(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
  (1) Appropriated money--Money that the legislature has appropriated through the General Appropriations Act or other law.
  (2) Appropriation year--The year that the legal authorization for the charge was granted by the legislature. Multiple appropriation year activity may occur within a single fiscal year.
  (3) Capital asset--A good other than a consumable that benefits a state agency during more than one appropriation year.
  (4) Comptroller--The comptroller of public accounts for the State of Texas.
  (5) Consumable--A good that perishes with use and that, under ordinary circumstances, will be entirely used during one appropriation year.
  (6) Institution of higher education--Has the meaning assigned by Government Code, §2113.205(e)(1).
  (7) Internet connection--Access to the Internet under an interagency contract or a contract with a private Internet service provider.
  (8) State agency--Has the meaning assigned by Government Code, §2113.205(e)(2).
  (9) Telecommunications service--Includes a corded telephone service, a cellular telephone and/or data 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.
  (10) Utility service--
    (A) electricity, water, natural gas, or propane, if furnished by a utility;
    (B) a telecommunications service; and
    (C) a wastewater treatment service, a well water service, or a waste disposal service, if provided by a utility.
(b) General requirements and exceptions.
  (1) 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.
  (2) 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.
  (3) This section does not apply to a purchase that is paid with money that is not appropriated money.
(c) Purchases of consumables.
  (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) 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) 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:
    (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;
    (B) delivery of the consumable was delayed until the next appropriation year for reasons beyond the agency's reasonable control; and
    (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.
(d) Purchases of services.
  (1) A state agency must charge its purchase of a service to the appropriation year in which the service is rendered.
  (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.
(e) Purchases of capital assets.
  (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 signing date of a validly executed contract is the determining factor, the delivery date of the asset is irrelevant.
  (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 within the following biennium so long as payment for the asset does not occur before the start of the subsequent year.
  (3) A payment under a lease-purchase agreement must be charged to the appropriation year in which the payment is made.
(f) Grant payments.
  (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) This subsection applies regardless of how the grantee will use the grant money.
  (3) This subsection applies even if the payments under a grant contract will be made over more than one appropriation year.
(g) Contracts for the purchase of a combination of consumables, services, and capital assets.
  (1) This subsection applies only to:
    (A) a contract that involves the purchase of two or more of the following: a consumable, a service, or a capital asset; or
    (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) 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) 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) 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.
(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.
(i) Periodical subscriptions, maintenance contracts, post office box rentals, insurance, Internet connections, and surety or honesty bonds.
  (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, an Internet connection, or a surety or honesty bond, regardless of whether the subscription, contract, rental, insurance, connection, or bond covers more than one appropriation year.
  (2) This subsection prevails over subsections (c) - (h) of this section to the extent of any conflict.
(j) Utility services.
  (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) 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; amended to be effective October 17, 2004, 29 TexReg 9557; amended to be effective March 11, 2013, 38 TexReg 1695