Can a Texas hospital district pay to build a structure to house a city's ambulance that serves the district?

TX AG Opinion GA-0721: Can a hospital district fund a building for a city's ambulance?

Plain-English summary

A state representative asked whether the Hall County Hospital District could contribute funds to build a structure to house emergency service vehicles operated by the City of Turkey. The county has no hospital, and the district contracts with the cities of Memphis and Turkey to provide mobile emergency medical services. The district wanted to give money to the City of Turkey to house a new ambulance serving part of Hall County, asserting the building was necessary for the district's purposes and that the district would keep public control over the funds through its services contract with the city.

A hospital district can exercise only the powers expressly delegated to it or clearly implied. The district's enabling act requires it to furnish medical and hospital care for its needy inhabitants and says it "may operate or provide for the operation of a mobile emergency medical service," with the board managing the district's funds and resources. The opinion read that as giving the board discretion to provide for the operation of such a service, and the authority to decide in the first instance what is necessary to do so, including whether spending district funds to build a structure to house the City of Turkey's emergency vehicle is necessary for the mobile emergency medical service.

The opinion then turned to the Texas Constitution. Article III, section 52(a) bars a political subdivision from gratuitously granting public money or a thing of value to any individual, association, or corporation. Under Texas Municipal League, an expenditure is permissible if it serves a legitimate public purpose and brings a clear public benefit in return, and the body must ensure the predominant purpose is public, retain public control over the funds, and secure a return benefit. The bar also applies to gratuitous grants from one political subdivision to another, though a subdivision may pay funds to another to serve a purpose within the granting entity's own powers if the recipient is obligated to use the funds for that purpose. Whether an expenditure satisfies section 52 is for the governing body to decide in the first instance. So the opinion concluded the district's board must decide both whether the building is necessary for the mobile emergency medical service and whether the expenditure satisfies article III, section 52(a).

Currency note

This opinion was issued in 2009. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The district's enabling act, the Health and Safety Code hospital-district provisions, and the case law applying article III, section 52 may have developed since 2009. Confirm current law before relying on anything below.

Who this opinion affected (as of 2009)

Hospital district boards: The opinion explained that a board with authority to provide for a mobile emergency medical service may decide in the first instance whether a particular expenditure, like funding a building for an ambulance, is necessary for that service, subject to the constitutional public-purpose limits.

Cities receiving district funds: The opinion described the conditions under which a district could transfer funds to a city, including that the purpose be within the district's powers and that the city be obligated to use the funds for that purpose.

Taxpayers and auditors: The opinion laid out the article III, section 52 test (public purpose, public control, return benefit) that the board had to apply before making the expenditure.

Common questions

Did the AG approve the expenditure?
No. The opinion did not approve or reject the spending. It explained that whether the building is necessary for the EMS service, and whether the expenditure meets article III, section 52, are decisions for the district's board in the first instance.

Can a hospital district give money to a city at all?
Yes, within limits. The opinion explained that a subdivision may transfer funds to another for a purpose within its own powers if the recipient is obligated to use the funds for that purpose, but it cannot make a gratuitous gift.

What does the constitution require for the spending?
The opinion described the public-purpose test: the predominant purpose must be public, the district must keep public control over the funds, and the district must receive a return benefit.

Background and statutory framework

A special district can exercise only powers expressly delegated or clearly implied (Tri-City Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945, 946 (Tex. 1940); Jackson County Hosp. Dist. v. Jackson County Citizens for Continued Hosp. Care, 669 S.W.2d 147, 154 (Tex. App.-Corpus Christi 1984, no writ)). The district's enabling act requires it to furnish medical and hospital care for needy inhabitants and lets it operate or provide for the operation of a mobile emergency medical service, with the board managing district funds (Act of May 25, 1987, 70th Leg., R.S., ch. 1017, §§ 5.02, 4.01(a), 5.03, 1987 Tex. Gen. Laws 3430; see Tex. Const. art. IX, §§ 9, 9A; Tex. Health & Safety Code Ann. ch. 286 (Vernon 2001 & Supp. 2008)). The board may determine the scope of such services in the first instance (Jackson County Hosp. Dist., 669 S.W.2d at 154).

Article III, section 52(a) bars gratuitous grants of public money (Tex. Const. art. III, § 52(a)). An expenditure is permissible if it serves a public purpose and brings a clear public benefit, with the body ensuring a predominantly public purpose, public control, and a return benefit (Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383-84 (Tex. 2002)). The bar applies to transfers between subdivisions, subject to the rule that a subdivision may pay another to serve a purpose within its powers if the recipient is obligated to use the funds for it (State ex rel. Grimes County Taxpayers Ass'n v. Tex. Mun. Power Agency, 565 S.W.2d 258, 265-66 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd); Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 842 (Tex. 2000); Harris County Flood Control Dist. v. Mann, 140 S.W.2d 1098, 1104 (Tex. 1940)). Whether an expenditure satisfies section 52 is for the governing body in the first instance (Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960)).

Citations

Statutes:

• Tex. Const. art. III, § 52(a); art. IX, §§ 9, 9A
• Act of May 25, 1987, 70th Leg., R.S., ch. 1017, §§ 5.02, 4.01(a), 5.03, 1987 Tex. Gen. Laws 3430
• Tex. Health & Safety Code Ann. ch. 286 (Vernon 2001 & Supp. 2008)

Cases:

• Tri-City Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945 (Tex. 1940)
• Jackson County Hosp. Dist. v. Jackson County Citizens for Continued Hosp. Care, 669 S.W.2d 147 (Tex. App.-Corpus Christi 1984, no writ)
• Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377 (Tex. 2002)
• State ex rel. Grimes County Taxpayers Ass'n v. Tex. Mun. Power Agency, 565 S.W.2d 258 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd)
• Barrington v. Cokinos, 338 S.W.2d 133 (Tex. 1960)
• Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000)
• Harris County Flood Control Dist. v. Mann, 140 S.W.2d 1098 (Tex. 1940)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0721
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2009/ga0721.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

June 17, 2009

The Honorable Jim Pitts
Chair, Committee on Appropriations
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-2910

Opinion No. GA-0721

Re: Whether the Hall County Hospital District may contribute funds for the construction of a building to house emergency service vehicles operated by the City of Turkey (RQ-0772-GA)

Dear Representative Pitts:

Your predecessor asked about the authority of the Hall County Hospital District (the "District") to contribute funds for the construction of a building to house emergency service vehicles operated by the City of Turkey.[1] The request letter informs us that the county does not have a hospital and that the District contracts with the cities of Memphis and Turkey to provide mobile emergency medical services. Request Letter at 1. According to the letter, the District wishes to contribute money to the City of Turkey to house a new ambulance that provides services to a portion of Hall County. Id. The request letter asserts that: (1) "a new building is necessary to accomplish the hospital district purposes of providing medical care to the district's needy inhabitants and providing for the operation of a mobile emergency medical service," and (2) "the district will retain public control over the contributed funds through the contract the hospital district has with the city for the provision of the mobile emergency medical services." Id. at 2.

A special district such as a hospital district board "may exercise only such powers as have been expressly delegated to it by the Legislature, or which exist by clear and unquestioned implication." Tri-City Fresh Water Supply Dist. No. 2 v. Mann, 142 S.W.2d 945, 946 (Tex. 1940); see also Jackson County Hosp. Dist. v. Jackson County Citizens for Continued Hosp. Care, 669 S.W.2d 147, 154 (Tex. App.-Corpus Christi 1984, no writ) (applying the Tri-City standard to determine a hospital district board's powers). The District's enabling legislation requires the District to assume "full responsibility ... for furnishing medical and hospital care for the district's needy inhabitants," and states that the District "may operate or provide for the operation of a mobile emergency medical service." Act of May 25, 1987, 70th Leg., R.S., ch. 1017, § 5.02, 1987 Tex. Gen. Laws, 3430, 3433 (the "Act").[2] The District is governed by a board of directors which must manage, control, and administer the funds and resources of the District. Id. §§ 4.01(a), 5.03, at 3431, 3433. Under the plain language of the Act, the board has discretion to "provide for the operation" of a mobile emergency medical service. Id. § 5.02, at 3433.

Moreover, the board has the authority to determine in the first instance what is necessary to provide for the operation of such service. See Jackson County Hosp. Dist., 669 S.W.2d at 154 (determining that hospital district board's managerial responsibilities authorized it to discontinue emergency room services); Tex. Att'y Gen. Op. No. GA-0472 (2006) at 2 (advising that a hospital district having discretionary authority to provide ambulance services necessarily has the authority to determine the scope of those services). Thus, under the Act, the board has the discretion to determine in the first instance whether an expenditure of District funds to construct a building to house the City of Turkey's emergency service vehicle is necessary to provide for the operation of a mobile emergency medical service.

Next we must consider whether such a contribution to the City of Turkey would be constitutional. Texas Constitution article III, section 52 prohibits the Legislature from authorizing a political subdivision to "lend its credit or to grant public money or thing of value in aid of, or to any individual, association, or corporation whatsoever." TEX. CONST. art. III, § 52(a). Article III, section 52(a) prohibits the gratuitous application of public money by a political subdivision. Tex. Mun. League Intergov'tl Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 383 (Tex. 2002); State ex rel. Grimes County Taxpayers Ass'n v. Tex. Mun. Power Agency, 565 S.W.2d 258, 265 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd). The Court in Texas Municipal League explained that article III, section 52(a) does not prohibit an expenditure of public money that "(1) serves a legitimate public purpose; and (2) affords a clear public benefit received in return." Tex. Mun. League, 74 S.W.3d at 383. In that opinion, the court established a three-part test to determine whether a statute requiring an expenditure is for a public purpose under article III, section 52(a):

Specifically, the Legislature must: (1) ensure that the statute's predominant purpose is to accomplish a public purpose, not to benefit private parties; (2) retain public control over the funds to ensure that the public purpose is accomplished and to protect the public's investment; and (3) ensure that the political subdivision receives a return benefit.

Id. at 384.

While Texas Municipal League concerned payments from a political subdivision to a private party, article III, section 52 has also been construed to prohibit one political subdivision from gratuitously granting its funds to another political subdivision.[3] The provision does not, however, preclude a political subdivision from paying public funds to another political subdivision in order to serve a purpose within the powers of the political subdivision making the grant. See Grimes County Taxpayers Ass'n, 565 S.W.2d at 265-66 (holding that a political subdivision may pay or transfer its funds to another political entity if (1) the purpose of the payment or transfer is within the political subdivision's powers, and (2) the political entity receiving the funds is obligated by statute or contract to use the funds for that purpose).

Whether a political subdivision's expenditure comports with the requirements of article III, section 52 of the Texas Constitution is for the governing body of the political subdivision to decide in the first instance. See, e.g., Tex. Att'y Gen. Op. Nos. GA-0706 (2009) at 2 (stating that "[t]he factual determination regarding whether a public expenditure satisfies [the Texas Municipal League] test is for the governing body of the political subdivision in the first instance"), GA-0664 (2008) at 4 (stating that "[w]hether a particular transfer of county funds to another political subdivision serves a county purpose is for the commissioners court to determine in the first instance"); see also Barrington v. Cokinos, 338 S.W.2d 133, 142 (Tex. 1960) ("[A] court has no right to substitute its judgment and discretion for the judgment and discretion of the governing body upon whom the law visits the primary power and duty to act."). Thus, to determine if the contemplated expenditure is constitutional under article III, section 52, the District's board of directors must consider whether (1) the predominant purpose of the expenditure is to accomplish an authorized public purpose, (2) there are sufficient controls to ensure the public purpose is accomplished and the public investment is protected, and (3) that the District receives a return benefit. See Tex. Mun. League, 74 S.W.3d at 383 (setting forth public-purpose criteria); Grimes County Taxpayers Ass'n, 565 S.W.2d at 265 (stating that, for a political subdivision's payment to another political subdivision, the expenditure must be within the powers of the entity making the payment).

SUMMARY

The Hall County Hospital District has express authority to provide for the operation of a mobile emergency medical service. The District's board of directors has the discretion to determine in the first instance whether an expenditure of District funds to construct a building to house the City of Turkey's emergency service vehicle is necessary to provide for the operation of a mobile emergency medical service and whether such an expenditure comports with the requirements of article III, section 52(a) of the Texas Constitution.

Attorney General of Texas

ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee

[Footnote 1: See Request Letter at 1-2 (available at http://www.texasattorneygeneral.gov).]

[Footnote 2: See also TEX. CONST. art. IX, §§ 9 (authorizing the creation of hospital districts), 9A (authorizing the Legislature to promulgate "provisions necessary to regulate the provision of health care to residents"); TEX. HEALTH & SAFETY CODE ANN. ch. 286 (Vernon 2001 & Supp. 2008) ("Hospital Districts Created by Voter Approval").]

[Footnote 3: See, e.g., Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 842 (Tex. 2000) (determining that article III, sections 51 and 52 would not permit a city to gratuitously pay "the City's 'public money'" to a school district); Harris County Flood Control Dist. v. Mann, 140 S.W.2d 1098, 1104 (Tex. 1940) (holding that "under the plain terms of Section 52 of Article III, ... no part of the funds of Harris County can be pledged or used to pay the bonds of [the Harris County Flood] District"); San Antonio Indep. Sch. Dist. v. Bd. of Trs. of San Antonio Elec. & Gas Sys., 204 S.W.2d 22, 25 (Tex. Civ. App.-El Paso 1947, writ ref'd n.r.e.) (stating that under article III, sections 51 and 52, a "city cannot donate its funds to an independent municipal corporation such as an independent school district").]