Untitled Texas Attorney General Opinion ( 2004 )

ATTORNEYGENERAL OF TEXAS
GREG ABBOTT
July 30,2004
The Honorable Frank Madla Opinion No. GA-0222
Chair, Intergovernmental Relations Committee
Texas State Senate Re: Implementing a tax freeze by a county, city or
Post Office Box 12068 town, or junior college district for persons with
Austin, Texas 787 1 l-2068 disabilities or persons sixty-five years of age or
older (RQ-0 17 1-GA)
The Honorable Robert E. Talton
Chair, Urban Affairs Committee
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768-29 10
Dear Senator Madla and Representative Talton:
Article VIII, Section l-b(h) of the Texas Constitution, added in 2003, authorizes “a county,
a city or town, or a junior college district” to freeze the total amount of ad valorem taxes imposed
on the homesteads of persons with disabilities or persons sixty-five years of age or older. See TEX.
CONST. art. VIII, 3 1-b(h). You ask (1) whether the governing body of a home-rule municipality may
call an election to approve or disapprove of such a tax freeze without a petition from the voters; (2)
whether a tax freeze implemented by a home-rule municipality may be repealed by an election
initiated by voter petition and if so, by what procedure; and (3) whether a municipality that has
adopted a tax freeze may use a year prior to its adoption as the tax base year.’
I. Adoption of Tax Freeze bv Election
Pertinent to the first question, article VIII, section l-b(h) provides that “a county, a city or
town, or a junior college district” may adopt a tax freeze as follows:
(h) The governing body of a county, a city or town, or a junior college
district by official action may provide that if a person who is disabled
‘See Letter fromFrank Madla, Chair, Intergovernmental Relations Committee, Texas State Senate, to Honorable
Greg Abbott, Texas Attorney General (Jan. 2 1,2004) [hereinafter Madla Letter]; Letter from Honorable R.D. “Rick”
Hurt, Mayor, City of Bedford, to Honorable Kim Brimer, Senate District 10, Texas State Senate (Dec. 10, 2003)
(attachment to Madla Letter, supra) [hereinafter Madla Attachment]; Letter fromRobert E. Talton, Chair, Urban Affairs
Committee, Texas House of Representatives, to Honorable Greg Abbott, Texas Attorney General (Jan. 20, 2004)
[hereinafter Talton Letter] (letters on tile with Opinion Committee, also available at http://www.oag.state.tx.us).
The Honorable Frank Madla - Page 2 (GA-0222)
The Honorable Robert E. Talton
or is sixty-five (65) years of age or older receives a residence
homestead exemption prescribed or authorized by this section, the
total amount of ad valorem taxes imposed on that homestead by the
county, the city or town, or the junior college district may not be
increased while it remains the residence homestead of that person or
that person’s spouse who is disabled or sixty-five (65) years of age or
older and receives a residence homestead exemption on the
homestead. As an alternative, on receipt of a petition signed by five
percent (5%) of the registered voters of the county, the city or town,
or the junior college district, the governing body of the county, the
city or town, or the junior college district shall call an election to
determine by majority vote whether to establish a tax limitation
provided by this subsection. . . . The governing body of a county, a
city or town, or a junior college district may not repeal or rescind a
tax limitation established under this subsection.
TEX. CONST. art. VIII, 9 1-b(h). The first question is whether article VIII, section 1-b(h) permits
a governing body of a home-rule municipality to call for a binding election on whether to adopt
the freeze when there has been no proper petition from voters. See Madla Attachment, supra note
1, at 2.
Generally, the right to hold an election must be constitutionally or statutorily authorized. See
Countz v. Mitchell, 38 S.W.2d 770, 774 (Tex. 1931) (stating that “[tlhe right to hold an election
cannot exist or be lawfully exercised without express grant of power by the Constitution or
Legislature”); Ellis v. Hanks, 478 S.W.2d 172,176 (Tex. Civ. App.-Dallas 1972, writ ref d n. r. e.)
(stating that the right to hold an election “must be derived from the law”); Tex. Att’y Gen. Op. No.
GA-0001 (2002) at 3 (stating that “generally the right to hold an election depends upon statutory
authorization”). Also, when the constitution expressly grants a power and prescribes the means by
which or the manner in which the power is to be exercised, such means or manner is exclusive of
all others. See Houchins v. Plainos, 110 S.W.2d 549,553 (Tex. 1937) (concerning procedure for
dry area to become wet). Article VIII, section l-b(h) provides two alternative methods for
implementing a tax freeze. First, a governing body “by official action may provide” that the total
amount of ad valorem taxes for certain taxpayers will not increase - in other words, provide a tax
freeze. See TEX. CONST. art. VIII, 9 l-b(h) (emphasis added). Alternatively, upon proper petition,
the governing body “shall call an election” to determine whether to establish the provision’s tax
freeze. See id. (emphasis added).
The first question turns on whether the language in article VIII, section 1-b(h) that allows a
governing body to implement a tax freeze by “official action” includes the authority for the
governmental body to call for a binding election on its own motion, rather than on a proper petition
from voters. Generally, a city council takes “official action” by resolution or ordinance promulgated
by majority rule of the council. City of San Benito v. Rio Grande Valley Gas Co., 109 S.W.3d 750,
757 (Tex. 2003). Compare with TEX. TAX CODE ANN. 9 11.14(c) (Vernon Supp. 2004) (stating that
a “governing body of a taxing unit, by resolution or order, depending upon the method prescribed
The Honorable Frank Madla - Page 3 (GA-0222)
The Honorable Robert E. Talton
by law for oficial action by that governing body, may provide for taxation of [certain] tangible
personal property”).
The Texas Election Code authorizes governing bodies of certain municipalities to call a local
election. See TEX. ELEC. CODE ANN. 0 3.004(b) (Vernon 2003). Such a governing body’s call for
an election by order, resolution, or other binding measure undoubtedly would constitute official
action. Had the framers intended to deny a governing body the authority to call a tax freeze election
without a voter petition, article VIII, section l-b(h) could have been worded to that effect. Indeed,
the constitutional provision expressly limits a governing body’s authority in another respect - the
provision states that a governing body may not repeal or rescind a tax freeze once adopted. But by
using the phrase “official action” without limitation or qualification, article VIII, section I-(b)h
authorizes a governing body to call for a tax freeze election independent of the alternative petition
process. TEX. CONST. art. VIII, $ l-b(h).
II. Repeal bv Election Initiated bv Voter Petition
As discussed above, article VIII, section l-b(h) provides that the “governing body of a
county, a city or town, or a junior college district may not repeal or rescind a tax limitation
established under this subsection.” Id. The provision is silent with respect to the authority to repeal
an adopted tax freeze by election initiated by voter petition. The second question is whether, once
a home-rule municipality has adopted a tax freeze, it may be repealed by a vote initiated by petition.
See Madla Attachment, supra note 1, at 2.
Home-rule charters may contain general provisions for enacting ordinances by election
pursuant to a voter petition, known as the initiative process. See Quick v. City ofAustin, 7 S.W.3d
109, 123 (Tex. 1998). The power of initiative “‘is the exercise by the people of a power reserved
to them, and not the exercise of a right granted.“’ GZass v. Smith, 244 S.W.2d 645,648-49 (Tex.
1951) (quoting Taxpayers ‘Ass ‘n ofHarris County v. City of Houston, 105 S.W.2d 655,657 (Tex.
1937)). The power of initiative may be limited by a city’s charter and is subject to limitations in the
general law. See Glass, 244 S.W.2d at 649. Moreover, the power of initiative is limited by its very
nature: “When the people exercise their rights and powers under the initiative provisions of a city
charter they are acting as and become in fact the legislative branch of the municipal government.”
Id. Thus, if the governing body of a home-rule municipality does not have the authority to adopt an
ordinance, the voters of the municipality may not do so through the initiative process. See id. at 65 1;
City ofHitchcockv. Longmire, 572 S.W.2d 122,127 (Tex. Civ. App.-Houston [ 1st Dist.] 1978, writ
ref’d n.r.e.).
Here, article VIII, section l-b(h) provides that the “governing body of a county, a city or
town, or a junior college district may not repeal or rescind a tax limitation established under this
subsection.” TEX. CONST.art. VIII, 5 l-b(h). Consequently, the voters in an election pursuant to the
initiative process, acting as the municipality’s legislative branch, likewise do not have authority to
repeal or rescind a tax freeze established under article VIII, section 1-b(h). See City of Hitchcock,
572 S.W.2d at 127 (holding that voters did not have authority to repeal annexation ordinance if that
authority is not first vested in the municipality’s governing body).
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The Honorable Robert E. Talton
III. Tax Freeze Base Year
On January 13,2004, the City of Pasadena enacted an ordinance implementing article VIII,
section l-b(h), freezing homestead ad valorem taxes using 2003 records if the constitution permits,
but if it does not, using 2004 records. See Talton Letter, supra note 1, at 1. The third question is
whether a city may use as a tax base the year prior to the enactment of the ordinance, that is, whether
the amount of ad valorem taxes for the 2003 tax year may be used to establish a tax base. See id.
Section 11.261(b) of the Tax Code, added by House Bill 136, directly answers your question,
precluding the use of a year prior to implementation as the base tax year:
The county, municipality, or junior college district may not increase
the total annual amount of ad valorem taxes the county, municipality,
or junior college district imposes on the residence homestead of a
disabled individual or an individual 65 years of age or older above the
amount of the taxes the county, municipality, or junior college district
imposed on the residence homestead in thefirst tax year, other than
a tax year preceding the tax year in which the county, municipality,
or junior college district established the limitation described by
Subsection (a), in which the individual qualified that residence
homestead for the exemption provided by Section 11.13(c) for a
disabled individual or an individual 65 years of age or older. If the
individual qualified that residence homestead for the exemption after
the beginning of that first year and the residence homestead remains
eligible for the exemption for the next year, and if the county,
municipal, or junior college district taxes imposed on the residence
homestead in the next year are less than the amount of taxes imposed
in that first year, a county, municipality, or junior college district may
not subsequently increase the total annual amount of ad valorem taxes
it imposes on the residence homestead above the amount it imposed
on the residence homestead in theyear immediatelyfollowing theJirst
year, other than a tax year preceding the tax year in which the
county, municipality, or junior college district established the
Zimitation described by Subsection (a), for which the individual
qualified that residence homestead for the exemption.
TEX. TAX CODE ANN. 5 11.26 1(b) (Vernon Supp. 2004) (emphasis added). Generally, the base tax
year will be the first tax year in which a taxpayer qualifies a residence for the specified homestead
exemption, although a different rule may apply should the amount of taxes imposed decline. In any
event, the base tax year may not be the tax year preceding the tax year in which the freeze was
adopted. Consequently, article VIII, section l-b(h) does not permit a county, a city or town, or a
junior college district implementing that provision to use a year prior to implementation as the base
tax year.
(GA-0222)
The Honorable Frank Madla - Page 5
The Honorable Robert E. Talton
SUMMARY
Article VIII, section l-b(h) of the Texas Constitution
authorizes a governing body of a home-rule municipality to call an
election to adopt a tax freeze for persons who are disabled or who are
sixty-five years of age or older by official action on its own motion
and without a petition from the city’s voters. A tax freeze adopted by
a home-rule municipality under article VIII, section l-b(h) may not
be repealed by an election called pursuant to a petition of the city’s
voters. Article VIII, section l-b(h) does not permit a county, city or
town, or junior college district implementing that provision to use a
year prior to implementation as the base tax year.
Very truly yours,
Attorney General of Texas
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee