                           June 7, 1988




    Honorable Bob Bullock          Opinion No. JM-916
    Comptroller of Public Accounts
    L.B.J. State Office Building   Re: Authority    of the comp-
    Austin, Texas   78774          troller to contract with paid
                                   informants   for    information
                                   about revenue or property the
                                   state may be legally entitled
                                   to recover   (RQ-1302)

    Dear Mr. Bullock:

         You have requested   an opinion on questions    arising
    under article 4344g, V.T.C.S., which was adopted in 1987 by
    House Bill No. 921 of the 70th Legislature.  Acts 1987, 70th
    Leg., ch. 874, at 2971. Article 4344g, V.T.C.S., authorizes
    you to contract with any person to receive information about
    claims for the recovery of revenue or property which the
    state may be entitled to pursue, except for property subject
    to escheat by the state.   V.T.C.S. art. 4344g, 51(a).   See
    Prop. Code ch. 71-75. This enactment    creates a financial
    incentive to persons who may be able to aid the state in
    recovering dormant accounts.  Bill Analysis to H.B. No. 921,
    70th Leg.   (1987), on file in the Legislative     Reference
    Library.

         You first ask whether  this statute violates  article
    III, section 51, of the Texas Constitution, which provides
    in part:

               Sec. 51. The Legislature shall have no
            power to make any grant or authorize     the
            making of any grant of public moneys       to
            any individual,   association  of    indivi-
            duals, municipal    or   other  corporations
            whatsoever. . . .

?
    This provision prohibits giving away public funds: it does
    not deny the legislature  the use of state funds for state
    purposes.  State v. Citv of Dallas, 319 S.W.2d 767      (Tex.
    Civ. App. - Austin 1958), aff'd 331 S.W.Zd 737 (Tex. 1960).
    To comply with the requirements of article III, section   51,
    any contract between a private individual and the state must




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Honorable Bob Bullock - Page 2    (JM-916)


                                                                ?




serve a public purpose, adequate consideration   must go to
the state, and there must be contractual provisions designed    ?
to insure that the public purpose    is carried  out.   See.
e.cr., Dodson v. Marshall, 118 S.W.2d 621 (Tex. Civ. App.   -
Waco 1938, writ dism'd); Attorney     General Opinion   Nos.
H-1309, H-1260 (1978): H-912 (1976).

     Article 4344g, V.T.C.S., provides as follows:

            (a) The comptroller   of public   accounts
        may contract with any person for the receipt
        of information about any possible claim that
        the state may be entitled to pursue for the
        recovery of revenue or other property, except
        that this Act shall in no way relate to or
        affect property which   is recoverable by the
        state pursuant  to Chapters   71-75, Property
        Code.

           (b) In any contract under Subsection      (a)
        of this section, the total consideration      to
        be paid by the state:

           (1) shall be contingent on a recovery     by
        the state;

            (2) may not exceed    five percent of the
        amount of the revenue     or the value of the
        other property that the    state recovers as a
        result of the pursuit     of the claim about
        which the contracting     person provided   in-
        formation; and

           (3) may be limited by agreement to not
        exceed a specified, absolute dollar amount.

            (c) Consideration may not be paid by the
        state pursuant to a contract executed    under
        Subsection (a) of this section if at the time
        the contract  is executed   or within three
        months after the date of execution, and by
        means other than disclosure   under the con-
        tract, a state employee has knowledge of the
        claim disclosed  under the contract    or has
        knowledge of a cause of action different
        from that disclosed  under the contract    but
        entitling  the state to recover the same
        revenue or other property.  An affidavit by a
        state employee claiming that knowledge   under              I




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Honorable Bob Bullock - Page 3    (JM-916)




        those circumstances is prima facie     evidence
        of the knowledge and circumstances.

It is a public purpose of the state to locate and recover
revenue and other property to which it is entitled.     See.
e.s., Tex.  Const.  art. III,  §49a (comptroller's duty to
estimate anticipated revenue  for state from all sources);
Gov't Code 5403.011(2) (comptroller's duty to adopt regula-
tions for collection of state revenues), 5403.055   (warrant
may not be issued to person indebted to the state): 5403.091
(transfer to general revenue   fund of balance   in dormant
fund): Property Code ch. 71-75 (provisions for escheat    of
funds to state).

     Article 4344g, V.T.C.S., authorizes the comptroller   to
contract with a person to purchase information about claims
to revenue  or other property which the state may have.
Properly authorized  officers of the state may enter     into
a contract for services to be performed for the        state.
Fazekas v. Universitv of Houston, 565 S.W.2d 299 (Tex. Civ.
APP. - Houston [lst Dist.] 1978, writ ref'd n.r.e.),    cert.
dismissed, 440 U.S. 952 (1979). This statute makes payment
of consideration contingent upon a recovery by the state and
limits it to 5% of the amount of revenue or value of
property that the state recovers. Thus, the state will
receive adequate consideration for any payment made.

     Moreover, the state may not pay consideration  pursuant
to an article 4344g contract where a state employee       has
knowledge of the claim disclosed under the contract or other
knowledge entitling the state to recover. See V.T.C.S. art.
4344g(c).  This provision   prevents  the state from com-
pensating a private individual for information which dupli-
cates information in the possession of the state at the time
the contract is signed or within three months thereafter.

     Section 4344g(c), V.T.C.S.,   also effectively   prevents
a state employee  from entering   into a contract with the
comptroller under subsection (a) of that statute.        If a
state employee knows of a claim for revenue or property
which the state is entitled to pursue, the state may not pay
consideration under contract    for information    about that
claim.   Some state employees have an express duty to
investigate and pursue claims on behalf of the state.     See.
e.q., General Appropriations Act, Acts 1987, 70th Leg., 2d
C.S., ch. 78, art. I, rider 16, at 303         (collection of
delinquent judgments by attorney general); Educ. Code 552.39
(collection of money due on student loans). Subsection      (c)
of article 4344g, V.T.C.S., thus insures that the state will
not pay extra compensation       to a state employee       for



                              p. 4584
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Honorable Bob Bullock - Page 4    (JM-916)




information he has received  on behalf of the state in his
capacity as a state employee. &    Tex. Const. art. III, 544
(legislature may not grant extra compensation     to public
servant after public service shall have been performed);
V.T.C.S. art. 6252-9b,  58 (standards of conduct for state
officers and employees); Penal Code 539.03(a)    (misuse of
official information).

     We finally note  that article 4344g, V.T.C.S., does not
establish a traditional     reward program,  under which    the
government offers a reward to the general public,      payable
upon performing     a specific   service, and an individual
accepts the offer by -performing.     See. e.q., Broadnax    v.
Ledbetter, 99 S.W. 1111 (Tex. 1907) (sheriff offered    reward
for recapture of an escaped prisoner).      Under such reward
programs, the contract is formed only when an individual
accepts the state's offer by performing         the requested
service, and the courts have struggled with questions        of
contract formation as well as the validity of rewards under
article III, section 51. See Blain v. Pacific Exvress     Co.,
6 S.W. 679 (Tex. 1887)    (individual who captured one of two
criminals not entitled to half of reward offered for capture
of both criminals);   Weaver v. Scurry Countv     28 S.W. 836
(Tex. Civ. App. 1894, no writ) (statute authokizing    payment
of bounties    for destruction    of wild animals     analyzed
for compliance with article III, section 51, of the Texas
Constitution).   Since article 4344g, V.T.C.S.,   contemplates
that you will receive information pursuant to a contract, we
need not address the questions raised by a reward program.

     You next ask whether there is an appropriation     from
which to pay for information received under an article 4344g
contract.  Article VIII, section  6, of the Texas Constitu-
tion provides in part:

        No money shall be drawn from the Treasury but
        in pursuance of specific appropriations  made
        by law. . . .

No particular form of words is required to make a "specific
appropriation;"   it    is sufficient    if the    legislature
authorizes an expenditure     and specifies  the purpose    for
which an appropriation is made. National       Biscuit Co. v.
State, 135 S.W.Zd    687 (Tex. 1940).   The appropriation   for
the comptroller's office, like appropriations to other state
agencies, is itemized according to programs or functions     of
the office.    It does not identify each salaried position
or each contemplated     expenditure;   nor is such      minute
detail necessary to comply with article VIII, section 6, of
the Texas Constitution.     See S. & G. Construction    Co. v.



                              p. 4585
Honorable Bob Bullock - Page 5      (JM-916)




Bullock, 545 S.W.2d 953 (Tex. 1977)     (appropriation   from
Available University Fund for permanent improvements and new
construction may be used to pay judgment against University
of Texas for additional work under a construction contract);
Attorney General Opinion Nos. MW-251 (1980); H-1275   (1978);
H-944 (1977): H-289 (1974); WW-865 (1960) (construing terms
of appropriations).

     Your current appropriation provides in part:

                  COMPTROLLER OF PUBLIC ACCOUNTS
                    STATE COMPTROLLER'S OFFICE

                                       For the Years Ending
                                      August 31, August 31,
                                         1988        1989

     1.   Central Administration
          a.  Executive Administration
          b. Budget and Internal Accounting
          C.  Revenue Estimating and Research
          d. Legal Services

               Total, Central Administration

     2.   Tax Administration:
          a. Tax Policy and Taxpayer
              Services
          b. Tax information
          C.  Field Operations: Headquarters
          d. Field Overations:  Enforcement
          e. Field Operations:  In-State Audit
          f. Field Operations:  Out-of-State Audit

          . . . .

               Total, Tax Administration

     3.   Funds Management:
          a. Fund Accounting
          b. Claims

               Total, Funds Management

     4.   Aircraft Operations

     5.   Cost of Cigarette Tax Stamps,
          estimated

     6.   State Government Accounting Division



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Honorable Bob Bullock - Page 6    (JM-916)




     7.   Imvlementation of Bills Passed bv
          the 70th Leaislature. Resular Session

          GRAND TOTAL, COMPTROLLER  OF
             PUBLIC ACCOUNTS, STATE
             COMPTROLLER'S OFFICE

     (Emphasis added.)

Acts 1987, 70th Leg., 2d C.S., ch. 78, at 319 (amounts of
appropriation items omitted).    Specific amounts are appro-
priated for each item and the purpose of each expenditure
is stated. We find no provision       which bars the use of
appropriated funds to make payments       for article   4344g,
V.T.C.S., contracts.   See senerally,   In the matter of D-
H     556 S.W.2d 628 (Tex. Civ. App. - Waco 1977, writ ref'd
n=L.)    (rider barring use of appropriated funds to pay
judgment unless such payment was specifically authorized     in
an item of appropriation).    The fiscal note to House    Bill
No. 921 states that the bill "would have negligible     fiscal
implications to the State. . . .I1 Fiscal Note to H.B. No.
921, 70th Leg. (1987), on file at the Legislative    Reference
Library. Thus, the legislature would be unlikely to devote
a separate line item to appropriations authorized by article
4344g, V.T.C.S. See oenerallv   Mutchler v. Texas Devartment
of Public Safety   681 S.W.2d 282 (Tex. App. - Austin    1984,
no writ) (approp;iated funds could not be used for overtime
pay where program would cost over $4,000,000 per year and
legislature had consistently    refused to fund it).       Our
concern is whether there are line items in your appropria-
tion that could be used to fund article       4344g contracts
consistent with the legislature's    intent in adopting  items
of appropriation.

     Item 7 is subject to a rider which states that it shall
be used to administer several specifically identified    bills
adopted by the 70th session of the legislature.    Acts  1987,
70th Leg., 2d C.S., ch. 78, rider 16, at 323. House Bill
No. 921 is not included in this list: therefore, we conclude
that the legislature did not intend item 7 to be a source of
payments for information received pursuant to article 4434g,
V.T.C.S.  However, the acquisition of information leading to
the state's   recovery of revenue or other property      would
fall within the purpose of other items.      The items of the
appropriations to your office reflect the functions        and
programs of your office.    If you reasonably determine   that
the article   4344g, V.T.C.S.,   contracts should be handled
under a particular program     activity of your office,   then
the funds appropriated   for that purpose may be spent to
implement article   4344g, V.T.C.S.     You are in the best




                              P. 4587
        Honorable Bob Bullock - Page 7   (JM-916)




        position to determine where this new statutory     authority
        fits into the overall structure of your agency, but we can
-       suggest some items which could reasonably be used to pay for
        information leading to the recovery of revenue or property
        by the state.   For example, funds appropriated as item   d.
        under "Tax Administrationl' to enforce tax collection   laws
        could be spent to acquire information about taxes owing the
        state. See aenerallv Comptroller of Public Accounts, Budget
        Estimates for Fiscal Years 1988 and 1989    (July 1986), at
        135 (description of Tax Administration:   Field Operations:
        Enforcement).  Items 2e. and 2f., for in-state and out-of-
        state audit, might also be used to acquire information about
        revenues and other property which the state may be entitled
        to claim.

             We do not overlook the possibility that your office has
        already budgeted   its appropriation so that no funds for
        article 43449, V.T.C.S., contracts are available from any of
        the appropriation items which might be used for that purpose
        consistent with the legislature's     intent in making   the
        appropriation.   Article 4344g, V.T.C.S., authorizes you to
        enter into contracts but does not require you to do so, and
        you have discretion to allocate appropriated funds to other
        authorized activities   of your office rather than to this
        one.

             You finally ask whether your office would be authorized
        to show the informant information otherwise deemed confiden-
        tial under sections 111.006, 151.027 or 171.206 of the Tax
        Code to demonstrate that he is not entitled to compensation
        or is receiving the correct compensation for the information
        he furnished.1

             Title II of the Tax Code contains the laws on state
        taxation, including chapters 111, 151, and 171. Chapter 111
        of the Tax Code sets out the comptroller's powers and duties
        in collecting taxes imposed by title II. Tax Code §111.001.
        He has authority  to adopt rules not in conflict with the
        laws or constitution for the enforcement of the provisions
        of title II and the collection     of taxes and other re-
        venues thereunder. Tax Code 5111.002(a).   To carry out the
        provisions of title II he may examine a taxpayer's books and


    P

             1. Sections 154.308 and 155.185 of the Tax Code, which
        formerly provided  for the confidentiality   of information
        relevant to tax or cigarettes, cigars, and tobacco products,
        have been repealed. Acts 1985, 69th Leg., ch. 58, 544.
P




                                    p. 4588
Honorable Bob Bullock - Page 8   (JM-916)




records. Tax Code 5§111.004: 111.0041; 111.0043.      Section
111.006 of the Tax Code provides for the confidentiality   of
information obtained by examining a taxpayer's records:

            (a) The followins matter is confidential
        and mav not be used vubliclv.     opened to
        public insvection.  or disclosed  excevt as
        permitted  under Subsection    fb1 of   this
        section:

               (1) a federal tax return or federal
           tax return  information required to have
           been submitted to the comptroller with a
           state tax return or report: and

               (2)  all information secured, derived,
           or obtained by the comptroller     or the
           attorney general during the course of an
           examination   of   the taxpayer's   books,
           records, papers, officers, or employees,
           including an examination   of the business
           affairs,   operations,  source of income,
           profits, losses, or expenditures   of the
           taxpayer.

            (b) All information made confidential    in
        this title may not be subject to subpoena
        directed to the comptroller or the attorney
        general except  in a judicial     or adminis-
        trative  proceeding   in which this      state,
        another state, or the  federal government  is a
        party.

            (c) The comptroller     or the    attorney
        general may use information or records made
        confidential by provisions   of this title to
        enforce any provisions of this title or may
        authorize their use in a judicial       or an
        administrative   proceeding   in which    this
        state, another state, or the federal govern-
        ment is a party.   (Emphasis added.)

Tax Code 5111.006. See aenerallv Attorney General     Opinion
H-661 (1975); H-223   (1974); Open Records  Decision No. 300
(1981) (members of the public are not entitled to inspect
unde'r Open Records Act taxpayer records    in comptroller's
custody which are protected by confidentiality provisions).

      Section 111.006 of the Tax Code is a strict confiden-
tia lity prov ision. Subsection  (c) of that section allows



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         Honorable Bob Bullock - Page 9     (JM-916)




         the comptroller or attorney general to use such information
         to enforce the tax laws in title II or to authorize     their
         use in specified judicial or administrative proceedings.   It
         contains no language that would authorize the comptroller to
         reveal confidential information to an informant with whom he
         has contracted under article 4344g, V.T.C.S.   Chapter 151 of
         the Tax Code, which deals with the administration of sales,
         excise, and use tax, and chapter     171, which pertains   to
         franchise tax liability,    are subject to the confiden-
         tiality provision of section 111.006 of the code and include
         specific confidentiality   provisions   as well.    Tax Code
         §§151.027, 171.206. The comptroller may not disclose to an
         informant under a section 4344g contract information   deemed
         confidential under sections 111.006, 151.027 or 171.206 of
         the Tax Code.

                                 SUMMARY

                     Article 43449, V.T.C.S., which authorizes
                the comptroller to contract with informants to
                pay them for information     about revenue or
                property the state may be entitled to recover,
                does not violate article III, section 51, of
-               the Texas Constitution.    State employees   are
                not authorized   to contract with the comp-
                troller  to    provide  such   information    in
                exchange for consideration under an article
                4344g, V.T.C.S., contract.   Funds appropriated
                to the comptroller's office may be used to
                fund article     4344g, V.T.C.S.,     contracts,
                even though the appropriation    act does not
                expressly state that such contracts may be
                funded. Whether a particular line item may be
                used to fund such contracts depends upon the
                legislature's intent in adopting that line
                item. The comptroller's    office would not be
                authorized to show an informant     information
                that is confidential   under sections   111.006,
                151.027, or 171.206 of the Tax Code.




                                            JIM     MATTOX
-   ‘,
                                            Attorney General of Texas

         MARY KELLER
         First Assistant Attorney General
P




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Honorable Bob Bullock - Page 10     (JM-916)




MU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General




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