             E        OENEY        GENERAL
                    OF   -XAS
                   AUSTIN ~~.TExAs


                      January 17, 1962


Honorable D. C. Greer
State Highway Engineer
Texas State Highway Department
Austin, Texas
                                 Opinion No. WW-1243
                                 Re:   Whether the Texas Highway
                                       Department has the auth-
                                       ority to purchase steel
                                       for the manufacture of
                                       license plates and whether
                                       appropriated funds are
                                       available for the purchase
                                       of such steel and related
Dear Mr. Greer:                        questions.
          In your letter requesting an opinion from
this office on the question of whether the Texas High-
way Department has the authority to purchase steel for
the manufacture of license plates and certain other
related questions, you mentioned that for many years
the Texas Highway Department has obtained the license
plates which it issues with vehicle registrations from
the Department of Corrections.
          You further mentioned that because of the
lack of storage space for the steel which goes into the
plates, the Department of Corrections has had to let con-
tracts for the purchase of steel which called for monthly
deliveries, and that the only bids which the suppliers
would submit on this basis included escalator clauses
which provided for raislng the bid prices in the event
of increases in steel prices, transportation costs, and
the like prior to delivery. Also, in some instances,
strikes have interfered with the delivery of steel
necessitating the purchase of more expensive alumium
with which to manufacture the license plates.
Honorable D. C. Greer, page 2   (WW-1243)


          The Board of Control has previously suggested
that extra storage space be built in order to obtain the
savings that could be realized by taking delivery of a
year's supply of steel at one time, and pursuant to such
sug;eestionthe Legislature has appropriated funds for the
cor::tructionof a warehouse for such purposes which is now
n,r
  ,zing completion.
          Your letter further mentioned that the Depart-
ment of Corrections manufactures the plates on what approxi-
mates a vehicle registration year basis and receives their
appropriation on a fiscal year basis. At the present time,
the Department of Corrections has expended approximately
one-half of their current appropriation on the manufacture
of 1962 license plates which is now coming to a close. How-
ever, at the present time, the Department of Corrections not
only does not have sufficient funds available to purchase a
full year's supply of steel, to thereby take advantage of
the financial savings which could be made by use of their
increased storage capacity, but because of the unanticipated
Increase in the number of license plates required by the
passage of House Bill 1082, Acts of the 57th Legislature,
Regular Session, 1961, Chapter 259, page 554, the Department
of Corrections will not be able to purchase sufficient
materials to sustain production of the 1963 license plates
for the remainder of the fiscal year.
          Consequently, in order to insure that the pro-
duction of 1963 license plates will not be jeopardized and
to obtain for the State the savings that can be realized
by the bulk purchase of steel, the Texas Highway Department
and the Department of Corrections have tentatively agreed
on the following plan:
         "1 . The Department of Corrections will
         deduct from its funds which are currently
         available for the manufacture of license
         plates an amount necessary to buy the
         paint and other supplies needed to manu-
         facture the plates and will then requisi-
         tion and purchase the amount of steel
         which can be paid for with the remainder
         of such funds.
         "2 . The Highway Department will requisi-
         tion and purchase any additional steel
         necessary to produce the 1963 plates.
Honorable D. C. Greer, page 3.   (W-1243)


          “3. The Highway Department will purchase
          from the Department of Corrections all the
          plates it can manufacture from its own
          steel at the price established as provided
          in the appropriation bill.
          “4. The remainder of the plates will be
          manufactured by the Department of Correc-
          tions out of the Highway Department's
          steel for the same price, less the cost
          of the steel.
          “5. After the 1963 plates are manufactured,
          about the end of calendar year 1962, the De-
          partment of Corrections will have their 1962-
          1963 appropriation available to purchase a
          year's supply of steel and can go on into
          the manufacture of the 1964 plates on schedule."
          (Emphasis added)
          The Comptroller of Public Accounts has advised the
Texas Highway Department that a warrant will not be prepared
to pay for steel purchased by the Texas Highway Department
to be used in the manner set forth in the tentative agree-
ment between the Texas Highway Department and the Department
of Corrections. The basis for the position of the Comptroller
of Public Accounts is that such an arrangement would in effect
supplement the appropriations made to the Department of Cor-
rections for the same purpose and thus would be in violation
of certain provisions of Article III of Senate Bill 1, Acts
of the 57th Legislature, First Called Session, 1961, set
fort,hhereafter.
          In view of the position being taken by the Comptroll-
er of Public Accounts you have requested our opinion upon
the following questions:
          "1. Does this Department have the authority
          to purchase steel for the manufacture of
          license plates and funds appropriated with
          which to pay for such steel?
          "2. Do the two Departments have the authority
          to enter Into and carry out an agreement such
          as the one outlined above?"
Honorable D. C. Greer, page 4   (WW-1243)


          In the departmental appropriation to the Board of
Corrections in Senate Bill 1, there is found the provision
that:
         "It is the Intention of the Legislature that
         the sums appropriated hereinabove shall con-
         stitute the maximum amounts required to
         operate the Department of Corrections during
         the biennium beginning September 1, 1961,
         and that except-for the exchange of cotton-
         seed for cottonseed meal and cake, and other
         products or by-products of agriculture,
         livestock or industrial production in ex-
         cess of the quantities required forcon-
         sumption shall be sold, or disposed of
         through inter-agency contract, and the
         revenues accruing shall be deposited in
         the General Revenue Fund. Notwithstanding
         any other provisions of this Act, none of
         the revenues so deposited are reappropriated
         except as they shall apply to the sales of
         equipment, salvage, refunds and to recovered
         damage claims." (Emphasis added)
          In the departmental appropriation to TexasHighway
Department in Senate Bill 1, there is found the provision
that:
         "In addition to the purposes specified
         in appropriation Item No. 13 above, any
         necessary amounts of the moneys thereby
         appropriated may be used in the Highway
         Department to reimburse the State Prison
         System for the cost of manufacturing motor
         vehicle license plates, and said Prison Sys-
         tem shall be reimbursed as license plates
         are delivered and invoices are rendered
         to the Highway Department. At the time
         manufacture is started, the State Board
         of Control or its successor shall fix
         a price to be paid per license plate,
         and shall use as the basis for such
         price the costs of steel, paints, and
         other materials purchased, and the in-
         mate maintenance cost per day, and
         overhead expense, and miscellaneous
Honorable D. C. Greer, page 5.   (W-1243)


         charges, and the amount of profit pre-
         viously approved for such work."
          In Section 5 of Article III of Senate Bill 1,
entitled Executive, Legislative and Administrative De-
partments and Agencies Special Provisions, the Legis-
lature has provided that:
          "State moneys appropriated in this
          Article are to be construed as the
          maximum sums to be appropriated to
          and for the several purposes named
          herein; and the amounts are intended,
          to cover. and shall cover. the entire
          cost of the respective items and the
          same shall not be supplemented from
          any other sources exdepting such
          Federal funds as are designated or
          estimated. No expenditures shall'
          be made, and no obligations incurred,
          by any department or agency except
          as provided by the terms of this
          Article and by the general provisions
          in Article V of this Act." (Emphasis
          added)
          Funds appropriated to the Texas Highway Depart-
ment in Item No. 13 of the departmental appropriation
found in Article III of Senate Bill 1, may be used by
the Texas Highway Department for the purpose 0.fobtain-
ing license plates. The pertinent limitations upon
the use of these funds by the Te,xasHighway Department
to obtain license plates from the Department of Correc-
tions are twofold. First, the method of reimbursing
the Department of Corrections for these license plates
as set forth In Senate Bill 1, must be followed. Second-
ly, there must not be any arrangement which would, in
effect, amount to a supplemental appropriation to the
Department of Corrections.
          Under the tentative arrangement between the
Texas Highway Department and the Department of Corrections,
3he price paid by the Texas Highway Department for the
steel furnished to the Department of Corrections would
be deducted from the amounts reimbursed to the Department
of Corrections by the Texas Highway Department for manufac-
tune of the plates. Consequently, there would be no finan-
Honorable D. C. Greer, page 6.   (W-W-1243)


cial gain to the Department of Corrections, nor would the
license plates be more costly for the Texas Highway De-
partment to obtain. Therefore, we are of the opinion
that the proposed arrangement between the Texas Highway
Department and the Department of Corrections would not
result in a supplemental appropriation to the Department
of Corrections.
          In turn, the method of reimbursing the Depart-
ment of Corrections for manufacture of the license plates
would not be altered by the proposed arrangement for the
reason that the price to be paid per license plate by the
Texas Highway Department will be taking into account the
price of the steel furnished by the Texas Highway Depart-
ment.
          As to the authority of the Texas Highway Depart-
ment to purchase the steel which is to be furnished to
the Department of Corrections for the manufacturing of
license plates, the funds made available to the Texas
Highway Department in Item No. 13 of the departmental
appropriation to the Texas Highway Department are for
the purpose of:
          I!
           . . . operating expenses involved in
          establishing, planning, constructing,
          and maintaining a system of State
          Highways as contemplated and set forth
          in Chapter I, Title 116, Revised Civil
          Statutes of 1925, and Chapter 186, Gen-
          eral Laws, Thirty-ninth Legislature,
          Regultr Session, and amendments thereto.
          . . .
          The activities of the Texas Highway Department
pursuant to Article 6675a-13,under which the Texas Hlgh-
way Department has both the authority and the responsi-
bility to issue license plates upon payment of the
prescribed registration fee by applicants for motor
vehicle registration, and being a provision found In
Chapter I, Title 1.16of the Revised Civil Statutes of
1925, Is therefore a form of activity for which the
Texas Highway Department may make expenditures from the
funds appropriated to the Texas Highway Department by
virtue of Item No. 13 of the departmental appropriation.
.




    Honorable D. C. Greer, page 7   (NW-1243)


    Should the purchase of material for the manufacture of
    the license plates be necessary to Insure the avail-
    ability of such license plates to the Texas Highway
    Department in the carrying out of its responsibility
    to furnish license plates, then we are of the opinion
    that the expenditure of .funds for the purchase of such
    steel would be,a proper, necessary and legitimate ex-
    penditure of funds appropriated to the Texas Highway
    Department by Item No. 13 of the departmental appro-
    priation found in Article III of Senate Bill 1. The
    special provision contained in the departmental appro-
    priation to the Texas Highway Department, quoted
    heretofore, dealing with reimbursement to the Depart-
    ment of Corrections for manufacture of license plates
    would not servesas a restriction upon the Texas High-
    way Departmentsas to the purchase of the steel or
    upon the furnishing of such steel to the Department of
    Corrections pursuant to the proposed agreement, as such
    special provision merely specifies the manner in which
    the Department of Corrections will be reimbursed for
    the license plates it manufactures.
              As we are of the opinion that the proposed
    agreement between the Texas Highway Department and
    Department of Corrections is not in violation with the
    provisions of Senate Bill 1, it follows that there is
    no prohibition against the Texas Highway Department and
    Department of Corrections entering into and carrying
    out the proposed a reement set forth heretofore. In
    turn, Article 4413732), Vernonl~s Civil Statutes, the
    Interagency Cooperation Act, would clearly authorize
    these agencies to enter into the type of agreement
    proposed as the terms thereof, under the proposed arrange-
    ment in the instant case, would not be in violation of the
    laws of this state, and particularly Senate Bill 1.

                         SUMMARY
                         -------

                   Under the terms of the proposed
                   agreement between the Department
                   of Corrections and the Texas
                   Highway Department, the TexdS
                   Highway Department has the auth-
                   iruty to purchase steel which will
Honorable D. C. Greer, page 8.     (WW-1243)


              be furnished the Department of
              Corrections for the manufacture of
              license plates for the Texas Hlgh-
              way Department. The purchase price
              of such steel could be paid from
              the funds appropriated to the Texas
              Highway Department In Item No. 13
              of the departmental appropriation
              to the Texas Highway Department
              found in Article III of Senate Bill
              1.
               The Department of Corrections and
               the Texas Highway Department have
               the authority to enter into and
               carry out the agreement set forth
               herein.
                                 Yours very truly,
                                 WILL WILSON
                                 Attorney General of Texas


                                    Pat Bailey       t
PB:lg:zt                            Assistant

APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Elmer McVey
Howard Mays
Winston P. Crowder
Bob Eric Shannon
REVIEWED FOR THE ATTORNEY GENERAL
BY: Houghton Brownlee, Jr.
