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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