Senate Bill 1106 in the recent legislative session provided a significant change to Section 154.025 and Section 154.045, Local Government Code concerning disbursements to persons with outstanding debts. These sections prohibit counties from disbursing county funds to persons indebted “to the state, the county, or a salary fund.”
Although these statutory provisions have existed for over 70 years, they had been limited in their application by Opinions of the Attorney General and court decisions. A.G. Opinion GA-0518 (2007) held that delinquent taxes that have not been reduced to judgment are not “debt” that precludes a county from disbursing funds to a person indebted to the county under section 154.025. However, SB1106 apparently reverses this ruling because it defines “debt” to include “delinquent taxes, fines, fees, and indebtedness arising from written agreements with the county.”
Another difficult issue concerns whether the county should withhold salary checks to employees who are indebted to the county. Although the attorney general has opined that state agencies and school districts may not withhold salaries under a similar statute, the Texas Supreme Court has approved county salary withholding under Section 154.025. In Orange County v. Ware, 819 S.W. 2d 472 (Tex.1991), The Supreme Court approved withholding the salary of a county commissioner who was indebted to the county for bond forfeitures, holding that a county’s withholding of salary does not violate the constitutional prohibition on garnishment of wages.
SB1106 specifically requires notice by the county treasurer to the indebted person before applying the amount owed by the county to reduce the debt. The county should consider a procedure to apply Section 154.025, including the following:
Commissioners court determination of amount of indebtedness to be filed with county auditor and county treasurer.
Written notice from county treasurer that debt is outstanding and that any funds owed will be applied to debt.
In summary, SB1106 includes delinquent taxes as debt that precludes county payments. Upon proper notice, salaries can be withheld to offset the payment of indebtedness to the county.
For more information, please call me at 1-800-733-0699.
Jim Allison, General Counsel