Article III, Section 52 of the Texas Constitution ("Restrictions on Lending Credit or Making Grants by Political Subdivisions")
As amended November 2, 1999:
(a) Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association or company. However, this section does not prohibit the use of public funds or credit for the payment of premiums on nonassessable property and casualty, life, health, or accident insurance policies and annuity contracts issued by a mutual insurance company authorized to do business in this State.
(b) Under legislative provision, any county, political subdivision of a county, number of adjoining counties, political subdivision of the State, or defined district now or hereafter to be described and defined within the State of Texas, and which may or may not include, towns, villages or municipal corporations, upon a vote of two-thirds majority of the voting qualified voters of such district or territory to be affected thereby, may issue bonds or otherwise lend its credit in any amount not to exceed one-fourth of the assessed valuation of the real property of such district or territory, except that the total bonded indebtedness of any city or town shall never exceed the limits imposed by other provisions of this constitution, and levy and collect taxes to pay the interest thereon and provide a sinking fund for the redemption thereof, as the Legislature may authorize, and in such manner as it may authorize the same, for the following purposes to wit: (1) The improvement of rivers, creeks, and streams to prevent overflows, and to permit of navigation thereof, or irrigation thereof, or in aid of such purposes. (2) The construction and maintenance of pools, lakes, reservoirs, dams, canals and waterways for the purposes of irrigation, drainage or navigation, or in aid thereof. (3) The construction, maintenance and operation of macadamized, graveled or paved roads and turnpikes, or in aid thereof.
(c) Notwithstanding the provisions of Subsection (b) of this section, bonds may be issued by any county in an amount not to exceed one-fourth of the assessed valuation of the real property in the county, for the construction, maintenance, and operation of macadamized, graveled, or paved roads and turnpikes, or in aid thereof, upon a vote of a majority of the voting qualified voters of the county, and without the necessity of further or amendatory legislation. The county may levy and collect taxes to pay the interest on the bonds as it becomes due and to provide a sinking fund for redemption of the bonds.
(d) Any defined district created under this section that is authorized to issue bonds or otherwise lend its credit for the purposes stated in Subdivisions (1) and (2) of Subsection (b) of this section may engage in fire-fighting activities and may issue bonds or otherwise lend its credit for fire-fighting purposes as provided by law and this constitution.
(e) A county, city, town, or other political corporation or subdivision of the State may invest its funds as authorized by law.
This section first appeared in the Texas Constitution of 1876. Neither the Republic of Texas constitution (1836) nor any of the state's first four constitutions (1845, 1861, 1866, 1869) contained a provision with similar substantive language.
As adopted, it read: "The Legislature shall have no power to authorize any county, city, town, or other political corporation, or subdivision of the State, to lend its credit or to grant public money or thing of value, in aid of any individual, association, or corporation whatsoever; or to become a stockholder in such corporation, association or company." It has been amended seven times. Amendments were approved in 1904, 1970, 1978, 1986, 1989, and 1999 (two).
Note that the Texas Attorney General, in Tex. Att'y Gen. Op. KP-311 (2020), opined that: "A county may call a bond election under Texas Constitution article III, section 52(b) or (c) and expend bond funds for the construction, repair, improvement, and maintenance of city streets if the county has municipal consent and determines that the city streets are an integral part of or a connecting link to a county road or a state highway."
And, in Tex. Att'y Gen. Op. KP-237 (2019), he opined that: "Article III, section 52(a) of the Texas Constitution prohibits the expenditure of county funds for private . . . . With respect to the proposed expenditures to a school district, the specific question for the commissioners court is whether providing law enforcement services, grounds maintenance, and a library for an independent school district serves a specific county purpose."
- Texas Mun. League Intergovernmental Risk Pool v. Texas Workers' Comp. Comm'n, 74 S.W.3d 377, 383-84 (Tex. 2002) ("[S]ection 52(a) does not prohibit payments to individuals, corporations, or associations so long as the statute requiring such payments: (1) serves a legitimate public purpose; and (2) affords a clear public benefit received in return. . . . 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.")
- Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 739-40 (Tex. 1995) (footnote omitted) ("Section 52(a) of article III serves a related purpose; it 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, or to become a stockholder in such corporation, association or company.' Generally speaking, both sections are intended 'to prevent the application of public funds to private purposes; in other words, to prevent the gratuitous grant of such funds to any individual, corporation, or purpose whatsoever.' Byrd v. City of Dallas,  6 S.W.2d 738, 740 (1928).")
- State ex rel. La Crosse v. Averill, 110 S.W.2d 1173, 1174 (Tex.Civ.App.–San Antonio 1937, ref'd) ("Before proceeding to a consideration of the ultimate question presented by this appeal, it seems proper to express the opinion that both constitutional, statutory and charter provisions upon the subject condemn as unlawful the acts of the members of a city commission in binding the city, by ordinance and contract, to pay out public funds to attorneys or others for services rendered in behalf of such commissioners in defending them against prosecutions for offenses charged against them, either in their private or official capacity, in the courts of the land. Const, art. 1, § 3; article 3, §§ 52, 53; . . .")
- City of Breckenridge v. Stephens County, 40 S.W.2d 43, 43-44 (Tex. 1931) ("If the right to expend such funds exists, the right to make a contract so to do must also exist. After a careful investigation of the authorities, including the Constitution and laws of this state, we have reached the conclusion that the commissioners' court does have lawful authority to expend county road bond funds for the improvement of city streets where such streets form integral parts of county roads or state highways, when such improvements are made without conflicting with the jurisdiction of the municipality, or with its consent or approval. Section 52, art. 3, Texas Constitution; State v. Jones, 18 Tex. 874; . . .")
- Collingsworth County v. Allred, 40 S.W.2d 13, 17 (Tex. 1931) ("We conclude that a proper construction of the amendatory portion of section 52 of article 3 is that it was not intended to impair in any way the rights of counties to issue bonds under laws existing at the time of its adoption, but that its purpose was twofold: First, to authorize the Legislature to enlarge the existing powers of counties to issue bonds for the purposes specified therein; and, secondly, to authorize legislation conferring upon political subdivisions and defined districts of the state a power not then possessed of issuing bonds for all of the purposes specified, subject to the limitations therein imposed.")
- Vernon's Annotated Constitution of the State of Texas (this multi-volume and up-to-date resource is available at all law libraries and many municipal libraries)
- The Texas State Constitution: A Reference Guide (this one-volume resource is available at most law libraries and some municipal libraries)
- The Constitution of the State of Texas: An Annotated and Comparative Analysis (this two-volume resource is available at most law libraries and some municipal libraries)
- Constitution of the State of Texas (1876) (this resource is published and maintained by the University of Texas School of Law)
- Amendments to the Texas Constitution Since 1876 (this resource is published and regularly updated by the Legislative Council)
- Reports Analyzing Proposed Amendments (this resource is published and regularly updated by the Legislative Reference Library)