Untitled Texas Attorney General Opinion ( 2003 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
March 6,2003
The Honorable Randal Lee Opinion No. GA-0030
Cass County Criminal District Attorney
P-0. Box 839 Re: Allocation of appraisal district’s expenses
Linden, Texas 75563 between its appraisal and collection functions
(RQ-0598-JC)
Dear Mr. Lee:
You inquire about the costs that an appraisal district may allocate to the taxing units in the
district.’ See TEX. TAX CODE ANN. § 6.06(d) (Vernon 2001) (allocation of portion of appraisal
district budget to each taxing unit participating in the district). You state that the Cass County
Appraisal District has historically maintained two budgets, one for costs related to appraising
property and one for costs related to collecting property taxes. See Request Letter, supra note 1, at
1. Labor costs were traditionally divided between the two budgets depending upon the estimated
time spent on each function. See id. This year, the appraisal district moved all labor expenses to the
appraisal budget, causing a substantial increase in the costs allocated to the county and other taxing
units in the district. See id. at 2. You ask what costs an appraisal district may allocate to the taxing
units within its boundaries, and in particular you wish to know whether the taxing units must finance
the appraisal district’s costs for assessing and collecting the taxes of all taxing units, whether or not
a particular taxing unit uses those services. See id.
An appraisal district is established in each county with the duties and authority set out in
chapter 6, subchapter A of the Tax Code. See TEX. TAX CODE ANN. 8 6.01 (Vernon 2001). The
district’s boundaries in most cases are contiguous with the county’s boundaries, id. 8 6.02(a), and
the district is required to appraise property in the district for ad valorem tax purposes for each taxing
unit imposing such taxes on property in the district. See id. 5 6.01; see also id. 5 1.04(12) (defining
“taxing unit” to include a county, an incorporated city, a school district, a special district or authority,
and any other political unit of the state authorized to impose ad valorem taxes).
The appraisal district is funded by the taxing units that participate in it. See id. 9 6.062(a),
(c) (newspaper notice of proposed budget must state that “the appraisal district is supported solely
by payments from the local taxing units serviced by the appraisal district”). Each year the chief
‘Letter fromHonorable Randal Lee, Cass County District Attorney, to Honorable John Comyn, Texas Attorney
f 1
General (Aug. 23,2002) ( on 1 e with Opinion Committee) [hereinafter Request Letter].
The Honorable Randal Lee - Page 2 (GA-0030)
appraiser prepares a proposed budget “for the operations of the district for the following tax year,”
showing each proposed position of employment and the associated salary and benefits, proposed
capital expenditures, and an estimate of the amount of the budget that will be allocated to each
taxing unit. Id. § 6.06(a). Each taxing unit is allocated a portion of the appraisal district budget
proportionate to the dollar amount of property taxes that the unit imposed in the district in the year
when the budget is proposed. See id. 0 6.06(a), (d). If a taxing unit decides not to impose taxes for
any tax year, the unit is not liable for any of the costs of operating the district in that year. See id.
8 6*06(g)*
Tax Code chapter 5 requires the Texas Comptroller of Public Accounts (“the Comptroller”)
to adopt rules establishing minimum standards for the administration and operation of an appraisal
district, to prepare appraisal manuals and other materials to assist the appraisal districts, to
administer performance audits of appraisal districts, and to provide other kinds of assistance and
oversight to the appraisal district boards. See id. $0 5.03-. 16. Pursuant to this authority the
Comptroller has issued an Appraisal District Director’s Manual explaining the laws applicable to
the districts. The courts will generally defer to the construction of a statute by the administrative
agency charged with its enforcement. See Osterberg v. Peca, 12 S.W.3d 31,51 (Tex. 2000). The
Appraisal District Director’s Manual issued by the Comptroller describes the budget as follows:
Collection or assessment services are a separate budget from the main
appraisal district budget. Only units using these services pay for
them, so the chief appraiser should budget separately for these
services. This separation permits allocating costs to the responsible
taxing units.
TEXAS COMPTROLLEROF PUBLIC ACCOUNTS, APPRAISALDISTRICTDIRECTOR’SMANUAL (Feb.
2000) at 27, available at http://www.window.state.tx.us/taxinfo/proptax/director/96-301 .pdf (last
visited Dec. 4, 2002); see also id. at 48 (if appraisal district performs assessment and collection
functions under contract, the assessment and collection budget should be based on the contract).
An examination of the relevant provisions of Tax Code chapter 6 shows how the Comptroller
reached the conclusion quoted above. Subchapter A of chapter 6 establishes and governs the
appraisal district and provides that all local taxing entities must use the appraisal services of the
district. See TEX. TAX CODE ANN. 5 6.01(b) (Vernon 2001). Subchapter B identifies the assessors
and collectors of ad valorem tax. See id. $8 6.21-.30; see also id. ch. 26 (setting out steps of
assessment process). The county assessor-collector “shall assess and collect taxes on property in the
county for the county.” Id. 8 6.23(a). Section 6.24 of the Tax Code allows the appraisal district to
perform assessment or collection services for a taxing unit, including a county, if it contracts with
the unit as provided by the Interlocal Cooperation Act, TEX. GOV’T CODE ANN. ch. 791 (Vernon
1994 & Supp. 2003). The taxing unit’s use of the district for tax assessment or collection is optional,
unlike its use of the district’s appraisal services.
When an appraisal district assesses or collects taxes for a taxing unit, it will be fully
compensated under the contract by the taxing unit for which it performs the work. See generaZZy
The Honorable Randal Lee - Page 3 (GA-0030)
Tex. Att’y Gen. Op. LO-97-041, at 3. The Interlocal Cooperation Act provides that “[a@ interlocal
contractual payment must be in an amount that fairly compensates the performing party for the
services or functions performed under the contract.” TEX. GOV’TCODEANN. 5 791 .Ol l(e) (Vernon
Supp. 2003). Accordingly, the appraisal district’s costs for assessing or collecting taxes under
contract may not be included in the budget prepared under section 6.06 for the district’s operations
as the entity statutorily required to appraise property for the taxing units within its boundaries.
The Honorable Randal Lee - Page 4 (GA-0030)
SUMMARY
The budget of a tax appraisal district may allocate to the
taxing units within the district only the costs of operating the
appraisal district for its appraisal purposes. The costs of tax
assessment or collection, which the appraisal district may opt to
perform for taxing units under contract, are paid for by the taxing unit
that has contracted with the district for these services and are not
allocated to all taxing units within the district regardless of whether
or not the unit contracted with the district for assessment or collection
services.
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General - General Counsel
NANCY S. FULLER
Chair, Opinion Committee
Susan L. Garrison
Assistant Attorney General, Opinion Committee