Untitled Texas Attorney General Opinion

THE ATTORNEY GENERAL

OF TEXAS

February 18, 1988

Honorable James W. Carr Opinion No. JM-859

Lavaca County Attorney

P. 0. BOX 579 Re: Whether hospital dis-

2nd Floor, Courthouse trict taxes may be "rolled

Halletsville, Texas 77964 back" by election called

pursuant to petition by

Honorable William H. Cantrell taxpayers (RQ-1281)

Parker County Attorney

Parker County Courthouse

Weatherford, Texas 76086

Gentlemen:

Section 26.07 of the Tax Code provides that, if the

governing body of a taxing unit other than a school

district adopts an ad valorem tax rate that exceeds the

so-called "effective tax rate" calculated pursuant to

section 26.04 of the Tax Code by more than eight percent,

the qualified voters of the taxing unit by petition may

require that an election be held to determine whether or

not to reduce the tax rate adopted for the current year to

a rate that exceeds the "effective rate," in effect, by

only eight percent. See Attorney General Opinion JM-574

(1986). you ask whether section 26.07 of the Tax Code is

unconstitutional insofar as it applies to hospital

districts. We conclude that it is constitutional.

We note at the outset that, in passing upon the

constitutionality of any statute, we begin with a

presumption of validity. Smith v. Davis, 426 S.W.Zd 827

(Tex. 1968) : Texas National Guard Amorv Board v. McGraw,

126 S.W.2d 627 (Tex. 1939): Kov v. Schneider, 218 S.W.

479, (Tex. 1918).

There is a strong presumption that a

Legislature understands and correctly

appreciates the needs of its own people,

that its laws are directed to problems made

manifest by experience, and that its

discriminations are based upon adequate

grounds.

p. 4159

Honorable James W. Carr

Honorable William H. Cantrell

Page 2 (JM-859)

7

Texas National Guard Armorv Board v. McGraw, sunra at 634

(quoting Middleton v. Texas Power & Liaht Co., 249 U.S.

152 (1919)). ?

The relevant provisions of section 26.07 of the Tax

Code state the following:

(a) If the governing body of a taxing

unit other than a school district adopts a

tax rate that exceeds the rollback tax rate

calculated as provided by Section 26.04 of

this code, the qualified voters of the

taxing unit by petition may require that an

election be held to determine whether or not

to reduce the tax rate adopted for the

current year to the rollback tax rate

calculated as provided by Section 26.04 of

this code.

. . . .

(e) If a majority of the qualified voters

voting on the question in the election favor

the proposition, the tax rate for the taxing

unit for the current year is the rollback

tax rate calculated as provided by Section

26.04 of this code; otherwise, the tax rate

for the current year is the one adopted by

the governing body.

. . . .

Text of subset. (hl. as amended bv Acts

1987. 70th Lea.. ch. 457. 613. effective

until June 1. 1989

(h) Notwithstanding Subsection (a) of

this section, if the amount of 1987 or 1988

property taxes that the governing body of a

taxing unit other than a school district

determines is required to provide health

care services that the governing body is

required to provide to its residents under

the Indigent Health Care and Treatment Act

(Article 4438f, Vernon's Texas Civil

Statutes) exceeds the amount of the unit's

property taxes for the preceding year

imposed to provide those required services,

the adopted tax rate that allows voters to

seek to reduce the tax rate under this

p. 4160

Honorable James W. Carr

Honorable William H. Cantrell

Page 3 (JM-859)

section must exceed the rate calculated

under Section 26.04 of this code by eight

percent plus the rate that, applied to Ez

total taxable value submitted to

governing body, would impose taxes in an

amount equal to the amount of property taxes

to be imposed for the current year that the

governing body determines is required to

provide services required by the Indigent

Health Care and Treatment Act less the

amount of the unit's property taxes for the

preceding year imposed to provide those

required services. For purpose of this

section, the amount of taxes determined to

be required to provide the required health

care services or imposed for the preceding

year to provide those services does not

include taxes for which the governing body

receives or expects to receive state

reimbursement pursuant to Subtitle D of

Title 2 of the Indigent Health Care and

Treatment Act.

. . . .

It is suggested, first, that section 26.07 circum-

scribes authority conferred on hospital districts by

article IX, section 9, of the Texas Constitution. We

disagree.

The relevant provisions of article IX, section 9, set

forth the following:

The Legislature may by law provide for the

creation, establishment, maintenance and

operation of hospital districts composed of

one or more counties or all or any part of

one or more counties with power to issue

bonds for the purchase, construction,

acquisition, repair or renovation of

buildings and improvements and equipping

same, for hospital purposes; . . . providinq

for the lew of annual taxes at a rate not

f exceed seventv-five cents f75CI on the

OEe Hundred Dollar valuation of all taxable

pronertv within such district for the

p r-nose of meetina the recuirements of the

d?strict#s bonds. the indebtedness assumed

bv it and its maintenance and oneratinq

exnenses, providing that such district shall

p. 4161 i

Honorable James W. Carr

Honorable William H. Cantrell

page 4 (m-859)

not be created or such tax authorized unless

approved by a majority of the qualified

property taxpaying electors thereof voting

at an election called for the purpose. . . .

(Emphasis added.)

. . . .

In Attorney General Opinion JM-792 (1987), we were

asked whether section 26.07 of the Tax Code circumscribed

authority conferred on county commissioners by sections

l-a and 9 of article VIII of the Texas Constitution and,

accordingly, was unconstitutional insofar as it applied to

counties. Article VIII, section l-a, of the Texas

Constitution contains the following relevant language:

From and after January 1, 1951, the several

counties of the state gre authorized to lew

ad Valorem taxes UD all or aertv within

their resnective %ndaries" for county

Pm s . not to exceed thirtv cents

fYOG%7 ' . One Hundred

each Dollars ($100)

valuation, in addition to all other ad

valorem taxes authorized by the Constitution

of this State, provided the revenue derived

therefrom shall be used for construction and

maintenance of Farm to Market Roads or for

Flood Control, except as herein otherwise

provided. (Emphasis added.)

Article VIII, section 9, of the Texas Constitution sets

forth the following relevant provisions:

[N]o county, city or town shall levy a tax

rate in excess of Eighty Cents (80C) on the

One Hundred Dollars ($100) valuation in any

one (1) year for general fund, permanent

improvement fund, road and bridge fund and

jury fund purposes: provided further that at

1

levv the annual tax rate for each countv it

shall lew whatever tax rate may be needed

for the four f4) constitutional ournoses:

namely, general fund, permanent improvement

fund, road and bridge fund and jury fund so

long as the court does not impair any out-

standing bonds or other obligations and so

long as the total of the foregoing tax

levies does not exceed Eighty Cents (‘3’=)

p. 4162

Honorable James W. Carr

Honorable William H. Cantrell

Page 5 Of-8591

one the One Hundred Dollars ($100) valuation

in any one (1) year. (Emphasis added.)

We concluded that the specific language of sections

l-a and 9 of Article VIII of the Texas Constitution

confers explicit authority on commissioners courts, rather

than on the voters, to set tax rates and levy ad valorem

taxes upon property in the counties. Because the legisla-

ture by statute cannot remove governmental power conferred

by the constitution, see aenerally Anderson v. Wood, 152

S.W.Zd 1084 (Tex. 1941); Dodson v: Marshall 118 S.W.2d

621 (Tex. Civ. App. - Waco 1938, writ dism'dj and cannot

enact any law contrarv to a provision of the constitution,

Citv of -Fort Worth v. How&ton, 236 S.W.2d 615 (Tex.

1951), we concluded that section 26.07 of the Tax Code is

unconstitutional insofar asit applies to counties.

In Attorney General Opinion JM-835 (1987), we were

asked whether section 26.08 of the Tax Code, which

authorizes a tax rate rollback election under certain

circumstances for school district taxes, circumscribes

authority conferred on school district trustees by article

VII, sections 3 and 3-b, of the Texas Constitution, and is

therefore unconstitutional. Section 3 of article VII does

not directly authorize school districts to set tax rates

and levy property taxes. Instead, the provision

authorizes "the Legislature . . . to pass laws for the

assessment and collection of taxes in all said

districts. . . .I' See. e. a. Brown V. Truscott

Indeoendent School District, 34'S.W.2d 837 (Tex. Comm'n

App. 1931, judgm't adopted); Desdemona Indenendent School

District v. Howard, 34 S.W.2d 840 (Tex. Comm'n App. 1931

judgm't adotped). A school district's taxing authority is

subject to the legislature's power to enact laws setting

tax rates and providing for the assessment and collection

of taxes. Section 26.08 of the Tax Code is such a law.

We concluded that section 26.08 does not circumscribe any

authority conferred by article VII, section 3, and,

therefore, does not violate it.

Article IX, section 9, of the Texas Constitution,

like article VII, section 3, confers authority, not on the

governing bodies of hospital districts, but rather on the

legislature. It is empowered to create hospital districts

and to "provid[e] for the levy of annual taxes at a rate

of not to exceed seventy-five cents (75C) on the One

Hundred Dollar valuation of all taxable property within

such district for the purpose of meeting the requirements

of the district's bonds, the indebtedness assumed by it

and its maintenance and operating expenses. . . .'I Article

p. 4163

Honorable James W. Carr

Honorable William H. Cantrell

Page 6 W-859)

IX, section 9, does I& confer any authority on the

governing bodies of hospital districts. The phrase

beginning "provid[e] for the levy of annual taxes. . .I1

serves merely to set a ceiling or limitation on the tax

rate that the legislature is authorized to permit hospital

districts to adopt and confers on the legislature the same

broad authority. regarding taxation conferred on the

legislature by article 7, section 3. m section 2 of

art. 4494n, V.T.C.S. Accordingly, we conclude that

section 26.07, insofar as it applies to hospital districts

created pursuant to article IX, section 9, of the Texas

Constitution, does not circumscribe any authority

conferred on the governing body of a hospital district by

article IX, section 9.

It is also urged that section 26.08 of the Tax Code

violates article III, section 1, of the Texas

Constitution, by effecting an improper delegation of

legislative authority, and article I, section 28, of the

Texas Constitution, by effecting a suspension of the laws.

Specifically, it is urged that section 26.07 improperly

delegates to the voters the authority to set tax rates and

improperly suspends section 26.05 of the Tax Code, which

authorizes the governing body of a taxing unit to adopt a

tax rate. In Attorney General Opinion JM-835 (1987), we

concluded that section 26.08 of the Tax Code, which

governs tax rate rollback elections for school taxes, does

not contravene either of these constitutional provisions.

We so conclude regarding section 26.07 of the Tax Code.

It is to these constitutional provisions that we now turn.

Article III, section 1, of the Texas Constitution

provides: "The Legislative power of this state shall be

vested in a Senate and House of Representatives, which

together shall be styled 'The Legislature of the State of

Texas."' Article I, section 28, of the Texas Constitution

provides the following: "No power of suspending laws in

this State shall be exercised except by the Legislature."

It is a maxim of constitutional law that the power

conferred upon the legislature to make the laws cannot be

delecfated by that department to any other body or

authority. Texas National Guard Armor? Board v. I&Craw,

126 S.W.2d 627 (Tex. 1939); ma n v. Humble Oil & Refininq

&, 83 S.W.2d 935 (Tex. 193:) rehearino denied, 87

S.W.2d 1069 (Tex. 1935). The pri;ciple of non-delegation

has certain important qualifications. See aeneralle

Annot., "Permissible limits of delegation of legislative

power," 79 L. Ed. For example, the

legislature may 474

delegate '1g5:' - municipalities local

p. 4164

Honorable James W. Carr

Honorable Wil1iam.H. Cantrell

Page 7 (JM-859)

legislative power that is adequate to carry out the

purposes for which they were created. See, e.a

Stanfield v. State, 18 S.W. 577 (Tex. 1892). The United

States Supreme Court declared almost a century ago:

It is a cardinal principle of our system

of government, that local affairs shall be

managed by local authorities, and general

affairs by the central authority, and hence,

while the rule is also fundamental that the

power to make laws cannot be delegated, the

creation of municipalities exercising local

self-government has never been held to

trench upon that rule. Such legislation is

not regarded as a transfer of general

legislative power, but rather as the grant

of the authority to prescribe local regula-

tions, according to immemorial practice,

subject of course to the interposition of

the superior in cases of necessity.

Stoutenburah V. ennick, 129 U.S. 141, 147 (1889).

Article III, section 1, of the' Texas Constitution

requires that a law must be so complete in all of its

terms and provisions when it leaves the legislative branch

that nothing is left to the judgment of the recipient of

the delegated power. See. e-a. Commissioners Court of

Lubbock Countv v. Martin, 471 S.W.2d 100 (Tex. Civ. App. -

Amarillo 1971, writ ref*d n.r.e.). The rights, duties,

privileges, or obligations granted or imposed must be

definitely fixed and determined, or the rules by which

they are to be f.ixed and determined must be clearly and

definitely established, when the act is passed. Id. The

law must be final and decisive in all of its parts: any

discretion that is given must relate only to its

execution. I re Johnson 554 S.W.Zd 775 (Tex. Civ. APP.

- Corpus Chriiti 1977), w&it ref'd n.r.e., 569 S.W.2d 882

(Tex. 1978); McCombs v. Dallas County, 136 S.W.2d 975

(Tex. Civ. App. - Dallas 1940), writ ref'd, 140 S.W.2d

1109 (Tex. 1940). The test that courts invoke under

article III, section 1, is whether the legislature has

prescribed sufficient standards to guide the discretion

conferred. C mmissioners Court of Lubbock Countv

Martin, sunra;O Moodv Citv of Universitv P ark, 2%

S.W.2d 912 (Tex. Civ.vApp. - Dallas 1955, writ ref'd

n.r.e.). Section 26.08 of the Tax Code clearly sets forth

sufficient standards both with regard to the calling of an

election and with regard to the consequences if an

p. 4165

Honorable James W. Carr

Honorable William H. Cantrell

Page 8 (JIG859)

election is successful: whatever discretion is set forth

in the section relates only to its execution.

Early on, the Texas Supreme Court recognized the dis- -.

tinction between a delegation of power to make a law and

the discretionary exercise of a power conferred by a law.

In Citv of San Antonio v. Jones, 28 Tex. 19 (1866), the

Texas Supreme Court declared:

The legislature may grant authority as well

as give commands, and acts done under its

authority are as valid as if done in obed-

ience to its commands. Nor is a statute,

whose comvlete execution and annlication to

the subiect matter is. bv its nrovisions.

m de to denend on the assent of some other

b:dv. a deleaation of legislative Dower.

The discretion aoes to the e ercise of the

power conferred bv the law, b:t not to make

the law itself, .

The law. in such cases. mav denend for

Ats nractical efficiencv on the act of some

other bodv or individual: still. it is not

derived from such act. but from the leaisla-

tive author&y . Legislation of this

character is of familiar use, and occurs

whenever rights or privileges are conferred

upon individuals or bodies, which may be

exercised or not in their discretion. And

. *

mav be left to the iudoment of

individuals or nrivate cornorations- whether

thev will avail themselves of nrivileaes

conferred bv the leaislature. there is

certainlv no valid reason hv the same may

not be done with citizen: of a town or

district. who, as a class. are

affected bv the nronosed act. (EkEhas?:

added.)

28 Tex. at 32-33.

While the results of early Texas cases are incon-

sistent, see. e.a., State v. Swishey, 17 Tex. 441 (1856)

and Stanfield v. State, 18 S.W. 577 (Tex. 1892), at least

since 1920, Texas courts have upheld delegations of 1

authority to voters or some other body in instances in

which a statute whose complete execution and application

to the subject matter was made to depend on the assent of

those voters or some other body, when such matters ->

p. 4166

Honorable James W. Carr

Honorable William H. Cantrell

Page 9 (JM-859)

concerned local administration and control. See Trimmier

v, Carlton, 296 S.W. 1070 (Tex. 1927); SD rs v. Citv of

San AntOnlQ, 223 S.W. 166 (Tex. 1920); RaG: Deleaation of

Power in Texa to Aaencies Other han State Administrative

Bodies, 16 Tet. L. Rev. 494 (1957). Courts have upheld

numerous statutes granting political subdivisions power to

be exercised only upon a favorable vote of the governing

body or the people.

A statute leaving it discretionary with the

commissioners court to order the election of public

weighers was upheld in Johnson Martin, 12 S.W. 321

(Tex. 1889), while Stanfield v. gtate, 18 S.W. 577 (Tex.

1892) approved a statute authorizing counties to create

and abolish the office of county superintendent of public

instruction. A statute authorizing cities, on a vote of

the people, to improve streets and assess costs against

abutting property did not unconstitutionally delegate

legislative power. Soears v. Citv of San Antonio, sunra;

see also Revnolds v. a s County, 203 S.W.2d 320 (Tex.

Civ. App. - Amarillo 1947, writ denied, 207 S.W.2d 362)

(statute upheld authorizing counties to use voting

machines on local option basis): Sullivan v. Roach -

Maniaan Pavina Co. of Te a 220 S.W. 444 (Tex. Civ. APP.

- San Antonio 1920, wzis' dism'd) (street improvement

statute authorizing acceptance by a city does not violate

article III, section 1, or article I, section 28 of Texas

Constitution).

It cannot be gainsaid that the legislature properly

may delegate to the governing body of a hospital district

the authority to adopt a tax rate. m Moore v. Edna

Ifosnital District, 449 S.W.2d 508 (Tex. Civ. App. - Corpus

Christi 1969, writ ref'd n.r.e.). We see no reason why

the legislature could not also delegate to voters the

authority to compel the governing bodies of hospital

districts to reduce adopted tax rates upon a successful

rollback election. Accordingly, we conclude that section

26.07 of the Tax Code effects no impermissible delegation

of legislative authority in violation of article III,

section 1, of the Texas Constitution.

Article I, section 28, of the Texas Constitution,

which prohibits the suspension of laws unless it is done

by the legislature, frequently is invoked when analyzing

delegations of this sort. See. e.a., Attorney General

Opinions JM-483 (1986), H-1080 (1977); Ray, peleaation of

Power m Texas, 16 Tex. L. Rev. 484. It is urged that

section 26.07 of the Tax Code in effect authorizes voters

p. 4167

Honorable James W. Carr

Honorable William H. Cantrell

Page 10 (JM-859)

to suspend section 26.05 of the Tax Code, which authorizes

the governing bodies of taxing units to adopt tax rates.

---.

This issue was addressed, in Attorney General Opinion

JW-835 (1987), wherein we upheld as constitutional section

26.08 of the Tax Code. The relevant language of

subsection (e) of section 26.08 provides:

If a majority of the qualified voters voting

on the question in the election favor the

proposition, the aovernina bodv mav not

am in the following year that

exceeds the rollback tax rate calculated as

provided by Section 26.04, except that in

calculating the rollback tax rate the

assessor shall use the following formula:

ROLLBACK TAX RATE + [(EFFECTIVE MAINTENANCE

MD OPERATIONS RATE FOR ELECTION YEAR x 1.08

+ CURRENT DEBT RATE. . . . (Emphasis

added.)

We noted that section 26.08 does not effect any suspension

of a board of trustees' authority to adopt a tax rate: it

merely places a one-year ceiling or limitation on the tax ?

rate that a board of trustees may adopt. The power to

adopt a tax rate is still reposed with the board of

trustees, even in the event of a successful rollback

election. But section 26.07 of the Tax Code, which

governs taxing units other than school districts, does not

operate in the same fashion that section 26.08 does. The

relevant language of subsection (e) of section 26.07 of

the Tax Code provides:

If a majority of the qualified voters voting

on the question in the election favor the

proposition, the tax rate for the taxinq

unit for the curent vear is th rollback

tax rate calculated as nrovided Ev Section

6 .04 of this code: otherwise. the tax rate

for the CUrrent vear is the one adopted bv

the aovernina body. (Emphasis added.)

Unlike subsection (e) of section 26.08, subsection (e) of

section 26.07 of the Tax Code does D& continue to repose

in the governing body of taxing units the authority to set -\

the tax rate for the year in which the successful tax rate

rollback election is held. It is urged that, because

subsection (e) of section 26.07 has the effect of

suspending section 26.05, it violates article I, section

28, of the Texas Constitution. We disagree. ?

p. 4168

Honorable James W. Carr

. Honorable William H. Cantrell

page 11 (JM-859)

.-

Section 26.07 of the Tax Code does not act on or

affect section 26.05 in the same manner in which statutes

- enacted by the legislature, ordinances enacted by a

municipality, or injunctions issued by a court have acted

on statutes and have been held to violate article I,

section 28. See. e.a, State v. Allstate Insurance co.,

654 S.W.Zd 45 (Tex. AD;). - Austin 1983, writ ref*d n.r.e.)

(only legislature has-power to suspend.the laws, but to do

so it must effect a general suspension; i.e., it may not

suspend a statute for an individual case): Brown Cracker &

Candv Co. v. Citv f 11

(Dallas city ordinanze ~~,~~;in~'~r~.~Itu~4~n(T~.ce:~~~I,

designated areas was in violation of penal act of the

legislature forbidding prostitution; ordinance thereby

violated article I, section 28); State v. Ferouson, 125

S.W.2d 272 (Tex. 1939) (courts may not suspend any valid

statute, nor supervise and direct the manner and method of

its enforcement by appropriate officers of the executive

department). In a typical article I, section 28, case,~ a

statute is made inoperative in all possible future appli-

cations in a given area by means of an ordinance or court

injunction. S . e ar Brown Cracker & Candv Co. v. Citv

f Dallas SUD:~; A;to;ney General Opinions JM-483 (1986)

i-1080 (1477). Section 26.07 of the Tax Code does noC

make inoperative section 26.05: in every year, the

governing body of a taxing unit adopts a tax rate pursuant

to section 26.05. Only if the rate adopted exceeds the

effective rate by eight percent or more, only if the

requisite number of voters validly signs a petition to

call an election, and only if a majority of voters voting

at the election passes the proposition, will the tax rate

for that year by law be set at, in effect, only eight

percent over the effective rate. The following year the

governing body of the affected taxing unit will again

adopt a tax rate pursuant to section 26.05. At no point

is section 26.05 l%uspended;ll rather, it confers upon the

governing bodies of taxing units authority that may be

limited contingently, upon the happening of. certain

events.

Accordingly, we conclude that section 26.07 of the

Tax Code does not act to suspend section 26.05 of the Tax

Code in violation of article I, section 28, of the Texas

Constitution.

SUMMARY

Section 26.07 of the Tax Code, which

authorizes ad valorem tax rate rollback

elections for taxing units other than school

p. 4169

Honorable James W. Carr

Honorable William H. Cantrell

Page 12 (JB-859)

districts, is constitutional insofar as it

applies to hospital districts.

gxyti -

MATTOX

Attorney General of Texas

MARY KELLER

First Assistant Attorney General

LOU MCCREARY

Executive Assistant Attorney General

JUDGE ZOLLIE STEAXLSY

Special Assistant Attorney General

RICX GILPIN

Chairman, Opinion Committee

Prepared by Jim Moellinger

Assistant Attorney General

p. 4170