Untitled Texas Attorney General Opinion ( 1987 )

March 2. 1987
.lIYl MxrrGX
X,-‘=GRSEY GESERAL
Eonorable Bevil B. Wright Opinion No. JM-641
Hardin County Attorney
P. 0. Box 516 Re: Whether a county tax rate increase
Kountze , Texas 77625 to provide for indigent health care
services is subject to a rollback
election under section 26.07 of the
Tax Code, and related questions
Dear Ms. Wright:
The Sixty-ninth Legislature enacted in special session the
Indigent Health Care and Treatment Act [hereinafter the act], which
requires govermaental entities to provide certain health care services
to Indigent rqsldents. Acts 1985, 69th Leg., 1st C.S., ch. 1, at
3777. Sections 2 and 3 of Ehe act amended sections 26.04, 26.06, and
. 26.07 of the Tax Code, which set forth the requirements for the
effective ad valorem tax rate calculation, for the content of the
notice of the public meetings held prior to the adoption of the tax
rate, and for the tax rate rollback petition and election procedures,
respectively, with which taxing units must comply. You ask us three
questions regarding the effect of the act and its amendatory
provisions.
Section 26.04 of the Tax Code sets forth the method by which the
so-called “effective tax’rate” is calculated by each taxing unit prior
to the adoption of its ad valorem tax rate. The “effective tax rate”
is that tax rate which, when imposed upon the property that was taxed.
last year but using this year’s appraised values, will produce
approximately the amount of revenue that was produced last year. See
5
Tex. Const. art. VIII, section 21; Attorney General Opinion MW-m
(1982). Section 26.05 of the Tax Code provides that, if a taxing unit
adopts a tax rate that exceeds the effective tax rate by more than
three percent, the taxing unit must hold a public hearing on the
proposed increase and publish a specified public notice of the meeting
prior to Its being held. See Tax Code 126.06. Section 26.07 of the
Tax Code permits qualifiedxters of the taxing unit by petition to
require that a tax rate rollback election be held if the adopted rate
exceeds the effective rate by more than eight percent. If the
election is successful, the adopted rate is reduced to “a rate that
exceeds the rate calculated by section 26.04 of this code by only
eight percent .I’ Tax Code 526.07(a).
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Ronorable Bevil B. Wright - Page 2 (JM-641)
The amendments to sections 26.04, 26.06, and 26.07 of the Tax
Code contained in the act effectively segregate out the amount of the
tax rate increase attributable to the costs of providing in the first
year the health services required by the act. Section 26.04(e) was
amended by the act to include among the Items of information that the
taxing unit is required to publicize in connection with the calcula-
tion of its effective tax rate
a schedule of the unit’s expenses in providing
services required by the Indigent Health Care and
Treatment Act . . . showing the amount of required
expense which will be paid in the next year from
property tax revenues, the amount of required
expense paid in the preceding year from property
tax revenues, and the amounts of state
reimbursement, if any, received or expected for
either year.
Tax Code 926.04(e) (4).
Section 26.06 was amended by the addition of subsection (f).
vhich lists the items of information that the published notices for
the ad valorem tax rate increase and for the vote on the adoption of
the tax rate must contain for those taxing units that offer health
services as required by the act. Each notice is required to specify
explicitly the percentage of the tax rate increase which is attri-
butable to the costs of providing the required indigent health care
services. Each such notice must contain the following:
(Percentage of increase over the tax rate required
to levy amount needed for Indigent health care
services) percent of the increase will be used to
pay’for services required by the Texas Legisla-
ture in the Indigent Health Care and Treatment
Act. . . .
Tax Code 126,06(f).
Finally. section 26.07 was amended by the addition of subsection
(h) . It is with this section that you are concerned. Section 26.07.
as amended, provides the folloving in pertinent part:
Sec. 26.07. Election to Repeal Increase.
(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 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
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Honorable Bevil B. Wright - Page 3 (JM-641)
the current year to a rate that exceeds the rate
calculated as provided by Section 26.04 of this
code by only eight percent.
. . . .
(d) If the governing body finds that the
petition is valid (or fails to act within the time
allowed), it shall order that an election be held
in the taxing unit on a date not less than 30 or
more than 90 days after the last day on which it
could have acted to approve or disapprove the
petition. A state law requiring local elections to
be held on a specified date does not apply to the
election unless a specified date falls within the
time permitted by this section. At the election,
the ballots shall be prepared to permit voting for
or against the proposition: ‘Reducing the tax rate
in (name of taxing unit) for the current year from
(the rate adopted) to (the rate that is only eight
percent greater than the rate calculated as
provided by Section 26..04 of this code).’
(e) If a’majority of the qualified voters voting
on the question in the election favor the proposi-
tion, the tax rate for the taxing unit for the
current year is the tax rate that is eight percent
greater than the rate calculated as provided by
Section 26.04 of this code; othervise, the tax rate
for the current year is the one adopted by the
governing body.
. . . .
(h) Notwithstanding Subsection (a) of thfs
section, if in the first year after the effective
date of this Act the governingbody
unit other than a school district increases its tax
. rate to provide health care services that the
governing body is required to provide to its resi-
dents under the Indigent Bealth Care and Treatment
Act (S.B. 1, Acts of the 69th Legislature, 1st
Called Session, 1985) the adopted tax rate that
allows voters to seek to reduce the tax rate under
this section must exceed the rate calculated under
Section 26.04 of this code by eight percent plus
that rate which, applied to the total taxable value
submitted to the governing body, would impose taxes
in an amount equal to the amount vhich the
governing body would be required to pay out of
property taxes to provide services requlred.by the,
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Honorable Bevil B. Wright - Page 4 (JM-641)
Indigent Health Care and Treatment Act less the
amount the governing body paid out of property
taxes to provide the equivalent services In the
preceding year and less any state reimbursement
which the governing body expects to receive
pursuant to Subtitle D of Title 2 of the Indigent
Eealth Care and Treatment Act. (Emphasis added).
You first ask us
(wlhether Bardin County is entitled to include in
its adopted tax rate for 1986 an increase to
provide for the additional cost of indigent health
care services required under the Indigent iiealth
Care and Treatment Act and If such increase would
be subject to a rollback under amended section
26.07 of the Property Tax Code.
We addressed your first question In Attorney General Opinion
JM-528 (1986). In that opinion, the question posed was:
tIln an instance in which there has been a
successful tax rate rollback election and In which
the adopted rate includes a rate increase
attributable to the additional costs incurred by
providing the indigent health care services
required by the act, whether the rate increase for
providing those health fare services is also
rolled back.
We set out the amendments to each section of the Tax Code and
discussed the legislative history of the portions of the bill at
issue. We then concluded:
It is clear from a reading of the act that the
provisions amending the Tax Code, taken together.
were meant to isolate that portion of the tax rate
increase attributable to providing the services
required by the act. It would make little sense
for the legislature to require certain taxing
units to offer specified health care services to
indigents, to set forth tax rate calculation and
notice procedures segregating from a tax rate
increase that portion of the rate increase attrl-
butable to the costs of providing such services,
and to make that percentage rate increase neces-
sary to trigger the rollback provisions in the
first place eight percent over the effective rate
plus the portion of the rate increase attributable
to the costs of providing the services, and then
to intend that the ‘rolled-back’ rate be set at
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Honorable Bevil 8. Wright - Page 5 (JM-641)
eight percent over the effective rate. The
. legislature did not intend a construction that
would impair the ability of taxing units to
provide the services required by the act.
Attorney General Opinion Jl4-528 at 5-6. It is clear from an even
cursory reading of the amendments to the .Tax Code that Hardln County
is not merely “entitled” to include in its adopted tax rate for 1986
an increase in tax rate attributable to the additional costs incurred
by the county of complying with the Indigent Health Care and Treatment
Act; the county is required to do so. And it is equally clear that
any such 1986 percentage rate increase would not be subject to a
rollback if a successful election were held pursuant to section 26.07
of the Tax Code. The rollback limitations applicable to health care
taxation apply only “in the first year after the effective date of
[the act],” 1985. Tax Code 126.07(h).
You next ask
[wlhether the Commissioners Court of Hardin County
is required to order an election under amended
section 26.07 of the Property Tax Code if Hardin
County is entitled to include in its adopted tax
rate for 1986 an increase to provide for the
additional cost of indigent health care services
required under the Indigent Eealth Care and
Treatment Act and if so what tax rate should be
set.
Again, we implicitly answered the first part of your second
question in Attorney General Opinion m-528 (1986). Therein we
declared that
[i]n an instance in which a taxing unit provides
services as required by the Indigent Health Care
and Treatment Act and in which there has been a
successful tax rate rollback election in the first
year in which those services are provided,
subsection 26.07(a), when construed with
subsection 26.07(h), sets the ‘rolled-back’ rate
at eight percent over the effective rate plus the
additional percentage increase attributable to the
costs of providing the services required by the
act.
A corollary to this proposition is that the tax rate percentage
increase that triggers the rollback provisions in .the first place is
eight percent over the effective rate irrespective of any rate
percentage increase attributable to the costs of providing indigent
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Bonorable~Bevil B. Wright - Page 6 (J&641)
health care and treatment; the laygent health care portion is simply
. segregated out of the calculation.
Your final question is:
[wlhether the effective tax rate as calculated by
the County Tax Assessor according to section 26.04
of the Property Tax Code must be corrected if
there has been an error made by the appraisal
office in its Information provided to the County
Tax Assessor after (1) the tax rate has been
publicized as provided by section 26.04(e) of the
Property Tax Code; (2) adopted by the county
commissioners court; (3) Tax Statements have been
sent; (4) the deadline of January 31 has passed
for the payment of taxes without penalty..
We understand you to ask whether the county tax assessor is affirma-
tively required to re-calculate the effective tax rate after the tax
plan has already been put into effect if the appraisal office has
supplied to the assessor erroneous information upon which he based
his effective tax rate calculation. We answer your question in the
negative.
Section 26.01 of the Tax Code requires the chief appraiser to
prepare and certify to the assessor for each taxing unit that part of
the appraisal roll for the appraisal district that lists the property
taxable by the taxing unit. Subsections 26.04(a) and (b) provide the
following:
(a) On receipt of the appraisal roll, the
assessor for a taxing unit shall determine the
total appraised value. the total assessed value,
and the total taxable value of property taxable by
1. For example, if the county’s effective tax rate were
$.50/$100 valuation, the amount of tax rate increase attributable to
indigent health care costs were $.05/$100 valuation, and the amount of
tax rate increase attributable to increased expenditures other than
indigent health care were $.06/$100 valuation, the raterhat the
county would seek to adopt is $.50 + 5.05 + S.06. $.61/$100 valuation,
a 22% increase over the effective tax rate. The proposed rate
increase percentage that would trigger the rollback provisions.
however, is 12X, i.e. the $.06/$100 valuation increase attributable to
non-indigent heal=are costs.
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Honorable Bevil B. Wright - Page 7 (JPI-641)
the unit. Re shall also determine, using in-
formation provided by the appraisal office, the
appraised, assessed, and taxable value of property
added to the appraisal roll since the preceding
tax year by annexation of territory and the
appraised, assessed, and taxable value of the
improvements on the roll that were made after
January 1 of the preceding tax year. The sum of
the taxable value of annexed property and the
taxable value of improvements made after January 1
of the preceding tax year is the taxable value of
new property.
(b) The assessor shall submit the appraisal
roll for the unit showing the total appraised,
assessed, and taxable values of all property and
the total taxable value of new property to the
governing body of the unit by August 1 or as soon
thereafter as practicable.
Subsections (c) and (d) of section 26.04 of the Tax Code then set
forth the elaborate effective tax rate calculation required by article
VIII, section 21, of the Texas Constitution.
The only affirmative obligations imposed by chapter 26 of the
code on the taxing units’ assessors regarding the rate calculation
are specifically set forth therein. The code imposes no further
affirmative obligation on the assessors. Indeed, the code offers no
mechanism or procedure by means of which a taxing unit’s assessor
could re-calculate the effective rate. The legislature has created at
subsection (h) of section 26.04 of the Tax Code a remedy in the event
that the requirements of section 26.04 are not complied with. This
provision sets forth the following:
A person who owns taxable property is entitled to
an injunction prohibiting the taxing unit in which
the property is taxable from adopting a tax rate
if the assessor or designated officer or employee
of the unit, as applicable. has not complied with
the computation or publication requirements of
this section and the failure to comply was not in
good faith.
After the tax plan has been put into effect, the only remedy lies with
an aggrieved taxpayer seeking to enjoin enactment of the tax scheme.
See. e.a..
I _ State
~~~~ v. Whittenburg, 265 S.W.2d 569 (Tex. 1954); Citv of
Arlington v. Ca=, 2171 S.W.2d 414 (Tex. 1954); Jackson v. 1tiypearl
Independent SC,hool Districf, 392 S.W.2d 892 (Tex. Civ. 1-iPP- - Waco
1965, no writ). We conclu de, then, that the assessor is not empowered
to re-calculate the effective tax after the tax plan has been put into
p. 2906
Aonorable Bevil B. Wright - Page 8 (JM-641)
effect; the exclusive statutory remedy is that created by the
legislature in subsection (h) 06 section 26.04.
SUMMARY
The county is required to include in its
adopted tax rate for 1986 an increase sufficient
to provide for the additional costs incurred
because of the Indigent Health Care and Treatment
Act. Any such increase would not be subject to
the tax rate rollback provisions of section 26.07
of the Tax Code. The county commissioners are not
authorized to accept a rollback election petition
unless the rate adopted exceeds the effective tax
rate by more than eight percent, calculated
without regard for any percentage increase
attributable to costs incurred by complying with
the Indigent Eealth Care and Treatment Act. The
tax assessor is not empowered to re-calculate the
effective tax rate after the tax plan is in effect
in the event that the effective rate was in-
correctly calculated. The only remedy which the
legislature created in such an instance is set
forth in subsection (h) of section 26.04 of the
Tax Code and provides that a person who owns
taxable property is entitled to an injunction in
certain instances.
Attorney General of Texas
JACK EIGETOWER
First Assistant Attorney General
WARYRRLLER
ExeqR.ive Assistant Attorney General
RICE GILPIN
Chairman, Opinion Cossaittee
Prepared by Jim Moellinger
Assistant Attorney General
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