Attorney General Opinion JM-1196

TEE ATTORNEY GENERAL OF TEXAS Mr. William D. Taylor Opinion No. JM-1196 Interim Executive Director Department of Commerce Re: Whether interest earned on P. 0. BOX 12728 monies in the Texas Exporters Capitol Station Loan Fund may be used to admin- Austin, Texas 78711 minister the Texas Exporters Loan Program (RQ-1786) Dear Mr. Taylor: You ask about the proper construction of House Bill 369, which created the Texas Exporters Loan Fund.1 Specifi- cally, you ask whether interest earned by the deposit of money in the fund created by that bill may be "used" to administer the program authorized by that bill. The bill r- provides that the costs of administering the program must be paid by interest earned by the deposit~of money in the fund and by fees collected in connection with the program. However, a rider to the appropriations act provides that administration of the program shall be financed from fees generated from the program. The rider omits any reference 1. Senate Bill 223, which was a general "clean up" bill, made necessary corrections to Title 4 of the Government Code, conformed Title 4 of the Government Code to certain acts of the 70th Legislature, and also codified in a nonsubstantive way various statutes in that title. Acts 1989, 71st Leg., ch. 4, at 200. Article 3 of the bill added Subtitle F to the Government Code, which deals with commerce and industrial development. Chapter 481 of Subtitle F codified various statutes governing the Texas Department of Commerce. In addition to Senate Bill 223, the 71s.t Legis- lature enacted fifteen other bills that either amended or added sections to chapter 481, including Rouse Bill 369, which added section 481.059. Section 481.059 of the Govern- ment Code was not amended by any of the other bills enacted by the 71st Legislature. p. 6312 Mr. William D. Taylor - Page 2 (JM-1196) to interest generated by the deposit of the money in the fund. House Bill 369 added section 481.059 to the Government Code, which creates the Texas Exporters Loan Fund and authorizes the Texas Department of Commerce to use that fund to guarantee loans made by private lenders to certain businesses under certain conditions. Acts 1989, 71st Leg., ch. 818, 5 1, at 3751. Section 481.059 provides in pertinent part: (a) The Texas exporters loan fund is a fund in' the state treasury. The consists of. appropriations or transfers made to the fund, guarantee fees, other money received from operation of the program established by this section, and interest paid on monev in the fund. Money in the fund may be used only to carry out the purposes of this section. If any appropriations are made to the department from the general revenue fund to carry out this section for a fiscal year, at the end of that fiscal year .the unexpended balance of those appropriations shall be transferred to the Texas exporters loan fund. . . . . (g) The department shall administer the program established by this section in the same manner as its other programs under this chapter, except as provided otherwise by this section. ecostsnadmlnisterino thg e WO ; a on monev in the fund and bv fees collected in connection with the nroaram. (Emphasis added.) A rider to the appropriations act passed during the same legislative .session limits the funding source for paying the costs of administration of the program only to those fees generated by the program. Rider 37 provides the following: TEXAS EXPORTERS LOAN FUND. Contingent upon the final.passage of Senate Bill 165, Seven- ty-first Legislature, or similar legislation p. 6313 Mr. William D. Taylor - Page 3 (JM-1196) relating to the Texas Exporters Loan Fund, there is hereby appropriated in fiscal year 1990 to the Texas Department of Commerce $2,000,000 out of the General Revenue Fund to establish the Texas Exporters Loan Fund. financed from fees aenerated from the Texas wo*ers man ~uru3 2 . Acts 1989, 71st Leg., ch. 1263, art. I, at 5169. (Emphasis added.) You suggest that there is an irreconcilable conflict between the bill and the rider and that the bill controls. In your letter requesting an opinion from this office, YOU state: 2. The bill to which the rider refers, Senate Bill 165, differed from the bill finally enacted by the legislature, House Bill 369, in one important respect that relevant. to your inquiry. Subsection (g) of the %mittee substitute for Senate Bill 165, which governed the administration of the program, provided: "The department shall administer the program established by this section in the same manner as its other programs under this article, except as provided otherwise by this section." Senate Bill 165 omitted any reference to using the fees collected in connection with the program (or, for that matter, any reference to using interest earned from the deposit of the money in the fund). Senate Bill 165 was not enacted by the legislature: its house counterpart, House Bill 369, was. Rider 37, which was made effective expressly upon the passage of S.B. 165 or a comparable bill, apparently was drafted to reflect the language set forth in S.B. 165, not the language contained in H.B. 369. Thus, the bill ultimately enacted by the legislature creating the fund required that interest earned by the deposit of the money in the fund comprise one of the two funding sources that the legislature could appropriate to pay for the costs of administering the loan program. Rider 37 further limited for the duration of this biennium the funding source from which the program's administrative costs could come, i.e. only to the fees generated by the program. p. 6314 Mr. William D. Taylor - Page 4 (JM-1196) The statute, Section 481.059, clearly provides that such interest may be used for administration and that the interest is part of the Texas Exporters Loan Fund. The Fund, including the interest, is appropriated to Commerce in SB 222 [the appropriations act]. As was the case in mlock Calvert 480 S.W.Zd 367 (Tex. 1972), thereVis elsewh6re in the statutes authority to use the interest in the Fund for administration.3 [Section 481.059(g) of the Government Code.] Althouah 1 he e t snecificallv mentioned in SB 222, both leaislative intent and the a n ral orincinle under Article III. Sec. 3: eof the Texas Constitution that aeneral leaislation controls over conflictina 1 ouaae in an annrooriations act, indicate tE:t Commerce is authorized to use the interest for dministration of the Texas Exnorters Lo &nd or ara V-1254 ;195:; [TEX. ATT'Y GEN. OP. NO;: ; M-1041 (1972); TEX. ATT'Y GEN. LA NO. 72 (1973).] (Emphasis added.) We are unclear whether, by asking whether the commission may "usen the interest that accrues from the deposit of the money, you are asking whether the bill supersedes the rider and thereby author- the legislature to appropriate interest earned by the deposit of the money in the fund for the purposes of administering the program, or whether you are asking whether the legislature actuallv has appropriated such interest. For purposes of this opinion, we assume that you are asking whether the legislature has appropriated the interest earned, regardless of whether that appropriation has been effected by the general law or the appropriations bill. We conclude that section 481.059 of the Government Code acts as a limitation on the sources from which the legislature may appropriate We note that in Bullock (Tex. 31972) v. a rt. 480 S.W.2d 367 the Texas Supreme Court expre&ly declined to grant the keguested petition of mandamus to compel the comptroller to pay out of state funds the expense of a party primary election because there was ~g statute empowering the secretary of state to so expend state money. P. 6315 Mr. William D. Taylor - Page 5 (JM-1196) moneys for administration. The requirement that administra- tive costs "must be paid '1 from certain sources means that no other source of funding may be used for administrative costs. We conclude that 'the legislature has not appro- priated accrued interest generated by the deposit of money in the fund: therefore, we answer your question in the negative. Section 6 of article VIII of the Texas Constitution governs the withdrawal of money from the state treasury and provides in pertinent part: No money shall be drawn from the Treasury but in pursuance of specific appropriations made by law; nor shall any appropriation of money be made for a longer term than two years. Section 6 has been construed consistently to require an appropriation by the legislature before any money can be paid out of the state treasury. &iahtfoot v. Lane, 140 S.W. 89 (Tex. 1911); Pickle v. Finley, 44 S.W. 480 (Tex. 1898). An ap ropriation g may be effected either by the constitu- tion, by statute,5 or by a general appropriation bill.6 S e. a (estabtishitg vzte&s# Tex. Const. art. III, 5 49-b land fund and appropriating all moneys in the fund for purchase of land to sell to veterans.) 5. See, e-a., Acts 1959, 56th Leg., ch. 150, § 4, at 260 (amending V.T.C.S. art. 695c, 5 27). In an earlier opinion, this office declared: This does not mean that general legislation may not contain an appropriation which is merely incidental to and necessary to carry out the subject and purpose of the general law. [Citation omitted.] Neither does it mean that a general appropriation bill may not contain general provisions and details limiting and restricting the use of the funds therein appropriated, if such provisions are necessarily connected with and incidental to the appropriation and use of the funds and if they do not conflict with or amount to general (Footnote Continued) p. 6316 Mr. William D. Taylor - Page 6 (JM-1196) See aenerally Susman, Fiscal and Constitutional Limitations, 44 Tex. L. Rev. 106 (1965). Regarding whether certain language is sufficient to effect an appropriation, the Texas Supreme Court long ago declared: It is clear that an appropriation need not be made in the general appropriation bill. It is also true that no specific words are necessary in order to make an appropriation; and it may be conceded, as contended, that an .appropriation may be made by implication when the language employed leads to the belief that such was the intent of the Legislature. Pickle v. Finley, sunra, at 480-81. In what is probably the leading case in this area, National Biscuit Co. v. State, 135 S.W.2d 687 (Tex. 1940), the Texas Supreme Court declared: As just stated, one of the provisions of Sec. 6 of article 8 of our Constitution requires all appropriations of money out of the State Treasury to be specific. It is settled that no particular form of words is (Footnote Continued) legislation. [Citations omitted.] Attorney General Opinion V-1254 (1951). 6. In an earlier opinion, this office declared: If a bill does more than set aside a sum of money, provide the means of its distribution, and to whom it shall be distributed, then it is a general law. [Citations omitted.] The distinction between a general appropriation bill and general legislation has been recognized in this State in the simple fact that the former merely sets apart sums of money for specific objectives and uses while the latter does more than merely appropriate and limit the use of funds. General legislation constitutes a separate subject and cannot be included within a general appropriations bill. [Citations omitted.] Attorney General Opinion M-1199 (1972). p: 6317 Mr. William D. Taylor - Page 7 (JM-1196) C ,- required to render an appropriation specific within the meaning of the constitutional provision under discussion. It is sufficient if the Legislature.authorizes the expenditure by law, and specifies the purpose for which the appropriation is made. An appropriation can be made for all funds coming from certain sources and deposited in a special fund for a designated purpose. In such instances, it is not necessary for the appropriating Act to name a certain sum or even a certain maximum SUlU. Id. at 693. The issue is whether the language set forth in either the statute or rider effect an appropriation of earned interest consistent with the requirements of section 6 of article VIII of the Texas Constitution. The language of neither the statute nor the appropriations act rider expli- citly effects such an appropriation: the issue is whether such language effects an appropriation by implication. Based upon our examination of prior authority, we conclude that neither the language of section 481.059 of the Government Code nor the language of Rider 37 effects an appropriation of earned interest. Appropriations by implication have been found under certain circumstances. In Atkins v. State Hwv DeD't, . 201 S.W. 226 (Tex. Civ. App. 1917, no writ), the court held that the following language did effect an appropriation by implication: All funds coming into the hands of the Highway Commission, derived from the registration fees hereinbefore provided for, or from other sources, as collected, shall be deposited with the State Treasurer to the credit of a special fund designated as 'The State Highway Fund,' and shall be naid only on warrants issued bv the State ComntroU unon vouchers drawn bv the Chairman of t:e Commission, such vouchers to be accompanied by itemized sworn statements of the expendi- ures, except when such vouchers are for the regular salaries of the employees of the Commission. The said State Highway Fund shall be expended by the State Highway p. 6318 Mr. William D. Taylor - Page 8 (JM-1196) Commission for the furtherance of public road construction and the establishment of a system of State highways, as contemplated and set forth in this Act. (Emphasis added.) Acts 1917, 25th Leg., ch. 190, at 424. The court concluded that the language set forth above indicated the legisla- ture's intent that the fees involved be appropriated. Because the general laws at issue contained language very similar to that underscored above, several attorney general opinions held that those statutes involved also effected apprOpriatiOnS. See also Attorney General Opinions c-297 (1964); V-923, V-895, V-887 (1949). On the other hand, several attorney general opinions held that language contained in various general laws or appropriation act provisions did tion. not effect any appropria- For example, in Attorney General Opinion V-412 (1947), this office was asked, inter alia, whether an amendment passed in 1947 to then V.T.C.S. article 6053, which conferred broad regulatory authority on the Railroad Commission governing butane and liguified petroleum gases, effected an appropriation of connection with the act. license fees collected in. The amendment provided: All fees received by the state from licenses issued under this Act shall be made available to the Railroad Commission for use in paying the legitimate expenses incurred in administering and enforcing the provisions of this Act, and for no other purpose: provided, however, that any excess funds remaining at the end of each two-year period shall go to the General Fund. Acts 1945, 49th Leg., ch. 358, at 634. The appropriations act passed in 1947 contained a rider that provided that all fees received by the commission under article 6053 shall be paid into the General Revenue Fund. This office concluded that the language set forth above did not have the effect of appropriating the license fees collected. In Attorney General Opinion V-923 (1949), this office was asked to construe the following two paragraphs: All such fees as are collected under this Act shall be deposited in the State Treasury in a special fund under the title of the p. 6319 Mr. William D. Taylor - Page 9 (JM-1196) Texas Vegetable Certification fund. The purpose of the fees being to pay for the enforcement of the law and to provide inspections called' for: it further being the purpose to make the law self-supporting. Out of the fees collected under this Act, the Chief of the Warkets and Wardhouse Division of the Department of Agriculture shall be paid in addition to the amount of his salary in the general appropriation bill in the sum of Pour Hundred and Eighty Dollars ($480) per annum: which amount is hereby appropriated for said purpose. Acts 1949, 51st Leg., ch. 581, at 1130. The opinion held that the second paragraph makes 'a definite and specific appropriation, but that the first paragraph, because it failed to contain the words l'which amount is. hereby appropriated for said purposesn that is set forth in the second paragraph, did not effect an appropriation. See also Attorney General Opinion V-1422 (1952).7 .- We think that the language set forth in section 481.059 of the Government Code and in Rider 37 is comparable to the language of the statutes discussed in Attorney General Opinions V-412 and V-923. Therefore, we conclude that no appropriation of earned interest is effected by either the general law or the rider. The bill merely authorizes the legislature to appropriate money from two sources; the rider This office declared in Attorney General Opinion v-14227 i1952) : The fact that an assessment is made and collected and the fund is earmarked by general statute for a certain use does not make it available unless it is also appropriated by the Legislature for that use. Furthermore, even though a general statute specifies payment of a certain amount, the amount actually paid is determined by the amount appropriated by the Legis- lature. L at 3 (citations omitted). p. 6320 Mr. William D. Taylor - Page 10 (JM-1196) 4 merely limits the source to one and, in effect, carves out a subset from the bill for the duration of this biennium. Riders to an appropriations act frequently serve this sort of function: a rider may prohibit a state agency from using appropriated money for activities that the agency is otherwise authorized to conduct. Se . e.a General Opinions JW-860 (1988): U-499 (19z9). Attorney F&r example, state agencies have statutory authority to purchase insurance policies protecting against claims arising under the Tort Claims Act. Civ. Prac. & Rem. Code § 101.027. However, the general appropriations act for the current fiscal year prohibits any appropriated money from being expended for such purpose: None of the funds appropriated in this Act may be expended fo'r the purpose of purchasi'ng policies of insurance covering claims arising under the Texas Tort Claims Act. Acts 1989, 71st Leg., ch. 1263, art. V, 5 55, at 5797; see Attorney General Opinion JW-625 (1987). We conclude that section 481.059 does serve to limit the sources from which the administration of the loan program may be funded, but it does not effect an appropriation of those moneys. SUMMARY The interest earned by the deposit of money in the Texas Exporters Loan Fund has not been appropriated during the current bi- ennium to pay for the costs of administering the loan program. Very truly you , LJ Ed& A',, _ JIM MATTOX Attorney General of Texas WARYRRLLRR First Assistant Attorney General LOU MCCREARY Executive Assistant Attorney General p. 6321 Mr. William D. Taylor - Page 11 (JM-1196) JUDGE ZOLLIE STEAKLEY Special Assistant Attorney,General RKNEA HICKS Special Assistant Attorney General RICK GILPIN Chairman, Opinion Committee Prepared by Jim Moellinger Assistant Attorney General p. 6322