Untitled Texas Attorney General Opinion ( 2014 )

GREG
0
ATTORNEY GENERAL OF TEXAS
ABBOTT
July 2, 2014
The Honorable Judith Zaffirini Opinion No. GA-1070
Chair, Committee on Government
Organization Re: Whether a municipality that has a current
Texas State Senate tax rate of zero is subject to a rollback election
Post Office Box 12068 under section 26.07 of the Tax Code or an
Austin, Texas 78711-2068 ad valorem tax-freeze election under article
VIII, section 1-b(h) of the Texas Constitution
(RQ-1179-GA)
Dear Senator Zaffirini:
You ask three questions about whether the voter approval requirements of certain tax
laws apply to municipalities that have reduced their ad valorem tax rate to zero.' You first ask
whether section 26.07(a) of the Tax Code "allow[s] voters to petition for a rollback election
when a city increases the ad valorem tax rate from zero?" Request Letter A, at 2.
Section 26.07 provides that if a municipality "adopts a tax rate that exceeds the rollback
tax rate ... , the qualified voters of the [municipality] 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." TEX. TAX CODE ANN. § 26.07(a) (West 2008). The rollback tax rate is
calculated by multiplying the effective maintenance and operations rate by 1.08 and then adding
the current debt rate. !d. § 26.04( c)(2). The effective maintenance and operations rate is
calculated using the following formula:
(LAST YEAR S LEVY- LAST YEAR S DEBT LEVY- LAST YEAR'S JUNIOR COLLEGE LEVY)
(CURRENT TOTAL VALUE- NEW PROPERTY VALUE)
Id. § 26.012(9) (West Supp. 2013).
1
You submitted two separate letters to ask these questions, but because the questions are related, we will
answer them in one opinion. See Letters from Honorable Judith Zaffirini, Chair, Senate Comm. on Gov't Org., to
Honorable Greg Abbott, Tex. Att'y Gen. (Jan. 9, 2014), http://www.texasattomeygeneral.gov/opin. We will
hereafter refer to your request regarding section 26.07 of the Tax Code as "Request Letter A" and your request
regarding article VIII, section 1-b(h) of the Texas Constitution as "Request Letter B."
The Honorable Judith Zaffirini - Page 2 (GA-l 070)
You state that the City of Santa Clara reduced its tax rate to zero and did not impose an
ad valorem tax for the 2012 and 2013 tax years. Request Letter A, at 2. The City now wishes to
raise the ad valorem tax rate to a rate above zero. !d. You explain that because the current tax
rate is zero, both last year's levy and the effective maintenance and operations rate are both zero
as well. !d. The City also has "no current debt service," so the rollback rate is zero. !d. You are
concerned that "[i]f any increase in the tax rate would trigger voters' ability to petition for a
rollback election, the City in theory could be prevented from collecting ad valorem taxes
indefinitely," and you question whether the "rollback provision compels" this result. !d.
When construing a statute, the "primary objective is to give effect to the Legislature's
intent." Tex. Lottery Comm 'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010).
The best evidence of the Legislature's intent is found through the plain language, and we
generally will not add requirements or exceptions to a statute that are not contained in the plain
language. See City of Rockwall v. Hughes, 246 S.W.3d 621, 630--31 (Tex. 2008) (declining to
read additional words into a statute). Through chapter 26 of the Tax Code, the Legislature has
provided the method for a taxing unit to adopt a tax rate, including empowering the voters to
petition for a rollback election when a city increases the ad valorem tax rate above the rollback
rate. The Legislature has not provided an exception to the rollback election procedure for
instances when a taxing unit has ceased levying taxes? Taxing units "must substantially comply
with the requisite procedures exacted by statute in order to arrive at a valid tax levy," and
"[f]ailure to comply with the statutory directives in assessing taxes voids the assessment."
Corpus Christi Taxpayer's Ass'n v. City of Corpus Christi, 716 S.W.2d 578, 580 (Tex. App.-
Corpus Christi 1986, writ refd n.r.e.). Thus, unless the Legislature creates an exception to
section 26.07 of the Tax Code, if a municipality's rollback rate is zero, the qualified voters of the
municipality by petition may require that an election be held to determine whether or not to
reduce the adopted tax rate back to zero. TEX. TAX CODE ANN. § 26.07(a) (West 2008).
Assuming an affirmative answer to your first question, you also ask "at what rate of
ad valorem tax is the voters' right to petition for a rollback election triggered." Request Letter
A, at 2. Section 26.07 authorizes voters to petition for a rollback election any time the adopted
tax rate "exceeds the rollback tax rate." TEX. TAX CODE ANN. § 26.07(a) (West 2008). Under
the plain language of the statute, if a municipality's rollback tax rate is zero, any adopted ad
valorem tax rate above zero authorizes the voters to petition for a rollback election. !d.
You also ask whether article VIII, section 1-b(h) of the Texas Constitution requires a
properly petitioned city to hold an election to determine whether to freeze the ad valorem taxes
2
In Attorney General Opinion GA-0798, this office addressed a similar question about a hospital district
that had ceased levying taxes, and the requestor argued that the district should be considered "a new entity setting its
budget and tax rate for the very first time." Tex. Att'y Gen. Op. No. GA-0798 (2010) at 3. That opinion advised,
however, that it was impossible to "predict with any certainty that a court would uphold a decision by the District to
select the provisions of chapter 26 with which the District will comply." !d. at 4.
The Honorable Judith Zaffirini - Page 3 (GA-1070)
imposed on the homestead of certain individuals when the current ad valorem tax rate is zero.
Request Letter B, at 2. Article VIII, section 1-b(h) authorizes the governing body of a
municipality to freeze the total amount of ad valorem taxes imposed on property that is subject to
a residence homestead exemption and owned by a person that is disabled or is 65 years of age or
older. TEX. CONST. art. VIII, § 1-b(h). Section 1-b(h) also provides that five percent of the
registered voters in the municipality may petition the municipality to call an election to
determine by majority vote whether to establish the tax freeze. /d. You are concerned that when
a municipality has a tax rate of zero, "subjecting the city to such an election [could] prevent the
collection of taxes" on a significant percentage of properties subject to homestead exemptions.
Request Letter B, at 2. You question whether article VIII, section 1-b(h) compels this result. /d.
"[T]hose who are called upon to construe the Constitution are not authorized to thwart the
will of the people by reading into the Constitution language not contained therein, or by
construing it differently from its plain meaning." Cramer v. Sheppard, 167 S.W.2d 147, 154
(Tex. 1943) (orig. proceeding). In authorizing a tax freeze for homestead exemptions, the plain
language of article VIII, section 1-b(h) does not provide any exceptions for instances when a
taxing unit has a tax rate of zero. Unless the text is ambiguous or leads to absurd results, we
construe it according to its plain meaning and will not rewrite it to extend beyond its plain terms.
See Combs v. Health Care Servs. Corp., 401 S.W.3d 623, 629 (Tex. 2013). Article VIII, section
1-b(h) is neither ambiguous nor does it lead to an absurdity. Thus, article VIII, section 1-b(h) of
the Texas Constitution requires a municipality with an ad valorem tax rate of zero, upon
receiving a properly filed petition from five percent of authorized voters, to hold an election to
determine whether to freeze the total amount of ad valorem taxes imposed on property that is
subject to a residence homestead exemption owned by a person that is disabled or is 65 years of
age or older.
The Honorable Judith Zaffirini - Page 4 (GA-l 070)
SUMMARY
Under section 26.07 of the Tax Code, if a municipality's
ad valorem rollback rate is zero and it adopts a tax rate above zero,
the qualified voters of the municipality by petition may require that
an election be held to determine whether or not to reduce the
ad valorem tax rate back to zero.
Article VIII, section 1-b(h) of the Texas Constitution
requires a municipality with an ad valorem tax rate of zero, upon
receiving a properly filed petition from five percent of authorized
voters, to hold an election to determine whether to freeze the total
amount of ad valorem taxes imposed on property that is subject to
a residence homestead exemption owned by a person that is
disabled or is 65 years of age or older.
Very truly yours,
Attorney General ofTexas
DANIEL T. HODGE
First Assistant Attorney General
JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel
VIRGINIA K. HOELSCHER
Chair, Opinion Committee
Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee