          THEA'ITORNEY                 GENERAL
                      OF TEXAS
                     AUSTIN   m.T-S




                      October 25, 1961


Honorable Weldon Holcomb              Opinion No. WW-1174
Criminal District Attorney
Smith County                          Re: Time Warrants and
Tyler, Texas                              County Budgets.

Dear Mr. Holcomb:

         You inform us that the Commissioners' Court of
Smith County inaugurated proceedings on August 14, 1961,
looking to the issuance of interest bearing time warrants
in the amount of $2,500,000.00 for the purpose of evi-
dencing indebtedness arising from claims and accounts to
be incurred in connection with the planned construction
and improvement of roads within the county and the acqui-
sition of rights-of-way therefor.

         You declare that the 1961 budget does not include
the proposed expenditures under the program. Consequently,
your questions are:

               "1. May the Commissioners Court
         commence expenditure of monies for which
         time warrants will be issued without hav-
         ing budgeted these items in the budget for
         the year 1961?

               "2 . If the County may expend these
        funds through the remainder of the year
        1961, may this be done through a separate
        bookkeeping system or must it be done by
        budget amendment?

              'I
               3 . If it may not be done by either
        of the means requested in Question No. 2,
        will you please state as a matter of law
        how monies from this account can be ex-
        pended for the year 1961?"
Honorable Weldon Holcomb, page 2 (WW-1174)



         Sections of the Uniform Budget Law applicable to
counties are Articles 689a-9, as amended, through 689a-12,
V.C.S.

         A portion of Article 689a-11, V.C.S., declares:


               When the budget has been finally
         approved by the Commissioners' Court,
         the budget, as approved by the Court
         shall be filed with the Clerk of the
         County Court, and taxes levied only in
         accordance therewith, and no expendi-
         ture of the funds of the county shall
         thereafter be made except in strict com-
         pliance with the budget as adopted by the
         Court. Except that emergency expendi-
         tures, in cases of grave public necessity,
         to meet unusual and 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 amend-
         ments to the original budget."


         Article 6716-1, V.C.S., provides that expendi-
tures of the County Road and Bridge Fund shall be 'I. . .
strictly in accordance with annual budgeted appropriations
. . .II

         The time warrants will issue under the provisions
of Article 2368a. as amended, V.C.S.   Section 1 thereof
defines a time warrant:


              "The term 'time warrant' as used in
        this Act shall include any warrant issued
        by a city or county not payable out of
        current funds."
Honorable Weldon Holcomb, page 3 (WW-1174)



          Section 8, same Article, provides:

                "It is hereby made the duty of all
          Commissioners' Courts . . . to levy, and
          have assessed and collected, taxes suf-
          ficient to pay the interest as it accrues
          and the principal as it matures on all
          . . . time warrants issued in accordance'
          with the provision of this Act . . ."


          Section 7, Article XI, of our Constitution, de-
clares:

                "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 2%
          as a sinking fund."


         The Supreme Court in McNeil1 v. City of Waco, 89
Tex. 83, 33 S.W. 322 (1895) defined a "debt".


                "An obligation binding the city to
          pay for a matter relating to its ordinary
          expenses, such payment being, in contem-
          plation of the parties, not intended to be
          made out of the current funds of the year
          in which the expenditure is made, or any
          funds on hand lawfully applicable thereto,
          would be a debt within the meaning of the
          Constitution."


         In the instant case the time warrants are dated
September 1, 1961, and mature serially from 1964 through
1990. They bear 4% interest per annum, payable on July 1,
1962, and semi-annually thereafter on January 1 and July 1
in each year.
Honorable Weldon Holcomb, page 4 (WW-1174)



         The order of the Commissioners' Court authorized
the creation of a debt and pledged to its eventual retire-
ment Constitutional Road and Bridge Fund taxes to be col-
lected in the future. The time warrants themselves are but
non-negotiable evidences of county indebtedness payable in
the future to be from time to time exchanged for a like
amount of claims and accounts arising from the project as
its various aspects develop and contracts thereunder are
performed. Lasater v. Lopez, 110 Tex. 179, 217 S.W. 373
(1919); Nacoqdoches County v. Lafferty, 61 S.W.2d 994
(Comm. App. 1933). In the sense of the Uniform Budget Law,
the primary expenditure of county funds will occur on July
1, 1962, the first interest payment date.

         Under the facts and for the reasons announced we
advise that it is our opinion that the county budget for
the year 1961 is not involved in nor is it controlling of "
this situation.  Expressed in the alternative, the time
warrant program is not a matter for the 1961 budget,,but is
a proper item for the 1962 budget.

         This conclusion provides the answer for questions
two (2) and three (3).

                            SUMMARY

              County funds will not be expended by
              the issuance of time warrants during
              1961: consequently, that year's budget
              is not affected thereby.



                                  Very truly yours,

                                 WILL WILSON
                                 Attorney General of Te




GW-s
i10norable !Jeld.unIIolcomb, page 5 (WY-11741



APPROVED:

OPINION COMMITTEE
!J. V. Geppert, Chairman

Arthur Sandlin
J;>hn Reeves
KDbert Lewis
Bab Shannon

REVIIWED FOR THE ATTORNE"I GENERAL
By:   Houghtz? Brownlee, Jr.
