1. (a) Definitions. In this section:

   1. (1) "Appropriated money" means money that the legislature has appropriated through the General Appropriations Act or other law.
   2. (2) "Appropriation year" means the accounting period beginning on September 1st and ending the following August 31st.
   3. (3) "Capital asset" means a good other than a consumable that benefits a state agency during more than one appropriation year.
   4. (4) "Comptroller" means the comptroller of public accounts for the State of Texas.
   5. (5) "Consumable" means a good that perishes with use and that, under ordinary circumstances, will be entirely used during one appropriation year.
   6. (6) "Health and human services agency" has the meaning assigned by the Government Code, §531.001(4).
   7. (7) "Includes" and "including" have the meaning assigned by the Code Construction Act, the Government Code, §311.005(13).
   8. (8) "Institution of higher education" has the meaning assigned by the Education Code, §61.003.
   9. (9) "May not" has the meaning assigned by the Code Construction Act, the Government Code, §311.016(5).

   10. (10) "State agency" means:

       1. (A) a department, commission, board, office, or other entity in the executive branch of state government, including an institution of higher education;
       2. (B) the supreme court, the court of criminal appeals, another entity in the judicial branch of state government with statewide authority, or a court of appeals; or
       3. (C) the legislature or another entity in the legislative branch of state government with statewide authority.
   11. (11) "Telecommunications service" includes a corded telephone service, a cellular telephone service, a pager service, an Internet connection service, a cable television service, and a satellite television service. The term does not include a long distance charge, a prepaid telephone calling card, a cellular telephone roaming charge, and any other charge that is not imposed monthly as a flat rate.

   12. (12) "Utility service" means:

       1. (A) electricity, water, natural gas, or propane, if furnished by a utility;
       2. (B) a telecommunications service; and
       3. (C) a wastewater treatment service, a well water service, or a waste disposal service, if provided by a utility.

2. (b) General requirements and exceptions.

   1. (1) A state agency must comply with this section when determining the appropriation year to be charged for the agency's:

      1. (A) purchase of a good, service, or capital asset; or
      2. (B) payment of a grant.
   2. (2) The comptroller may require a state agency to make available to the comptroller the documentation that supports the agency's classification of a purchase or payment as a consumable, service, capital asset, or grant.
   3. (3) This section does not apply to the extent it conflicts with state law, including a valid rider or other provision of the General Appropriations Act.
   4. (4) This section does not apply to a purchase that is paid with money that is not appropriated money.

3. (c) Purchases of consumables.

   1. (1) Except as provided in paragraph (2) of this subsection, a state agency must charge its purchase of a consumable to the appropriation year in which delivery of the consumable occurs.
   2. (2) Except as provided in paragraph (3) of this subsection, a state agency may not charge its purchase of a consumable to a particular appropriation year if the agency could not reasonably have anticipated that the consumable would be consumed entirely during that year.

   3. (3) A state agency may charge the appropriation year that immediately precedes the appropriation year in which a consumable is delivered for the purchase of the consumable if:

      1. (A) the agency entered into a contract for the consumable during the immediately preceding appropriation year and, at the time of entrance into the contract, the agency reasonably anticipated that the consumable would be delivered during that year;
      2. (B) delivery of the consumable was delayed until the next appropriation year for reasons beyond the agency's reasonable control; and
      3. (C) the order quantity was no more than reasonably could have been consumed before the end of the immediately preceding appropriation year had delivery occurred as originally anticipated.

4. (d) Purchases of services.

   1. (1) A state agency must charge its purchase of a service to the appropriation year in which the service is rendered.
   2. (2) A state agency must prorate its payments under a contract that is performed over more than one appropriation year so that each appropriation year is charged only for the services that are rendered during that year.

5. (e) Purchases of capital assets.

   1. (1) Except as provided in paragraphs (2)-(3) of this subsection, a state agency must charge its purchase of a capital asset to the appropriation year in which the agency enters into a valid contract for the purchase. The delivery date of the asset is irrelevant.
   2. (2) A state agency may contract during a particular appropriation year for the purchase of a capital asset in reliance on an existing appropriation for a subsequent appropriation year so long as payment for the asset does not occur before the start of the subsequent year. For example, assume that the governor signs the General Appropriations Act for appropriation years 2004 and 2005 on June 1, 2003. A state agency may enter into a contract after May 31, 2003, for the purchase of a capital asset and pay for the asset with appropriation year 2004 money so long as the payment is not made before September 1, 2003. Similarly, the agency may enter into a contract after May 31, 2003, for the purchase of a capital asset and pay for the asset with appropriation year 2005 money so long as the payment is not made before September 1, 2004. If the agency enters into a contract before June 1, 2003, for the purchase of a capital asset, then the agency may not use appropriation year 2004 or 2005 money to pay for the asset because the appropriations for those years are not in existence on the date the contract is entered into.
   3. (3) A payment under a lease-purchase agreement must be charged to the appropriation year in which the payment is made.

6. (f) Grant payments.

   1. (1) A state agency's payment of a grant to an individual or entity must be charged to the appropriation year in which the agency contracts, awards, or otherwise legally commits to pay the grant if an appropriation for that year and purpose is available. Otherwise, the payment must be charged to the first appropriation year for which an appropriation is available.
   2. (2) This subsection applies regardless of how the grantee will use the grant money.
   3. (3) This subsection applies even if the payments under a grant contract will be made over more than one appropriation year.

7. (g) Contracts for the purchase of a combination of consumables, services, and capital assets.

   1. (1) This subsection applies only to:

      1. (A) a contract that involves the purchase of two or more of the following: a consumable, a service, or a capital asset; or
      2. (B) two or more closely related contracts that together involve the purchase of two or more of the following: a consumable, a service, or a capital asset.
   2. (2) If the dominant purpose of one or more contracts is to purchase a consumable, then subsection (c) of this section governs the determination of the correct appropriation year to charge for the purchases.
   3. (3) If the dominant purpose of one or more contracts is to purchase a service, then subsection (d) of this section governs the determination of the correct appropriation year to charge for the purchases.
   4. (4) If the dominant purpose of one or more contracts is to purchase a capital asset, then subsection (e) of this section governs the determination of the correct appropriation year to charge for the purchases.
8. (h) Purchase options. The appropriation year in which a state agency exercises a contractual option to purchase a good, a service, or a capital asset must be charged for the cost of exercising that option, subject to this section's requirements for determining the correct appropriation year to charge for the purchase.

9. (i) Seminars and conferences.

   1. (1) Except as provided in paragraph (2) of this subsection, a state agency may use money that is appropriated for a particular appropriation year to pay expenses that relate to conduct or attendance at a seminar or conference only to the extent that the seminar or conference occurs during that year.
   2. (2) To the extent that the use is cost-effective, a state agency may use money that is appropriated for a particular appropriation year to pay expenses that relate to conduct or attendance at a seminar or conference that will occur partly or entirely during a different appropriation year.
   3. (3) This subsection prevails over subsections (c)-(h) of this section to the extent of any conflict.

10. (j) Periodical subscriptions, maintenance contracts, post office box rentals, insurance, and surety or honesty bonds.

    1. (1) A state agency may use money that is appropriated for a particular appropriation year to pay the entire cost or amount of a periodical subscription, a maintenance contract, a post office box rental, insurance, or a surety or honesty bond, regardless of whether the subscription, contract, rental, insurance, or bond covers more than one appropriation year.
    2. (2) This subsection prevails over subsections (c)-(h) of this section to the extent of any conflict.

11. (k) Utility services.

    1. (1) A state agency may use money that is appropriated for a particular appropriation year to pay for a utility service that is provided during that appropriation year and September of the next appropriation year.
    2. (2) This subsection prevails over subsections (c)-(h) of this section to the extent of any conflict.

12. (l) Health and human services agencies.

    1. (1) Upon request by the health and human services commissioner and approval by the Legislative Budget Board and the governor's office of budget and planning, a health and human services agency may use the money that is appropriated by the General Appropriations Act for:

       1. (A) appropriation year 2002 to cover expenditures that must otherwise be charged to appropriation year 2001; and
       2. (B) appropriation year 2003 to cover expenditures that must otherwise be charged to appropriation year 2002.
    2. (2) This subsection prevails over subsections (c)-(h) of this section to the extent of any conflict.

13. (m) Moving and tenant finish-out costs.

    1. (1) A state agency that moves from leased space to state-owned space after passage of the General Appropriations Act in appropriation year 2001 may pay the required moving and tenant finish-out costs that the agency incurred in appropriation year 2001 from money that is appropriated for appropriation year 2002 as necessary to facilitate the move.
    2. (2) A state agency that moves from leased space to state-owned space after passage of the General Appropriations Act in appropriation year 2001 may pay the required moving and tenant finish-out costs that the agency incurred in appropriation year 2002 from money that is appropriated for appropriation year 2003 as necessary to facilitate the move.
    3. (3) This subsection prevails over subsections (c)-(h) of this section to the extent of any conflict.

Source Note:The provisions of this §5.56 adopted to be effective October 25, 1996, 21 TexReg 10216; amended to be effective August 11, 2002, 27 TexReg 6860.