                       April 9, 1987




Honorable Bob Bullock                  Opinion No.JM-673
Comptroller of Public Accounts
L.B.J. State Office Building           Re:   Whether the comptroller may
Austin, Texas   78774                  engage in inter-fund borrowing
                                       against constitutionally created
                                       and dedicated funds to cover
                                       deficits in the General Fund

Dear Mr. Bullock:

     Tou inform us that.'pursuatit to article 4344~. V.T.C.S.. which
authorizes the comptroller of public accounts and the state treasurer
to engage in inter-fund borrowing from certain state funds. money has
been borrowed from the fund designated Highway Fund No. 006. This
highway fund is comprised of federal, state constitutional. and state
statutory money. See Attorney General Opinion Nos. JM-323, m-321
(1985). You infomys     that the only money heretofore borrowed has
been state statutory money and the money received from the federal
government that is intended to reimburse the state pursuant co the
Federal IiighwayAct. 23 U.S.C. IO101 et seq. (1982). The comptroller
is required by appropriations act rider to credit such federal money
to the specific fund from which the original expenditure was made.
Acts 1985. 69th Leg., 3rd C.S., ch. 13, art. V. P20, at 594-95. You
ask the following question:       "May I inter-fund borrow against
constitutionally created and dedicated funds to cover deficits in the
General Fund?" The answer is "no."

     Article 4344~. V.T.C.S., permits the transfer of surplus cash
between funds in the state treasury in certain instances. Section 1
of article 4344~ provides the following:

             Section 1. The comptroller of public accounts.
          with the consent    of the State Treasurer, may
          transfer surplus cash, excluding constitutionally
          dedicated revenues. between finds In the State
          Treasury. Those transfers are authorized to allow
          effective management of the cash flow of the
          General Revenue Fund and to avoid temporary cash
          deficiency in the General Revenue Fund.        The
          comptroller shall return the surplus cash to the
          fund from which it was transferred as soon as
          practicable. The comptroller shall preserve the
          fund equity and the State Treasurer shall allocate



                            p. 3088.
Ronorable Bob Bullock - Page 2     (JM-673)




          the depository interest as if the transfers had
          not been made. (Emphasis added).

By the clear terms of the statute, you may not engage in inter-fund
borrowing of constitutionally dedicated revenues.

        We note that, even in the absence of the above underscored
language in section 1 of article 4344~. V.T.C.S., constitutionally
dedicated revenues deposited In the state treasury could not be
borrowed. The Texas $onstitution imposes specific limirations on the
scope of the transfers that could be authorized by any statute.
Article    VIII, section 7. of the Texas Constitution sets forth the
following:

          The legislature shall not have power to borrow, or
          in any manner divert from its purpose. any special
          fund that may, or ought to, come into the Treasury;
          and shall make it penal for any parson or persons
          co borrow, withhold or in any manner co divert from
          its purpose any special fund, or any part thereof.

     The Texas Supreme Court has concluded that a?ticle VIII, section
7, of the Texas Constitution amlies onlv co constitutional funds.
not to statutory funds. Brazoa-River Conservation and Reclamation
District v. McGraw, 91 S.W.2d 665 (Tex. 1936). Specifically, the
court has held that article VIII. section 7. does not apply to special
funds created by statute. Gulf Insurance Co. V. James, 185 S.W.2d 966
(Tex. 1945). See also Attorney General Opinion Nos. JM-566. .JM-539
(1986); a-323.    JM-321 (1985): V-107 (1947): O-2302 (1940). Am
stat&   that purported to auth&ze    the dorm&g    of coastitu~ionall~
dedicated revenues would violate article VIII, section 7, of the Texas
Coastitution.

                             S.U MM    A   R Y

                 By the clear terms of article 4344~. V.T.C.S.,
         the comptroller of public accounts and the state
         treasurer may not engage in inter-fund borrowing of
         constitutionally    dedicated revenues.   Any statute
         purporting to permit such a practice would violate
         article VIII, section 7, of the Texas Constitution.




                                           Attorney   General of Texas

JACKHIGRTOWRR
First Assistant Attorney General




                                 p. 3089
Eonorable Bob Bullock - Page 3    (JM-673)




MARY RELLER
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman. Opinion Committee

Prepared by Jim Moelllnger
Assistant Attorney General




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