Untitled Texas Attorney General Opinion ( 1990 )

December 27, 1990
Honorable Charles D. Penick Opinion No. JM-1276
Criminal District Attorney
804 Pecan Street Re: Authority of road
Bastrop, Texas 78602 district to borrow money,
of county to guarantee
its repayment, and relat-
ed questions (RQ-1792)
Dear Mr. Penick:
Based upon the following factual representations, YOU
have asked that we address fourteen questions dealing with
the relationship of Bastrop County (and the members of its
commissioners court) to a county road district wholly con-
tained within the county and created pursuant to article
III, section 52, of the Texas Constitution and the proce-
dures set forth in the County Road and Bridge Act, article
6702-1, V.T.C.S.1
In May of 1987, the commissioners court of Bastrop
County received a petition calling for an election to create
a road district and to issue bonds in an amount not to
exceed $360,000.2 Following the hearing on the petition,
the court issued its order authorizing an election on the
creation of the district, the issuance of bonds in the
amount of $400,000, and the levying of a tax in payment
1. Disputed fact issues are not determined in the
opinion process of this office. We merely apply the law to
the facts given us.
2. The County Road and Bridge Act does not require the
creation of a road district to be initiated by a petition of
interested property owners. See V.T.C.S. art. 6702-1,
5 4.413(a) (commissioners courts "in their sole discretion"
may establish road districts). A petition must be offered,
however, prior to an election on whether to issue road
district bonds. Id. 0 4.416.
P. 6825
Honorable Charles D. Penick - Page 2 (JM-1276)
thereof. The election was held and the voters in the ter-
ritory of the proposed district approved the creation of the
district and the issuance of $400,000 in bonds to finance
improvements to the roads. You state that the bonds were to
be repaid by the collection of ad valorem taxes.
Following sale of the bonds and during the course of
construction, it was determined that more work was needed to
complete the roads, and a change order authorizing the addi-
tional work was approved by the commissioners court in their
capacity as ex-officio directors of the road district.3 It
was later determined that the $400,000 approved by the
voters at the bond election would not cover all costs
related to the road project, including costs of construc-
tion, bond issuance, engineers fees, and attorneys fees.
The-deficiency amounted to $50,000, money that the district
does not have.
To remedy this, a proposal was brought before the com-
missioners court asking that they "resolve to stand behind
the Road District in an attempt to borrow $50,000 from a
bank," because the bank would not make the loan without the
county's guarantee. As we understand it, the proposal has
not been acted upon and the $50,000 remains unpaid.
Finally, you state that the commissioners court has
levied taxes in an amount sufficient to repay the $400,000
according to the terms of amortization contained in the bond
documents. In addition, the commissioners court levied a
tax sufficient to collect the $50,000 that remains outstand-
ing over a period of five years.
With the foregoing facts in mind, we turn to your gues-
tions.
You first ask:
3. The commissioners court acts as the administrative
body of the road district. see id. §§ 4.435 (contracts of
over $50 must be approved by the commissioners court), 4.457
(commissioners court shall levy taxes to pay road district
bonds): see also 36 D. Brooks, Countv and Soecial District
Law 5 40.39 (Texas Practice 1989). A road district is
nevertheless a separate and independent political entity,
declared a body corporate with the power to sue and be sued,
V.T.C.S. art. 6702-1, 0 4,432, contract, and hold property.
Brooks, suora 5 40.36.
Pm 6821
Honorable Charles D. Penick - Page 3 (JM-1276)
1. Is the election valid even though the
notice that was posted calling for a
public hearing stated an amount of
$360,000 and that amount was changed at
the public hearing to $400,000?
Section 4.417 of article 6702-l authorizes the com-
missioners court to "change the amount of the bonds proposed
to be issued* if, on the hearing of a petition for an
election required by section 4.416(b) of the act, "the
change is found-necessary or desirable." See Attorney Gen-
eral Opinion WW-462 (1958). Thus, the election was not
rendered invalid because the amount of the bonds to be voted
upon was changed as a result of the required public hearing.
Secondly, you ask:
2. Can the Road District created under art.
6702-l [V.T.C.S.] borrow money in any
other manner than through the issuance of
bonds as set out in the statute?
We conclude that road districts may borrow money by
methods other than through the issuance of bonds, but the
creation of such debt is governed by article III, section
52, of the Texas Constitution and legislation enacted
pursuant to that provision.
Article III, section 52, provides the following in
pertinent part:
(b) Under Legislative provision . . . any
defined district . . . upon a vote of two-
thirds majority of the resident property tax-
payers voting thereon . . . in addition to
all other debts, may issue bonds or otherwise
lend its credit in any amount not to exceed
one-fourth of the assessed valuation of the
real property of such district . . . and levy
and collect taxes to pay the interest thereon
and provide a sinking fund for the redemption
thereof, as the Legislature may authorize,
and in such manner as it may authorize the
same, for the following purposes to wit:
. . . .
(3) The construction, maintenance and
operation of macadamized, graveled or paved
roads and turnpikes, or in aid thereof.
P. 6828
Honorable Charles D. Penick - Page 4 (JM-1276)
Tex. Const. art. III, 5 52(b) (3).
County road districts are "defined districts" within
the meaning of article III, section 52. See Anderson Countv
Road, 296 S.W. 1062 (Tex. 1927); cf.
V.T.C.S. art. 6702-1, 9 4.445(a) (". . . in any road
district or other defined district"). A road district may
therefore issue bonds or "othewise lend its credit" upon a
two-thirds majority vote under legislative provision.
Section 4.411(b) of the road and bridge act provides
that
any road district may issue bonds, tax antic-
ipation notes, bond anticipation notes, or
other obligations for the purpose of the
construction, acquisition by purchase,
maintenance, and operation of macadamized,
graveled, or paved roads and turnpikes or in
aid of these purposes . . . .
Bonds llshall be issued in the manner provided in 1part
2 of this act] and as contemplated and authorized by Article
III, Section 52, of the Texas Constitution." Negotiable
bond anticipation notes and tax anticipation notes may be
issued in the event funds are not available to pay principal
and interest obligations on bonds (and an emergency is
declared regarding the matter) "or to meet any other needs."
V.T.C.S. art. 6702-1, § 4.411A(a).
Bond anticipation notes may be issued for any purpose
for which the district's bonds may have previously been
approved or for the refunding of previously issued bond
anticipation notes. The commissioners court may covenant
with purchasers of the notes that it will use the proceeds
of the sale of any bonds yet unissued for the purpose of
refunding the notes. && 5 4.4llA(c). Because you state
that all bonds of the road district in this instance have
been sold, it may not take advantage of these instruments.
Tax anticipation notes may be issued for any purpose
for which the road district may levy taxes under the act.
These notes are secured with the proceeds of the taxes to be
levied by the district in the succeeding 12 months, but the
notes are not expressly required to mature within that
period. See id. § 4.411A(b). The commissioners court may
covenant with purchasers that it shall levy a tax sufficient
P. 6829
Honorable Charles D. Penick - Page 5 (JM-1276)
to pay principal and interest on the notes and the costs of
collecting the taxes. &4
Road districts can only levy taxes for the purpose of
paying principal of and interest on its bonds, id. 5 4.425,
and bonds may only be issued following approval of the
requisite number of voters. & S 4.422. m 36 D. Brooks,
Countv an d Soecial District Law § 40.40 (Texas Practice
1989). The ability of a road district to issue tax
anticipation notes is thus tied to the previous approval of
district bonds by the voters, and the value of such notes is
necessarily limited by the amount of outstanding bonded
indebtedness. Moreover, the power of a road district to
borrow in this manner is subject to voter approval under
article III, section 52. &l~ Attorney General Opinion O-763
(1939) (road district may issue time warrants if approved by
voters and if tax sufficient to pay interest and provide
sinking fund is levied).
We are aware of no other legislative provision
authorizing a road district to incur debt.
Your third question is:
3. Can the Road District borrow money in an
amount in excess of the amount voted on by
the residents of the Road District without
the necessity of another election?
4. This provision may have been meant to allow the
creation of short-term debts payable with current revenues,
thereby avoiding the constitutional restriction on the
assumption of debt without establishing an interest and
sinking fund and levying a sufficient tax therefor. See
Tex . Const. art. XI, 5 7; McNeil1 v. Citv of Waco, 33 S.W.
322 (Tex. 1895). Such debts must, however, be satisfied
with revenues from the current budget year: taxes collected
in future budgets years cannot be pledged as security within
the meaning of this prohibition. See senerallv Citv of Fort
Worth v. Bobbitt, 41 S.W.2d 228, 232 (Tex. Comm'n App. 1931,
original opinion adopted); McClellan v. Guerra, 258 S.W.Zd
72 (Tex. 1953). See also Bolton v. Wharton, 161 S.E. 454,
459 (S.C. 1931) ("tax anticipation notes" are not bonds, to
which the general credit of the municipality is pledged, but
are merely obligations payable solely out of particular
taxes, and must be issued before taxes are due and in the
year in which they are collectible).
P. 6830
Honorable Charles D. Penick - Page 6 (JM-1276)
Bonds issued in excess . - of the amount
_- - authorized
._. - by the
voters are treated as void. Ball . Pre idio County 29
S.W. 1042 (Tex. 1895).5 Anyas thz disctssion of bond
anticipation notes and tax anticipation notes observed, the
amounts a road district may borrow through these means is
limited either to the amount of unissued bonds or the amount
of bonds outstanding. Article III, section 52, of the
constitution authorizes such districts to incur such debt
only upon a two-thirds vote of the electorate. The road
district therefore must obtain voter approval to incur debt
in excess of the amount originally authorized by the voters.
Next, you ask:
4. Can Bastrop County loan money to the Road
District?
Section 4.401 of article 6702-l authorizes the commis-
sioners court of a county to invest sinking funds accumulat-
ed for the redemption and payment of bonds issued by the
county in bonds (of proper maturity) of any road district of
the state. a V.T.C.S. art. 842a-2 (Public Funds
Investment Act); V.T.C.S. art. 4413(34c) (investment of
local funds).
But, otherwise, a county has no authority to loan money
to a road district. In the eyes of the law they are dis-
tinct and separate governmental units. Subsection (a) of
article III, section 52, of the constitution states that the
legislature shall have no power to authorize any county to
lend its credit or grant public money to any individual,
association, or corporation whatsoever except as otherwise
constitutionally provided. See Harris Countv Flood Control
Dist. v. Mann, 140 S.W.2d 1098, 1105 (Tex. 1940).
Your fifth question reads:
5. If the Road District can borrow money in a
manner other than the issuance of Bonds
5. The m case concerned courthouse and jail bonds,
and was decided under a law that required an order of the
commissioners court, rather than an election, to authorize
the bonds. Bond elections now perform the function
previously performed by such orders of the commissioners
court. &8 San Saba Countv v. McGraw, 108 S.W.Zd 200 (Tex.
1937) (taxing power delegated to voters).
p. 6831
Honorable Charles D. Penick - Page 7 (JM-1276)
can the Commissioners Court guarantee the
note?
The other legislatively sanctioned methods of borrowing
by a road district -- bond anticipation notes and tax
anticipation notes -- were discussed in our answer to your
second question. In light of that response, we need not
address this question.
Your sixth question asks about the authority of a
county to borrow money for a period in excess of one year.
6. Can the county borrow money from a bank
for a period of more than one year if the
note is set up to come due and be renewed
on an annual basis within the county's
budgetary year?
Counties may incur such debt only for county purposes,
only by obtaining the necessary consent of the electorate,
when applicable, see Henderson Countv v. Allred, 40 S.W.2d
17, 19 (Tex. 1931), and by establishing the requisite
sinking fund and taxation provisions. See Tex. Const. art.
XI, 5 7; McClellan v. Guerra, m; cf. Local Gov't Code
§ 271.053 (certificates of obligation). A note reasonably
anticipated to be paid from current funds of the county
during the county's budgetary year does not create an
article XI, section 7 debt, however. See McNeil1 v. Citv of
Waco
-, 33 S.W. 322 (Tex. 1895). However, a note set up to
come due and be renewed on an annual basis would not appear
to meet this requirement.
You also ask:
7. Can the tax collector and the Commis-
sioners Court levy a tax on the residents
of the Road District created under art.
6702-l to collect monies over the amount
voted on by the residents in the election
creating the Road District and authorizing
the issuance of Bonds?
In accordance with our previous answers, the commis-
sioners court may levy and collect road district taxes only
in an amount 'sufficient to pay the principal of and inter-
est on" bonds of the district. V.T.C.S. art. 6702-1,
55 4.425, 4.457. Taxes in excess of that amount may be le-
vied to discharge any authorized, tax-secured, indebtedness
left unpaid as a result of casual loss (for example, the
failure of the county depository). Henson v. Commissioners
P. 6832
Honorable Charles D. Penick - Page 8 (JM-1276)
court of Henderson County, 56 S.W.Zd 240 (Tex. Civ. APP. -
Dallas 1932, writ ref'd). Your description of the facts,
however, does not indicate that any loss of tax funds has
occurred. Rather, it appears that the funds authorized by
the voters were inadequate to meet the need for which they
were authorized.
Question number eight is:
8. Once the tax rate is established and the
tax is levied and it is determined to be
an illegal tax, can the Commissioners
Court change that tax on their own motion
or on the motion of a property owner, or
does the property owner have to file a
lawsuit to enjoin the tax collector from
collecting an illegal tax?
When the commissioners court levies a tax illegally,
the remedy of injunction is available to a taxpayer prior to
the time the tax plan is put into effect and intervening
rights have vested. See Citv of Arlinaton v. Cannon, 271
S.W.Zd 414 (Tex. 1954). We think the commissioners court
may do voluntarily what it properly can be required to do by
a writ of injunction and that it has no authority to collect
an invalid levy. See, e.q Mataoorda Countv Drainace Dist.
No. 1 V. Commissioners Cour; of Matauorda Countv, 278 S.W.2d
539 (Tex. Civ. App. - Galveston 1955, writ ref'd n.r.e.).
The ninth question is:
9. Can the Commissioners be liable indivi-
dually for their actions as ex-officio
directors of the Road District if it is
determined that they were negligent in
their actions?
Whether county commissioners in a particular case may
be held personally liable in damages for negligence in the
handling of road district affairs can be determined only
upon a review of facts beyond those provided us. See q -
erally 35 D. Brooks, Countv and Snecial District Law 5 2e:o
(Texas Practice 1989). Questions such as this cannot be
usefully addressed in an opinion of the attorney general,
but should instead be answered by the legal advisor to the
commissioners court upon the development of appropriate
facts. &8 Attorney General Opinion JM-1224 (1990) at 15.
Your next question reads:
p. 6833
Honorable Charles D. Penick - Page 9 (JM-1276)
10. What duty does the Criminal District
Attorney have to represent the Road
District in any litigation if the Road
District was represented by private
counsel from its inception?
We understand you to ask about the duty to represent
the road district in civil litigation, since the criminal
district attorney would be required to represent the state
in any criminal proceedings involving the road district.
Gov't Code 5 44.111(a) (criminal district attorney of
Bastrop County shall represent the state in all criminal
matters before the district and inferior courts and any
other court in which the county has pending business).
The criminal district attorney of Bastrop County is
assigned "all the powers, duties, and privileges in Bastrop
County that are conferred by law on county and district
attorneys in the various counties and districts.,, Gov't
Code 5 44.111(b). It is not one of the county attorney's
prescribed legal duties to represent the county in its
general legal business or in the conduct of ordinary civil
actions. Hill Farm. 425 S.W.Zd 414
(Tex. Civ. App. - Waco 1968), aff'd on o;her srounds, 436
S.W.2d 320 (Tex. 1969). The same rule prevails when the
duties of the county attorney are discharged by a criminal
district attorney. -See Tarrant Auoraisal Dist. v. Colonial
Countrv Club, 767 S.W.Zd 230, 236 (Tex. APP- - Fort Worth
1989, writ denied). Since the criminal district attorney of
Bastrop County can not be compelled to represent Bastrop
County in ordinary civil actions, we conclude he is under no
duty to represent a road district of the county in similar
circumstances. See Attorney General Opinion s-03 (1953)
(criminal district attorney for Harris County is under no
duty to represent county flood control district in civil
cases).
Your next question reads:
11. Is the county responsible for any of the
debt that was incurred by the Commis-
sioners acting as ex-officio members of
the Road District?
Bastrop County and the road district are separate and
distinct governmental units. Neither is responsible for the
debts of the other, although it is possible for the county,
according to sections 4.451-4.453 of article 6702-1,
V.T.C.S., to issue "compensation bonds,,, upon a vote of the
P. 6334
Honorable Charles D. Penick - Page 10 (JM-1276)
county electorate, to *lpurchasell the district's roads,
thereby relieving the district of its debt.
If the road district is indebted to the contractor as a
result of the actions of members of the commissioners court
purporting to act for the road district, it is a road dis-
trict, and not a county, debt. Nor is the county respon-
sible if the members of the court have become personally
liable as a result of actions taken for the purported
benefit of the road district, which were not in their
capacities as officers acting for the entire county. See
my V.T.C.S. art. 6702-1, 5 4.432; Rar
r is
Gerhart, 283 S.W. 139 (Tex. 1926): Attorney General Opinion
JM-153 (1984).
The twelfth in your series of questions is:
12. Can the Commissioners Court hire an
attorney and pay that attorney out of
county funds to defend them in any action
brought against them in their capacity as
ex-officio directors of the Road District
or do the funds for representation have
to come from the Road District?
We advise that county funds may not be used for such
purposes, and whether road district funds may be spent for
such purposes must be determined in light of the facts of
the case.
As amended in 1989, section 157.901 of the Local Gov-
ernment Code reads:
(a] A county official or employee sued by
any entity, other than the county with which
the official or employee serves, for an
action arising from the performance of public
duty is entitled to be represented by the
district attorney of the district in which
the county is located, the county attorney,
or both.
(b) If additional counsel is necessary or
proper in the case of an official or employee
provided legal counsel under Subsection (a)
or if it reasonably appears that the act
complained of may form the basis for the
filing of a criminal charge against the
official or employee, the official or employ-
ee is entitled to have the commissioners
P. 6835
Honorable Charles D. Penfck - Page 11 (JM-1276)
court of the county employ and pay private
counsel.
(c) A county official or employee is not
required to accept the legal counsel provided
in this section.
This provision does not apply to non-county officers
and employees. &S Attorney General Opinion MW-252 (1980)
(predecessor to section 157.901 does not apply to district
offices). It is therefore inapplicable to members of the
commissioners court for action taken in their capacity as
administrators of the road district.
Section 157.901 is declaratory of part of a common rule
regarding the employment of legal counsel by a public body
for its officers and employees, but it does not supplant the
common-law rule. Attorney General Opinions JM-824, JM-755
(1987): MW-252). The common-law rule allows a public
entity, such as a county or special district, to employ
attorneys to defend public officers and employees when its
governing body believes that the legitimate interests of the
public entity -- and not merely the personal interests of
the officer or employee -- require the assertion of a vigo-
rous legal defense on behalf of the public interest. See
Attorney General Opinions JM-824, JM-755 and authorities
cited therein. The governing body may provide such
representation when it determines that the public officer or
employee acted in good faith and within the scope of an
official duty. Id. Whether a particular lawsuit involves
the legitimate interests of either the county or the road
district is always a question of fact that must await the
good faith determination of the governing body of the county
or road district in light of all relevant facts. Id.
Two other things should be noted about the common-law
rule. First, it is permissive -- it does not recuire the
public body to employ attorneys to represent its officers
and employees.6 Second, the common-law rule does not limit
a county to employing legal counsel only for officials and
employees of the county government. It would, for example,
allow a county to pay costs adjudged against the district
6. Section 157.901, on the other hand, "entitles"
county officials and employees to legal representation by
the county or district attorney under the conditions
described therein.
P. 6836
Honorable Charles D. Penick - Page 12 (JM-1276)
attorney and certain fees relating to a lawsuit filed
against him, provided the commissioners court reasonably
believed the county's interests were at stake and the law-
suit arose from actions taken by the district attorney in
the performance of his public duties. Attorney General
Opinion MW-252: see also Attorney General Opinion H-544
(1975) (county's authority to pay legal expenses of district
judge in defending lawsuit arising from conduct of court of
inquiry by judge). The county's authority to pay for such
matters on behalf of non-county officials, however, must
arise either expressly or impliedly by statute, a,
statutory provisions requiring the county to pay the expens-
es of the district attorney's office or expenses connected
to courts of inquiry. See Attorney General Opinions NW-252;
H-544.
Since the expenses of the road district in this in-
stance are not borne by the county, neither section 157.901
nor the common-law rule would authorize the county to pay
for the defense of members of the commissioners court in
lawsuits arising from actions taken in their capacity as
ex- officio directors of the road district. Whether the
commissioners court, acting as directors of the road dis-
trict, may spend road district funds to employ attorneys to
defend their actions is a question of fact that cannot be
determined by this office.
Another provision that should be consulted is section
102.004 of the Civil Practice and Remedies Code. This
section allows a local government (which is defined to
include a county or special district) to provide legal
counsel to represent a defendant for whom the local govern-
ment may pay damages under chapter 102, i.e. current or
former officers and employees, or their estates. Civ. Prac.
& Rem. Code g 102.004(a): see also id. 55 102.001(1)
(definition of "employee"), 102.002(a), (b) (payment of
actual damages, attorneys fees, and court costs awarded
against an "employee,') . The county thus is not authorized
under section 102.004 to pay for the representation of the
commissioners court in these circumstances. The counsel may
be the local government's regularly employed counsel, pro-
vided there is no potential conflict of interest between the
local government and the defendant, in which case other
counsel may be employed. Id. 5 102.004(a).
A local government may pay damages that result from an
act or omission of the employee or officer in the course and
scope of his employment and that arise from a cause of
action for negligence. Id. 102.002(a). The local govern-
ment may not, however, pay damages awarded against an
p. 6837
Honorable Charles D. Penick - Page 13 (JM-1276)
officer or employee that arise from a cause of action for
official misconduct or from a cause of action involving a
wilful or wrongful act or omission or an act or omission
constituting gross negligence. & 102.002(C).
You do not indicate what possible causes of action may
be brought against the commissioners court, and we decline
to speculate on such possibilities. The foregoing discus-
sion, however, should assist you in determining the duty of
the road district to pay for the legal representation of the
county commissioners in their capacity as ex-officio direc-
tors of the road district.
Your thirteenth question is:
13. If the answer to number 12 is no and the
Criminal District Attorney cannot repre-
sent the Road District, can the Road
District obtain funds from any source for
legal representation other than through
the issuance of' bonds after an election
authorizing same?
In view of our answers to your second, third, and tenth
questions, it is unnecessary to address this question.
Your final question reads:
14. Can the method of taxation of the resi-
dents in the Road District be changed
from an Ad Valorem Taxation to a tax on a
per lot basis without another election
authorizing the change, since the bonds
were issued based upon an Ad Valorem
method of taxation?
Section 4.425 of article 6702-1, V.T.C.S., the County
Road and Bridge Act enacted in 1983, provides:
Each year that bonds are outstanding,
taxes shall be levied sufficient to pay the
principal of and interest on the bonds.
Taxes shall be levied in accordance with the
procedures for taxation set forth in Sections
51.502 through 51.506, Water Code. To the
extent that the provisions of this Act refer
to ad valorem taxes, such provisions shall be
deemed to refer to taxes levied on any basis
of taxation for which provision is herein
made if the commissioners court determines to
P. 6838
Honorable Charles D. Penick - Page 14 (JM-1276)
levy on a basis other than an ad valorem
basis.
The sections of the Water Code referenced in section
4.425 require the conduct of a public hearing to determine
"whether the taxes to pay the construction bonds and mainte-
. _ .
nance, operation, and acministrative costs of the district
shall be levied, assessed, and collected on:
(1) the ad valorem basis;
(2) the basis of assessment of specific
benefits:
(3) the basis of assessment of benefits on
an equal sum per acre: or
(4) the ad valorem basis for part of the
total tax or defined area or property and on
the benefit basis for the other part of the
tax or defined area or property.
Water Code 0 51.502. Chapter 51 of the Water Code relates
to water control and improvement districts, which may be
created under either article XVI, section 59, or article
III, section 52, of the constitution. See Water Code
5 51.011.
Section 4.427 of article 6702-1, provides the
following:
When the bonds are issued for and on the
faith and credit of a political subdivision
or road district, the taxes shall be assessed
and collected in the same manner as for the
assessment and collection of common school
district taxes.
Common school district taxes are levied strictly on an ad
valorem basis. Educ. Code §§ 20.01, 22.11. It is unneces-
sary to consider whether sections 4.425 and 4.427 are in
conflict, because the commissioners court in this instance
is prohibited from changing the basis on which the taxes of
the road district are levied.
The order of the commissioners court calling the 1987
bond election in the road district contains the question to
be submitted to the voters and reads in pertinent part:
P. 6839
Honorable Charles D. Penick - Page 15 (JM-1276)
Whether or not the bonds of Bastrop County
Road District No. 3 shall be issued . . . to
bear interest at such rate or rates . . . as
in its discretion the Commissioners' Court of
Bastrop County, Texas shall determine and
shall ad valorem taxes be levied [sic] on all
taxable property in said District subject to
taxation for the purpose of paying the
interest on said bonds and to provide a
sinking fund for their redemption at
maturity?
Order of the Commissioners Court of Bastrop County, calling
for a bond election in Bastrop County Road District No. 3
(June 22, 1987). This language, though ungrammatical,
clearly conveys the understanding that the bonds issued by
the road district would be retired through the collection Of
ad valorem taxes, and the voters who approved the issuance
of the bonds on this basis are entitled to the benefit of
that understanding.
In San Saba Countv v. McGraw, 108 S.W.Zd 200 (Tex.
1937), the supreme court ruled that the conditions and
safeguards surrounding a tax voted. upon by the people
pursuant to constitutional provision become a part of the
election itself and cannot be impaired and destroyed by
subsequent legislatures. The law treats such conditi0r.s as
a contract with the voters, and any attempt to substan:ially
alter the rights and expectations of the voters will be
treated as a violation of the constitutional provision
authorizing the vote and of article I, section 16, which
prohibits laws impairing the obligation of contracts. Id.
at 203.
The rule expressed in San Saba Countv v. McGraw also
applies to the order adopted by the commissioners court
calling for an election on whether to issue bonds for public
roads. A long line of cases holds that the conditions
expressed in the order become a solemn contract with the
voters, and the voters are entitled to receive substantially
all of the benefits and security of the contract. See
Fletcher v. Howard, 39 S.W.2d 32 (Tex. Comm'n App. 1931,
opinion adopted): Moore v. Coffman, 200 S.W. 374 (Tex.
1918).
The commissioners court is therefore prohibited by
article I, section 16, of the constitution from levying
taxes for the road district on the benefits basis pursuant
to section 4.425 of the County Road and Bridge Act. San
Saba Countv v. McGraw, m.
P. 6840
Honorable Charles D. Penick - Page 16 (JM-1276)
SUMMARY
A county road district bond election is
not rendered invalid if the amount to be
voted upon is changed after a public hearing.
A county road district may borrow money by
issuing tax anticipation notes and bond
anticipation notes as well as bonds, but it
may not do so unless authorized by the
electorate in accordance with article III,
section 52, of the constitution. It may not
borrow money in excess of the amountof the
amount so authorized.
A county is not responsible for debts
incurred by members of the commissioners
court acting for a county road district. A
county may not loan money to a road district,
but it may invest sinking fund monies in the
bonds of the road district. Nor may a
commissioners court, acting for the county,
guarantee the note of a road district. A
county can borrow money for a period of more
than a year by complying with constitutional
requirements.
The tax collector and the commissioners
court cannot ordinarily levy or collect a tax
in a road district in excess of the amount
voted by the electorate.
Whether members of a commissioners court
may be personally liable for their management
of road district affairs cannot be answered
in an opinion of the attorney general. A
criminal district attorney is under no
obligation to represent a road district of
his county in civil proceedings. County
funds may not be used to pay for the legal
representation of members of the commis-
sioners court for actions taken in their
capacity as ex-officio directors of a road
district; whether road district funds may be
spent for such purposes is a question of
fact.
The ad valorem basis of taxation in the
county road district cannot be changed to a
"benefits" basis if the order of the commis-
sioners court calling the election on the
P- 5841
Honorable Charles D. Penick - Page 17 (JM-1276)
Very
truly
,
issuance of the bonds states that such bonds
will be retired through the collection of ad
J A;,
h
valorem taxes.
Y
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
MU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
P.ENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Steve Aragon
Assistant Attorney General
3. 6812