Untitled Texas Attorney General Opinion ( 1973 )

Honorable Harold Vittitoe Opinion No. H- 12
County Attorney, Brooks County
P. 0. Box 502 Re: Whether revenues collected
Falfurrias, Texas 78355 in calendar year 1972 from
that year’s ad valorem tax
levy can be spent for expenses
authorized by that year’s
county budget duly adopted
to the extent that the revenues
from the levy appear in the
budget as, available estimated
revenues to be expended
under various items of
expenses therein set out
Dear Mr. Vittitoe: and related questions?
You have submitted a request for our opinion in answer to six
questions all having to do withthe’budgetary process of Texas counties.
We note that Brooks County has fewer than 225,000 residents and,
therefore, is not governed by Article 1666a. Vernon’s Texas Civil
Statutes.
Your first question asks:
“Can revenues actually collected in calendar
year 1972 from the 1972 ad valorem tax levy in
Brooks County, Texas be spent for expenses authorized
by said County’s 1972 County Budget duly adopted to the
extent that said revenues from said 1972 tax levy appear
in said 1972 Budget as available estimated revenues to
be expended under various items of expenses set out
in the said 1972 budget?”
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Honorable Harold Vittitoe, page 2. (H-12)
This question has been expressly answered in Duval County V. Rios,
326 S.W.2d 42 (Tex. Civ. App. San Antonio, 1959, no writ history)
where the court held that taxes collected during October, November
and December on levys made during the same year were to be con-
sidered as “current revenues” of the county for that year.
The San Antonio court relied upon the fact that the earlier
contrary holding in McClellan v. Guerra, 154 Tex. 373, 258 S.W.
2d 72 (1953) resulted in the adoption of what is now Section 9a of
Article 689a (Acts 1953, 53rd Leg., ch. 439, p. 1056) which provides:
“The county judge in preparing the budget to
cover all proposed expenditures of the county govern-
ment for the succeeding year shall estimate the
revenue to be derived from taxes to be levied and
collected during such succeeding year and such
revenue shall be included in the estimated revenues
available to cover the proposed budget. ”
Section 3 of the 1953 Act declared:
“The fact that under the present law it is not
clear that revenue derived from taxes levied and
collected during the year covered by the county
budget constitute current revenue of the county to
be used during that year to defray current expenses
of the county should be taken into consideration in the
preparation of all county budgets, and the fact that the
larger counties and all cities of the State are now per-
mitted to use, and are using, such revenues to defray
their current expenses for the year, while small
counties may be deprived of that right under recent
court decisions, which will result in unjust discrimina-
tion against the smaller counties, creates an emergency
. . . . 11
And see Guerra v. Rodriques, 274 S.W.2d 715 (Tex. Civ. App. Austin,
1955, error ref. n. r. e. ).
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Honorable Harold Vittitoe, page~3, (H-12)
Your first question, therefore, is answered “Yes”.
Your second,third and fourth questions are conditioned upon an
affirmative answer to question No. 1 and ask that we assume further
that there are no cash balances in some of the county funds of Brooks
County (although there are budgeted balances in such funds estimated to
be supplied by the levy and collection of ad valorem taxes during the
calander year 1972).
Question No. 2 asks:
“Under budget conditions outlined in Question
No. 1, can County warrants be drawn, registered and
delivered to the payee on such County Funds (containing
no cash balances) so long as the aggregate of such warrants
on each such fund, when added to warrants on each such
fund pr,eviously drawn, registered and delivered to payee,
do not exceed budgeted items of revenue and expense in
each such fund in the 1972 budget? ”
Your third question is:
“If the answer to Question No. 2 is ‘rYes’f, do
such warrants so drawn on funds without present cash
.balances constitute a “debt” within the prohibition of
Article 11, Section 7. of the Texas Constitution, where such
estimated revenues from the 1972 tax levy shown to be
expended in the 1972 budget are in fact collected in 19727”
Your fourth question is:
“DO such warrants so drawn on such funds without
present cash balances constitute legal obligations of the
County, supported by a pledge of the full faith and credit
of the County, which entitle holders of such warrants as
assignees for value to payment in the order of their
registration so long as such budgeted revenues from said
1972 tax levy are actually collected in calendar year
1972 and thereafter deposited to such County Funds?”
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Honorable Harold Vittitoe, page 4, (H-12)
Section 7 of Article 11 of the Texas Constitution provides, in
part:
“But no debt for any purpose shall ever be incurred
in any manner by any city or county unless provision
is made, at the time of creating the same, for levying
and collecting a sufficient tax to pay the interest thereon
and provide at least two per cent (2%) as a sinking
fund;. . . ”
As used in this context, the word “debt” has been held to mean:
‘1. . . [A] ny pecuniary obligation imposed by
contract, except such as were, at the date of the contract,
within the lawful and reasonable contemplation of the
parties, to be satisfied out of the current revenues for the
year, or out of some fund then within the immediate
control of the corporation. . . .‘I McNeil1 V. City of
Waco, 89 Tex. 83, 33 S.W. 322, 324 (1895).
This definition has been cited and followed without exception in
later cases: Brazeale V. Strenst& 196 S.W. 247 (Tex. Civ. App.
Tewrkana, 1917, no writ history); Ste\renson V. Biake, 131 T&. 103,
113 S.W.2d 525 (1938); T. & N. 0. R. R . Co. V. Galveston County,
141 Tex. 34, 169 S.W.2d 713 (1943); Ochiltrel e County V. Hedrick, 366
S.W.2d 866 (Tex. Civ.App., 1963, error ref . n. r. e. ): Foster V. City of
Lubbock, 412 S.W.2d 376 (Tex. Civ. App. Amarillo, 1967. erro: r ref.
n.r:e. ).
Thus, the important consideration at the time the warrant is
issued or the expense is incurred is whether “within the lawful and
reasonable contemplation of the county officers” it will be satisfied out
of current revenues for that year or out of some fund within the control
of the county.
When it has been determined that the sum of claims representing
ordinary expenses amounts to as much as it reasonably could be expected
the current revenues of the county would amount to, then even ordinary
expenses thereafter incurred are within the prohibition of the Consti-
tutional provision. Braseale V. Strength, supra.
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Honorable Harold Vittitoe, page 5, (H-12)
That it is contemplated the obligation “might” come due and be
paid out of current revenues is not sufficient to meet the Constitutional
requirements. Stevenson v. Blake, 131 Tex. 103, 113 S.W.2d 525 (1938)
held that a contract for attorneys fees, part of which were to become
payable when judgments in pending litigation became final, was void
or voidable under the Constitutional prohibition.
That, in fact, the indebtness is not paid out of available current
revenues or the current revenues do not develop as anticipated, does not
render the obligation void. Wilkinson v. Franklin County, 94,s. W. 2d
1190 (Tex. Civ. App. Texarkana. 1936,. error ref. ); Guerra v. Rodriguez,
274 S.W.2d 715 (Tex. Civ. App. Austin, 1965, error ref. n. r. e. );
‘County v. Kent, 374 S.W.2d 313 (Tex. Civ. App. Beaumont, 1963, no
writ history).
Whether or not a particular obligation amounts to a debt in violation
of the. Constitutional provision in Article 11. Sec. 7, is a fact question
and the courts will consider the entire transaction, its background,
etc., and will test the ,reasonablenes~s of the contemplation that the
obligation would be paid from current revenues. Rains v. Mercantile
Natl. Bank, 144 Tex. ,466, 191 S.W.2d 850 (1946) is a good example.
See also Clay Building Co. v., City of Wink, 141 S.W.2d 1040 (Tex. Civ.
App. El Paso, 1940, no writ history).
Under these authorities we answer your second question “yes”.
so long as it is lawful and reasonable to anticipate that, in fact, the
warrants will ultimately be paid out of current revenues.
With the same assumption, the answer to your third question is
“No”. Such warrants would not constitute a “debt” within the prohibition
of Article lli Section 7 of the Constitution of Texas.
The answer to your fourth question is “Yes”.
Your fifth question asks:
“Where the County Budget of Brooks County
for 1972 (adopted in the summer of 1972 by said
Court, under the emergency provisions of Article
689a-11, increasing therein the estimated revenues
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Honorable Harold Vittitoe, page 6, (H-12)
and budgeted expenses for 1972, before said Court meets
as a Board of Equalization and sets the tax rate for said
County’s ad valorem tax levy for 1972, can all ad valorem
taxes actually collected by Brooks County in calendar year
1972 from said 1972 ad valorem tax levy, which are shown
in said amended 1972 budget as etstimated revenues
expendable in 1972, be expended under said amended budget
in 1972 for expenses authorized by said amended budget?”
The amendment of county budgets is controlled by Article 689a-11,
which provides, in applicable parts:
‘1. . . when the budget has been finally approved
by the commissioner’s court, the budget, as approved by
the court shall be filed with the clerk of the county clerk,
and taxes levied only in accordance therewith, and no
expenditure of the funds of the county shall thereafter be
made except in strict compliance with the budget as adopted
by the court. Except that emergency expenditures, in case
of grave public necessity, to meet unusual unforeseen
conditions which could not, by reasonably diligent thought
and attention, have been included in the original budget,
may from time to time be authorized by the court as
amendments to the original budget. . . . ‘I
Assuming, as your question states, that the budget is “duly
amended” under these provision, then we answer your fifth question
“Yes”.
Provided all other conditions are met, the date on which an amend -
ment to the budget is adopted does not affect the liability of “current
revenues” during the tax year to meet its expenditures. See for instance
McClellan V. Guerra, 152 Tex. 373, 258, S. W. 2d 72 (1953), in which the
court, while holding the current revenues were insufficient, was not
concerned, apparently, by the amendment on August 16, 1951 of the
1951 budget which had been originally adopted on September 11, 1950.
See also Rains v. Mercantile Natl. Bank, 144 Tex. 466, 191 S.W.2d 850
(1946).
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Honorable Harold Vittitoe, page 7, (H-12)
Your sixth question asks:
“Under the amended budget circumstances outlined
in Question No. 5, would the same answers be given to
Questions Nos. 2, 3 and 4, above, if the words ‘Question
No. 5’ were substituted for the words ‘Question No. 1’
in the first line of Question No. 2? ”
Our answer is “Yes”, based upon the same assumption we made
in our answer to question five.
-SUMMARY -
With reference to courties whose budgets are
not governed by the provisions of Article 1666a, Vernon’s
Texas Civil Statutes, provided the requirements of
Article 689a-11 are met, amendments to the budget may be
made at any time pr i 0.r to and during the affected tax
year; taxes levied and collected during the tax year
constitute current revenues for that year and are avail-
able to pay validly adopted budgetary items; a budgetary
item is not invalid as constituting a “debt” within the
prohibition of Article 11, Section 7, of the Texas Consti-
tution if the county commissioners court could lawfully
and reasonably anticipate that it would be wholly satis-
fied out of current revenues during the budget year, or
out of some fund then within their control.
Very truly yours,
n
Attorney General of Texas
APPROVED:
J&IN M. BARRON
DAVID M. KENDALL, Chairman
Opinion Committee
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