Untitled Texas Attorney General Opinion ( 1988 )

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