West Orange-Cove Consolidated I.S.D. v. Felipe Alanis, in His Official Capacity as the Commissioner of Education

IN THE SUPREME COURT OF

TEXAS

No. 02-0427

West Orange-Cove Consolidated

I.S.D., et al., Petitioners

v.

Felipe Alanis, in his Official

Capacity as The Commissioner of Education, et al., Respondents

On Petition for Review from the Court of Appeals for the Third District

of Texas

Argued on March 27, 2003

Justice Smith, dissenting.

In the 1989-1990 school year,

during which this Court issued its landmark Edgewood I decision,

funding for primary and secondary education in Texas totaled $15.3 billion. Tex.

Educ. Agency, Snapshot 1990: 1989-90 School District Profiles, at 19 (1991).

Since that decision, the funding disparity among school districts has decreased

significantly, and student test scores and other indicia of educational quality

have increased statewide. However, like all government services, education costs

money. By the 2000-2001 school year, total funding for primary and secondary

education had risen to $35.4 billion. Tex. Educ. Agency, Snapshot 2001: 2000-01

School District Profiles, at 28 (2002). Another truism regarding government

services is that taxpayers supply virtually all of the money required to deliver

those services.

Article VIII, section 1-e of the Texas Constitution prohibits a state

property tax. In this case, four school districts, nominally representing the

taxpayers of their respective districts, assert that the state's public school

finance system violates article VIII, section 1-e. However, the purpose of the

litigation is not to vindicate taxpayers' rights. Rather, the acknowledged

purpose is to bring several billion dollars of additional "resources" (a/k/a tax

revenue) into the school finance system.

In resolving this case, the Court makes several fundamental errors. However,

because this appeal is being determined on an expedited basis, I am able to

fully address only three of those errors.

First, the Court decides a case over which it lacks subject matter

jurisdiction. Taxpayers can bring their own lawsuit if it is in their best

interests. Therefore, the plaintiff school districts should be denied standing

to sue.

Second, brushing aside the rulings of the district court and the court of

appeals, and ignoring its own relevant precedent and persuasive precedent of

other state supreme courts, the Court holds that school districts have a legal

obligation to comply with the general diffusion of knowledge standard contained

in article VII, section 1 of the Texas Constitution. The holding transforms this

putative taxpayer suit brought under article VIII, section 1-e into an article

VII, section 1 "adequacy" challenge. Nobody, including the taxpayers of the

plaintiff school districts, should be fooled by this constitutional sleight of

hand.

Finally, the Court reaffirms its narrow construction of article VIII, section

1-e, and in substance validates once again the much maligned "Robin Hood"

component of the state's public school finance system. The Court's stated

defense of adherence to the "rule of law" will ring hollow to those Texans

saddled with paying excessive property taxes that are both inequitable and

unconstitutional.

In my view, the Court's resolution of this case is unfair to Texas taxpayers

and represents a setback for Texas constitutional jurisprudence. Accordingly, I

respectfully dissent.

I

Standing

The plaintiffs, four independent school districts, are political

subdivisions of the State. They have sued the State contending generally that

the public school finance system violates article VIII, section 1-e of the Texas

Constitution. Specifically, the school districts assert that they have lost all

"meaningful discretion" in setting their maintenance and operations tax rate and

therefore "the statutory cap on the M&O tax rate has become a statewide ad

valorem tax." The only judicial relief sought by the plaintiffs is a declaration

that the "statutory cap on M&O tax rates constitutes an unconstitutional

statewide ad valorem tax."

A

In Texas Association of Business v. Air Control Board , 852 S.W.2d

440 (Tex. 1993), this Court stated:

Subject matter jurisdiction is essential to the

authority of a court to decide a case. Standing is implicit in the concept of

subject matter jurisdiction. The standing requirement stems from two limitations

on subject matter jurisdiction: the separation of powers doctrine and, in Texas,

the open courts provision. Subject matter jurisdiction is never presumed and

cannot be waived.

. . . .

. . . Because standing is a constitutional

prerequisite to maintaining a suit under both federal and Texas law, we look to

the more extensive jurisprudential experience of the federal courts on this

subject for any guidance it may yield.

. . . .

. . . We therefore hold that standing, as a

component of subject matter jurisdiction, cannot be waived in this or any other

case and may be raised for the first time on appeal by the parties or by the

court.

Id . at 443-46.

The standing test used by the federal courts requires "the party who invokes

the court's authority to show that he personally has suffered some actual or

threatened injury as a result of the putatively illegal conduct of the

defendant, and that the injury fairly can be traced to the challenged action and

is likely to be redressed by a favorable decision." Valley Forge Christian

Coll. v. Ams. United for Separation of Church & State, Inc. , 454 U.S.

464, 472 (1982) (citations and quotations omitted). The standing test used by

Texas courts requires that "(a) there shall be a real controversy between the

parties, which (b) will be actually determined by the judicial declaration

sought." Bd. of Water Eng'rs v. City of San Antonio , 283 S.W.2d 722,

724 (Tex. 1955). The federal and Texas standing tests are both based in large

part on the constitutional separation of powers doctrine. See Tex.

Ass'n of Bus. , 852 S.W.2d at 444 (citing Valley Forge

Christian College in support of the following statement: "One limit on

courts' jurisdiction under both the state and federal constitutions is the

separation of powers doctrine.").

Although the federal and Texas standing tests are phrased in somewhat

different terms, their substance is substantially similar.

(1) For example, in both federal and Texas courts, a political

subdivision lacks standing to pursue a claim that the state has violated its

constitutional rights. See, e.g. , Coleman v. Miller , 307 U.S.

433, 441 (1939) ("Being but creatures of the State, municipal corporations have

no standing to invoke the contract clause or the provisions of the Fourteenth

Amendment of the Constitution in opposition to the will of their creator.");

Deacon v. City of Euless , 405 S.W.2d 59, 62 (Tex. 1966) (holding that

political subdivisions "do not acquire vested rights against the State").

However, there are some differences between federal and Texas standing

requirements. For example, in Nootsie, Ltd. v. Williamson County Appraisal

District , 925 S.W.2d 659 (Tex. 1996), the Court stated:

Nootsie argues that as a political subdivision of the State, the district has

no inherent vested rights protected by the Constitutions of Texas and the United

States. This argument misses the mark because the district does not contend that

the statute violates constitutional rights belonging to the district. Instead,

the district asserts an interest because it is charged with implementing a

statute that it believes violates the Texas Constitution. This interest provides

the district with a sufficient stake in this controversy to assure the presence

of an actual controversy that the declaration sought will resolve.

Id . at 662 (citations omitted). The specific standing rule set forth

in Nootsie differs from the federal rule regarding such third-party

standing. See Smith v. Indiana , 191 U.S. 138, 148-49 (1903)

(county auditor "charged by law with the duty of making [tax] assessment[s]" had

no standing in federal court to challenge constitutionality of state exemption

statute; county auditor "had no personal interest in the litigation" and "was

testing the constitutionality of the law purely in the interest of third

persons, viz. , the taxpayers . . . .").

B

The real parties in interest in this litigation are the taxpayers of the

plaintiff school districts. The school districts have no constitutional right

under article VIII, section 1-e to "meaningful discretion." Cf. Robbins v.

Limestone County , 268 S.W. 915, 917 (Tex. 1925) (holding that county has

standing to file suit to protect its constitutionally recognized property

interests); Milam County v. Bateman , 54 Tex. 153, 165-66 (1880) (same).

Therefore, they have not "suffered some actual or threatened injury as a result

of the putatively illegal conduct" of the State. Thus, the plaintiffs have no

standing to seek a declaration that the "statutory cap on M&O tax rates

constitutes an unconstitutional statewide ad valorem tax." See Agar

Sch. Dist. No. 58-1 v. McGee , 527 N.W.2d 282, 285 (S.D. 1995) (school

district lacked standing to challenge validity of property tax levy because it

was not a taxpayer and had failed to establish any other "actual or threatened

injury").

The plaintiffs' lack of standing is confirmed by a review of the judicial

relief available for the alleged constitutional violation. The Court cannot

restore the school districts' "meaningful discretion" (and, in substance,

increase taxes and reduce constitutionally mandated equity) by eliminating the

$1.50 statutory cap or increasing it to $1.75, $2.00, or some higher amount.

See County Sch. Trs. v. Dist. Trs. , 153 S.W.2d 434, 439 (Tex. 1941)

(because it could not "be said that the Legislature would have passed any part

of the [unconstitutional school law] with the invalid portion eliminated," the

entire law was void). In addition, the Court cannot restore the "meaningful

discretion" of the plaintiffs in this case by lowering either the constitutional

general diffusion of knowledge standard or the statutory accreditation

standards. The only available remedy for a proven violation of article VIII,

section 1-e is an order enjoining the collection of the unconstitutional state

ad valorem taxes.

(2) Such an order would not restore the school districts' "meaningful

discretion." Because the alleged injury would not be "redressed by a favorable

decision," the plaintiffs lack standing. See Town of Acton v.

McGary , 356 A.2d 700, 707-08 (Me. 1976) (political subdivisions' claims

dismissed because they were not taxpayers and "even if the State property tax

were to be held unconstitutional in this litigation, such interests as the

plaintiff municipalities may legitimately here assert as deserving of protection

remain legally unaffected").

Finally, the plaintiffs' first amended original petition discloses the true

purpose of the lawsuit:

Accordingly, Plaintiffs request that the Court enter a judgment declaring

that the $1.50 statutory cap on M&O tax rates constitutes an

unconstitutional statewide ad valorem tax. This constitutional deficiency cannot

be cured simply by raising the statutory cap, because such a solution would only

aggravate the State's overreliance on local property taxes as a means of

financing the school system. Rather, Plaintiffs request that the State assume a

greater responsibility for financing the school system and end its overreliance

on the local property tax.

This Court is not empowered, as a remedy for a proven violation of article

VIII, section 1-e, to order the State to "assume a greater responsibility for

financing the school system." The plaintiffs do not contend otherwise.

The plaintiff school districts lobbied the 77th Legislature for increased

education funding. When the Legislature failed to appropriate the plaintiffs'

desired level of funding, they filed this suit.

(3) The requested judicial declaration is sought to force the

Legislature to raise an additional two or three billion dollars a year in tax

revenue for primary and secondary education.

(4)

The plaintiffs do not seek to vindicate the rights of the taxpayers in their

districts. Rather, these political subdivisions have invoked the jurisdiction of

Texas courts to obtain a judicial declaration that will enhance their bargaining

position with the Legislature. Under these circumstances, the policy concerns

that undergird both the separation of powers and standing doctrines are strongly

implicated.

I would hold that the plaintiff school districts lack standing to seek the

requested declaration. C

The Court's response regarding this issue reveals that Texas does not have

much of a standing doctrine. The Court fails to discuss how its announced

standing rule relates to either the separation of powers doctrine or the Texas

open courts provision and, in a conclusory analysis, essentially holds that a

political subdivision that is affected by a statute in any manner may challenge

its constitutionality in Texas courts.

It is true that the State has not challenged the plaintiffs' standing to sue.

However, this Court is not authorized to issue advisory opinions at the request

of parties who lack standing. Tex. Ass'n of Bus. , 852 S.W.2d at 444 .

Moreover, the Court has a constitutional duty to confirm that it has subject

matter jurisdiction. Republic of Tex. v. Laughlin , Dallam 412 (Tex.

1841) ("Before we are permitted to decide the several points made in this case,

we feel it to be our duty first to dispose of a preliminary question; and that

is, 'whether the record and proceedings before us make out a proper case for the

interposition and decision of this Court.'"), cited with approval in

Morrow v. Corbin , 62 S.W.2d 641, 647 (Tex. 1933).

The Court correctly notes that standing was not an issue in Edgewood

I , Edgewood II , Edgewood III , or Edgewood IV .

However, in each of those cases, several plaintiffs clearly had standing;

therefore, whether the school districts had standing was not material to the

proper resolution of the case. See Bd. of Educ. v. Walter , 390

N.E.2d 813, 826 (Ohio 1979) (plaintiff students had standing to challenge

state's public school finance system; court noted that question of whether

plaintiff school board lacked standing was not dispositive, and therefore "the

issue does not merit extended analysis"). In Edgewood I , Edgewood

II , and Edgewood IV , article VII, section 1 of the Texas

Constitution was at issue, and the plaintiffs included students (and their

parents) who had standing to seek a declaration that the state's school finance

system violated that provision. Similarly, in Edgewood III and

Edgewood IV , article VIII, section 1-e was at issue, and several

plaintiffs were taxpayers who had standing to seek a declaration that the system

was unconstitutional.

The Court "see[s] no difference in the standing of an appraisal district to

assert its claims in Nootsie and the standing of the school districts

here." ___ S.W.3d at ___. However, there are material differences. The most

important difference is that, unlike the appraisal district in Nootsie ,

the plaintiff school districts in this case are attempting to simultaneously

represent groups that have conflicting interests. In addition to taxpayers,

school districts represent their students and employees. Taxpayers generally

prefer lower taxes, while students and employees generally prefer more education

spending.

As a general rule, litigants should not be allowed to assert the rights of

third parties. In this case, the plaintiffs represent groups with conflicting

interests. And the real parties in interest, the districts' taxpayers, are

capable of filing their own lawsuit if it is in their best interests.

Accordingly, the plaintiff school districts should be denied standing to sue on

behalf of their taxpayers. Cf . Wright, Miller, & Cooper, Federal

Practice and Procedure: Jurisdiction 2d § 3531.11, at 25-26 (2d ed. 1984) ("In

this setting, it may seem tempting to adopt by analogy the third-party standing

doctrine that permits an association to borrow standing from injured members.

Residual concerns of federalism and political theory, however, counsel against

simply adopting this rule. Risks remain that a state may be choosing sides

between different groups of citizens with conflicting interests, and may not

represent the interests of the injured citizens as well as should be.").

At a minimum, because the plaintiffs' standing is unclear, the Court should

have raised the issue sua sponte, requested supplemental briefing, and fully

addressed it. See Tex. Ass'n of Bus. , 852 S.W.2d at 443

("Because TAB's standing to bring this action is not readily apparent, and

because our jurisdiction as well as that of the trial court depends on this

issue, we requested supplemental briefing on standing . . . .").

The Court holds that the plaintiffs have standing. Despite my contrary view,

I address other issues because of the public importance of this case.

II

Article VIII, Section 1-e

Article VIII, section 1-e was added to the Texas Constitution in 1968. It has

been amended twice, once in 1982 and again in 2001. The section currently

provides that "[n]o State ad valorem taxes shall be levied upon any property

within this State." Tex. Const. art. VIII, § 1-e.

A

Before Carrollton-Farmers Branch Independent School District v. Edgewood

Independent School District , 826 S.W.2d 489, 520 (Tex. 1992) ( Edgewood

III ), no Texas court had ever "addressed a challenge brought under article

VIII, section 1-e." With limited analysis of the text, purpose, and history of

the provision, this Court held:

An ad valorem tax is a state tax when it is imposed

directly by the State or when the State so completely controls the levy,

assessment and disbursement of revenue, either directly or indirectly, that the

authority employed is without meaningful discretion . How far the State

can go toward encouraging a local taxing authority to levy an ad valorem tax

before the tax becomes a state tax is difficult to delineate. Clearly, if the

State merely authorized a tax but left the decision whether to levy it entirely

up to local authorities, to be approved by the voters if necessary, then the tax

would not be a state tax. The local authority could freely choose whether to

levy the tax or not. To the other extreme, if the State mandates the levy of a

tax at a set rate and prescribes the distribution of the proceeds, the tax is a

state tax, irrespective of whether the State acts in its own behalf or through

an intermediary. Between these two extremes lies a spectrum of other

possibilities. If the State required local authorities to levy an ad valorem tax

but allowed them discretion on setting the rate and disbursing the proceeds, the

State's conduct might not violate article VIII, section 1-e. It is difficult,

perhaps impossible, to define for every conceivable hypothetical precisely where

along this continuum such taxes become state taxes. Therefore, if the

Legislature, in an effort to remedy Senate Bill 351 with as few changes as

possible, chose to inject some additional element of leeway in the assessment of

the CED tax, it is impossible to say in advance whether that element would

remove the tax from the prohibition of article VIII, section 1-e. Each case must

necessarily turn on its own particulars. Although parsing the differences may be

likened to dancing on the head of a pin, it is the Legislature which has created

the pin, summoned the dancers, and called the tune. The Legislature can avoid

these constitutional conundra by choosing another path altogether.

Id. at 502-03 (emphasis added).

In Edgewood Independent School District v. Meno , 917 S.W.2d 717,

737-38 (Tex. 1995) ( Edgewood IV ), with no additional analysis of the

text, purpose, or history of article VIII, section 1-e, the Court applied the

aforementioned Edgewood III language and concluded inter alia that a

school district would lack "meaningful discretion" if the so-called "ceiling"

and "floor" became the same. In the pertinent paragraph, the Court stated:

However, if the cost of providing for a general

diffusion of knowledge continues to rise, as it surely will, the minimum rate at

which a district must tax will also rise. Eventually, some districts may be

forced to tax at the maximum allowable rate just to provide a general diffusion

of knowledge. If a cap on tax rates were to become in effect a floor as well as

a ceiling, the conclusion that the Legislature had set a statewide ad valorem

tax would appear to be unavoidable because the districts would then have lost

all meaningful discretion in setting the tax rate.

Id. at 738 .

B

In this case, it is undisputed that the ceiling is the $1.50 statutory cap

and that the statutory accreditation standards serve as one measure of the

floor. However, whether the constitutional general diffusion of knowledge

standard is an alternative measure of the floor is sharply contested.

The State and the intervenors assert, and the courts below held, that school

districts are forced to meet only the accreditation standards, and therefore the

general diffusion of knowledge standard is irrelevant for purposes of article

VIII, section 1-e. The plaintiffs assert and this Court holds that the floor may

be either the accreditation standards or the general diffusion of knowledge

standard. ___ S.W.3d at ___.

In its final order, the district court stated:

Thus, in determining whether the Legislature has

imposed a state ad valorem tax, the only constitutionally relevant inquiry is

whether the Legislature has compelled --directly by levy or indirectly by

program mandate--a tax rate of $1.50. Regardless whether the Legislature should

raise the accreditation standards, the districts are only legally required to

meet those standards. Because the Legislature only compels a district to meet

accreditation standards, the court must determine whether a tax rate cap has

become a floor and a ceiling only by reference to the accreditation

standards.

To escape the force of this logic, the plaintiffs

seize upon the "general diffusion of knowledge" language in the "however"

paragraph containing the changed-circumstances warning. Under this language, the

plaintiffs seek to establish: 1) what educational program is necessary for a

true general diffusion of knowledge, 2) what such a program costs, and 3) that

it takes at least, if not more than, what the state now gives the districts plus

what the districts can raise at a $1.50 tax rate.

In interpreting "a general diffusion of knowledge"

in this way, the plaintiffs are taking the language out of context. In the

"however" paragraph, the Supreme Court uses the term "general diffusion of

knowledge" synonymously with the accreditation standards, not as a separate

standard. The Court comes to this conclusion for two reasons.

First, as explained above, the logic of the Supreme

Court's reasoning compels this conclusion. The school districts are under no

legal obligation to fund what they may believe necessary in their hearts for a

general diffusion of knowledge. The school districts are only legally obligated

to fund what the Legislature has determined in the accreditation standards is

required for a general diffusion of knowledge.

Second, the Supreme Court expressly says it is

equating the accreditation standards with a general diffusion of knowledge. 917

S.W.2d at 730 n. 9. In Edgewood IV , when discussing a state ad valorem

tax, the Supreme Court uses the terms interchangeably because it found that the

Legislature had defined the one as the other.

Modified Final Order at 30-31. The court of appeals, with limited analysis,

reached the same conclusion as the district court on this issue. See 78

S.W.3d 529 , 536-39.

With no direct support, this Court concludes that "[t]he public school system

the Legislature has established requires that school districts provide both an

accredited education and a general diffusion of knowledge." ___ S.W.3d at ___.

In substance, the Court holds that school districts have a legally enforceable

duty to meet the constitutional standard imposed directly on the Legislature by

article VII, section 1 of the Texas Constitution. That holding is inconsistent

with several of this Court's constitutional precedents. See, e.g. ,

Webb County v. Bd. of Sch. Trs. , 65 S.W. 878, 880 (Tex. 1901) (article VII,

section 1 "devolves the duty of establishing and maintaining public free schools

upon the legislature, and shows that the function of such establishment and

maintenance was to be performed by state agencies"); El Dorado Indep. Sch.

Dist. v. Tisdale , 3 S.W.2d 420, 422 (Tex. Comm'n App. 1928, judgm't

adopted) (article VII, section 3 powers given Legislature as means to accomplish

mandate of article VII, section 1, including authority to provide "'for the

management and control of the public school or schools of such districts,'" are

"continuing, and in nature they are such as not to be delegable").

In addition, the conclusion that school districts have a legal obligation to

satisfy duties imposed directly on the legislative branch by a state

constitutional provision is inconsistent with the jurisprudence of other states.

For example, in Danson v. Casey , 399 A.2d 360 (Pa. 1979), the School

District of Philadelphia and parents of children attending the district's

schools challenged the constitutionality of the state's public school finance

system. The plaintiffs alleged that, in violation of article III, section 14 of

the Pennsylvania Constitution,

(5) the statutory funding scheme failed to provide the school district

with adequate revenue. Holding that the school district lacked standing, the

Court stated:

It is obvious, however, that appellant School

District of Philadelphia has failed to allege that it has suffered any legal

harm from its projected financial deficit. The School District argues that it

has a duty to provide a certain level of educational services which it cannot

fulfill because of the effect of the statutory funding scheme. This argument

must fail. The School District has no greater duty to provide education for the

children of Philadelphia than the Legislature has delegated to it. It would be

unreasonable to conclude that a greater duty has been delegated than that which

the Legislature, through the statutory funding scheme, has provided the school

district the means to fulfill.

Id. at 365 (citation omitted); see also Roosevelt Elem. Sch.

Dist. No. 66 v. Bishop , 877 P.2d 806, 813 (Ariz. 1994) ("[N]othing in art.

XI prohibits the legislature from delegating some of its authority to

other political subdivisions of the state to help finance public education. But

there is nothing in art. XI, § 1 that allows the state to delegate its

responsibility under the constitution.") (emphasis in original);

City of New York v. State , 655 N.E.2d 649, 654 (N.Y. 1995) ("Surely, it

cannot be persuasively argued that the [plaintiff school board and other

municipal entities] should be held accountable either under the Equal Protection

Clause or the State Constitution's public Education Article by reason of the

alleged State underfunding of the New York City school system over which they

have absolutely no control.") (citation omitted).

I would hold that the constitutional general diffusion of knowledge standard

is relevant only to a challenge brought against the State under article VII,

section 1 and, conversely, that the standard is irrelevant to a challenge

brought solely under article VIII, section 1-e.

In its response regarding this issue, the Court offers nothing new. The

reality is that school districts are required to meet only the statutory

accreditation standards. The aspirational mission statement found at the

beginning of the Education Code, and cited only in part by the Court, does not

mention school districts. See Tex. Educ. Code § 4.001(a). And even if

the mission statement is read to apply directly to school districts, the Court

has referenced no means by which anyone may enforce it. How school districts, in

the complete absence of any enforcement mechanism, are "forced" by either the

Texas Constitution or the Education Code to comply with the constitutional

general diffusion of knowledge standard remains unexplained. C A

review of Edgewood III , Edgewood IV , and the prior proceedings

in this case leaves me with a firm conviction that the Court's "meaningful

discretion" test must be reconsidered. The test is inflexible and incapable of

easy application.

(6) More importantly, it is only marginally tailored to the text,

purpose, and history of article VIII, section 1-e. Finally, while this Court is

obviously not required to follow precedents of other state courts, it is

instructive that our decisions regarding article VIII, section 1-e differ

significantly from the construction given similar provisions contained in other

state constitutions.

In Cramer v. Sheppard , 167 S.W.2d 147 (Tex. 1942), after reviewing

the historical evidence concerning the constitutional provision at issue, the

Court stated the following general principles of constitutional

interpretation:

The rule has long prevailed in this State that

constitutional provisions should not be given a technical construction which

would defeat their purpose. The meaning of a constitutional provision is fixed

when it is adopted, and it is not different at any subsequent time. It should be

construed in the light of the conditions existing at the time of adoption. We

cannot question the wisdom of a constitutional provision. If the meaning of the

language of a constitutional provision is plain, the courts must give full

effect thereto, without regard to the consequences.

Id. at 154 (citations omitted).

In 1962, the Texas Commission on State and Local Tax Policy issued a

legislatively mandated report on the state property tax. The influential report,

which is widely credited with leading to the complete abolition of the state

property tax, stated:

Providing More Local Revenue

Late in 1958, the Hale-Aiken Committee of

Twenty-Four (established by the Legislature to make recommendations for

improving public education) proposed that:

"The State should make additional tax resources

available to counties and to local school districts by withdrawing completely

from the field of ad valorem taxation."

Speaking before the Texas Municipal League in

October 1961, Governor Daniel said:

". . . it is my opinion that the time is near at

hand when the State should step completely out of the ad valorem tax field and

leave that source entirely to cities and other political subdivisions."

Note that these statements do not say that

abandonment of the State tax is the answer to all local fiscal problems; only

that abandonment might give some of the more hard-pressed communities a little

more fiscal elbow room.

It is a fact that most states that have abandoned

the property tax as a source of State revenue have done so largely because they

wished to allow local governments the exclusive use of this tax. In recent years

nearly all of the states, and Texas has not been an exception, have greatly

expanded their programs of State aid to local governments, particularly to local

school districts. To many it seems anomalous for the State to collect large sums

from the one tax source that most local governments have at their disposal and

then distribute this back to the local governments in the form of grants-in-aid.

Certainly if one purpose of the State aid program is to give relief to property

taxpayers, this is an odd and contradictory way to accomplish the goal.

Tex. Comm'n on State & Local Tax Policy, The State Property Tax 10-11

(Dec. 1962).

During this era, the most influential treatise on state and local taxation

was Cooley's The Law of Taxation .

(7) In that authority, the distinction between state taxes and local

taxes, and the proper use of each, was described as follows:

A state purpose must be accomplished by state

taxation, a county purpose by county taxation, and a public purpose for any

inferior district by taxation of such district. This is not only just but it is

essential. To any extent that one man is compelled to pay in order to relieve

others of a public burden properly resting upon them, his property is taken for

private purposes, as plainly and as palpably [as] it would be if appropriated to

the payment of the debts or the discharge of obligations which the person thus

relieved by his payments might owe to private parties. "By taxation," it is said

in a leading case, "is meant a certain mode of raising revenue for a public

purpose in which the community that pays it has an interest. An act of the

legislature authorizing contributions to be levied for a mere private purpose,

or for a purpose which, though it be public, is one in which the people from

whom they are exacted have no interest, would not be a law, but a sentence

commanding the periodical payment of certain sums by one portion or class of

people to another." This principle has met with universal acceptance and

approval because it is as sound in morals as it is in law.

1 Cooley, The Law of Taxation, § 314, at 653-54 (4th ed. 1924) (footnotes

omitted).

In 1967, the Legislature adopted a proposed constitutional amendment

regarding the state property tax. The proposed amendment adding section 1-e to

article VIII provided:

1. From and after December 31, 1978, no State

ad valorem taxes shall be levied upon any property within this State for State

purposes except the tax levied by Article VII, Section 17, for certain

institutions of higher learning.

2. The State ad valorem tax authorized by Article

VII, Section 3, of this Constitution shall be imposed at the following rates on

each One Hundred Dollars ($100.00) valuation for the years 1968 through 1974:

[setting forth a rate that declines in each of those years] and thereafter

no such tax for school purposes shall be levied and collected . . . .

Tex. S.J.R. 32, § 1, 60th Leg., R.S., 1967 Tex. Gen. Laws 2972 (emphasis

added). The emphasized text reflects two important points: 1) the proposed

amendment generally prohibited the levy of ad valorem taxes for "state

purposes"; and 2) it provided for the gradual abolition of the state property

tax for education.

(8)

The proposed amendment adding section 1-e to article VIII was placed on the

November 5, 1968 ballot. Before the election, the Texas Legislative Council

(9) published an analysis of the proposed constitutional amendments.

With regard to the state property tax amendment, the publication set forth the

following arguments:

For:

1. The state ad valorem tax has long been the

subject of attack on the basis that it is poorly and inequitably administered.

Certainly, under-evaluation, evasion, and lack of uniformity in the assessment

rate from county to county, among different kinds of property within the same

county, and among individual owners of the same kind of property in the same

county do exist in many instances. Adoption of the proposed amendment would

overcome these inequities in keeping with the constitutional mandate that

taxation be "equal and uniform." (Article VIII, Section 1)[.]

2. Complete abolition of the state ad valorem tax

by gradual reductions over a period of years, as proposed by Amendment No. 7,

would create no undue pressure on the state fiscal structure. It would

benefit counties and local subdivisions of the state, now finding it ever harder

to meet growing government needs with present revenue sources, by making the ad

valorem tax exclusively available to them.

Against:

1. Phasing out of the ad valorem tax at a time when

it is ever harder to obtain funds needed for state government operations, as

proposed by Amendment No. 7, would necessitate an increase in other taxes,

possibly the state sales tax, to provide compensating revenues. Tax experts are

already predicting an increase in the present sales tax, and further increases,

in view of the one percent levied by most Texas cities, would overburden those

least able to pay.

2. The ad valorem tax, though it may sometimes be

inequitably assessed, is drawn from those most able to pay. Abolition of the tax

would inevitably benefit the "haves" at the expense of the "have nots."

Tex. Leg. Council, 14 Proposed Constitutional Amendments Analyzed, at 24

(general election Nov. 5, 1968) (emphasis added).

The League of Women Voters of Texas prepared a similar analysis of the

proposed amendments. With regard to the state property tax amendment, it

stated:

For:

The state ad valorem tax, a subject of controversy

for a long time, is wasteful, inefficient, and inequitable. Complete abolition

of the state ad valorem tax by a series of gradual reductions would create no

undue pressure on the state to find new sources of revenue. The proportion of

total revenue receipts from ad valorem taxes has dropped steadily from .0301

cents per dollar in 1960 to .0242 in 1966. The ad valorem tax levied for

general-revenue purposes was abolished in 1951.

Abolition would benefit local governments

struggling to meet growing demands for services on a limited tax base, by making

the ad valorem property tax exclusively available to them.

Against:

The phasing out of the state ad valorem tax at a

time when Texas is constantly seeking new sources of revenue to meet the ever

increasing cost of government could jeopardize the financial structure of the

state.

The state ad valorem tax is paid by property

owners, who are usually in a financial position to support public services. The

creation of new sources of revenue would undoubtedly add to the burden of those

least able to pay.

14 Important Reasons to Vote , Austin Am.-Statesman, Nov. 3, 1968, at

A10 (setting forth verbatim the analysis prepared by the League of Women Voters

of Texas) (emphasis added).

The state's major newspapers also provided information regarding the proposed

amendments. For example, the Austin American-Statesman reported:

One of the longstanding goals of Gov. John

Connally's administration has been abolishment of the state ad valorem tax, and

that issue is the basis for the seventh amendment on the ballot this year.

. . . .

The chief argument against the state ad valorem tax

is that there can be no uniform or fair means of assessment of collection.

Under-evaluation, lack of conformity and out-right evasion has long plagued this

tax.

Adoption of the amendment, it is argued, would

overcome these inequities and keep taxation "fair and uniform."

It also would make ad valorem taxes exclusively

available to the cities and counties to aid in their financial burdens.

Arguing against the amendment, it is pointed out

phasing out this tax simply would mean another tax from another source to gain

needed funds to operate state government.

It also is maintained the ad valorem tax is drawn

from those most able to pay, and doing away with it would benefit the "haves" at

the expense of the "have nots."

Jerry Hall, Texas Voters Must Decide on Pollution, Tax Issues ,

Austin Am.-Statesman, Oct. 26, 1968, at 44 (emphasis added).

The proposed constitutional amendment adding section 1-e to article VIII

passed by a vote of 1,251,528 to 700,078. The provision's original text and the

available historical evidence establish that the principal purpose and intent of

article VIII, section 1-e at the time of its adoption was to prohibit the levy

of ad valorem taxes for state purposes, thereby leaving the property tax for the

exclusive use of the state's political subdivisions. Historical evidence

regarding the 1982 and 2001 amendments to article VIII, section 1-e reflects

that neither was intended to modify the provision's fundamental purpose and

intent.

(10)

D

Nothing in the text or history of article VIII, section 1-e

mandates that the level of state control over an ad valorem tax levy be absolute

before the provision is violated. Thus, the Court's narrow construction of the

provision, and the resulting "meaningful discretion" test, produces results that

are inconsistent with the provision's text, purpose, and history.

For example, although they clearly conflict with the fundamental purpose and

intent of article VIII, section 1-e, the wealth-equalization provisions

contained in Chapter 41 of the Education Code have been found to pass

constitutional muster under the Court's "meaningful discretion" test.

See Edgewood IV , 917 S.W.2d at 737-39 . But see id. at

757 n.15 (Enoch, J., concurring & dissenting) (concluding that the system

violates article VIII, section 1-e and stating that "[w]hat is determinative is

that the State mandates the local tax and uses the revenues thus generated for

state purposes"); id. at 765 (Hecht, J., joined by Owen, J., concurring

& dissenting) (concluding that the system violates article VIII, section 1-e

and noting that "[t]he State's control of redistributing local revenues is no

different than it was under Senate Bill 351").

A Legislative Budget Board publication describes the wealth-equalization

provisions as follows:

For the 2001-2002 school year, districts with per

pupil property wealth that exceeds $300,000 are able to generate more than

$30.00 per WADA per penny of tax effort without state assistance. These

districts are often referred to as "Chapter 41 Districts." This ability to raise

more revenue per tax effort is capped, however. In 1993 Senate Bill 7

established the "share the wealth" provision. Statute [sic] requires districts

with per pupil property values that exceed $300,000 to share their wealth by

choosing one of the following five "recapture" options:

1. Consolidate with another (poorer) district.

2. Detach property to another school district for

taxation purposes.

3. Purchase average daily attendance credits from

the state. The cost of a credit depends on a calculation that approximates the

amount of tax revenue raised per child in the Chapter 41 District.

4. Contract for the education of non-resident

students (partner with a poorer district). The cost of educating a non-resident

depends on a calculation that approximates the amount of tax revenue raised per

child in the Chapter 41 district.

5. Consolidate its tax base with one or more other

districts.

The two most commonly employed choices are buying

attendance credits from the state (writing the state a check), or sharing

revenue with another district (writing a district a check). In the 2001-02

school year, there are 101 Chapter 41 districts. The associated recapture

revenue realized by the state is anticipated to total $1.31 billion in the

2002-03 biennium.

. . . .

Almost all districts that have been subject to

recapture since 1995 have elected to apply options (3) purchasing attendance

credit from the state; or (4) contract for the education of non-resident

students. (The one exception is the Tuloso-Midway ISD, which deeded industrial

property to Corpus Christi ISD in 1993-Option 2).

Tex. Leg. Budget Bd., Financing Pub. Educ. in Tex. Kindergarten Through Grade

12 Legislative Primer, at 23-34 (3d ed. 2001).

In its final order in the Edgewood IV litigation, the district court

stated: "[T]he Love analysis supports counting recaptured dollars as

state aid as discussed at page 23. These dollars were obtained by the state in a

trade with the property-rich districts. They are now properly characterized as

state dollars." Revised Opinion at 32. Similarly, the Texas Education Agency

publication Snapshot 2000 states: "Beginning with the 1993-94 school

year, state revenue also includes revenues collected from districts exercising

one of the wealth equalizing options. . . . These local tax dollars were

redistributed as state aid." Tex. Educ. Agency, Snapshot 2000: 1999-2000 School

District Profiles, at 28-29 (2000) (included in the record as defendants'

exhibit number one).

Under article VII, sections 1 and 3 of the Texas Constitution, the State and

each school district share responsibility for funding the education of the

district's students. Therefore, in Texas, the funding of primary and secondary

education is generally a mixed state and local purpose. However, at a minimum,

each Chapter 41 district fully satisfies its responsibility when it funds one

hundred percent of the cost of educating its own students. In addition, this

Court has held that a school district is constitutionally prohibited from

funding the education of students who reside in other school districts. Love

v. City of Dallas , 40 S.W.2d 20, 27 (Tex. 1931) ("Since the Constitution,

art. 7, § 3, contemplates that districts shall be organized and taxes levied for

the education of scholastics within the districts, it is obvious that the

education of nonresident scholastics is not within their ordinary functions as

quasi-municipal corporations."). Thus, equalization among school districts of

access to education funding is solely a state purpose. See id. at 26

("[T]axes levied in school districts and cities for school purposes were and are

levied for the benefit of the district or city, or the inhabitants thereof, and

not for the school system of the state generally.").

The State is prohibited by article VIII, section 1-e from levying an ad

valorem tax for any state purpose. Moreover, that provision was adopted in part

to abolish the state property tax for education. Therefore, the Texas

Constitution clearly prohibits the State from directly levying an ad valorem tax

for the purpose of equalizing funding among school districts.

This Court has repeatedly held that the State may not accomplish indirectly

what it is prohibited from doing directly. See Edgewood III ,

826 S.W.2d at 503 ("[A]rticle VIII, section 1-e prohibits the State from doing

indirectly through CEDs what it cannot do directly, that is, levy an ad valorem

tax."); Love, 40 S.W.2d at 27 ("[T]o say that the Legislature can

compel a district to admit nonresidents without just compensation would be

permitting that department to do indirectly what it admittedly cannot do

directly."); Jernigan v. Finley , 38 S.W. 24, 26 (Tex. 1896) ("The

legislature cannot do by indirection what it cannot do directly.").

The manifest intent and effect of Chapter 41 of the Education Code is to

divert local ad valorem taxes to the state treasury and to use those funds to

accomplish what is solely a state purpose. Accordingly, the wealth-equalization

provisions in Chapter 41 of the Education Code violate article VIII, section

1-e. Cf. Love, 40 S.W.2d at 28 (power of the Legislature over school

district property is not "absolute or unlimited" and "though such property is

subject to very broad legislative legislation, its confiscation or diversion is

prohibited by both the federal and state Constitutions"); Buse v.

Smith , 247 N.W.2d 141, 155 (Wis. 1976) (holding recapture component of

state's public school finance system unconstitutional, court stated that "the

state cannot compel one school district to levy and collect a tax for the direct

benefit of other districts, or for the sole benefit of the state").

This conclusion is consistent with the Court's analysis in Edgewood II

regarding the interplay of the relevant constitutional provisions:

On motion for rehearing, plaintiff-intervenors

request that we modify our opinion to overrule Love v. City of Dallas ,

120 Tex. 351 , 40 S.W.2d 20 (1931), or interpret that case "in a manner that

would permit the [state-wide] recapture of local ad valorem revenues for

purposes of equalization." We believe Love is sound and decline to

overrule or modify it. Moreover, the interpretation requested by

plaintiff-intervenors would violate the Texas Constitution. Accordingly, we

overrule the motion for rehearing.

In Love , this Court held that the City of

Dallas could not be compelled to educate students who resided outside of the

city's school district. We held that article VII, section 3 of our Constitution

only "contemplates that districts shall be organized and taxes levied for the

education of scholastics within the districts." 120 Tex. at 367 , 40 S.W.2d at

27 .

. . .

Our Constitution clearly recognizes the distinction

between state and local taxes, and the latter are not mere creatures of the

former. The provision that "[n]o State ad valorem taxes shall be levied upon any

property in this State," Tex. Const. art. VIII, § 1-e, prohibits the Legislature

from merely recharacterizing a local property tax as a "state tax." Article VII,

section 3, however, states that "the Legislature may authorize an

additional ad valorem tax to be levied and collected within all school

districts heretofore formed or hereafter formed, for the further

maintenance of public free schools, and for the erection and equipment of school

buildings therein ." Tex. Const. art. VII, § 3, (emphasis added). These

constitutional provisions mandate that local tax revenue is not subject to

state-wide recapture.

Edgewood Indep. Sch. Dist. v. Kirby , 804 S.W.2d 491, 499 (Tex. 1991)

( Edgewood II ) (opinion on rehearing).

The poor correlation between the text, purpose, and history of article VIII,

section 1-e and the implementing test created by this Court in Edgewood

III and Edgewood IV reflects that the test should be abandoned or,

at a minimum, substantially modified.

E

Several other states have constitutional prohibitions similar to

article VIII, section 1-e of the Texas Constitution, yet none of those states

determines whether a tax is improper by examining the political subdivision's

"meaningful discretion" or the control exercised by the state over the act of

taxation itself. Rather, in these states, whether a tax is an unconstitutional

state ad valorem tax depends on whether the tax serves state or local

purposes.

The Oklahoma Constitution provides that "[n]o ad valorem tax shall be levied

for State purposes, nor shall any part of the proceeds of any ad valorem tax

levy upon any kind of property in this State be used for State purposes." Okla.

Const. art. X, § 9(a). To ensure that local ad valorem taxes are used

exclusively for local purposes, this provision makes clear that no part of the

tax money may be allocated for the benefit of the state. The Oklahoma Supreme

Court has concluded that "[w]hether Article 10, Section 9, is being violated

depends upon whether county funds are being spent for a State, rather than a

county, purpose." State ex rel. Dep't of Human Servs. v. Malibie , 630

P.2d 310, 316 (Okla. 1981). The court has consistently applied that test to

determine whether an ad valorem tax violates section 9(a). See, e.g. ,

State ex rel. Jordan v. City of Bethany , 769 P.2d 164 (Okla. 1989)

(holding that article X, section 9 prohibited legislatively directed

cost-of-operations sharing for performance of autopsies as part of felony

homicide prosecutions, an exclusive state service and duty, because the

legislature was attempting to divert municipal and county revenues to assist in

the funding, or partial funding, of state services); see also Pease v. Bd.

of County Comm'rs , 550 P.2d 565 (Okla. 1976); St. Louis-San Francisco

Ry. Co. v. Tillman County Excise Bd. , 208 P.2d 576 (Okla. 1949); Excise

Bd. v. Chicago, R.I. & P. Ry. Co. , 34 P.2d 268 (Okla. 1934). In fact,

the court has concluded that the state may regulate the process by which the

county raises and distributes ad valorem tax revenue so long as it does not

allocate any portion of that revenue for state purposes: "The county is governed

by state law in the manner in which it raises and distributes ad valorem tax

revenue. While the state can regulate this process, it cannot - because of

express constitutional prohibition - allocate ad valorem tax revenue for the

benefit of the state." Bd. of County Comm'rs v. City of Muskogee , 820

P.2d 797, 805 (Okla. 1991), overruled on other grounds by Clay v. Indep.

Sch. Dist. No. 1 , 935 P.2d 294 (Okla. 1997). Thus, the purpose of the tax,

not the state's degree of control over the taxation process, is

determinative.

The Nebraska Constitution provides that "[t]he state shall be prohibited from

levying a property tax for state purposes." Neb. Const. art. VIII, § 1A. The

Nebraska Supreme Court has noted that "[t]he purpose of this section was to

require the state, after the adoption of sales and income taxes, to leave the

realm of property taxation." Swanson v. Dep't of Educ. , 544 N.W.2d 333,

340 (Neb. 1996); see also Craig v. Bd. of Equalization , 164 N.W.2d 445,

448 (Neb. 1969) ("The meaning of the constitutional prohibition is

related to the national scene of state-local relations."). The court recognized

that "[f]unding most, if not all, county functions has served state purposes"

and "[f]ederal, state, and local governments have joined to combat conditions of

common concern" such that "conceptual stratification of operations by state and

local governments seems ill-suited to the reality of vertical integration."

Craig , 164 N.W.2d at 448 . Nevertheless, the court confirmed that

"stratification is the central arch of the constitutional prohibition."

Id. Thus, the court has concluded that whether a property tax is

constitutional turns "on a determination of whether the controlling and

predominant purposes are state purposes or local purposes." State ex rel. W.

Neb. Technical Cmty. Coll. v. Tallon , 219 N.W.2d 454, 460 (Neb. 1974).

Because the focus lies on the purpose of the tax, the Nebraska Supreme Court

has determined that "[t]he levy of a property tax by a local governmental unit

should not be treated as a state levy for state purposes merely because the

Legislature has authorized or required the local governmental unit to make the

levy." R-R Realty Co. v. Metro. Utils. Dist. , 166 N.W.2d 746, 748 (Neb.

1969). Conversely, the court has also held that "where the Legislature has

authorized and required local governmental units to make a property tax levy for

state purposes, it should not be treated as a local levy for local purposes

merely because it is made by a local governmental unit." Tallon , 219

N.W.2d at 460 . In other words, "the Legislature cannot circumvent an express

provision of the Constitution by doing indirectly what the Constitution

prohibits it from doing directly." Rock County v. Spire , 455 N.W.2d

763, 770 (Neb. 1990).

The Florida Constitution provides that "[n]o state ad valorem taxes shall be

levied upon real estate or tangible personal property." Fla. Const. art. VII, §

1(a). Ad valorem taxation is expressly left to political subdivisions for local

purposes: "Counties, school districts, and municipalities shall, and special

districts may, be authorized by law to levy ad valorem taxes and may be

authorized by general law to levy other taxes, for their respective purposes . .

. ." Id. § 9(a). The Florida Supreme Court has held that the

"overriding purpose" of article VII, section 1(a) "is to make a constitutional

division of tax revenues between those available for state uses and those

reserved for local government." Alachua County v. Adams , 702 So. 2d

1253, 1254 (Fla. 1997). To further that purpose, the court has made it clear

that "the legislature may not circumvent the prohibition of state ad valorem

taxation by any scheme or device which requires local ad valorem taxes and then

channels the proceeds into essentially state functions which are not also local

functions." Bd. of Pub. Instruction v. State Treasurer , 231 So. 2d 1, 4

(Fla. 1970). Thus, in deciding whether a tax amounts to a state ad

valorem tax prohibited by article VII, section 1(a), the court has held that

"[t]he determinative question is whether the ad valorem tax receipts are used to

further a local purpose." St. Johns River Water Mgmt. Dist. v. Deseret

Ranches of Florida, Inc. , 421 So. 2d 1067, 1070 (Fla. 1982).

Although their constitutions have provisions similar to article VIII, section

1-e of the Texas Constitution, these states have no test like our "meaningful

discretion" test and have instead focused on the purpose of the ad valorem tax

to determine whether it is constitutional. Given the similarity of language and

intent that those provisions have to article VIII, section 1-e, the court

decisions interpreting those provisions provide additional evidence that this

Court should abandon its current "meaningful discretion" test and adopt an

approach that focuses on the purpose of the disputed ad valorem

tax. F In light of the foregoing analysis, the Court should have

requested that the parties brief the following question: Whether the

interpretation of article VIII, section 1-e of the Texas Constitution adopted by

the Court in Edgewood III and Edgewood IV should be

reconsidered?

High courts have inherent authority to, sua sponte, raise legal issues that

are important to the proper resolution of a pending case and to request briefing

thereon. See, e.g. , Patterson v. McLean Credit Union , 485 U.S.

617 (1988) (per curiam) (case restored to calendar for reargument and parties

requested to brief question of whether precedent should be overruled). In

addition, both this Court and the United States Supreme Court have consistently

held that the doctrine of stare decisis has limited application in the area of

constitutional interpretation.

For more than a century, this Court has recognized that the rule of stare

decisis is not absolute and that its force varies depending on the context. In

Willis v. Owen , 43 Tex. 41 (1875), the Court considered the

constitutionality of a statute under which a de facto statewide property tax of

one percent had been levied for school purposes. Although it acknowledged that

the constitutionality of the statute had been upheld in prior decisions of the

Court and that "[i]t may, therefore, be thought that the question should not be

regarded by us as now open for discussion," the Court nevertheless ruled the

statute unconstitutional. The Court explained that stare decisis could not

dictate the outcome of the case because of the nature of the issues

involved:

We cannot, however, regard the rule of stare

decisis as having any just application to questions of the character

involved in these cases. This doctrine grows out of the necessity for a uniform

and settled rule of property, and definite basis for contracts and business

transactions. If a decision is wrong, it is only when it has been so long the

rule of action, as that time and its continued application as the rule of right

between parties demands the sanction of its error. Because, when a decision has

been recognized as the law of property, and conflicting demands have been

adjusted, and contracts have been made with reference to and on faith of it,

greater injustice would be done to individuals, and more injury result to

society by a reversal of such decision, though erroneous, than to follow and

observe it. But when a decision is not of this character, upon no sound

principle do we feel at liberty to perpetuate an error, into which either our

predecessors or ourselves may have unadvisedly fallen, merely upon the ground of

such erroneous decision having been previously rendered.

The questions to be considered in these cases have

no application whatever to the title or transfer of property, or to matters of

contract. They involve the construction and interpretation of the organic law,

and present for consideration the structure of the government, the limitations

upon legislative and executive power, as safeguards against tyranny and

oppression. Certainly, it cannot be seriously insisted, that questions of this

character can be disposed of by the doctrine of stare decisis . The

former decisions of the court in such cases are unquestionably entitled to most

respectful consideration, and should not be lightly disregarded or overruled.

And in case of doubtful interpretation, a long-settled and well-recognized

judicial interpretation, or even legislative or executive construction within

the sphere of their respective functions, might be sufficient to turn the

balanced scale. But in such case the former decision or previous construction is

received and weighed merely as an authority tending to convince the judgment of

the correctness of the particular conclusion, and not as a rule to be followed

without inquiry into its correctness.

Id. at 48-49 .

Twenty years later, the Court revisited the rule of stare decisis and its

application to constitutional issues. In its decision in Higgins v.

Bordages , 31 S.W. 52 (Tex. 1895), the Court overruled a decision after

concluding that it conflicted with a constitutional provision exempting

homesteads from forced sale for the payment of assessments for local

improvements. On rehearing, the Court examined its departure from precedent,

framing the issue as follows: "Shall we uphold the constitution as it was made

by the sovereign power of the state of Texas, or shall we uphold a decision of

the supreme court, itself a creature of the constitution?" Higgins v.

Bordages , 31 S.W. 803 , 804 (Tex. 1895) (opinion on rehearing). The Court

chose to overrule precedent, because to do otherwise "means to disregard the

constitution, as we understand its provisions, and in our judgment would deprive

citizens of a constitutional protection, provided by a convention representing

the sovereign power of the state, which had the right to determine the policy of

this state with regard to this question." Id. at 805.

The United States Supreme Court has also held that stare decisis cannot

compel the outcome on constitutional questions. In Smith v. Allwright ,

321 U.S. 649, 665 (1944), the Court noted that it was "not unmindful of the

desirability of continuity of decision in constitutional questions," but

nevertheless recognized long-standing practice that the Court may "freely

exercise" its power to reexamine the basis of its constitutional decisions:

[W]hen convinced of former error, this Court has

never felt constrained to follow precedent. In constitutional questions, where

correction depends upon amendment and not upon legislative action this Court

throughout its history has freely exercised its power to reexamine the basis of

its constitutional decisions. This has long been accepted practice, and this

practice has continued to this day. This is particularly true when the decision

believed erroneous is the application of a constitutional principle rather than

an interpretation of the Constitution to extract the principle itself.

Id. at 665-66 (footnotes omitted). In Payne v. Tennessee ,

501 U.S. 808 (1991), the Court again acknowledged that stare decisis is not

absolute, especially in constitutional cases: " Stare decisis is not an

inexorable command; rather, it 'is a principle of policy and not a mechanical

formula of adherence to the latest decision.' This is particularly true in

constitutional cases, because in such cases 'correction through legislative

action is practically impossible.'" Id. at 828 (citations omitted);

cf. Dickerson v. United States , 530 U.S. 428, 443 (2000) (stating that

" stare decisis is not an inexorable command, particularly when we are

interpreting the Constitution," but refusing to overrule precedent).

In Texas Association of Business v. Texas Air Control Board , 852

S.W.2d 440 (Tex. 1993), this Court overruled an important constitutional

precedent. With regard to the applicability of stare decisis in the

constitutional context, the Court stated that "[a]lthough our concern for the

rule of stare decisis makes us hesitant to overrule any case, when

constitutional principles are at issue this court as a practical matter is the

only government institution with the power and duty to correct such errors."

Id. at 446 .

It is clear that the stare decisis doctrine does not prevent the Court from

reconsidering its "meaningful discretion" test.

G

With regard to whether the "meaningful discretion" test should be

reconsidered, the Court responds that: "We find nothing in the text or history

of article VIII, section 1-e to require that a state tax be determined by its

purpose rather than by the extent of state control over its employment. Nor are

we clear how such a purpose-oriented standard would operate." ___ S.W.3d at ___.

As to the first statement, the foregoing analysis proves otherwise. The second

statement raises a legitimate concern. However, Oklahoma, Nebraska, and Florida

have each been able to develop and consistently apply a purpose-oriented

standard. In contrast, this Court has accurately described the difficult task of

applying its "meaningful discretion" test: "Each case must necessarily turn on

its own particulars. Although parsing the differences may be likened to dancing

on the head of a pin . . . ." Edgewood III , 826 S.W.2d at 503 . In any

event, the Court's role is not to question the wisdom of a constitutional

provision, but simply to apply it. See Cramer , 167 S.W.2d at

154 .

Justice Douglas stated: "A judge looking at a constitutional decision may

have compulsions to revere past history and accept what was once written. But he

remembers above all else that it is the Constitution which he swore to support

and defend, not the gloss which his predecessors may have put on it." Douglas,

Stare Decisis , 49 Colum. L. Rev. 735 , 736 (1949). I agree and,

therefore, would replace the current "meaningful discretion" test with a

purpose-oriented standard. To adhere to the Court's contrary holdings in

Edgewood III and Edgewood IV would require me to disregard the

fundamental purpose and intent of article VIII, section 1-e as I understand it,

and would deprive Texas taxpayers of their constitutional rights. See

Higgins , 31 S.W. at 805 .

III

Article VII, Section 1

The Court's insistence on importing the general diffusion of knowledge

standard of Article VII, section 1 of the Texas Constitution into Article VIII,

section 1-e necessitates a discussion of that standard. However, because this

appeal is being determined on an expedited basis, I am unable to fully address

this important issue.

The Court continues to broadly interpret article VII, section 1 of the Texas

Constitution. That provision requires the Legislature to "establish and make

suitable provision for the support and maintenance of an efficient system of

public free schools." Tex. Const. art. VII, § 1. The Court's interpretation of

article VII, section 1 will require it, sooner rather than later, to determine

the qualitative level and cost of an "adequate education" for Texas

schoolchildren. That determination is not only one the Court was not elected to

make, it is also one the Court is ill-equipped to handle. In any event, the

likely result will be a decision by this Court that the current level of primary

and secondary funding is insufficient to meet the "constitutional mandate" of

article VII, section 1. Of course, responsibility for funding the additional

educational services ordered by the Court will fall to Texas taxpayers.

IV

Conclusion

The court of appeals dismissed all of the plaintiff school

districts' claims. Because the plaintiffs lack standing to seek the requested

judicial declaration, I would affirm the court of appeals' judgment.

____________________________________

STEVEN WAYNE SMITH

JUSTICE

OPINION DELIVERED: May 29, 2003

1. Cf. Theresa M. Gegen, Note, Standing on

Constitutional Grounds in Texas Courts : Effect of Texas

Association of Business v. Texas Air Control Board, 47 Baylor L. Rev. 201 ,

220-21 (1995) (concluding that "the Texas Supreme Court leaves undefined how far

Texas courts should go when looking to federal standards for guidance in dealing

with standing issues").

2. Without addressing its relevance to standing, the

district court noted this fact: "Under the plaintiffs' theory, what is invalid

is the tax itself, not the cap. . . . If the plaintiffs' complaint is that the

Legislature has itself levied an ad valorem tax, then the only remedy is to

prohibit the collection of the tax." Modified Final Order at 34.

3. In the district court, the plaintiffs' attorney

stated:

You know what they offered us? They said, But I

tell you what, George, we'll give you an interim committee. . . . They said it's

not on our agenda, there are other things, legislative redistricting. There are

other things that they would choose to do rather than deal with this. And that's

why the courts have been brought into . . . .

4. The plaintiffs' attorney and court had this dialogue:

Attorney: I want to make this point clear to the

Court right now--that what we're not here for--we can actually tell you from our

pleadings what we're here for. . . .

Court: How much would it cost?

Attorney: Well, we've done--it's hard to say,

but--

Court: It's not hard to say. We can say exactly. If

you go to $1.55 or $1.60, or $1.70, somebody can tell us exactly what it will

cost.

Attorney: It's in the billions of dollars, between

[$]2 and $3 billion.

Court: So--all right. Two and three billion. And

what was the State budget this year?

Attorney: Well, they spent 30 billion on public

education. . . .

Court: That is the question. I mean, that's what

Senator Ratliff probably asked you when you came over to talk to them. What are

you going to cut? What are you going to raise? Where are you going to get $3

billion a year?

Attorney: . . . [I]f we were to sit with Senator

Ratliff today, I would tell him that we would have to seek additional resources.

That might include a sales tax that was once tried and vetoed by Governor

Clements. It could involve increased gasoline tax, it could involve an increase

of severance taxes and it could involve a revisit of George Bush's business tax,

which was later abandoned. Now, I am sure there are other things that could be

done about additional resources . . . .

5. Article III, section 14 provides: "The General Assembly

shall provide for the maintenance and support of a thorough and efficient system

of public education to serve the needs of the Commonwealth." Pa. Const. art.

III, § 14.

6. In addition to the proper measure of the floor, the

parties and the courts below raise, debate, and ultimately disagree about

several other issues regarding the "meaningful discretion" test. For example,

the parties and the courts below have asserted or held that, for a school

district to state a viable claim under article VIII, section 1-e, it must allege

that all, something approaching or exceeding half, just some, or only one of the

more than one thousand school districts in Texas have lost their "meaningful

discretion." Such divergent opinions among highly qualified lawyers and judges

indicates that the test is unsatisfactory.

7. For example, between 1954 and 1975, The Law of

Taxation (4th ed. 1924) was cited in ten of this Court's decisions.

8. The Legislature was clearly aware of the impact that the

proposed amendment would have on education funding, both state and local. For

example, the following amendments to S.J.R. 32 were defeated in the House: 1)

"The loss in revenue to the Available School Fund resulting from the adoption of

this Amendment to this Constitution shall be offset by a tax on incomes of both

natural persons and corporations . . . ." H.J. of Tex., 60th Leg., R.S. 2409

(1967); and 2) "As the ad valorem tax levied by the State is reduced as provided

in Section 1-e of this Article the Legislature shall have authority by general

law to authorize and empower local school districts to levy additional ad

valorem taxes at the same rate as the state tax rate is reduced, such taxing

authority to be in addition and cumulative of all other taxing authority now

permitted such school districts." Id. at 2298.

9. The Texas Legislative Council is an agency of the

legislative branch. See generally Tex. Gov't Code ch. 323.

10. See Tex. H.J.R. Res. 1, § 1, 67th Leg., 2d

C.S., 1982 Tex. Gen. Laws 52 ; Tex. Leg. Council, Analyses of Proposed

Constitutional Amendments Appearing on November 2, 1982 Ballot, at 7 (purpose of

proposed amendment to article VIII, section 1-e was to eliminate the $.10 state

property tax for certain institutions of higher learning); Tex. H.J.R. Res. 75,

§ 5.02, 77th Leg., R.S., 2001 Tex. Gen. Laws 6718 ; Tex. Leg. Council, Analyses

of Proposed Constitutional Amendments, at 83 (general election Nov. 6, 2001)

(purpose of proposed amendment to article VIII, section 1-e was to eliminate

expired, and therefore unnecessary, transition provision).