What happens to the money when the Texas governor line-item vetoes part of the budget?

Plain-English summary

Glenn Hegar, the Texas Comptroller of Public Accounts, asked the AG to sort out the effect of Governor Greg Abbott's veto proclamation for House Bill 1, the General Appropriations Act passed by the Eighty-fourth Legislature. The Comptroller's office has to actually book the numbers after a veto, so it needed to know which of the Governor's strikes were valid, how much each agency's budget should drop, and whether the affected agencies could still spend other money on the same things. One unusual feature: Attorney General Ken Paxton recused himself because of a possible conflict of interest, so the opinion was signed by First Assistant Attorney General Charles E. Roy under a written delegation, and it still carries the full force of an attorney general opinion.

The legal framework came from Article IV, section 14 of the Texas Constitution, which lets the Governor object to "one or more" items of appropriation in a bill while approving the rest. The AG leaned on the two Texas Supreme Court cases that have construed that power. Fulmore v. Lane (1911) held that a single lump sum split into yearly columns was really two items of appropriation, so the Governor could veto one year and leave the other. Jessen Associates v. Bullock (1975) held that a budget rider that merely qualifies or directs the use of an appropriation is not itself an item of appropriation and cannot be vetoed, but a provision that designates a specific purpose and a specific amount is an item of appropriation even if it sits inside a larger, more general item. With those rules, the AG worked through six sets of vetoes.

For the Texas Facilities Commission, the Governor struck three named construction projects and their unexpended-balance lines; the AG concluded those were items of appropriation, the veto reduced the Commission's funds, and because the Act said those capital funds could be spent "only for the purposes shown," the money could not be redirected to the three vetoed projects. For the Department of State Health Services, the Governor struck "in each fiscal year" from a jail-based competency-restoration pilot, which the AG read as cutting one year's $1,743,000 item while leaving the other. For the Texas Education Agency, the struck membership-fee provision was an item of appropriation even though it named only an estimated amount. For the Water Development Board, the struck water-conservation grant money was an item of appropriation. For four universities and a community college, the struck earmarks were items of appropriation that reduced each institution's lump sum. And for the State Securities Board, the struck salary-increase money, which was contingent on a bill that failed, was an item of appropriation that the veto eliminated, unlike other contingent riders that would never have taken effect anyway. Across the board, the AG repeated the same closing rule: a veto is purely negative, and an agency may generally spend other available funds for the same purpose if some authority outside the vetoed language permits it.

Currency note

This opinion was issued in 2015. 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. This opinion interprets the 2015 General Appropriations Act, which governed a single two-year budget cycle that has long since ended; the constitutional veto power it analyzes remains, but the specific appropriations, agency strategies, and dollar figures are historical.

What the opinion meant for those who asked

The Comptroller's office (as the opinion described it): The opinion gave the Comptroller a rule for booking each veto: each struck provision designated a specific purpose and amount, so it was an item of appropriation, and the veto reduced the relevant agency's appropriation by the struck amount. For provisions that did not name which budget "Strategy" they came from, the opinion described the accounting choice as one for the Comptroller in consultation with the affected agency and the Legislative Budget Board.

State agencies whose funds were vetoed (as the opinion described it): The opinion described the Governor's veto authority as purely negative, nullifying the set-aside of funds for a purpose. It described agencies as generally able to spend other available funds for the same purpose where authority outside the vetoed language permitted it, with the notable exception of the Facilities Commission capital funds, which the Act restricted to "only" the purposes shown.

The Legislature (as the opinion described it): The opinion described the line drawn by Fulmore and Jessen, that a provision designating a specific purpose and amount is an item of appropriation subject to veto even inside a larger item, while a rider that merely qualifies or directs an appropriation is not.

Common questions

What is a line-item veto in Texas?
The AG explained that Article IV, section 14 of the Texas Constitution lets the Governor object to one or more items of appropriation in a bill while approving the rest, and that "no item so objected to shall take effect."

Can the Governor veto money that is buried inside a bigger budget line?
Yes, in the AG's reading. Relying on Jessen Associates v. Bullock, the AG explained that a provision designating a specific purpose and a specific amount is an item of appropriation even when it is included in a larger, more general item.

Does vetoing the money mean the agency cannot spend anything on that purpose?
Not necessarily. The AG described the veto as purely negative: it cancels the set-aside but does not order anything. If other funds are available and some authority outside the vetoed language permits spending them for that purpose, the agency is likely allowed to do so. The exception in this opinion was the Facilities Commission's capital budget, which the Act said could be spent "only for the purposes shown," so that money could not go to the vetoed projects.

Why did the First Assistant Attorney General sign this opinion instead of the Attorney General?
The opinion explains that Attorney General Paxton recused himself because of an actual or perceived conflict of interest, and that under a written delegation he authorized First Assistant Attorney General Charles E. Roy to sign such opinions, which then carry the full force of an attorney general opinion.

Background and statutory framework

Article IV, section 14 of the Texas Constitution authorizes the Governor to object to items of appropriation in a bill while approving the rest, and provides that no item objected to shall take effect (Tex. Const. art. IV, § 14). The attorney general's authority to issue opinions rests on the Constitution and on Government Code sections 402.042 and 402.043, and the delegation of signing authority during a recusal rests on Government Code section 402.001 (Tex. Gov't Code §§ 402.042, 402.043, 402.001).

The AG built its analysis on the two Texas Supreme Court decisions construing the item-veto power. In Fulmore v. Lane, 140 S.W. 405 (Tex. 1911), the Court treated a lump-sum appropriation that was divided into separate yearly columns as two items of appropriation, so the Governor could validly veto the second year while leaving the first, and described the Governor's authority as "purely negative." In Jessen Associates v. Bullock, 531 S.W.2d 593 (Tex. 1975), the Court held that a provision merely qualifying an appropriation or directing its use is not an item of appropriation and cannot be vetoed, while a provision that "designates a specified purpose and the amount to be used therefor" is an item of appropriation even if included in a larger, more general item. Prior attorney general opinions had added that a budget rider can be vetoed if it is itself an item of appropriation, and that no particular form or dollar certainty is required for a provision to be an item of appropriation. Applying those principles to the six sets of vetoes the Comptroller asked about, the AG concluded that each vetoed provision designated a specific purpose and amount and so was a valid item of appropriation, and it closed each analysis with the same rule about an agency's ability to spend other available funds where authority outside the veto allows.

Citations

Constitutional and statutory provisions:

• Tex. Const. art. IV, § 14 (the Governor's authority to veto items of appropriation)
• Tex. Gov't Code § 402.042 (authority to issue attorney general opinions)
• Tex. Gov't Code § 402.043 (authority to issue attorney general opinions)
• Tex. Gov't Code § 402.001 (delegation of authority within the office)

Cases:

• Fulmore v. Lane, 140 S.W. 405 (Tex. 1911)
• Jessen Associates v. Bullock, 531 S.W.2d 593 (Tex. 1975)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0048
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2015/kp0048.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

September 28, 2015

The Texas Constitution and sections 402.042 and 402.043 of the Government Code grant the attorney general authority to issue attorney general opinions. An attorney general opinion is a written interpretation of existing law. The development of an attorney general opinion is an involved and thorough process involving many layers of comprehensive review. Attorney general opinions do not necessarily reflect the attorney general's personal views, nor does the attorney general in any way "rule" on what the law should say. As have those that have come before it, this administration strives to craft opinions with the greatest level of legal accuracy and without any hint of impropriety.

By its very nature, the attorney general opinion process invites a variety of legal issues to be brought before our office for analysis and review. The questions asked are outside the scope of this office's control, and some of the questions to be addressed may raise actual or perceived conflicts of interest for the Attorney General and his staff. Consistent with applicable statutes and rules, staff members involved in the opinion process must recuse themselves from matters in which there may exist an actual or perceived conflict of interest. Accordingly, pursuant to section 402.001 of the Government Code, I delegate my signature authority in the attorney general opinion process to the First Assistant Attorney General, Charles E. Roy, for those opinions in which I may have an actual or perceived conflict of interest or in which my involvement gives even the appearance of impropriety. Any such opinion signed by the First Assistant under this delegation carries the full force of an attorney general opinion.

Very truly yours,

KEN PAXTON
Attorney General of Texas

December 21, 2015

The Honorable Glenn Hegar
Texas Comptroller of Public Accounts
Post Office Box 13528
Austin, Texas 78711-3528

Dear Comptroller Hegar:

In the process of reviewing this matter, this office concludes there could be an actual or perceived conflict of interest such that the Attorney General has recused himself from any participation on the matter. Accordingly, pursuant to Government Code section 402.001 and the authority delegation issued by the Attorney General on September 28, 2015, the First Assistant Attorney General will sign this opinion. Any such recusal is intended to go beyond the letter and spirit of the governing law and rules in order to avoid even the appearance of impropriety and to demonstrate our ongoing commitment to the highest ethical standards.

Charles E. Roy
First Assistant Attorney General

CER:lly

December 21, 2015

The Honorable Glenn Hegar Opinion No. KP-0048
Texas Comptroller of Public Accounts
Post Office Box 13528 Re: Effect of the Governor's vetoes of the
Austin, Texas 78711-3528 General Appropriations Act (RQ-0047-KP)

Dear Comptroller Hegar:

You ask for an opinion "on the effect of certain parts of the Governor's veto proclamation for House Bill 1, the General Appropriations Act," enacted during the Eighty-fourth Legislature. [1] Request Letter at 1. Article 4, section 14 of the Texas Constitution authorizes the Governor to veto items of appropriation:

If any bill presented to the Governor contains several items of appropriation he may object to one or more of such items, and approve the other portion of the bill. In such case he shall append to the bill, at the time of signing it, a statement of the items to which he objects, and no item so objected to shall take effect.

TEX. CONST. art. IV, § 14.

The Texas Supreme Court has twice taken the opportunity to construe this provision. In Fulmore v. Lane, 140 S.W. 405 (Tex. 1911), the Court addressed the Thirty-second Legislature's appropriations bill, wherein it appropriated to the Attorney General's department "the sum of eighty-three thousand and one hundred and sixty ($83,160) dollars, to be expended during the two fiscal years ending August 31, 1912, and August 31, 1913." Id. at 407. Below this general statement in the appropriations bill, the sum of $83,160 was divided and placed in separate columns, "one for $41,580 available for the year ending August 31, 1912, and a like sum for the year ending August 31, 1913." Id. at 410. In his veto message, the Governor "vetoed the lump sum of $83,160 appropriated to the Attorney General's department" and further explained that "[b]y striking out the lump appropriation and the words describing the same, and the appropriation of $41,580 for the second year, the sum of $41,580 is left subject to the use of the Attorney General[.]" Id. at 408. Contrary to the argument that the Legislature made only one item of appropriation in the sum of $83,160, the Court held that "there were two items of appropriation for the Attorney General's department." Id. at 411. Thus, the Governor lawfully vetoed the appropriation for the second year but "left available the item of $41,580 appropriated for the first fiscal year." Id. With regard to the Governor's striking of the lump sum of $83,160, the Court explained that such clause "was surplusage and its elimination in no manner affected either of the two items of appropriation." Id.

In Jessen Associates v. Bullock, 531 S.W.2d 593 (Tex. 1975) (orig. proceeding), the Court addressed the Governor's attempt to veto a rider to the appropriations bill that authorized the construction of certain enumerated projects by the Board of Regents of the University of Texas System. Id. at 596-97. In analyzing whether the specific rider in question was an "item of appropriation" and thereby subject to the Governor's veto, the Court explained that "if the provision which the Governor attempted to veto . . . is merely language qualifying an appropriation, or directing its uses, then the veto is of no effect." Id. at 598. On the other hand, "[w]here a certain provision designates a specified purpose and the amount to be used therefor, it is an item of appropriation even though it may be included in a larger, more general item." Id. at 599. Concluding that the rider did not itself set aside any funds, the Court held that the "Governor ... exceeded the power granted to him ... in attempting to veto the rider." Id. at 600.

While the Court in Jessen concluded that the particular rider in question was not an appropriation, opinions from prior attorneys general have emphasized that riders are not immune from the Governor's veto if they include "items of appropriation." See Tex. Att'y Gen. Op. No. O-3685 (1941) at 3 ("a rider of this type constitutes an item of appropriation ... and is subject to the veto power of the Chief Executive"). "The Governor has no authority to veto a rider in an appropriation bill unless it is in itself an item of appropriation." Tex. Att'y Gen. Op. No. M-1199 (1972) at 2 (emphasis added). "No particular form, or method, or verbiage, is required to constitute an item of appropriation." Tex. Att'y Gen. Op. No. O-3685 (1941) at 2. It is with these authorities and principles in mind that we consider your specific questions concerning the Governor's vetoes of the Eighty-fourth Legislature's General Appropriations Act.

I. Texas Facilities Commission

Your first and second sets of questions concern the Governor's veto of provisions in the Act relating to certain funds for the Facilities Commission. Request Letter at 5-7. In particular, for the fiscal year ending August 31, 2016, the Act allocates to the Facilities Commission $983,665,000 for construction of buildings and facilities, listing seven specific projects and a corresponding amount for each. See Act, art. I-42 at 4397. The Governor struck three of those projects and their corresponding amounts from the Act: $132,000,000 for the G. J. Sutton Building Replacement, $26,000,000 for the Elias Ramirez State Office Building - New Parking Garage, and $57,995,000 for acquisition and relocation of the Department of Motor Vehicles Headquarters. Proclamation at 5300-01; Act, arts. I-41 & I-42 at 4396-97 (3.e.(5)-(7)). The Act states that these amounts "shall be expended only for the purposes shown and are not available for expenditure for other purposes." Act, art. I-41 at 4396 (3.). These three allocations therefore set aside funds for a specified purpose and are items of appropriation. See Jessen, 531 S.W.2d at 599. The Governor's veto of said items results in those funds not being appropriated to the Facilities Commission. See TEX. CONST. art. IV, § 14 ("no item so objected to shall take effect").

The Legislature did not allocate separate funds for these projects for the fiscal year ending August 31, 2017; however, the Act includes, and the Governor struck, the unexpended balance appropriation for each of these projects. [2] Act, art. I-42 at 4397 (4.); Proclamation at 5301. Because the Governor's veto nullifies the appropriations for the fiscal year ending August 31, 2016, no unexpended balances of the appropriations would occur for the following fiscal year, and the Governor's striking of these appropriations is likely an acknowledgment of that fact. See Tex. Att'y Gen. Op. No. MW-51 (1979) at 6 (concluding that two provisions appropriating unspent balances were items of appropriation subject to the Governor's veto).

As you note, these specific items of appropriation vetoed by the Governor were included as part of larger sums allocated earlier in the Act. See Request Letter at 6. The Texas Supreme Court explained in Jessen that "[w]here a certain provision designates a specified purpose and the amount to be used therefor, it is an item of appropriation even though it may be included in a larger, more general item." Jessen, 531 S.W.2d at 599. The Act allocates $1,288,649,445 to the Facilities Commission. Act, art. I-39 at 4394. The Act then divides this sum into four "Goals," which each include one or more "Strategies." Id. Goal A addresses "Facilities Construction and Leasing," and Strategy A.2.1. allocates $988,291,706 for Facilities Design and Construction. Id. You question whether that Strategy should be reduced by the amount of the vetoed appropriations. Request Letter at 6. Language in the Act indicates that at least two of the amounts vetoed were included in the previously articulated Strategy A.2.1. Act, art. I-46 at 4401 (20., 22.) (stating that included in the amounts appropriated in Strategy A.2.1 were the appropriations for the Department of Motor Vehicles Headquarters and the G.J. Sutton Building Replacement). And both the amount of funds allocated to Strategy A.2.1 and the Strategy's stated purpose indicate that it likely includes the specific funds appropriated for the three projects that were vetoed by the Governor. [3] Act, art. I-39 at 4394. Regardless of which Strategy the Legislature intended for the specific appropriations at issue, however, the effect of the Governor's veto is to reduce by $215,995,000 the funds appropriated to the Facilities Commission by the Act.

With regard to vetoes, the Governor's "authority is purely negative." Fulmore, 140 S.W. at 412. An effective veto nullifies the setting aside of an amount of funds for a specific purpose. If additional funds apart from what was vetoed by the Governor are available, and if authority outside of the veto permits expenditure of those funds for a given purpose, an agency is likely authorized to spend its other funds accordingly. In this particular instance, however, the Act provides that the funds appropriated to the Facilities Commission for capital budget items "shall be expended only for the purposes shown." Act, art. I-41 at 4396 (3.). Because the three purposes at issue are now struck from the Act by virtue of the Governor's veto, funds appropriated to the Facilities Commission by the Act for capital budget items may not be used for the three vetoed projects.

You also ask about the Governor's veto of Riders 20 and 22. See Request Letter at 6. These Riders are duplicative of the appropriations vetoed by the Governor for acquisition and relocation of the Department of Motor Vehicles Headquarters and for the G. J. Sutton Building Replacement. See, e.g., Act, art. I-46 at 4401 (20.) ("Included in the amounts appropriated to the Texas Facilities Commission, in Strategy A.2.1, Facilities Design and Construction, is $57,995,000 in Revenue Bond Proceeds in fiscal year 2016 for acquisition and relocation to a new headquarters space for the Texas Department of Motor Vehicles[.]"). Upon his decision to veto those items, Riders 20 and 22 became surplusage, and the striking of these paragraphs simply reinforces the veto of the capital budget items and corresponding reduction of funds discussed above.

II. Texas Department of State Health Services

Your third set of questions relates to the Governor's veto of funds for the Department of State Health Services ("Department"). Request Letter at 7-8. Under Strategy B.2.3., the Act allocates $127,656,512 for fiscal year 2016 and $127,656,510 for fiscal year 2017, for community mental health crisis services. Act, art. II-48 at 4499 (B.2.3). The Act subsequently provides that "[o]ut of funds appropriated above in Strategy B.2.3 . . . , the Department . . . shall allocate $1,743,000 in each fiscal year of the 2016-17 biennium in General Revenue to be used only for the purpose of conducting a jail-based restoration of competency pilot program." Act, art. II-72 at 4523 (70.) (emphasis added). From this language, the Governor struck "in each fiscal year." Proclamation at 5301.

Similar to the appropriation addressed by the Texas Supreme Court in Fulmore, the clear intent of the Act is to set aside $1,743,000 for fiscal year 2016 and $1,743,000 for fiscal year 2017 to be used solely for a jail-based restoration of competency pilot program. See Fulmore, 140 S.W. at 407 (addressing an appropriations act stating "there is hereby appropriated the sum of eighty three thousand and one hundred and sixty ($83,160.00) dollars, to be expended during the two fiscal years ending August 31st, 1912, and August 31st, 1913"). The language of the Act therefore sets aside two separate amounts of funds for a specific purpose, or establishes "two items of appropriation." Id. at 410. The Governor vetoed one of those items, the effect of which is to reduce the Department's appropriated funds by $1,743,000 for the biennium.

You ask from which fiscal year that amount should be eliminated. Request Letter at 8. The Texas Supreme Court has explained that in determining the effect of a veto, we review the Governor's veto message as a whole. Fulmore, 140 S.W. at 411. By striking the language "each fiscal year" and explaining that he intended to veto "one year of this appropriation," it is clear that the Governor intended to spread the $1,743,000 item of appropriation over the biennium. Proclamation at 5301. Thus, the effect of the veto is to strike the appropriation for fiscal year 2017, while preserving the fiscal year 2016 appropriation. The Act authorizes any unexpended balance remaining on August 31, 2016, to be "appropriated for the same purposes in fiscal year 2017." Act, art. II-65 at 4516 (39.). Because the Act explains that the funds allocated for this program were included in Strategy B.2.3, a proper accounting would reduce Strategy B.2.3 by $1,743,000. Act, art. II-72 at 4523 (70.); Proclamation at 5301. If additional funds apart from the $1,743,000 vetoed by the Governor are available, and if authority outside of the veto permits expenditure of those funds for a jail-based restoration of competency pilot program, the Department is likely authorized to spend its other funds accordingly. [4]

III. Texas Education Agency

Your fourth set of questions asks about the Governor's veto of the following provision:

Out of funds appropriated above, the Texas Education Agency shall allocate funds for the purpose of paying membership fees to the Southern Regional Education Board, estimated to be $193,000 per fiscal year.

Act, art. III-18 at 4609 (61.); Proclamation at 5302; Request Letter at 8. This provision sets aside funds, an estimated $193,000 per fiscal year, for the purpose of paying membership fees to a particular organization. The fact that the provision does not articulate a fixed sum does not preclude this from being an item of appropriation. As an opinion from this office previously concluded, a provision "may constitute a sufficient appropriation although it does not name a certain sum or a maximum sum." Tex. Att'y Gen. Op. No. O-3685 (1941) at 2 (opining that an uncertain sum appropriated for salaries, travel and other necessary expenses was an item of appropriation subject to the Governor's veto). Because the provision sets aside funds for a particular purpose, it constitutes an item of appropriation, and the Governor's veto of this item has the effect of reducing the agency's lump-sum appropriation by $193,000 each fiscal year.

The provision does not identify from which Strategy the appropriation is derived, so a determination as to which Strategy should be reduced by this veto will need to be made by the Comptroller in consultation with the Texas Education Agency and the Legislative Budget Board. If additional funds apart from the $193,000 per fiscal year vetoed by the Governor are available, and if authority outside of the veto permits expenditure of those funds for membership fees to the Southern Regional Education Board, the Texas Education Agency is likely authorized to spend its other funds accordingly.

IV. Texas Water Development Board

Your fifth set of questions concerns the Governor's striking of funds allocated to the Water Development Board. Request Letter at 9. In particular, the Act provides for and the Governor struck the following provision:

Included in amounts appropriated above in Strategy A.3.1 Water Conservation and Assistance, is $1,000,000 in fiscal year 2016 from General Revenue for the purpose of providing grants to water conservation education groups. The Water Development Board shall award the grants through a competitive process, which may require grant applicants to provide private matching funds. Any unexpended balances as of August 31, 2016 in funds appropriated for this purpose are appropriated for the same purpose in the fiscal year beginning September 1, 2016.

Act, art. VI-59 at 5030 (20.) (emphasis added); Proclamation at 5303. The clear intent of this provision is to set aside $1,000,000 for the purpose of providing grants to water conservation education groups. It is therefore an item of appropriation subject to the Governor's veto. The effect of the Governor's veto is to reduce by $1,000,000 the total sum appropriated to the Water Development Board for fiscal year 2016. Because the Governor's veto nullifies the appropriation for the 2016 fiscal year, no unexpended balance of the appropriation will occur during the following year. The Act explains that the funds allocated for these grants were included in Strategy A.3.1, and a proper accounting would thereby reduce Strategy A.3.1 by $1,000,000. Act, art. VI-59 at 5030 (20.). If additional funds apart from the $1,000,000 vetoed by the Governor are available, and if authority outside of the veto allows the Board to provide grants to water conservation education groups, the Board is likely authorized to spend its other funds accordingly.

V. State Universities and Colleges

You next ask about the Governor's striking of funds for four state universities and one community college. Request Letter at 9-14. In particular, the Act provides for and the Governor struck the following allocations: (1) $2,500,000 for each fiscal year to the University of Texas at Austin for identity theft and security; (2) $137,577 for each fiscal year to Texas A&M University for an international law summer course; (3) $1,000,000 for each fiscal year to Tarleton State University for the Center for Anti-Fraud, Waste, and Abuse; (4) $500,000 for each fiscal year to Stephen F. Austin State University for the Waters of East Texas Center; and (5) $100,000 for each fiscal year to Del Mar College for a maritime museum. Act, art. III-66 at 4657 (C.2.8.); art. III-87 at 4678 (C.1.1); art. III-94 at 4685 (C.3.2); art. III-131 at 4722 (C.3.4); art. III-200 at 4791 (D.2.1.).

Regardless of whether the allocations are labeled as informational, Strategies, or riders, if they set aside funds for a specific purpose, they are "items of appropriation." In each of these allocations, the Legislature provides for an amount of money to be set aside for a specific purpose. [5] These five allocations are therefore items of appropriation. The Governor's vetoes are valid and reduce each institution's lump-sum appropriation by the corresponding amount struck for each institution. If additional funds apart from those vetoed by the Governor are available, and if authority outside of the veto allows the educational institutions to spend funds in the manner provided, the institutions are likely authorized to spend their other funds accordingly.

VI. Texas State Securities Board

Your final set of questions concerns funds allocated to the Securities Board. Request Letter at 15. The Act provides, and the Governor struck, the following language:

Amounts appropriated above include $557,352 in fiscal year 2016 and $636,688 in fiscal year 2017 in General Revenue for the purpose of employee merit salary increases contingent upon House Bill 2493, or similar legislation relating to the classification of the agency as a Self-Directed and Semi-Independent agency, not being enacted.

Act, art. VIII-55 at 5148 (3.); Proclamation at 5304. This provision sets aside $557,352 for fiscal year 2016 and $636,688 for fiscal year 2017 for the purpose of employee salary increases, and it therefore constitutes two items of appropriation subject to the Governor's veto. The appropriations were contingent upon House Bill 2493 or similar legislation not being enacted, which ended up being the case.

The Governor's Proclamation message in conjunction with this veto states, "[t]his veto deletes a contingent rider for a bill that did not pass." Proclamation at 5304. Briefing submitted to this office on behalf of the Securities Board notes that the Governor vetoed a number of appropriation riders that were contingent on the passage of other legislation that failed to pass. [6] With regard to these other vetoes, the Governor's Proclamation message included the same explanatory statement provided for the veto of Securities Board funds. Each of the other vetoes, however, had no meaningful effect on the agency or its appropriations, as the appropriations were contingent on the passage of a bill that failed, so the appropriations would not have become effective regardless of the Governor's veto. In this instance, on the other hand, the Securities Board appropriations were contingent on a bill failing, which did occur, so the appropriations would have been effective but for the Governor's veto. The briefing suggests that in every other instance when the Governor intended to affirmatively veto appropriations, the Governor struck the appropriations language and included an explanation as to why the veto occurred. Brief at 6-8. While this may be the case, we cannot ignore the clearest intent of the Governor's veto, which is his striking of the appropriation language and which results in the total sum appropriated to the Securities Board being reduced by the amounts struck.

The vetoed provision does not state from which of the Securities Board Strategies the appropriated funds derive. According to information provided by the Securities Board, however, the Legislative Budget Board has explained how the vetoed funds were apportioned among the Board's Strategies, and this could provide a method to account for the vetoed funds. See Securities Board Brief at 9. Regardless of which Strategies the Legislature intended for the specific appropriations at issue, however, the effect of the Governor's veto is to reduce by $557,352 in fiscal year 2016 and $636,688 in fiscal year 2017 the funds appropriated to the Securities Board by the Act. If additional funds apart from those vetoed by the Governor are available, and if authority outside of the veto permits expenditure of those funds for employee merit salary increases, the Board is likely authorized to spend its other funds accordingly.

SUMMARY

Article 4, section 14 of the Texas Constitution authorizes the Governor to veto "items of appropriation." The Texas Supreme Court has explained that "where a certain provision designates a specified purpose and the amount to be used therefor, it is an item of appropriation even though it may be included in a larger, more general item." The provisions vetoed by the Governor each designate a specific purpose and the amount to be used therefor, and they are items of appropriation subject to the Governor's veto.

The Governor's authority to veto items of appropriation is purely negative. An effective veto nullifies the setting aside of an amount of funds for a specific purpose. If additional funds apart from what was vetoed by the Governor are available, and if authority outside of the vetoed language permits expenditure of those funds for a given purpose, an entity is likely authorized to spend its other funds accordingly.

Very truly yours,

CHARLES E. ROY
First Assistant Attorney General

BRANTLEY STARR
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

Assistant Attorney General

[1] Letter from Honorable Glenn Hegar, Tex. Comptroller of Pub. Accounts, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Aug. 26, 2015), https://www.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs (hereinafter "Request Letter"); see General Appropriations Act, 84th Leg., R.S., ch. 1281, § 1, 2015 Tex. Gen. Laws 4343 (hereinafter the "Act"); Veto Message of Gov. Abbott, Tex. H.B. 1, 84th Leg., R.S. (2015) (located at 2015 Tex. Gen. Laws 5298-5307) (hereinafter "Proclamation").

[2] See Act, art. IX-26 at 5191 (Sec. 6.01) ("A reference in this Act to 'unexpended balance' or 'UB' is a reference to the unobligated balance of an amount appropriated by this Act for the fiscal year ending August 31, 2016, unless another meaning is clearly indicated.").

[3] The total sum of appropriations for the seven projects listed is $983,665,000, see Act, art. I-42 at 4397 (3.e.(7)), and Strategy A.2.1. is the only Facilities Commission Strategy that was allocated funds that equal or exceed that amount. Act, art. I-39 at 4394 (A.).

[4] Unlike the Governor's veto of the Facilities Commission's capital budget items discussed above, the Governor's veto of funds appropriated to the Department does not itself impact the use of any of the Department's other available funds.

[5] See Act, art. III-68 at 4659 (9.) ("Amounts appropriated above include $5,000,000 in General Revenue for the 2016-17 biennium to provide research and education in the areas of identity management, protection, security, and privacy, and to develop solutions to identity problems for businesses, adults, and children at The Center for Identity at the University of Texas at Austin."); art. III-88 at 4679 (4.) (providing that the funds allocated to Texas A&M University "will be used for the International Summer Course"); art. III-95 at 4686 (6.) (providing that the funds allocated to Tarleton State University "will be used for the Center for Anti-Fraud, Waste, and Abuse"); art. III-132 at 4723 (4.) (providing that the funds allocated to Stephen F. Austin State University "will be used for the Waters of East Texas Center"); art. III-207 at 4798 (26.) (providing that the funds allocated to Del Mar College "shall be used for a maritime museum").

[6] See Letter from Beth Ann Blackwood, Chair, Tex. State Securities Bd., to Honorable Ken Paxton, Tex. Att'y Gen. at 3 (Sept. 24, 2015) (on file with the Op. Comm.) (hereinafter "Securities Board Brief").