                                                                                                          .




                                  The Attorney           General             of Texas

JIM MATTOX                                        my    31,   1985
Attorney General

                               Eonorable William I?, Robby                     Opinion No.   J'M-323
supremeCourtBUlldhlQ           Lieutenant Goverao,r of Texas
P. 0. Box 12549
Austin. TX. 79711. 2548
                               P. 0. Box 12068, C,q?itol Station               Re: Whether interest    on non-
5121475-2591                   Austin, Texaa    781’11                         constitutional   funds in state
Telex 9101574.1367                                                             highvay fund may be appropriated
Telecopier 5t 21475-0255       Honorable Gib Lewis. Speaker                    for general revenue purposes
                               Texas Rouee of Repr'esentatives
714 Jackson. Suite 700         P. 0. Box 2910
Dallas. TX. 75202-4505         Austin, Texas   787 69
2141742.8944
                               Bonorable Grant JOnaB,  Chairman
                               Senate Finance Committee
4824 AIberIa Ave., Suite 180
El Paso, TX. 789052793
                               Texas State Senate
915l533.3494                   P. 0. Box 12068, Cepitol Station
                               Austin, Texas   78711

1001 Texas. Suite 700          Eonorable Jim Rudd, Chairman
Houston. TX. 77002.311 ,l
                               Rouse Appropriaticns    Committee
71312236996
                               Texas Rouse of Representatives
                               P. 0. Box 2910
006 Broadway. Suite 312        Auetin, Texas     7t769
Lubbock. TX. 79401.3479
505/747-5239
                               Gentlemen:

 4309 N. Tenth. Suite B             You ask whether interest   on non-constitutional  funds in the state
 McAllen. TX. 79501-1595       highway fund may be appropriated    for general revenue purposes by rider
 51215S2-4547                  to the General Applwopriations Act.

200 Main Plaza. Suite 400           Article VIII,      section    7-a.   of the Texas Constitution     dedicates   to
San Antonio. TX. 782052797     highway purposes
51212254191
                                            all net revenues   remaining after      peymsnt of 811
 An Equal Opportunity/
                                            refunds allowed by law and expenses of collection
 Attirmrtive Action Employer                derived :Erom motor vehicle   registration    fees,  and
                                            all taxlra, except gross production      and ad valorem
                                            taxes,   on motor fuels     and lubricants      used to
                                            propel wtor vehicles   over public roadways. . . .

                                The interest      on the motor vehicle    registration    fees and fuel taxes
                                dedicated    to highcap purposes by article      VIII, section  7-a. must also
                                be used for highuay purposes.        A diversion    of that interest  to other
                                ournoses vould vialate
                                S~.~~~
                                                            article VIII. section     7 of the Texas Constitu-
                                tion.    Lavson' V. baker. 220 S.W. 260 (Tex. Civ. App. - Austin 1920.
                                vrit ref'd);    see ,?m.T.C.S.
                                                ---                 art. 2543d.


                                                                 p.   1477
Bonorable William P. Robby
Ronorable Gib Lawis                                                                       .
gonorable Grant JOneB
Ronorable Jim Rudd
Page 2   (JM-323)




      Article   VIII,   section    7-a.  of the TeXBB Constitution   does ‘not
actually establish     a state highway fund , or refer to the fund by name.
T’he fund was created by statutes which predate the adoption of article
VIII,   section   7-a.   in 194(i., See Tex. A.J.Res.   49. 49th Leg.,     1945
Tex. Gen. Laws 1049.         Art:Lcle6694,   V.T.C.S., which derives    from a
1917 statute,    provides that

                [a]11 funds coming into the hands of the Com-
            mission    derived   :Erom the registration     fees  or
            other sources prcvided for in this subdivision,       es
            collected,     shall   be deposited   with    the State
            Treasurer to the credit of a special        fund desig-
            nated as ‘The Sta,te Highway Fund’. . . .

Acts 1917, 35th Leg., ch. ‘l!)O, 423, at 424.        Sections 153.503 through
153.505 of the Texas Tax Code allocate         motor fuel taxes to the state
highvay    fund.    These provtsions     are the current       codification   of
statutes    enacted in 1941.   Acts 1941. 47th Leg., ch. 184. art. XVII,
525 at 330.      The approval of article    VIII, section    7-a. in 1946 gave
constitutional     status  to d.edications    of funds already       required by
statute.

      There are statutory    tledications   of monies to the state highway
fund vhich    do not have constitutional          status.   Article    6673a,
V.T.C.S.,  requires   funds ilerived from the sale of excess land to be
placed in the state highwy fund.          Federal aid money and county aid
money is deposited     in the !state treasury to the credit     of the state
highway fund.    V.T.C.S. erl:. 6674e.    Article 6674f. V.T.C.S..   provides
for certain transfers    of general revenue to the state highway fund.

       The state highway fund therefore           is not a constitutional         fund in
its entirety.       It consists     of funds dedicated        to highvay purposes by
the constitution      as veil 81) funds statutorily         required to be placed in
the highway fund.        It thus can be described         as a collection      of consti-
tutional    and non-constitc,tional          funds.      Only the constitutionally
dedicated    registration     fees and motor vehicle          fuel taxes are subject
to    the rule      that    Interest     must be spent          for    constitutionally
authorized purposes.         See ‘I.T.C.S.    art. 2543d; Lawson v. Baker, supra.
The interest     on statefunds        dedicated    by statute     to highway purposes
may be legally       severed and placed in the general revenue fund.                    See
Gulf Insurance Co. v. Jamek, 185 S.W.2d 966 (Tex. 1945) (article                     VIII.
section   7, of Texas Conetitution         applies only to special funds created
by the constitution,       not by statutes);       Attorney    General Opinion w-338
 (1981);  see also Bra206 Rbrer Conservation               & RBClBBiBtiOn District       V.
HcCrav. 91 S.W.2dmji.                  1936) (article       VIII,   sectlon    7, of the
Texas Constitution       does no,t apply to general revenue funds).

      Article    2543d.   V.T.C.S.,  severs the interest    from the principal
 of non-constitutional      funds placed in state depositories.


                                        p.   1478
Rooorable William P. Bobby
Honorable Gib Leuie                                                                .
lionorable Grant Jones
Ronorable Jim Rudd
Page 3 (JM-323)




               Section  1.    hterest       received   on account    of
           time depositB of ‘mneye in funds and accounte in
           the charge of the State TreeSUrer           shall be allo-
           cated    es fOllW6:      To each constitutional        fund
           there shall be credited         the pro rata portion      of
           the interest    rece,lved due to such fund.        The re-
           mainder of the iwerest         received,   with the excep-
           tion of that powion required by other statutes            to
           be credited   on a pro rsta basis to protested           tax
           payments, shall be credited         to the General Revenue
           Fund. The intewst        received shall be allocated      on
           a monthly beBiB.

Interest   on constitutional     funds must be credited      to the constitu-
tional fund and interest      on trust funds must be credited      to the trust
fund.    See Attorney     Genewl   Opinions J&306     (1984);    MW-82 (1979);
E-1040 (1977);   M-468 (196’):).     Attorney General Opinion M-468 (1969)
held that certain      federal. grant funds vere trust        funds,    end that
interest   on them could not be transferred         to general      revenue but
remained part of the trust fund.

      Article     2543d, V.T.C.S.,    placed   In the general      revenue fund
interest    on certain     monies in the state highway fund, &,             those
which are neither truBt funds nor constitutionelly         dedicated revenues.
The legislature     may appropriate by rider interest    vhich article     2543d.
V.T.C.S.,    placed in the general revenue fund, so long as the rider is
not inconsistent      with general lav.    The validity of’ a particular    rider
depends on its        only appr’opriatlng    funds or limiting       an item    of
appropriation.       Sea Tex. Ctmst. ert. III. s35; JeBBeU ABBOCietBB, Inc.
v. Bullock,     531=.2d      593 (Tex. 1975); Moore v. Sheppard, 192 S.W.2d
559 (Tex. 1946).

                                   SUMMARY

               Interest  earned on non-constitutional funds in
            the state   highuay fund may be appropriated   for
            general revenue purposes.




                                            J
                                              Very truly    yours,

                                                     A
                                              JIM        UATTOX
                                              Attorney    General of Texas

TOU GREEN
First Assistant    Attortiey   General


                                  p. 1479
Aonorsble William P. Robby
Honorable Gib Levis
Ronorable Grant Jones
Honorable Jim Rudd
Page 4    (a-323)




DAVID R. RICE&S
EXeCUtiVe    ABBiBtaUt     Attorrwy     &Ueral

ROBWT GRAY
Special Assistant        Attorney     General

RICR GILPIN
Chairman, Opinion        Cownittelr

Prepared by Susan L. Gerrilwn
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpia.       Chairman
Colin Carl
SuBan   GerriBon
Tony Guillory
Jim Hoellinger
Jennifer Riggs
Nancy Sutton
Bruce Youngblood




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