Honorable T. M. 'lkimble

First Assistant State Superintendent Austin, Texas
Dear Sir: OpinionNo. O-6687 Re: Effect of tax and valuationreductions under provisions of 3. B. 167, 49th Legislature,R.S.
Your recent communicationto this departmentreads as follows:

"Section2 of Article I, of S.B. No. 167, an Act of the 49th Legislature,reads, in part as follows:
"'No schooldistrictwill be eligible for aid under the provisions of thisAct which has reduced its tax rate within the two years immediatelypreceding the year for which aid is applied for hereunder orwhich has reduced its tax valuation in order to showbudgetary need.'
"A common school district,which contracts to a receivingdistrict, has paid all outstandingbonds forwhich the second 50 cents on the $100.00was levied. Now, the citizensplan to diminish the tax from one dollar to fifty cents per $100.00. Will this disqualify that district for EqualizationAid under the new EqualizationAid Law?
"A school district,which has for the last two years had a 654 maintenance tax, has recently voted a bond issue,which will require a 5Oq! bond levy. Thiswill mean that a schooldistrictwill use 50# on a $1.00 tax for maintenancepurposes and 50$ to liquidate their bonds. This means a reduction of 15# in their localmaintenance tax rate, but an increase of 35# in their over-all tax levy. Would such a district be ineligibleto receive aid under the provisions of the EqualizationLaw quoted above?
"An oil field district,which had a high valuation has lost the value due to the depletion of the oil in the field. Under the provisions ofHonorable T. M. Trimble, page 2 0-6687

the EqualizationLaw quoted above, is such a district eligible to receive aid, since it has been necessary to reduce the values on the real estate as there is no longer an oil field in the district to hold up the values?"
Session, Chapter 304,Acts of the 49thLegislature,Regular

listed by Vernon as Article 2784e, repeals Article 2784, Revised,Civil Statutes, 1925, after re-enacting its provisionswith the following changes:

Subdivision 1 of Section 1 of Chapter 304, reads as follows:

"1

. In common schooldistricts, for the furthermaintenance of public free schools and the erectionand equipmentof school buildings therein, a special tax; and in independentdistricts for the maintenance of schools therein, an ad valorem tax not to exceed OneDollar and Fifty Cents ($1.50) on the one hundreddollars valuatlon of taxable property of the district."
In Subdivision 1 of Article 2784, Revised Civil Statutes, 1925, the correspondingad valorem tax was fixed at $1.00. Subdivision 3 of Section 1 of Chapter 304, reads as followsr “3

. The amount ofmaintenance tax, together with the amount of bond tax of any district, shall never exceed OneDollar and Fifty Cents ($1.50)on the one hundred dollars valuation of taxableproperty; and if the rate of bond tax, togetherwith the rate of maintenance tax voted in the district shall at any time exceed OneDollar and Fifty Cents ($1.50) on the one hundred dollars valuation, suchbond tax shall operate to reduce themaintenance tax to the difference between the rate of the bond tax and One Dollar and Fifty Cents ($1.50)
In Subdivision 3 of Article 2784,Revised Civil Statutes, 1925, itwas provided that the amount of thewtenance tax, togetherwith the amount of the bond tax, should never exceed one dollar on the hundred dollars valuation.

The fifty-centmaximum rate for bonds, as set forth in Chapter 304 is the same as set forth in Subdivision 2 of Article 2784,Revised Civil Statutes, 1925.I

.

Honorable T. M. Trimble,page 3 O-6687

Subdivision 4 of Section 1 of Chapter 304 which is identicalwith Subdivision 4 of said Article 2784, Revised Civil Statutes, 1925, reads as follows:

"4

. No tax shallbe levied, collected,abrogated, diminished or increased,and no bonds shall be issued hereunderuntil such action has been authorizedby a majority of the votes cast atan election held in the district for such-purposes,at which none but property taxpayingqualified voters of such district shall be entitled to vote." Article 2785, Revised Civil Statutes, 1925, reads in part as follows:

"Beforean election is held to determine the pro osition of the levy of such tax (maintenance tax P or the issuance of such bonds, a petition therefor, signedby twenty (20) or more, or a majorityof those entitled to vote at such election, shall be presented to the County Judge of the county if for a common shcooldistrict, and to the district trustees if for an independent schooldistrict.

. . . The petition, election order and notice of election shall in all cases either state the specificrate of tax to be voted on or.that the rate shallnot exceed the limit herein specified. *..)I Article 2787, Revised Civil Statutes, 1925,which applies to common schoolbonds, contains, among others, the followingprovisions:

II

. . .At the time of the issuanceof said bonds and eachyear thereafter so long as any-,ofsaid bonds are outstanding,the said court shall levy a bond tax within the limits herein specified to pay the interest on saidbonds and redeem the same at maturity. The rate of such tax shallbe determinedby the trustees of the district and county superintendentand certified by the county superintendent to the commissioners court, and said court shall levy the tax at said rate until a change is recommended by said school officers. Said tax shallbe assessed and collected as provided by law for the assessment and collection of special local tax for the maintenance of public free schools. After said bonds shall have been issued and sold and said bond tax has been levied, it shallbe unlawful to hold an election in said district to determinewhether or not said tax shallbe. .

Honorable T. M. Trlmble, Page 4 o-6687

discontinued or lowereduntil said bonds, together with the interest thereon, shall have been fully paid, nor shall the limitsand boundaries of said common schooldistrict ever be decreased by the countyboard of school trustees until all of said bonds and the accrued interest thereon shall have been fully paid." Article 2794,Revised Civil Statutes, 1925, applying to changes in common school tax, reads as follows:

"At any time after the expirationof two years after any common schooldistrict has levied a school. tax on itself, twenty property taxpaying qualified voters, or a majority of suchvoters in the district, may have an electionheld, upon the proper petition to the county judge, to determinewhether such tax shallbe abrogated, increasedor diminished. Said election shall be held and conductedas other elections in saiddistrict. If the electionbe to abrogate or diminish the school tax, the ballots shall havewritten or printed thereon the words: 'For abrogating school tax,' or 'Fordiminishing school tax to
. . .cents;' and 'Againstabrogating school tax,' or 'Againstdiminishing school tax to
. . . . cents.' If the electionbe to determinewhether the tax shallbe increased,the ballots shall have written or printed thereon the words: 'For increase of school tax' and 'Againstincrease of school tax.'" Article 2795>Revised Civil Statutes, 1925, concerning the levy of common school tax, provides in part as follows:

"Thecommissionerscourt, at the time of levying taxes for county purposes, shall also levy upon all taxable propertywithin any common schooldistrict the rate of tax so voted if a specificrate has been voted; otherwise said court shall levy'such a rate within the limit so voted as has been determined by the board of trustees of saiddistrict and the county superintendentand certified to said court by the county superintendent.

. . .'
In view of the foregoing provisions,your first question is answered as follows:

If, before levying the bond tax of fifty cents, only fifty cents had theretoforebeen levied for maintenance purposes, then said common schooldistrict need not levy over fifty cents for maintenance purposes, and would not be dis-Honorable T. M. Trimble, page 5 O-6687

qualified to receive EqualizationAid under the new law. However, if before levying said ,fiftg-cent bond tax,.the distrect had voted a greater sneclflcmaintenance tax than fifty cents, and said greatermaintenance tax has not been diminished or increasedby a majority vote cast at an electionheld in the district for sala purpose, then said specificmaintenance tax must be continuedby said district, even though saidbona3 have been liquidated. (See Subsection 4 of Section 1 of said Chapter 304 and also Articles 2785 and 2795, Revised ( Civil Statutes, 1925).

Likewise, If before levying said fifty-centbond tax, the district had voted a maximum maintenance tax ,of,more than fifty cents, but not a specificmaintenance tax, and the commissioners' court had been levying a greater rate for maintenance purposes,within the limit so voted, as had-beendetermined by the board of trustees of said district and the county superintendent,and certified to said court by the county superintendent,then saidmaintenance tax so certified must be continuedby said dlstrlct in order to qualify for EqualizationAid4 even though saidbonds have been llquldated. (SeeSubsection of Section 1 of said Chapter 304, and also Articles 2785 and 2795, R.C.S., 1925. Also see OpinionNo. o-6768 of this department, a copy of which is attached hereto).

We now answer your second question: If the schooldistrict has $oted said fifty-cent .- bond tax as a specific tax on or since June 4, 1945, the date said Chapter 304 became effective, samewould not affect the sixty-five-centmaintenance tax, as from and lncludlng said date, $1.50 Fs now the maximum for all tax purposes. However, If said fifty-centbond levywas voted prior to June 4, 1945, the provisions of Subdivision 3 of Article 2784,Revised Civil Statutes, (nowrepealed)Ewouldapply. Therefore,by operation of law. and not by reason of any action of the school district, the fifty-centbona tax reduced the sixty-five-centmaintenance tax to the difference between the rate of bond tax (fifty cents),, and one dollar. This would leave the maintenance tax (orglnallg sixty-five cents), during the time said bond issue was outstanding,to be fifty cents. However, unless said sixty-five-centmaintenance tax is reduced, eitherby an election or by action of the board of trustees and the county superintendent,as per the provisions of Articles 2794 and 2795, Revised Civil Statutes, 1925, same is by operation of law continued in force and effectwhen said bonds are liquidated. Also, if the fifty-centbond tax so votedby the district ia a maximum tax and not a specific tax, and suchbond tax shouldbe reduced by the trustees of saiddlstrict and the county superintendentat any time before saidbonds have beenHonorable T. M. Trimble,page 6 O-6687

finally liquidated,as per Article 2787, then and in such event the maintenance tax ~111 automaticallybe increased to an amount which represents the difference between the rate of the bond tax and one dollar, but in no event to exceed sixty-five cents. The contents of the preceding sentence are based on the assumption that the sixty-five-centmaintenance tax has not been reduced eitherby election, if voted as a specific tax, or by actton of the board of trustees and the county superintendent,if voted as a maximum tax. (See Arts. 2794 and 2795,R. C. S., 1925).

In view of the foregoing, saiddistrictwill not become Ineligible for EquallsationAid under the provislons of Senate Bill No. 167, 49th Legislature,Regular Ses31on, so long only as itsmaintenance tax of sixty-five cent3 is reduced by operation of the bond taxYour third questton Implies and assumes that the valuations of the districtwere lost as a result of depletion rather than by a reductfon in tax valuation bv the dlstrlct in order to show budgetary need. If such Is a fact, it obviously follows that such a condition or result would not render such district ineligible to receive aid. Each case inwhich tax valuation is reduced,will necessitatea determination as to the cause there0 f. Where proper lnvestigation results in a determination that such reduced tax valuation has resulted from causes other than by action of the district in order to show budgetary need, such tax reduction will not render the affected district ineligible for aid.
Yours very truly
ATTORNEYGENERAL OF TEXAS

By s/L. H. Flewellen L. H. Fl~ewellen Assistant LHF/JCP/wc Enclosure-l

APPROVE0 SEP 28, 19'45 s/Carlos CI Ashley FIRST ASSISTANT ATTORNEY GENERAL Approved Opinion CommitteeBy,s/J. F. Chairman