction, leaving a balance of $300,000.00
in the new construction allocation.
'The balance of $300,000.00~for new con-
struction is not sufficient to allow the Board
to contract for a new project.
- ,
Hon. Larry 0. Cox, page 2 (v-1363)
"If it is legally possible, the Board
would like to enter into a contract, during
this fiscal year, for a project in excess of
$300,000.00. The Board will make the sums
allocation during the second fiscal year of
the biennium, that is, $1,500,000.00 to re-
pairs and $3,500,000.00 to new construction.
"We do not think there is any question
that we can legally encumber the balance of
$3OO,OOO.OC during this fiscal year, even
though the project will not be completed and
paid for until the succeeding fiscal year.
Nor do we think there is any question that
we can legally contract and encumber at this
time the funds that will be available to us
in the second fiscal year of the biennium,
so long as no payment is made until the be-
ginning of the second fiscal year. Therefore,
it logically follows that the Board may enter
into a new construction contract in excess of
the balance of $300,000.00 so long as we do
not attempt to pay out more than $300,000.00
during this fiscal year and the balance after
this fiscal year.
"It is the interpretation of the State
Comptroller that .shouldan appropriationfor
any particular building be insufficient in
any one fiscal year, then the building can-
not be built.
?Should ws grant that the State Comptroller
is correct in his interpretation of the law, we
believe that such interpretation would not ap-
ply in our case due to the fact that our appro-
priation of $5,000,000.00 each fiscal year is
not for any particular building but, as set out
in Subsection B of Section 26 of~the aforesaid
appropriation bill, '. . . for the purpose of
architectural and engineering plans, construct-
ing, repairing, and equipping such buildings as
in the opinion of the Board are necessary to the
proper care of those committed or to be commit-
ted to such hospitals and special schools accord-
ing to law. . .I."
We have been unable to find sny constitutional
prohibition which would preclude the Board for Texas
State Hospitals and Special Schools from entering into
. -
Hon. Larry 0. Cox, page 3 (v-1363)
a construction contract in one fiscal year with partial funds
of that year's appropriation and partial funds from the suc-
ceeding fiscal year's~appropriation if both years are in the
same biennium. This method of expenditure would not be violative
of Section 49, Article III, Constitution of Texas, prohibiting
the creation of a debt by or on behalf of the State, since the
obligation incurred by the contract would be payable out of
appropriations, within the biennium~for which revenues have
been provided. Charles Scribner's Sons v. Marrs, ll4 Tex. 11,
&2&W. 722 (1924); Schmoldt v. Bolan, 80 P.2d 609 (Okra. SUP.
. And since ~the contract would not call for an exoendi-
t&e.of money beyond the amounts appropriate& for the current
biennium, it would not violate Article VIII, Section 6.
You have correctly stated that the balance of
$300,000 in this year's appropriationmay legally be encunioer-
ed during this fiscal year, even though the project for which
it is spent will not be completed md paid for until the suc-
ceeding fiscal year. In ~tt'y Gen. Op. o-2631 (1940), it was
held that capital assets may be purchased out of a current ap-
propriation, although the article purchased will not be delivered
and paid for until after the close of the fiscal year.
We a*lsoagree with your statement that you msy legal-
ly encumber at‘this time the fun& which will be available to
you in the second fiscal year of the biennium, so long as no
payment is made until the beginning of the second fiscal year.
Au opinion appearing in Reports and Opinions of the Att'y Cen.,
1914-1916, p. 695, held that a contract for the erection of a
building atone of the State colleges could be made prior to
the date on which the appropriation became available. The opin-
ion stated:
'The fact that this $l25,000.00 appropriated
for the erection of a dormitory and dining room
is notavailable until the 1st. day of September,
1916, does not postpone the taking effect of this
Act of the Legislature until that date. This Act
is as much the law now as it will be subsequent
to September 1, 1916, and the Board of Regents would
bewarranted in letting the contract for the erec-
tion of said building at the present time or at
any time after the enactment of-such law and prior
to August 31, 1917, the expiration of the fiscal
period for which appropriation is made.
"Of course, as this $l25,000.00 is by express
provision of the Act notavailable until Septem-
ber 1, 1916, no warrants could be drawn or .payments
Hon. Larry O. COX, page 4 (v-1363)
made out of same until that date."
See Att'y Cen. Ops. O-2239 (1940), O-6011 (1944);
and V-1139 (1950) for similar holdings.
Inasmuch as your Board may now contract for ~expen-
diture of the $300,000 balance in the current appropriation,
even though payment is not to be made until the succeeding
fiscal year, snd inasmuch as it may also contract for construc-
tion to be paidfor out of the appropriation for the succeed-
ing fiscal year, we must determine if there is any reason why
portions of these two appropriations may not be expended on
the same project. The question becomes one of legislative in-
tent--whether the Legislature intended that the cost of each
construction project must be paid completely out of a single
year's~appropriation or whether it intended only that $5,OOO,OCvJ
each year should be available for use by the Board on whatever
projects it undertook.
The State Hospitals and Special Schools Building
Fund was created by House Bill 2, Acts 5lst leg., 1st C.S.
1950, ch. 1, p. 1 (Art. 7047c-1, V.C.S.), which increased the
tax on cigarettes and allocated to this fund a percentage of
the net revenues from the tax, not to exceed $5,OOO,OOC for
each fiscal year, through August 31, 1957. .House Bill 2 pro-
vided that the moneys appropriated to the Board from the Build-
ing Fund were to be used "for the purpose of constructing, re-
pairing and equipping such buildings as in the opinion of the
Board are necessary to the proper care of those committed or to
be committed to such hospitals and spedal:schools according
to l&w."
The current appropriation bill, House Bill 426, Acts
52nd Leg., R.S. 1951, ch. 499, p. 1228, likewise permits the
Board.to use these funds for the construction of such buildings
as in the opinion of the Board are necessary. Section 26(b),
Article II of House Bill 426 reads:
"All funds credited to the State Hospitals and
Special SchoqJs Building Fund under this Article are
hereby appropriated to the Board for Texas State
Hospitals and Special Schools for the purpose of
architectural and engineering plans, constructing,
repairing, and equipping such buildings as in the
opinion of the Board are necessary to the proper
care of those committed or to be committed to such
hospitals and special schools according to law. Pro-
vided, however~,the fees paid to an architect shall
not exceed six per cent (6) for the plans, specifi-
cations and supervision of construction of said
. -
Hon. Larry 0. Cox, page 5 (v-1363)
buildings and all constnxtion contracts made
for, and the final acceptance in connection
with such construction, other than the plans
and specifications, shall be subject to the
review and approval of the Board of Control.
The Board may contract for, and pay for plans
and specifications for sny contemplated con-
stN&ionj even though the contract for such
plans and specifications may be made in one
(1) year and the contract for construction is
entered into the following year."
The Legislature has not designated that the ap-
propriated funds be used for the construction of s$ecific
buildings, nor has it limited the Board in the manher in
which the funds are to be applied to the construction of
such buildings as it deems necessary. The provision expresa-
ly permitting the~Board to pay for plans and specifications
for a contemplated construction out of a,different appro-
priation than the one from which construction costs are paid
shows that the Legislature did not require each project to
be financed completely out of the appropriation for a single
fiscal year. On the contrary, we think the entire legis-
lative history of the ,StateHospitals aud Special Schools
Building Fund shows that the Board is authorized to apply
the full amount of each appropriation to an.over-all program
for the improvement of the facilities of the institutions
under its jurisdiction and that each project need not be
financed in whole out of a single year's appropriation. To
hold that the $300,000 remaining in the current appropria-
tion canuot be spent in the building program contemplated
for the second year of the biennium would thwart the will
and intention of the Legislature, that intention being clear-
",
ly to authorize the expenditure of $10,000,000 for such pur-
poses within the biennium.
The question you have presented IS to be diStin-
guished from that considered in Attorney General's Opinion
O-7352 (1946). In that instance, the Legislature appro-
priatedto Stephen F. Austin State Teachers' College, for
the year ending August 31, 1946, the sum of $24,000 "for
steam tunnels and steam pipes for main buildings." There,
the appropriation was for a specific improvement, and pro-
vided for the expenditure of a specific amount in the con-
struction of that improvement. There, the intention of the
Legislature was clearly to the effect that the $24,000 was
all that should be spent for the improvement specifically'
designated. In the question before usherein, the types of -;
buildings and the number of such constructions are not
Hon. Larry 0. Cox, page 6 (v-1363)
specifically designated in the appropriation. The reasoning
of Opinion O-7352, which denied to the college the power to
contract for anything less than a completed steam system to
be paid for entirely out of the $24,000 appropriation, is not
applicable to the present situation.
In view of the foregoing discussion, it is our
opinion that under the present facts the Board for State Hos-
pitals and Special Schools may enter into a contract for a con-
struction project to be paid forpartially out of the appro-
priation for the current fiscal year and partially out of the
appropriation for the succeeding fiscal year, both years being:
in the same biennium.
Under the provisions.of its ,pqesentappro-
priations for:building construction and repairs,
the Board for Texas State Hospitals and Special
Schools may enter into a contract for a construc-
tion project to be paid for partially out of the
appropriation for the current fiscal year apd
partially out of the appropriation for the suc-
ceeding fiscal year, both years being in the same
biennium.
APPROVRD: Yours very truly,
J. C.,Davis, Jr. PRICE DANIEL
County Affairs Division Attorney General
Jesse P. Luton, Jr.
ReviewingAssist~t
Charles D. Mathews
First Assistant Assistant
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