Untitled Texas Attorney General Opinion ( 2001 )

OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
JOHN CORNYN
March 13,200l
Mr. Charles W. Heald, P.E. Opinion No. JC-0353
Executive Director
Texas Department of Transportation Re: Whether state highway revenues may be
125 East 11 th Street invested in a toll road project without a
Austin, Texas 78701-2483 requirement for repayment (RQ-03 19-JC)
Dear Mr. Heald:
You have asked this office, in effect, whether the Texas Department of Transportation
(“TxDOT”) may provide funds for the construction of toll roads that are not required to be repaid
from toll revenues. We conclude that, absent an amendment to article III, section 52-b of the Texas
Constitution, TxDOT may not do so.
As we understand the background to your request, in considering the needs of the state for
more highways, you have concluded that construction of additional toll roads would be of benefit.
Such roads, you note, “are financed with revenue bonds and generally are supposed to be self-
supporting from user fees (toll revenue). . . . However, given the high cost of projects, it is now
difficult to find projects that would generate enough toll revenue to pay for themselves in a
reasonable amount of time.“’ Accordingly, you seek a method to invest “state highway revenues in
a toll road project without a requirement for repayment.” Request Letter, note 1, at 2. We agree
with a report to the Seventy-seventh Texas Legislature from the Senate Committee on State Affairs
that, absent the amendment of article III, section 52-b of the Texas Constitution, such a method is
not available.*
Article III, section 52-b forbids the legislature to “lend the credit of the State or grant money
to, or assume any indebtedness” of any entity engaged in the construction or operation of toll roads
or turnpikes, except that the legislature “may authorize the Texas Department of Transportation to
expend money, from any source available, for the costs of turnpikes, toll roads, or toll bridges of the
Texas Turnpike Authority, [the TTA], or successor agency,provided that any monies expended out
of the state highway fund shall be repaid to the fund from tolls or other turnpike revenue.” TEX.
‘Letter from Charles W. Heald, P.E., Executive Director, Texas Department of Transportation, to Honorable
John Comyn, Texas Attorney General at 1 (Dec. 1,200O) (on file with Opinion Committee) [hereinafter Request Letter].
*See SENATE COMM.ON STATE AFFAIFG,REPORT TO THE 77~~ LEGISLATURE,~HARGE ~JNTERMODAL
TRANSPORTATION 48 (2000). We note that Senate Joint Resolution No. 12, which would amend section 52-b to this
effect, is now pending before the 77th Legislature. See Tex. S.J. Res. 12, 77th Leg., R.S. (2001).
Mr. Charles W. Heald, P.E. - Page 2 (JC-0353)
CONST. art. III, 9 52-b (emphasis added). Considering this provision, the Senate Committee on State
Affairs in a report to the Seventy-seventh Texas Legislature wrote that “[t]he Texas Constitution
requires TTA to repay TxDOT for any monies received out of the highway fund for the cost of a toll
or turnpike project .“3 Accordingly, the committee recommended “passing a constitutional
amendment to remove the requirement that TTA repay all funds received from TxDOT for
construction, operation, and maintenance of toll projects.“4
It has been argued, however, both in correspondence to your associate general counsel and
in briefs submitted to this office, that it may be possible for TxDOT to make the grant in question
without the amendment of section 52-b? The arguments advanced for this position are that the “anti-
gift provisions” of the Texas Constitution, including article III, sections 50, 5 1, and 52-b, are not
implicated by the donation of funds from TxDOT to TTA because such donation is for a public
purpose, namely road construction; that article III, section 52-a, “enacted after” section 52-b, would
permit such donation for “the development or expansion of transportation in the state”; and that
certain monies, most notably federal highway aid, while dedicated to highway construction, might
be redirected by statute to some fund other than the highway fund so as to obviate the necessity of
repayment. See MDCK Brief of l/9/01, note 5, at 5-6. We disagree.
First, it is well-settled that the constitutional provisions forbidding gratuitous donations
require that public expenditures not only be for a public purpose, but also have “sufficient controls
. . . to ensure that the public purpose is carried out.” Tex. Att’y Gen. Op. No. JC-0113 (1999) at 2.
Outright grants - “expenditures which, by definition, lack sufficient controls to ensure that an
authorized public purpose is achieved,” ~ are forbidden. See id. at 2-3 (citations omitted). Thus,
for example, in Attorney General Letter Opinion 96-076, we wrote that the Corpus Christi Regional
Transit Authority was not permitted, under article III, section 52, to donate public funds to an
organization that provided emergency medical services, but might contract for the provision of such
services. As we noted:
This office has repeatedly interpreted [constitutional grant provisions]
to require that expenditures of public funds must be for a public
purpose, that there must be adequate contractual or other controls to
ensure that the public purpose is carried out, and that the political
3See SENATE COMM.ON STATEAFFAIRS,REPORT TO THE 77~~ LEGISLATUFE,~HARGE 1, INTERMODAL
TRANSPORTATION 47(2000).
4See id. at 49.
‘See Letter from Robert M. Collie, Jr., Mayor, Day, Caldwell & Keeton, L.L.P., to Jack Ingram, Associate
General Counsel, Texas Department of Transportation (Feb. 1,1999) [hereinafter MDCK Letter of 2/l /99 J; Brief from
Robert M. Collie, Jr., Mayor, Day, Caldwell & Keeton, L.L.P., to Honorable John Comyn, Texas Attorney General (Jan.
9, 2001) [hereinafter MDCK Brief of l/9/01]; Brief from Robert R. Randolph, Vinson & Elkins, to Honorable John
Comyn, Texas Attorney General (Jan. l&2001) [hereinafter V&E Brie@
Mr. Charles W. Heald, P.E. - Page 3 (JC-0353)
subdivision expending the funds must receive an adequate quid pro
quo.
Tex. Att’y Gen. LO-96-076, at 2 (emphasis added) (citations omitted).
In the case of toll roads, the Texas Constitution precisely defines the necessary quid pro quo,
namely the requirement that monies received by the TTA from the state highway fund “shall be
repaid to the fund from tolls or other turnpike revenue.” TEX.CONST. art. III, 8 52-b. Section 52-b
constitutes the sole express method by which such monies may be expended for the construction of
toll roads and turnpikes. Indeed, the proviso that such monies must be repaid was the way in which
the amendment to section 52-b permitting such expenditures was presented to the electorate for its
approval. The agreed ballot language for House Joint Resolution No. 10, of the Seventy-second
Texas Legislature read: “The constitutional amendment mandating the repayment to the Department
of Transportation of monies expended to assist the Texas Turnpike [Aluthority in the construction,
maintenance, and operation of turnpikes, toll roads and toll bridges.“6
As to the suggestion that article III, section 52-a of the Texas Constitution, which provides
inter alia for “the making of loans and grants of public money . . . for . . . the development or
expansion of transportation,” TEX. CONST. art. III, 9 52-a’ “arguably overrides any inconsistent
provision in the constitution, such as Section 52-b”’ Request Letter, supra note 1, at 2, such an
argument is unavailing for three reasons. First, the argument that section 52-a permits the public
financing of toll roads and turnpikes is belied by the defeat, in the same election in which section
52-a was adopted, of an amendment of section 52-b precisely to that effect.7 Second, the relevant
language in 52-b, which was added by amendment in 1991 ,8 is in fact more recent in time than is
section 52-a, which was adopted in 1987. Third, section 52-b’s provision of a method for the
dispensing of money for toll road and turnpike projects is more specific than section 52-a’s grant of
authority for loans for transportation development, and accordingly prevails over it. See Rooms With
A View, Inc. v. Private Nat ‘1Mortgage Ass ‘n Inc., 7 S.W.3d 840,846 (Tex. App.-Austin 1999, pet.
denied) (“We use the same guidelines in interpreting constitutional provisions as we do interpreting
statutes.“); TEX. GOV’T CODE ANN. 5 3 11.026 (Vernon 1998).
6H~~~~ RESEARCH ORGANIZATION,CONFERENCE COMM. REPORT,Tex. H.J. Res. 10,72d Leg., 1st C.S., at 1
(Aug. 9, 1991) (emphasis added).
7See Tex. H.J. Res. 65, 70th Leg., R.S. (1987) (proposing amendment to 52-b, which failed to pass in the
November 1987 election); see also Tex. H.J. Res. 5, 70th Leg., R-S.,1987 Tex. Gen. Laws 4122 (text of 52-a, which
was adopted in the November 1987 election).
*See Tex. H.J. Res. 10,72d Leg., 1st C.S., 1991 Tex. Gen. Laws 1113.
Mr. Charles W. Heald, P.E. - Page 4 (JC-0353)
Section 52-a was adopted by the voters of Texas at the November 3, 1987 election. It had
been proposed by the Seventieth Texas Legislature as House Joint Resolution No. 5.9 The
Seventieth Legislature also proposed, in the same session, an amendment to section 52-b’ House
Joint Resolution 65.” That proposed amendment “would [have] allow[ed] the state, acting through
the State Department of Highways and Public Transportation [now TxDOT] to construct joint
projects with the Texas Turnpike Authority and to contribute money from any available source to
the Texas Turnpike Authority to pay costs of the authority ‘s turnpikes, toll roads, or toll bridges.“’ ’
This amendment was defeated by the same voters who adopted section 52-a.‘*
Limited authority for TxDOT to aid in the financing of TTA’s toll projects was provided by
the voters four years later, in the November 5, 1991 election, when the amendment to section 52-b
proposed by the Seventy-second Texas Legislature as House Joint Resolution 10 was adopted. This
amendment, which conditions the receipt by TTA ofmoney from the highway fund on its repayment
from toll revenues, is accordingly later in time than section 52-a, and would therefore prevail were
the two in fact inconsistent. See Clapp v. State, 639 S.W.2d 949,952 (Tex. Crim. App. 1982) (“If
the provisions. . . are in irreconcilable conflict . . . the section later in point of adoption will be given
controlling effect.“); see also Rooms With A View, 7 S.W.3d at 846 (“We use the same guidelines
in interpreting constitutional provisions as we do interpreting statutes.“); TEX. GOV’T CODE ANN.
6 311.025(a) (Vernon 1998).
Further, section 52-b’ which deals with the financing of a particular kind of road or bridge
construction, namely the construction of toll roads and bridges and which, as we have noted, is the
only constitutional provision authorizing such financing, is more specific in its language than section
52-a’s grant of authority for financing “the development or expansion of transportation,” and would
for that reason, as well, prevail in the event of any such inconsistency. See Clapp, 639 S.W.2d at
952; (“[IIn construing apparently conflicting provisions of the same constitution, the more general
provision must yield to the more specific provision.“); Rooms With A View, 7 S.W.3d at 846; White
v. Sturns, 651 S.W.2d 372,374 (Tex. Civ. App.-Austin 1983, writ ref d n.r.e.); TEX. GOV’T CODE
ANN. 8 3 11.026(b) (Vernon 1998).
It has, however, been suggested that TxDOT might expend monies other than those “out of
the state highway fund” for TTA toll road projects without a requirement of repayment.
Accordingly, you “seek an opinion whether or not the exception requires the repayment of money
that is not expended from the state highway fund or constitutionally required to be deposited into
such fund.” Request Letter, supra note 1, at 2. In the absence of more specific information, it would
‘See Tex. H.J. Res. 5,7Oth Leg., R.S., 1987 Tex. Gen. Laws 4122.
“See Tex. H.J. Res. 65,7Oth Leg., R.S. (1987).
‘*TEXAS LEGISLATIVECOUNCIL, INFORMATION REPORT No. 87, at 16 (1987) (“Analysis of Proposed
Constitutional Amendments & Referenda”) (emphasis added).
‘*See TEX. CONST. art. III, 0 52-b historical note (Vernon 1997).
Mr. Charles W. Heald, P.E. - Page 5 (JC-0353)
be difficult for us to advise you with respect to all possible funding sources. However, it appears
that what is principally of concern here are federal highway funds. It has been suggested that the
dedication of such monies to the state highway fund is merely a statutory matter, and that the
amendment or repeal of section 22 1.003 of the Transportation Code, which places federal aid in the
highway fund, could make federal funds available for the purpose of making grants for toll road
construction. See MDCK Letter of 2/l/99, supra note 5, at 4; MDCK Brief of l/9/01, supra note
5, at 5. We do not agree.
Article VIII, section 7-b of the Texas Constitution reads:
All revenues received from the federal government as
reimbursement for state expenditures of funds that are themselves
dedicated for acquiring rights-of-way and constructing, maintaining,
and policing public roadways are also constitutionally dedicated and
shall be used only for those purposes.
TEX. CONST.art. VIII, 4 7-b. This office discussed the meaning of article VIII, section 7-b at some
length in Attorney General Opinion No. JC-0039 (1999). In that opinion, we wrote:
It is clear from the legislative history that the intent of section
7-b was that federal highway funds would stay dedicated to
highways. The Legislative Budget Board’s fiscal note, dated July 15,
1987, asserts, “The fiscal implication to the State would be to restrict
the use of certain federal funds to specific purposes thereby limiting
the future choices of the Legislature.” FISCALNOTE, Tex. S.J. Res.
8, 70th Leg., 2d C.S. (1987). The bill analysis of the House
Committee on Ways and Means describes the purpose of the
amendment as “[t]o constitutionally dedicate federal highway
reimbursements for highway purposes.” HOUSECOMM.ONWAYS &
MEANS,BILLANALYSIS,Tex. S.J. Res. 8’70th Leg., 2d C.S. (1987).
In explaining the background for the amendment in its Analyses of
Proposed Constitutional Amendments, the Legislative Council wrote,
“Under the federal program of aid for public highways, states are
required to pay almost all costs of planning, land acquisition, and
construction on a highway project. If a project meets federal aid
specifications, the state is then reimbursed from federal money for a
major portion of its expenses (generally 90 percent of all costs of an
interstate highway.) The reimbursements have traditionally then been
used in Texas to replenish the dedicatedpool ofstate money.,’ TEXAS
LEGISLATIVE COUNCIL,INFORMATION REPORT No. 88-1, at 15 (July,
1988) (emphasis added). Among the arguments for the amendment
listed by the Legislative Council is, “If federal reimbursements of
state highway expenditures are not required to be dedicated to
Mr. Charles W. Heald, P.E. - Page 6 (JC-0353)
highway and highway policing purposes, the dedicated pool of state
money could easily be spent each year, and the availability of
unrestricted money would be unforeseen from one fiscal biennium to
another.” Id. at 16. Based on all that, it is clear that the intent of
section 7-b was to assure that federal highway reimbursements were
to be spent on highways, and on nothing else.
Tex. Att’y Gen. Op. No. JC-0039 (1999) at 5-6. On that basis, we concluded that if certain federal
funds were in fact reimbursements for state highway fund expenditures, their use to pay debt service
on a particular kind of revenue bond would be constitutionally impermissible. See id. at 6.
It is argued, however, that while the purpose for which federal funds are to be spent is
constitutionally mandated, section 7-b “does not mandate their deposit into the State highway fund.
Rather, federal aid money is deposited in the State treasury to the credit of the highway fund
pursuant to a statute.” MDCK Letter of 2/l/99, supra note 5, at 4 (citations omitted). This argument
is unavailing for two reasons. First, as you point out, it is now the case that “all funds, federal and
state, appropriated to TxDOT go into the state highway fund.” Request Letter, supra note 1, at 2.
Both the money generated by motor vehicle registration fees and gasoline taxes, which are the
principal sources of state highway revenue, and the money received for highway purposes from the
federal government have been constitutionally set aside, the first by article VIII, section 7-a and the
second by article VIII, section 7-b of the Texas Constitution. As a practical matter, those monies
constitute the state highway fund. When the voters, in adopting the amendment to section 52-b’
provided that money from the state highway fund for toll roads had to be repaid, those state and
federal funds were the monies to which they referred. Second, an argument that such funds may be
placed in some other fund, and thus be available for toll road construction, because section 7-b does
not use the phrase “the state highway fund” and section 221.003 does, is an argument that proves
too much. See generally MDCK Brief of l/9/01, supra note 5. In the same brief, it is admitted that
“[s]ome public funds, such as registration fees and motor vehicle fuel taxes, have been deemed
constitutionally dedicated to the State highway fund.” Id. at 5. Yet the language of article VIII,
section 7-a, which dedicates such money to highway construction, is also void of any reference to
the state highway fund. See TEX. CONST., art. VIII, 9 7-a. Further, the location of automobile
registration fees in the state highway funds is also referenced by a statute. See TEX. TRANSP.CODE
ANN. 4 202.002 (Vernon 1999). An argument that section 7-b funds might by mere statutory
amendment be freed from the strictures of article III, section 52-b’ therefore, would permit the same
result with regard to section 7-a funds. Such an argument would render the requirements of section
52-b a nullity. We may not so regard them.
As we wrote in 1985, the legislature is prohibited “from borrowing, or . . . diverting from its
purpose, any special fund.” Tex. Att’y Gen. Op. No. JM-321 (1985) at 3. Just as the legislature in
that case could not by statute divert the interest from section 7-a funds to the general revenue fund,
so here it may not divert section 7-b funds. If such funds are advanced by TxDOT to TTA from the
state highway fund, then they must be repaid. See TEX. CONST.art. III, 8 52-b.
Mr. Charles W. Heald, P.E. - Page 7 (JC-0353)
SUMMARY
Absent an amendment to article III, section 52-b of the Texas
Constitution, the Texas Department of Transportation may not
provide the Texas Turnpike Authority with funds for the costs of
turnpikes, toll bridges, or toll roads without requiring the repayment
of such funds from tolls or other turnpike revenue.
Attorney General of Texas
ANDY TAYLOR
First Assistant Attorney General
CLARK KENT ERVIN
Deputy Attorney General - General Counsel
SUSAN D. GUSKY
Chair, Opinion Committee
James E. Tourtelott
Assistant Attorney General - Opinion Comrnittee