Untitled Texas Attorney General Opinion ( 1987 )

.
TEE ATTORSEY GEXERAL
OF TEXAS
April 14, 1987
Mr. F. E. Williams opinion NO. .1X-677
Chambers County Auditor
P. 0. Box 910 Re: Calculation of maximum tax
Anahuac, Texas 77514 attributable to the road and
bridge fund
Dear Mr. Williams:
Chapter 26 of the Tax Code sets forth the method by which each
taxing unit must calculate an "effective tax rate" and the procedures
that each taxing unit must follow in adopting a tax rate. The "effec-
tive tax rate" is the tax rate that will produce both the revenue
necessary to satisfy the taxing unit's debt payment obligations for
the year in which the rate is calculated and the same amount of
operating revenue levied on properties taxed in the previous year and
taxable in the current year. See Attorney General Opinion m-495
(1982). We understand you to askhree questions about the calcula-
tion of the effective tax rate for a county. We will answer each of
your questions in turn.
Generally, the total county tax rate vll result from the tax
rates sat for three different property taxes. Article VIII. sections
l-a and 9 of the Texas Constitution impose a ceiling on each indivi-
dual rate and provide that the total rate cannot exceed $1.25/$100
valuation. The three individual taxes are: (1) the fund for farm-to-
market road/flood control (lateral road fund), with a rate ceiling of
$.30/$100 valuation (section l-a); (2) the general fund, the permanent
improvement fund, the road and bridge fund. and the jury fund, with a
rate coiling of $.80/$100 valuation (section 9); and (3) the fund
for the further maintenance of public roads, with a rate ceiling of
1. We note that other statutory and constitutional provisions
permit counties to 1-Y additional property taxes in certain
instances, a, for jails, courthouses, sea wall const.ruction,fire
fighting, and other special purposes. For convenience. we are
limiting our answer to the first question to the three most widely
imposed constitutional taxes. If a county levies any of these addi-
tional property taxes, the assessor calculates an effrctive tax rate
for each additional tax under the reasoning we adopt herein and adds
it to the county's total effective rate.
p. 3107
Nr. F. E. William - Page 2 (JM-677)
$.lS/$lOO valuation (section 9). We understand you to ask first
whether the tax rate rollback election provisions set forth in section
26.07 of the Tax Code may be invoked when the increase in either the
general fund, the permanent improvement fund, the road and bridge
fund, and the jury fund component of the tax rate exceeds the
effective tax rate for that fund by eight percent or more or whether
the tax rate rollback election provisions can be invoked only when the
total county tax rate exceeds the total county effective tax rate by
eight percent or more. For two Gns. we conclude that section
26.07 of the Tax Code may be invoked only when the tocal couuty tax
rate exceeds the total county effective tax rate by eight percent or
more.
First, courts generally will confer great weight to an agency's
interpretation of a statute, unless it is obviously contrary to the
statute's clear and unambinuous meaninn. Teacher Retirement Svstem v.
Duckworth. 260 S.W.2d 632;~ 636 (To=.-Civ. App,. - Fort Worth 1953),
aff'd. 264 S.W.2d 98 (Tex. 1954); Pacific Employers Insurance Co. v.
Gon. 242 S.W.2d 185, 189 (Tex. 1951); Dallas Title and Guaranty
Co. v. Board of Insurance Commissioners, 224 S.W.2d 332, 336 (Tex.
civ. ADD. - Austin 1949. writ ref'd). The contemmraneous
construction of a statute by those charged with the responsibility of
its administration will be respected, especially when the construction
has been sanctioned by long acquiescence. Stanford v. Butler, 181
S.W.Zd 269, 273 (Tex. 1944). The State Property Tax Board has always
construed sections 26.05 and 26.07 of the Tax Code to require that
each component of the tax rate be calculated as an independent rate
and then added together for a total rate.
Second, the clear terms of the Tax Code provisions require that
the eight percent tax rate increase triggering the tax rate rollback
election apply to the county's effective rate, not to the effective
rate of each component of a county's rate. Section 26.04(d) of the
Tax Code provides in pertinent part:
The designated officer or employee shall calculate
the tax rate that if applied to the total taxable
value submitted to the governing body leas the
taxable value of new property would impose the
amount of property taxes determined as provided by
Subsection (c) of this section [which essentially
determines the amount of operating revenue levied
on properties taxed in the previous year and
taxable in the current year]. . . . (Emphasis
added).
See also Tax Code 526.042 (governing calculation of effective tax rate
in a county imposing a sales and use tax).
p. 3108
Mr. F. E. Williams - Page 3 (JM-677)
Section 26.05 of the Tax Code provides the following in pertinent
part:
(a) By September 1 or as soon thereafter as
practicable, the governing body of each taxing
unit shall adopt a tax rate for the current tax
year and shall notify the assessor for the unit of
the rate adopted. The tax rate consists of two
components, each of which must be approved
separately. The components are:
(1) the rate that, if applied to the total
taxable value, will impose the amount of taxes
needed to pay the unit's debt service as
described by Section 26.04(e)(3) of this code;
and
(2) the rate that, if applied to the total
taxable value, will impose the amount of taxes
needed to fund maintenance and operation
expenditures of the unit for the next year.
(b) a taxing unit may not impose prop.erty
taxes in any year until the governing body has
adopted a tax rate for that year, and the annual
tax rate must be set by ordinance, resolution or
order, depending on the method prescribed by law
for adoption of a law by the governing body. . . .
(c) The governing body may not adopt a tax
rate that exceeds the tax rate calculated as
provided by Section 26.04 of this code by more
than three- percent until it has held a public
hearing on the proposed increase and has otherwise
complied with Section 26.06 of this code. The
governing body of a taxing unit shall reduce a tax
rate set by law or by vote of the electorate to
tberate calculated as provided by Section 26.04
of this code and may not adopt a higher rate
unless it first complies with Section 26.06 of
this code. (Emphasis added).
And finally. section 26.07 of the Tax Code sets forth the
procedures that must be followed in order to conduct a tax rate
rollback election to repeal the rate increase. The section provides
in pertinent part:
(a) If the governing body of a taxing unit
other than a school district adopts a tax rate
that exceeds the rate calculated as provided by
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Mr. F. E. Williams - Page 4 (JM-677)
Section 26.04 of this code by more than eight
percent, the qualified voters of the taxing unit
by petition may require that an election be held
to determine whether or not to reduce the tax
rate adopted for the current year to a rate that
exceeds the rate calculated as provided by
Section 26.04 of this code by only eight percent.
(Emphasis added).
A reading of chapter 26. as a whole, indicates that the tax rate
rollback election provisions of section 26.07 may be invoked only in
an instance in which the total tax rate adopted exceeds the total
effective tax rate by eight percent or more. If the legislature had
intended that a county's component rates individually be limited to
the three percent-eight percent rate increase lixitations. it could
easily have so provided. But it did not. Because we are required to
give effect to the evident intent of the legislature, Bernard l-lanyard
Enterprises, Inc. v. McBeath. 663 S.W.Zd 639. 643 (Tex. App. - Austin
1983, writ ref'd n.r.e.); Chemical Bank v. Commercial Industries
Service Co., 662 S.W.Zd 802. 804 (Tax. App. - Rouston [14th Dist.]
1983), writ ref'd n.r.e., 668 S.W.2d 336 (Tex. 1984). we are compelled
to conclude that the tax rate rollback election provisions set forth
in section 26.07 may be invoked only when the total tax rate adopted
pursuant to section 26.05 of the code exceeds the total effective tax
rate as calculated by section 26.04 by eight percent or more.
We understand your next question to be whether the construction
that we have adopted in answer to your first queation permits, in
effect, the "transfer" to another fund of tax money that must be used
only for purposes authorized by the qualified voters of the county in
the first election permitting the imposition of the tax. Our answer
is that it does not. Your coucern apparently arises from the language
contained in the relevant constitutional provisions authorizing the
imposition of the taxes at issue.
Article VIII, section l-a, of the Texas Coustitution provides the
following in pertinent part:
Sec. l-a. From and after January 1, 1951. uo
State ad valorem tax shall be levied upon any
property within this State for general revenue
purposes. From and after January 1. 1951, the
several counties of the State are authorized to
levy ad valorem taxes upon all property wlthin
their respective boundaries for county purposes,
except the first Three Thousand Dollars ($3,000)
value of residential homesteads of married or
uomarried adults. male or female, including those
living alone, not to exceed thirty cents (30~) on
each One Hundred Dollars ($100) valuation, in
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Mr. F. E. Williams - Page 5 (JM-677)
addition to all other ad valorem taxes authorized
by the Constitution of this State, provided the
revenue derived therefrom shall be used for
construction and maintenance of Farm to Market
Roads or for Flood Control, except as herein
otherwise provided. (Emphasis added).
Article VIII, section 9. of the Texas Constitution sets forth the
following:
Sec. 9. The State tax on property, exclusive
of the tax necessary to pay the public debt, and
of the taxes provided for the benefit of the
public free schools, shall never exceed Thirty-
five Cents (35~) on the One Hundred Dollars ($100)
valuation; and uo county, city or town shall levy
a tax rate in excess of Eighty Cents (80~) on the
One Huudred Dollars ($100) valuation in any one
(1) year for general fund, permanent improvement
fund, road and bridge fund and jury fund purposes;
provided further that at the time the Commis-
sioners Court meets to levy the anuual tax rate
for each county it shall levy whatever tax rate
way be needed for the four (4) constitutional
purposes; namely, general fund, permanent improve-
ment fund, road and bridge fund and jury fund so
long as the Court does not impair any outstanding
bonds or other obligations and so long as the
total of the foregoing tax levies does not exceed
Eighty Cents (80~) on the One Hundred Dollars
($100) valuation in any one (1) year. Once the
Court has levied the annual tax rate, the same
shall remain in force and effect during that
taxable year; and the Legislature may also
authorize an additional annual ad valorem tax to
be levied and collected for the further main-
tenance of the public roads; provided, that a
majority of the qualified property taxpaying
voters of the county voting at an election to be
held for that purpose shall vote such tax. not to
exceed Fifteen Cents (15~) on the One Hundred
Dollars ($100) valuation of the property subject
to taxation in such county. Any county may put
all tax money collected by the county into one
general fund, without regard to the purpose or
source of each tax. And the Legislature may pass
local laws for the maintenance of the public roads
and highways, without the local notice required
for special or local laws. This Section shall not
be construed as a limitation of powers delegated
p. 3111
Mr. F. E. Williams - Page 6 (JM-677)
to counties, cities or towns by any other Section
or Sections of this Constitution. (Emphasis
added).
The underscored sentence of article VIII, section 9, was added by
a constitutional amendment in 1967. Acts 1967, 60th Leg.. H.J.R. No.
3. at 2979. Prior to the 1967 amendment it was well established that
the general fund. permanent improvement fund, road and bridge fund,
and jury fund, the four so-called "constitutional funds" of article
VIII. section 9. could not be comminaled or used for ourooses other
than-that for which each was levied.- See First State Bank and Trust
Company of Rio Grande City v. Starr Couafy, 306 S.W.2d 246 (Tax. Civ.
APP. - San Anconio 1957, no writ); Carroll v. Williams, 202 S.W.2d 504
(Tax. 1918); Attorney General Opinion Nos. O-6948 (1945): O-5422
(1943); O-4763 (1942): After the-adoption of the 1967 amendment, the
courts and this office consistentlv construed the amendment to nermit
commingling or consolidation of the article VIII, section 9, funds.
Lewis v. Nacogdoches County, 461 S.W.2d 514 (Tex. Civ. App. - Tyler
1970. no writ); Attorney General Opinion Nos. H-530 (1975); h-194
(1974) ; M-1250, M-1195 ~(1972); M-892 (1971); M-369 (1969); M-207
(1968). but not to permit the commingling or consolidation of any of
the article VIII, section 9, funds with the articlr VIII, section l-a
fund. Attorney General Opinion Nos. H-530 (1975); M-1250 (1972).
The matter of commingling funds is entirely separate from the
matter of determining the effective tax rate. As indicated. the
county may raise the effective tax rate by eight percent without
triggering the rollback election provisions. There is no requirement,
however, that any tax increase be apportioned among the funds for
which taxes are raised. All or none of the increase may go to the
lateral road fund. Ouce the taxes are assassad and collected for the
lateral road fund, however, that money may not be commingled with the
other funds.
Your final question is about the effect of the adoption of
article VIII, section 21. of the Texas Constitution on the tax rate
ceilings set forth in article VIII, section l-a and 9. Article VIII,
section 21 provides the following:
Sec. 21. (a) Subject to any exceptions pre-
scribed by general law, the total amount of
property taxes imposad by a political subdivision
in any year may not exceed the total amount of
property taxes imposed by that subdivision in the
preceding year unless the governing body of the
subdivision gives notice of its intent to consider
an increase in taxes and holds a public hearing on
the proposed increase before it incraases those
total taxes. The legislature shall prescribe by
law the form, content, timing, and methods of
p. 3112
Mr. F. E. Williams - Page 7 (JM-677)
giving the notice and the rules for the conduct of
the hearing.
(b) In calculating the total amount of taxes
imposed iu the current year for the purposes of
Subsection (a) of this section, the taxes on
property in territory added to the political
subdivision since the preceding year and on new
improvements that were not taxable in the pre-
ceding year are excluded. In calculating the
total amount of taxes imposed in the preceding
year for the purposes of Subsection (a) of this
section. the taxes imposed on real property that
is not taxable by the subdivision in the current
year are excluded.
(c) m= legislature by general law shall
require that, subject to reasonable exceptions. a
property owner be given notice of a revaluation of
his property and a reasonable estimate of the
amount of taxes that would be imposed on his
property if the total amount of property taxes for
the subdivision were not increased according to
any law enacted pursuant to Subsection (a) of this
section. The notice must be given before the
procedures required in Subsection (a) are insti-
tuted. (Emphasis added).
The "general law" required by article VIII. section 21 (or rather
the "exceptions" to the specific formula calculations set forth
therein) is the effective tax rate calculation detailed in section
26.04 of the Tax Code. See Attorney General Opinion MW-495 (1982).
Your concern apparently ar=s from the recent decline in the value of
real property in Texas. When article VIII. section 21. of the Texas
Constitution and its companion statute, now-repealed article 7244~.
V.T.C.S. (the predecessor statute to section 26.04 of the Tax Code).
were euacted in 1978. real property valuations in Texas were rising.
As a result, the effective tax rates generally dropped from year to
year. A simple example will illustrate (for purposes of brevity; we
will discuss only the maintenance and operation component of the tax
rate). If in 1978 a taxing unit's tax rate was $1.50/$100 valuation,
with the taxable property on the tax roll having en appraised value of
$10 million, the same taxing unit's effective tax in 1979, after a
reappraisal that increased the appraised value of taxable property on
the tax roll to $20 million, would be $.75/$100. & the rate that,
when applied to the property taxed last year cud taxed this year at
this year's appraised value. will produce the same amount of operating
revenue produced last year. Obviously, when the appraised value .of
real property dropsfrom one year to the next, the effective tax rate
will necessarily rise. In those counties that suffer significant
p. 3113
Mr. F. E. Williams - Page 8 (JM-677)
reductions in appraised value of property on their tax roll, it is
conceivable that the effective tax rates of the various components of
the county's total tax rate may exceed the constitutionally imposed
tax rate ceilings. We understand you to ask whether article VIII,
section 21. acts to supercede or impliedly repeal the tax rate
ceilings set forth in article VIII, sections l-a and 9. The answer is
"no."
Article VIII. section 21, of the Texas Constitution is a notice,
provision; neither it nor its statutory counterpart prescribes any
maximum tax rates. Together, they only require public notice if any
tax rate adopted exceeds a certain calculated tax rate (the effective
tax rate) by a specified percent and permit a tax rate roliback
election in the event that the adopted rate exceeds the calculated
rate by a larger specified percent. The Texas Supreme Court has
enunciated the rule that
[t]he Constitution must be read as a whole, and
all amendments thereto must be considered as if
every part had been adopted at the same time
and as one instrument, and effec:t must be given
to each Dart of each clause, exvlained and
qualified-by every other part. [Citation omitted].
Different sections, amendments. or provisions of a
Constitution which relate to the same subject
matter should be construed together aud considered
in the light of each other. [Citations omitted].
Purcell v. Lindsey, 314 S.W.2d 283, 284 (Tex. 1958); see also State v.
Clement*. 319 S.W.2d 450 (Tex. Civ. App. - Texarkaua 1958, writ
ref'd). We do not perceive any conflict between the two constitu-
tional provisions. mArticle VIII. section 21. requires that each
taxing unit must calculate au effective tax rate and, if the tax rate
that the taxing unit finally adopts exceeds a specified percent, must
comply with certain public notice and public meeting requirements.
The other two constitutional provisions, article VIII, sections l-a
and 9, authorize the imposition of certain property taxes for certain
purposes and impose a tax rate ceiling on each in the event that those
taxes are imposed. In this instance, we must construe article VIII,
sections l-a. 9. and 21. of the Texas Constitution together; the tax
rate ceilings imposed by article VIII that are applicable to the tax
rates that are actually adopted remain in effect.
SUMMARY
The tax rate rollback election procedures set
forth in section 26.07 of the Tax Code way be
invoked in a county only when cha total tax rate
adopted by a county exceeda the total effective
tax rate by a specified percent; it may not be
p. 3114
Mr. F. E. Williams - Page 9 (JM-677)
invoked when the adopted tax rate of a component
of the county's total tax rate exceeds that
component's effective tax rate by a specified
percent. When the adopted tax rate of a component
of the county's total tax rate exceeds that
component's effective tax rate, no i.mpentissible
"transfer" of tax money occur*. Article VIII,
sections l-e, 9. and 21 of the Texas Constitution
should be construed together. In au instance in
which the effective tax rate calculated pursuant
to article VIII, section 21, of the Texas
Constitution and section 26.04 of the Tax Code
exceeds the tax rate ceilings set forth in article
VIII, sections l-a and 9. the tax rate ceilings
imposed by article VIII that are applicable to the
tax rates that are actually adopted, are still in
effect.
J
Very truly yours
A
JIM MATTOX
Attorney General of Texas
JACX HIGHTOWER
First Assistant Attorney General
MARYXELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STEAXLF.T
Special Assistant Attorney General
RICK GILPIN
Chairman. Opinion Committee
Prepared by Jim Moellinger
Assistant Attorney General
p. 3115