Untitled Texas Attorney General Opinion ( 2005 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
October 3,2005
The Honorable Jeff Wentworth Opinion No. GA-0363
Chair, Committee on Jurisprudence
Texas State Senate Re: Whether a city that has not established a
Post Office Box 12068 residence homestead exemption under article VIII,
Austin, Texas 7871 l-2068 section 1-b of the Texas Constitution is authorized
to establish the property tax limitation under article
VIII, section 1-b(h) (RQ-0336-GA)
Dear Senator Wentworth:
You ask whether a city that has not established a residence homestead exemption under
Texas Constitution article VIII, section 1-b may establish the property tax limitation allowed under
section 1-b(h), either by city council action or by an election called upon receipt of a voter petition. ’
Article VIII, section 1-b(h), adopted in 2003, authorizes “a county, a city or town, or a junior
college district” to limit increases of the total amount of ad valorem taxes imposed on the
homesteads of persons with disabilities or persons sixty-five years of age or older. TEX. CONST. art.
VIII, 4 l-b(h). The limitation is known colloquially as a “tax freeze.” The enumerated entities may
adopt such a tax limitation either by official action of the governing body or by an election called
by the governing body upon receipt of a proper voter petition. Id.; see generally Tex. Att’ y Gen. Op.
Nos. GA-0222 (2004), GA-0244 (2004). You reference the experience of the City of Windcrest (the
“City”). Request Letter, supra note 1, at 2. We are informed that the City has received a voter
petition to conduct an election on whether to adopt an article VIII, section l-b(h) tax limitation, but
is concerned that the subsection may be construed as authorizing the tax limitation only for those
entities that have established their own residence homestead tax exemption.*
Section l-b contains a number of mandatory and optional tax exemptions and limitations
other than the limitation in subsection (h). TEX. CONST. art. VIII, 8 l-b. Subsection (a) is a
mandatory exemption from state-purpose taxation of $3,000 of the assessed taxable value of the
‘See Letter from Honorable Jeff Wentworth, Chair, Senate Committee on Jurisprudence, to Honorable Greg
Abbott, Texas Attorney General (Apr. 4, 2005) (on file with Opinion Committee, also available at
http://www.oag.state.tx.us) [hereinafter Request Letter].
*Letter fromHonorable Michael S. Brenan, City Attorney, City of Windcrest, to Nancy S. Fuller, Chair, Opinion
Committee, Office of the Attorney General (May 2,2005) (on file with Opinion Committee).
The Honorable Jeff Wentworth - Page 2 (GA-0363)
residence homesteads of all adults. Id. art. VIII, § l-b(a). Subsection (b) authorizes an optional
exemption, established either by governmental body action or by voter initiated election, from
taxation by a county, city, town, school district, or other political subdivision of not less than $3,000
of the market value of residence homesteads of persons who are disabled or sixty-five years of age
or older. Id. art. VIII, 9 1-b(b).3
Subsection (c) provides a mandatory exemption of $15,000 of the market value of an adult’s
homestead from ad valorem taxation for general elementary and secondary public school purposes.
Id. art. VIII, 5 l-b(c). Additionally, subsection (c) authorizes the Legislature by general law to
exempt an amount not to exceed $10,000 of the market value from such taxation of the residence
homestead of persons who are disabled or sixty-five years of age or older. Id. For persons who
receive a subsection (c) exemption, subsection (d) provides a mandatory tax freeze of the total
amount of taxes that may be imposed for such school tax purposes. Id. art. VIII, 5 1-b(d).4
Subsection (e) grants a political subdivision the discretion to exempt from ad valorem
taxation a percentage of market value of the residence homestead of an adult. Id. art. VIII, 5 1-b(e).
Finally, subsection (h) provides in pertinent part:
The governing body of a county, a city or town, or a junior college
district by official action may provide that if a person who is disabled
or is sixty-five (65) years of age or older receives a residence
homestead exemption prescribed or authorized by this section, the
total amount of ad valorem taxes imposed on that homestead by the
county, the city or town, or the junior college district may not be
increased while it remains the residence homestead of that person or
that person’s spouse who is disabled or sixty-five (65) years of age or
older and receives a residence homestead exemption on the
homestead.
Id. art. VIII, 9 1-b(h). You state that subsection (h) is not clear whether a city that has never adopted
a homestead exemption may establish subsection (h)‘s tax limitation. Request Letter, supra note 1,
at l-2.
To construe subsection (h), we must adhere to the rules of constitutional construction as
articulated by the courts. We must attempt to give the constitutional provision the effect that the
legislators and voters intended. Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342, 344 (Tex.
2001). We rely heavily on the provision’s literal text and attempt to give effect to its plain language.
3Additionally, subsection (f) permits a surviving spouse to claim an exemption if the deceased spouse had
received the subsection (b) exemption for the homestead residence of a person sixty-five years of age or older. TEX.
CONST.art. VIII, $ l-b(f).
4Subsection (g) provides for transfer of a subsection (d) limitation on increases of the total amount of taxes for
public elementary and secondary school tax purposes for a person who qualifies for the limitation and subsequently
establishes a new residential homestead.
The Honorable Jeff Wentworth - Page 3 (GA-0363)
Id.; Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353,355 (Tex. 2000). We must presume “that
the language of the Texas Constitution is carefully selected, [and must] construe its words as they
are generally understood.” Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000).
Subsection (h)‘s plain language does not purport to restrict the counties, cities, towns, or
junior college districts that may promulgate or adopt a subsection (h) tax limitation to only those
entities that have previously established their own homestead residence tax exemptions. Rather, the
subsection prescribes the terms of the limitation that such entities may establish, either by action of
the governmental body or by voter initiative. TEX. CONST. art. VIII, 5 l-b(h). Under subsection (h),
such entities “may provide that if a person who is disabled or is sixty-five (65) years of age or older
receives a residence homestead exemption prescribed or authorized by this section,” then the total
ad valorem taxes the entity imposes on the property may not increase while it remains the person’s
residence homestead. Id. (emphasis added), “This section” is section l-b. Section l-b prescribes
or authorizes residence homestead exemptions in subsections (a), (b), (c), (e), and (f). For example,
under article VIII, section l-b(c), the legislature has enacted enabling legislation that exempts from
school district taxation $15,000 of the appraised value of the homestead residence for most adults,
plus an additional exemption of $10,000 for persons disabled or sixty-five years of age or older.
TEX. TAX CODE ANN. tj 11.13(b)-(c) (V emon Supp. 2004-05). Thus, a city that has never adopted
an exemption from its own taxes nevertheless could adopt an effective tax limitation available to its
citizens who are disabled or sixty-five years of age or older who receive a residence homestead
exemption from school district taxes? We see no textual basis for restricting the availability of the
tax limitation in subsection (h) to only persons residing in entities that have established the optional
exemptions in subsections (b) and (e).
This construction is confirmed by the companion legislation promulgated by the same
legislature that proposed article VIII, section l-b(h) to the voters. The Seventy-eighth Legislature
enacted Tax Code section 11.26 1, effective only if the voters adopted the constitutional amendment
now embodied in article VIII, section l-b(h). Act of May 28,2003,78th Leg., R.S., ch. 396, $9 1,
4,2003 Tex. Gen. Laws 1642, 1642-46 (codified as TEX. TAX CODE ANN. 5 11.261). Tax Code
section 11.261 “applies only to a county, municipality, or junior college district that has established
a limitation on the total amount of taxes that [the entity imposes] on the residence homestead of a
disabled individual or an individual 65 years of age or older under Section 1-b(h), Article VIII, Texas
Constitution.” TEX. TAX CODE ANN. 5 11.261(a) (Vernon Supp. 2004-05). For implementing the
limitation, section 11.261(b) of the Tax Code provides:
The county, municipality, or junior college district may not increase
the total annual amount of ad valorem taxes the [entity] imposes on
the residence homestead of a disabled individual or an individual 65
years of age or older above the amount. . . imposed on the residence
‘Because of the general applicability of the exemption under article VIII, section l-b(c), we need not decide
whether a residence homestead exemption under one of the other subsections, received by a person who is disabled or
sixty-five years of age or older, would qualify that residence for the tax limitation under article VIII, section l-b(h). See
TEX. CONST.art. VIII, 8 l-b(a)-(c), (e)-(f), (h).
The Honorable Jeff Wentworth - Page 4 (GA-0363)
homestead in the first tax year . . . in which the individual qualified
that residence homestead for the exemption provided by [Tax Code]
Section 11.13(c) for a disabled individual or an individual 65 years of
age or older.
TEX. TAX CODE ANN. 5 11.261(b) (V emon Supp. 2004-05). Section 11.13(c) is a tax exemption
from school district taxation of a portion of the value of the homestead residence of an adult who is
disabled or sixty-five years of age or older. Id. 8 11.13(c) (Vernon 2004-05). In other words, the
constitutional limitation in article VIII, section 1-b(h) on taxes imposed by a county, municipality,
or junior college district may be based on the school district tax exemption in Tax Code section
11.13(c) for persons disabled or sixty-five years of age or older. The Tax Code does not suggest that
any other tax exemption is required before the article VIII, section 1-b(h) limitation may be adopted.
Consequently, we conclude that the limitation in article VIII, section l-b(h) is available to entities
that have not previously established one of the optional homestead residence exemptions in section
l-b.
The Honorable Jeff Wentworth - Page 5 (GA-0363)
SUMMARY
A city is authorized to establish the property tax limitation
under article VIII, section l-b(h) of the Texas Constitution even if it
has not previously enacted a residence homestead exemption under
article VIII, section 1-b of the Texas Constitution.
Very truly yours,
General of Texas
BARRY R. MCBEE
First Assistant Attorney General
NANCY S. FULLER
Chair, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee