Untitled Texas Attorney General Opinion

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

May 12,2008

Ms. Peggy D. Rudd Opinion No. GA-0626

Director and Librarian

Texas State Library and Archives Commission Re: Authority ofa multi-jurisdictional library

Post Office Box 12927 district to assess and collect ad valorem taxes

Austin, Texas 78711-2927 (RQ-0648-GA)

Dear Ms. Rudd:

You inquire about the taxing authority of multi-jurisdictional library districts ("library

districts") created under Local Government Code chapter 336. 1 See TEX. Loc. GOV'T CODE ANN.

ch. 336 (Vernon 2005 & Supp. 2007). You state that no library districts have been established under

this statute yet, but several jurisdictions wish to consider this option. See Request Letter, supra note

1, at 2. However, they hesitate to do so without legal guidance as to their taxing authority. See id

You first ask whether Local Government Code chapter 336 provides sufficient authority to

enable library districts to assess and collect ad valorem taxes on property within district boundaries

or whether a constitutional amendment is necessary to grant this authority. See id. at 1. Section

336.021 provides that a multi-jurisdictional library district may be created by a "lead governmental

entity," defined as the county or municipality that proposes to create the district. See TEX. Loc.

GOV'T CODE ANN. § 336.021(a) (Vernon Supp. 2007); see also id. § 336.001(4) (Vernon 2005)

(defining "[l]ead governmental entity"). The lead governmental entity adopts a resolution proposing

"the creation of a district for specific counties and municipalities that by resolution agree to have

their territory in the district." Id. § 336.021(a); see id. § 336.022 (Vernon Supp. 2007) (territory

included in district). A district created under chapter 336 "is a special district and a political

subdivision of this state." Id. § 336.002 (Vernon 2005).

A district has statutory authority to call an election to approve a sales tax or an ad valorem

tax on property in the district, or both. See id. § 336.023(a)-(b) (Vernon Supp. 2007); see also id.

§ 336.023 (c) (the lead governmental entity must set by resoIution the date ofthe election and the type

and rate of each tax that will appear on the ballot proposition). However, no provision ofthe Texas

Constitution expressly authorizes a library district to impose an ad valorem tax. Thus, your question

lLetter from Ms. Peggy D. Rudd, Director and Librarian, Texas State Library and Archives Commission, to

Honorable Greg Abbott, Attorney General of Texas, at 1 (Nov. 14,2007) (on file with the Opinion Committee, also

available at http://www.oag.state.tx.us) [hereinafter-Request Letter].

Ms. Peggy D. Rudd - Page 2 (GA-0626)

raises the following issue: Whether the Legislature may authorize a political subdivision to impose

an ad valorem2 tax absent express constitutional authority.

We begin with the well-established rule that the Legislature may adopt any law "not

forbidden expressly or by implication" by the Texas Constitution. Brown v. City ofGalveston, 75

S.W. 488, 492 (Tex. 1903); see Gov'tServs. Ins. Underwriters v. Jones, 368 S.W.2d 560,563 (Tex.

1963) (Legislature's authority is limited only by the express or implied restrictions arising from the

constitution). Moreover,"[t]he power to prescribe taxes and penalties rests with the Legislature, and

[the Supreme] Court will not interfere with that authority and declare a law invalid unless the law

clearly appears to violate the Constitution of the State." Isbell v. Gulf Union Oil Co., 209 S.W.2d

762,765 (Tex. 1948). See also Stratton v. Comm'rs Court ofKinney County, 137 S.W. 1170,1177

(Tex. Civ. App.-San Antonio 1911, writ refd) (the power to tax for governmental purposes is

inherent in the state's sovereignty and is limited only by the constitution).

The constitutional question before us was raised by the parties in Shepherd v. San Jacinto

Junior College District, which involved a challenge to the constitutionality oflegislation authorizing

a junior college district to levy and collect an ad valorem tax for the support and maintenance ofthe

junior college. See Shepherd v. San Jacinto Junior ColI. Dist., 363 S.W.2d 742, 743 (Tex. 1962).

The junior college district argued that the Legislature may create a political subdivision and

authorize it to levy, assess, and collect an ad valorem tax, without constitutional authorization. See

ida The majority opinion of the Texas Supreme Court declined to address this question, finding

instead that constitutional authority existed in Texas Constitution article VII, section 3. 3 See ide at

743,747.

The concurring and dissenting opinions considered whether the Legislature may delegate ad

valorem taxing power to a political subdivision absent express constitutional authority. See ide

at 757-58. Justice Griffin, concurring, found no constitutional prohibition against legislation

authorizing a junior college district to levy an ad valorem tax, and also found the legislation to be

impliedly authorized by Texas Constitution article VII, section 1 and former article III, section 48.

See ida at 757.

ChiefJustice Calvert's dissent reviewed relevantconstitutional provisions and constitutional

history.4 The Chief Justice noted that constitutions prior to the constitution of 1876 had not placed

any limitation on the legislative power to levy ad valorem taxes, but the 1876 constitution expressly

limited the Legislature's power to levy such taxes as well as "the power of every political

Z"An ad valorem tax is levied against property on its value." State v. Wynne, 133 S.W.2d 951,957 (Tex. 1939),

eert. denied, 310 U.S. 659 (1940). In this opinion, we will use the terms "ad valorem tax" and "property tax"

interchangeably.

3Article VII, section 3 authorizes the Legislature to provide for the formation of school districts with authority

to levy and collect an ad valorem tax.

4Judge Walker joined in the dissent. See Shepherd, 363 S.W.2d at 781.

Ms. Peggy D. Rudd - Page 3 (GA-0626)

subdivision or municipal corporation then known to delegates ofthe Convention and to the people."

Id. at 770. The constitutional provisions that expressly authorized specific entities to levy ad

valorem taxes also expressly limited the taxing power. See id 5 Moreover, the delegates to the 1875

constitutional convention defeated several proposed amendments that would. have authorized the

state, school districts, or cities and counties to levy ad valorem taxes to support schools. See ide

Chief Justice Calvert thus concluded that the intent of the people who adopted the constitution was

to deny the state and its political subdivisions the power to levy and collect ad valorem taxes except

as expressly provided in the constitution. 6 Id. at 770-71.

Intermediate appellate court opinions subsequent to Shepherd have stated in dicta that the

Legislature may permit a political subdivision to levy an ad valorem tax only pursuant to express

constitutional authority, thus echoing the Shepherd dissent without citing it. The court in Texas

Municipal Power Agency, discussing the Legislature's creation ofa political subdivision without ad

valorem taxing power, stated that "[t]he restrictions on the power to levy ad valorem taxes found in

the Constitution necessarily limit the power of the legislature to create municipal corporations or

political subdivisions to be supported by ad valorem taxation." State ex reI. Grimes County

Taxpayers Ass 'n v. Tex. Mun. Power Agency, 565 S.W.2d 258,271 (Tex. Civ. App.-Houston [1st

Dist.] 1978, writ dism'd); see also Manges V. Freer Indep. Sch. Dist., 653 S.W.2d 553, 558 (Tex.

App.-SanAntonio 1983), rev 'd on other grounds, 677 S.W.2d488 (Tex. 1984) (school district has

no inherent authority to levy ad valorem taxes; the authority must arise from a grant ofpower found

in the constitution).

Prior opinions of this office have recognized implied constitutional limitations on the

Legislature's authority to create a new political subdivision with authority to impose an ad valorem

tax. In 1944, the State Librarian requested an opinion on a question similar to your question. She

inquired as follows:

Would it take a constitutional amendment to allow a special

tax to be voted for county library support or additional county library

support?

Tex. Att'y Gen. Ope No. 0-5842 (1944) at 1. The opinion cited the limits on property tax found in

Texas Constitution article VIII, section 9, which at that time provided that "no county, city or town

shall levy more than twenty-five cents for city or county purposes [and other limits for roads and

bridges, jury fees, and other permanent improvements]·on the one hundred dollars valuation." TEX.

CONST. art. VIII, § 9 historical note (Vemon2007) [Act approved Apr. 7, 1883, 18thLeg., R.S., Tex.

J. Res. 4, § 1, 1883 Tex. Gen. Laws 133, 133, r.eprinted in 9 HP.N Gammel, The Laws of Texas

1822-1897, at 439 (Austin, Gammel Book Co. 1898)]. This office concluded that the county could

5See TEX. CONST. art. VIII, §§ I-a, 9.

6See 2 GEORGE D. BRADEN et aI., THE CONSTITUTION OF THE STATE OF TEXAS: AN ANNOTATED AND

COMPARATIVE ANALYSIS 519-21 (1977) (Author's Comment on Texas Constitution, article VII, § 3, praising Shepherd

dissent).

Ms. Peggy D. Rudd - Page 4 (GA-0626)

allocate to library purposes part of the twenty-five cents on the one hundred dollars valuation

allowed for county purposes, but a constitutional amendment would be required to authorize a library

purpose tax that would be in addition to the constitutionally-limited twenty-five cents per hundred

dollars valuation. See Tex. Att'y Gen. Ope No. 0-5842 (1944) at 3.

Attorney General Opinion V-1116 addressed a 1949 enactment authorizing a commissioners

court to establish a mosquito control district with ad valorem taxing power in the county.7 See Tex.

Att'y Gen. Ope No. V-1116 (1950). No constitutional provision expressly permitted a mosquito

control district to impose an ad valorem tax. The opinion determined that the tax levy authorized

for mosquito control districts was part ofthe county ad valorem tax established and limited by article

VIII, section 9 of the constitution, citing the following statement from Anderson v. Parsley:

The power of the county commissioners under the Constitution, art.

8, § 9, as amended December 19, 1890, to levy a tax of25 cents on

$100 valuation to construct buildings, sewers, and other permanent

buildings, being limited to that levy for all such purposes, a levy can

be made for a courthouse and jail only so far as the limit has not

already been reached for the other purposes.

Anderson v. Parsley, 37 S.W.2d 358,363 (Tex. Civ. App.-Fort Worth 1931, writrefd). Thus, the

1949 statute did not add to the county taxation power authorized by Texas Constitution article VIII,

section 9.

We also note the Legislature's consistent practice of proposing amendments to the

constitution to authorize new ad valorem taxes. As initially adopted in 1876, the constitution limited

the authority ofcounties, cities, and towns to assess and collect ad valorem taxes. See Shepherd, 363

S.W.2d at 770 (Calvert, C.l., dissenting). It has been amended numerous times to expressly grant

additional taxing authority to cities or counties or to authorize the Legislature to create new kinds

of political subdivisions with ad valorem taxing authority. See, e.g., TEX. CONST. art. III, §§ 48-e

(special districts for emergency services, adopted 1987), 52(b) (ad valorem tax for road and flood

purposes, adopted 1.904), see interp. commentary (Vernon 2007) (amendment adopted because

constitutional limits on state, city, and county taxing power made large scale water conservation

projects or road construction programs impossible to finance); TEX. CONST. arts. III, § 52d (tax for

road purposes in Harris County, adopted in 1937); VII, § 3 (authorizing state ad valorem tax for

school districts and authorizing Legislature to provide for additional ad valorem tax in school

districts, adopted 1883); IX, §§ 9 (hospital districts with ad valorem taxing power, adopted 1962),

9B (hospital districts with ad valorem taxing power in counties of75,000 or less, adopted 1989), 12

(airport authorities with ad valorem taxing power, adopted 1966); XI, §§ 4 (limits on property tax

authority of general law cities, adopted 1876 and amended to increase limits in 1920), 5 (limit on

property tax authority of home rule cities, adopted 1876), 7 (authorizing property tax in certain

7See Act ofMar. 10, 1949, 51st Leg., R.S., ch. 46, 1949 Tex. Gen. Laws 80, 80-81 (now codified at Health and

Safety Code chapter 344).

Ms. Peggy D. Rudd - Page 5 (GA-0626)

counties for seawalls; tax adopted in 1932); XVI, § 59 (authorizing Legislature to create conservation

and reclamation districts with authority to levy and collect taxes, adopted 1917). For more than a

century, the Legislature has proposed and the voters have adopted constitutional amendments to

authorize new ad valorem taxes or increase the amount that could be levied and collected under an

existing tax.

Texas Constitution article VIII, section 17 is also relevant to our discussion ofyour question.

In contrast to the limits on ad valorem taxing power that permeate the Texas Constitution, article

VIII, section 17 provides broad authority for the Legislature to authorize the taxation ofsubjects and

objects in addition to those expressly named in the constitution:

The specification of the objects and subjects oftaxation shall

not deprive the Legislature of the power to require other subjects or

objects to be taxed in such manner as may be consistent with the

principles of taxation fixe'd in this Constitution.

TEX. CONST. art. VIII, § 17 (emphasis added). Article VIII, section 17 must be read together with

the constitutional provisions expressly authorizing property taxes and other specific kinds of tax.

See Guinn v. State, 551 S.W.2d 783, 788 (Tex. Civ. App.-Austin 1977, writ refd n.r.e.). As

adopted in 1876, article VIII, section 1 authorized only a property tax, poll tax, income tax, and

occupation tax. 8 However, other kinds oftaxes, such as those imposed by the Limited Sales, Excise

and Use Tax Act, were not "by reason of such omission [from article VIII, section 1] invalid and in

violation of the Constitution." Am. Transfer & Storage Co. v. Bullock, 525 S.W.2d 918, 923 (Tex.

Civ. App.-Austin 1975, writ refd). The Legislature has plenary power under article VIII, section

17 to require the taxation of subjects and objects not expressly named in the constitution. See ide

The legislative power to tax must be exercised in a manner consistent with the principles oftaxation

fixed in the constitution, such as the requirement that "[t]axation shall be equal and uniform." TEX.

CONST. art. VIII, § 1(a); see Am. Transfer & Storage Co., 525 S.W.2d at 920.

In State v. Wynne, the Texas Supreme Court determined that a tax on the distribution of

motor fuel was an excise tax and not a property tax, and for that reason the tax was valid under

article VIII, section 17 and did not violate the limits on property tax imposed by article VIII, section

9. See State v. Wynne, 133 S.W.2d 951, 957-58 (Tex. 1939), cert. denied, 310 U.S. 659 (1940).

And, article VIII, section 17 authorized the Legislature to adopt the statutes providing for the

unemployment tax. See Guinn, 551 S.W.2d at 788; see also Friedman v. Am. Surety Co., 151

S.W.2d 570, 580 (Tex. 1941) (characterizing unemployment compensation tax on employers as an

"excise tax," and finding that it did not violate various constitutional provisions). Article VIII,

section 17 authorizes the Legislature to impose taxes on "subjects or objects" other than those

expressly authorized by the constitution, but it does not authorize the Legislature to remove limits

8See TEX. CONST.art. VIII, § 1,8 HP.N Gammel, The Laws of Texas 1822-1897, at 813 (Austin, Gammel

Book Co. 1898), available at http://texashistory.unt.edulpennalink/meta-pth-6731 :781 (last visited Apr. 29, 2008).

Article VIII, section 1 of the Texas Constitution was amended in 1978 to delete the poll tax and substitute taxation of

intangible property. See TEX. H.RJ. REs. 1, 65th Leg., 2d C.S., 1978 Tex. Gen. Laws 54 (adopted 1978).

Ms. Peggy D. Rudd - Page 6 (GA-0626)

on taxation imposed by the constitution. See, e.g., TEX. CONST. art. VIII, §§ 9 (limits on property

tax assessed by counties, cities, towns), 24(a) (law imposing personal income tax may not take effect

until approved by majority of voters at a statewide referendum).

In construing constitutional provisions, we try to give them the effect their makers and

adopters intended. See Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000); City

ofEl Paso v. El Paso Cmty. CoIl. Dist., 729 S.W.2d 296, 298 (Tex. 1986). And we strive to avoid

a construction that renders any provision meaningless or inoperative. See Stringer, 23 S.W.3d at

355; Hanson v. Jordan, 198 S.W.2d 262,263 (Tex. 1946). The Supreme Court of Texas has not

definitively settled whether the Texas Constitution impliedly prohibits the Legislature from allowing

a political subdivision to impose ad valorem taxes absent express constitutional authorization.

However, the Legislature has shown a long-standing pattern of amending the constitution to

authorize new kinds ofpolitical subdivisions to impose ad valorem taxes, while certain intermediate

appellate courts have assumed that ad valorem taxes must be constitutionally authorized. This office

has also stated that the Legislature may not increase a county's ad valorem taxing power absent a

constitutional amendment. See Tex. Att'y Gen. Ope No. 0-5842(1944) at 3. The authority on this

question tends to indicate that the Legislature may not impose an ad valorem tax absent express

constitutional authority. In our opinion, it is more likely than not that a court would find that a multi-

jurisdictional library district established under Government Code chapter 336 lacks authority to

assess and collect ad valorem taxes on property within the district, absent express constitutional

authorization. 9

You also ask whether the lead governmental entity, "the county or municipality that by

resolution creates a Library District, [may] collect ad valorem taxes on behalfofthe Library District

and disburse those taxes to the Library District under existing authority or is a constitutional

amendment required to grant this specific authority." See Request Letter, supra note 1, at 1. That

is, ifa duly constituted library district wishes to contract with the lead governmental entity to collect

its taxes, may it do SO?10 In answering this question, we reiterate our opinion that a court would

probably hold this ad valorem tax unconstitutional.

Local Government Code section 336.251 provides for collection of library district taxes:

(b) If the district imposes an ad valorem tax, the board shall

have the taxable property in its district assessed for ad valorem

taxation .and the ad valorem taxes in the district collected, in

accordance with anyone of the methods set forth in this section, and

any method adopted remains in effect until changed by the board.

9The Legislature has authorized the creation of a multi-jurisdictional library district supported by a sales tax.

See TEX. Loc. GOV'T CODE ANN. § 336.027(a) (Vernon Supp. 2007).

lOTelephone Interview with Peggy Rudd, Director and Librarian, Texas State Library and Archives Commission

(Mar. 13, 2008) (clarifying question 2).

Ms. Peggy D. Rudd - Page 7 (GA-0626)

(c) The board may have the taxable property in its district

assessed or its taxes collected, wholly or partly, by the tax assessors

or tax collectors of any county, municipality, taxing district, or other

governmental entity in which all or any part of the district is located.

The tax assessors or tax collectors of a governmental entity, on the

request of the board, shall assess and collect the taxes of the district

in the manner prescribed in the Property Tax Code. Tax assessors

and tax collectors shall receive compensation in an amount agreed on

between the appropriate parties, but not to exceed two percent of the

ad valorem taxes assessed.

TEX. Loc. GOV'T CODE ANN. § 336.251 (b)-(c) (Vernon 2005).

Pursuant to subsection 336.251 (c), the district board may have the district's taxes collected

by the tax collector of any county or municipality in which all or any part of the district is located.

See ide § 336.251 (c). The lead governmental entity is a county or municipality in which at least part

of the district is located. See ide § 336.021 (creation of district by county or municipality that by

resolution assumes the role of lead governmental entity). Section 336.251(c) authorizes the library

district board to have the tax collector ofthe lead governmental entity collect its taxes in the manner

prescribed in the Property Tax Code. See ide § 336.251(c); see also TEX. TAX CODE ANN. § 1.01

(Vernon 2008) (title 1 of the· Tax Code may be cited as the Property Tax Code). The provisions

governing property tax collection are found in Tax Code chapter 31. See id. ch. 31. Subsection

336.251(c) of the Local Government Code establishes a limit on the compensation· that a tax

collector may receive from the district board. Thus, a library district board may have its taxes

collected by the tax collector of the lead governmental entity and remitted to it pursuant to Local

Government Code section 336.251. See TEX. Loc. GOV'T CODE ANN. § 336.251 (Vernon 2005).

While the board's power to negotiate the collector's compensation is limited by section 336.251, it

appears that the Legislature may amend this provision without also amending the constitution. See

TEX. TAX CODE ANN. § 6.24 (Vernon 2008) (authority of taxing unit to contract with other taxing

units for the assessment and collection of taxes).

Ms. Peggy D. Rudd - Page 8 (GA-0626)

SUMMARY

The Texas Supreme Court has not determined whether the

Texas Constitution impliedly prohibits the Legislature from allowing

a political subdivision to impose ad valorem taxes absent express

constitutional authorization. However, the authority that exists

indicates that a court would more likely than not find that express

constitutional authority is necessary for legislation permitting a multi-

jurisdictional library district established under Government Code

chapter 336 to impose an ad valorem tax.

If the ad valorem tax authorized by Local Government Code

chapter 336 were constitutional, the library district board could have

the tax collector of the lead governmental entity collect and remit

taxes to the district. Although section 336.251 limits the board's

authority to negotiate the tax collector's compensation, it appears that

the Legislature may amend this provision without also amending the

constitution.

KENT C. SULLIVAN

First Assistant Attorney General

ANDREW WEBER

Deputy Attorney General for Legal Counsel

NANCY S. FULLER

Chair, Opinion Committee

Susan L. Garrison

Assistant Attorney General, Opinion Committee