Untitled Texas Attorney General Opinion ( 2013 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
February 5, 2013
The Honorable James L. Keffer Opinion No. GA-0987
Chair, Committee on Energy Resources
Texas House of Representatives Re: Authority of the Comptroller to implement
Post Office Box 2910 rules regarding the imposition and collection of a
Austin, Texas 78768-2910 sales and use tax by a municipality under
particular circumstances (RQ-1 078-GA)
Dear Representative Keffer:
Your former colleague, Representative Burt R. Solomons, asked about the authority of the
Texas Comptroller of Public Accounts (the "Comptroller") to implement rules with regard to the
collection of a municipal sales and use tax authorized under section 43.0751 of the Texas Local
Government Code. 1 His request letter explained that in 2009, the City of Lewisville (the "City")
entered into a strategic partnership agreement (the "Agreement") with multiple water supply districts.
Request Letter at 1. The City agreed to provide fire services, emergency medical services and law
enforcement services to the districts. !d. In exchange for those services, the water supply districts
were annexed by the City for limited purposes and agreed to the imposition of a sales and use tax,
which the City has collected since entering into the Agreement and which is equal to the sales and
use tax imposed within the city boundaries? !d. at 1-2.
The request letter also explained that in 2011, the City held an election to create crime control
and fire control districts and to levy an additional sales and use tax to fund those districts. !d. at 2. 3
1SeeLetter from Honorable Burt R. Solomons, Chair, House Comm. on Redistricting, to Honorable Greg
Abbott, Tex. Att'y Gen. (Aug. 29, 2012), http://texasattorneygeneral.gov/opin ("Request Letter").
2
Local Government Code section 43.0751 authorizes the governing body of a municipality and a conservation
and reclamation district operating under chapter 49 of the Water Code to "negotiate and enter into a written strategic
partnership agreement for the district by mutual consent." TEX. Lac. Gov'TCODEANN. § 43.0751(a)-(b) (West Supp.
2012). The strategic partnership agreement may provide for "limited-purpose annexation of the district." !d. §
43.0751(f)(1).
3
Chapters 344 and 363 of the Local Government Code outline the procedures for the creation, operation and
financing of fire control and crime control districts, respectively. See TEx. Loc. Gov'T CODE ANN. §§ 344.00 1-.302;
363.001-.302 (West 2005 & Supp. 2012).
The Honorable James L. Keffer - Page 2 (GA-0987)
The City requested that the Comptroller collect the additional tax in the areas annexed for limited
purposes, but the Comptroller declined to do so. !d. Based on these facts, Representative Solomons
asked the following question:
Is the Comptroller permitted to implement rules with regard to the
imposition and collection of a sales and use tax that prevent a
municipality from imposing a sales and use tax, levied pursuant to an
existing Strategic Partnership Agreement, on districts that have been
annexed for limited purposes?
Request Letter at 2.
The Legislature has authorized a municipality to impose a sales and use tax on the part of the
districts that have been annexed for limited purposes pursuant to a strategic partnership agreement:
A municipality that has annexed all or part of a district for limited
purposes under [section 43.0751] may impose a sales and use tax
within the boundaries of the part of the district that is annexed for
limited purposes. Except to the extent it is inconsistent with this
section, Chapter 321, Tax Code, governs the imposition,
computation, administration, governance, and abolition of the sales
and use tax.
TEX. Loc. Gov'T CODE ANN. § 43.0751(k) (West Supp. 2012). Pursuant to this provision, the
Agreement states that in the areas of limited-purpose annexation, a sales and use tax shall be
imposed "at a rate equal to the Sales and Use Tax imposed by the City within its corporate
boundaries." 4 Since the inception of the Agreement, the Comptroller's "office has collected the
City's sales and use tax" in the areas annexed for limited purposes. 5 However, in response to the
request letter, the Comptroller's office informs us that it "has not collected the additional sales and
use tax amount in the Limited Purpose Districts because the statutory requirements for imposing a
fire control district or crime control and prevention district tax have not been met for those areas."
Comptroller Brief at 2.
The Comptroller is charged with the administration, collection and enforcement of taxes
imposed under chapter 321, which include fire control district and crime control district taxes. TEX.
TAX CODE ANN.§§ 321.106, .108, .301 (West 2008). Consistent with those duties, the Comptroller
may adopt reasonable rules for its enforcement of chapter 321. !d.§ 321.306 (West 2008). "[A]n
4
See Strategic P'ship Agreement Between the City of Lewisville, Tex. and Denton Cnty. Fresh Water Supp.
Dists. 1-A, 1-B, 1-C, 1-D, 1-E, 1-F, 1-G, and 1-H, at 6 (submitted with Request Letter) (on file with the Op. Comm.).
5
See Letter from Ashley Harden, Gen. Counsel, Tex. Comptroller of Pub. Accounts, to Honorable Greg Abbott,
Tex. Att'y Gen. (Dec. 21, 2012) (on file with the Op. Comm.) (hereafter "Comptroller Brief').
The Honorable James L. Keffer - Page 3 (GA-0987)
agency's interpretation of a statute it is charged with enforcing is entitled to 'serious consideration,'
so long as the construction is reasonable and does not conflict with the statute's language." R.R.
Comm'nofTex. v. Tex. CitizensforaSafeFuture & Clean Water, 336 S.W.3d619, 624 (Tex. 2011).
In light of this rule, we analyze the Comptroller's construction of the relevant statutes.
While Local Government Code subsection 43.0751(k) expressly authorizes a municipality
to impose a sales and use tax on an area that is annexed for limited purposes, chapter 321 "governs
the imposition, computation, administration, governance, and abolition of the sales and use tax,"
except when inconsistent with section 43.0751. TEX. Loc. Gov'T CODE ANN.§ 43.0751(k) (West
Supp. 20 12). Chapter 321 requires that elections must be held to adopt fire control and crime control
district taxes in accordance with Local Government Code chapters 344 and 363. TEX. TAX CODE
ANN. §§ 321.106(a), .108(a) (West 2008). Furthermore, the district taxes must be "approved by a
majority of the qualified voters of the proposed district voting at an election called and held for that
purpose." TEX. Loc. Gov'T CODE ANN. §§ 344.053, 363.053 (West 2005). Briefing submitted to
our office indicates that "voters in the Limited Purpose Districts never received the statutorily
required opportunity to give their approval for creation of the [districts] and imposition of the
associated taxes." Comptroller Brief at 2. As a result, the Comptroller has not collected the
additional sales and use tax in those areas. /d.
Subsection 43.0751 (k) provides municipalities with the general authority to impose sales and
use taxes in areas annexed for limited purposes. It does not, however, empower municipalities to
alter the statutory requirements associated with the imposition of a sales and use tax. Specifically,
section 43.0751(k) does not empower municipalities to ignore the procedures in chapter 321 for
imposing and collecting taxes in fire control and crime control districts. It is therefore reasonable
to conclude, as the Comptroller has concluded, that municipalities must comply with chapter 321
by providing voters in areas annexed for limited purposes the opportunity to vote on the imposition
of fire control and crime control district taxes before the municipality imposes them on those areas
under subsection 43.0571 (k). As the agency charged with administration, collection and
enforcement of the taxes authorized by chapter 321, the Comptroller's reasonable interpretation of
the statute would likely be shown deference by the courts.
The Honorable James L. Keffer - Page 4 (GA-0987)
SUMMARY
The Comptroller has concluded that, pursuant to Tax Code
sections 321.106 and 321.108, voters in areas annexed for limited
purposes under Local Government Code section 43.0751 must be
given the opportunity to vote on the imposition of fire control and
crime control district taxes before a municipality may impose them
on those areas. As the agency charged with administration, collection
and enforcement of the taxes authorized by chapter 321, the
Comptroller's reasonable interpretation would likely be shown
deference by the courts.
Very truly yours,
DANIEL T. HODGE
First Assistant Attorney General
JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel
JASON BOATRIGHT
Chairman, Opinion Committee
Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee