Municipal Corner

A Water Control and Improvement District may not use surplus “interest and sinking funds” to reduce the cost of future bonds. Tex. Att’y. Gen. Op. KP-0459 (2024).

The Victoria County District Attorney requested an opinion from the Texas Attorney General regarding whether a water control and improvement district may use surplus Interest and Sinking (“I&S”) funds to reduce the cost of future bonds. After reviewing the Texas Water Code, the Attorney General determined that the District may not use its surplus I&S funds to reduce future bonds.

In 2020, the Victoria County Water Control and Improvement District (the “District”) was left with surplus I&S funds after paying off all debt for which I&S ad valorem taxes were assessed during the 2019-20 fiscal year. Accordingly, the District sought clarification regarding other authorized uses of the surplus funds. In response, the Attorney General provided that, as a water control and improvement district created under the authority of Article XVI, Subsection 59(a) of the Texas Constitution, the District has only those powers expressly granted by statute or implied as an incident to its express powers. And irrespective of prior Attorney General opinions providing for how surplus I&S funds may be used, neither the Texas Constitution nor the Texas Water Code authorizes the District to expend surplus I&S fund moneys.

The Attorney General determined that Chapter 51 of the Texas Water Code, which governs water control and improvement districts, provides an exhaustive list of ways districts can expend I&S funds that does not authorize repurposing such funds. Additionally, Chapter 49, which applies to all water districts, fails to authorize such use of these funds. Because neither chapter expressly authorizes the use of I&S funds to reduce future bond amounts, the Attorney General concluded that the District cannot use the surplus I&S funds for the suggested purpose.

Emergency Service Districts originally formed as Rural Fire Prevention Districts have authority to provide county-wide services. Tex. Att’y. Gen. Op. No. KP-0457 (2024).

The Johnson County Attorney requested an opinion from the Texas Attorney General regarding whether Johnson County’s Emergency Services District (“ESD”), originating as a Rural Fire Prevention District (“RFPD”), has the authority to operate a county-wide ambulance service. The Attorney General concluded that the converted ESD does have the authority to provide county-wide ambulance services under Texas Health and Safety Code § 775.

In 1956 Johnson County voters agreed to create an RFPD pursuant to Article III, Section 48-d of the Texas Constitution which, at the time, did not expressly authorize RFPDs to provide ambulance services. Upon the enactment of Texas Health and Safety Code § 775 in 2003, the RFPD converted to an ESD as required by new State law. Because the present-day ESD originated as an RFPD when ambulance services were not expressly authorized, the County Attorney questioned whether the ESD does in fact have authority to provide county-wide ambulance services.

In reviewing the statutory history, the Attorney General provided that once the new Texas Health and Safety Code § 775 was enacted, Article III, Section 48-d of the Texas Constitution was repealed, thereby removing the authority to create RFPDs and replacing it with the new authority for ESDs. The Attorney General interpreted Texas Health and Safety Code § 775, along with the remaining provisions of Article III, Section 48 of the Texas Constitution, to authorize ESDs to provide emergency ambulance services. Accordingly, the Attorney General concluded that a Court is likely to find a converted ESD has the same general authority to operate and provide ambulance services under Texas Health and Safety Code § 775 as if it were an entity originally created as an ESD.

Madison Huerta is an Associate in the Firm’s Governmental Relations, Water, and Districts Practice Groups. If you would like additional information or have questions related to these or other matters, please contact Madison at 512.322.5825 or mhuerta@lglawfirm.com.