March 2. 1987 

.lIYl MxrrGX 

X,-‘=GRSEY GESERAL 

5 

Eonorable Bevil B. Wright 

Hardin County Attorney 

P. 0. Box 516 

Kountze , Texas 77625 

Opinion No. JM-641 

Re: Whether a county tax rate increase 

to provide for indigent health care 

services is subject to a rollback 

election under section 26.07 of the 

Tax Code, and related questions 

Dear Ms. Wright: 

The Sixty-ninth Legislature enacted in special session the 

Indigent Health Care and Treatment Act [hereinafter the act], which 

requires govermaental entities to provide certain health care services 

to Indigent rqsldents. Acts 1985, 69th Leg., 1st C.S., ch. 1, at 

3777. Sections 2 and 3 of Ehe act amended sections 26.04, 26.06, and 

. 26.07 of the Tax Code, which set forth the requirements for the 

effective ad valorem tax rate calculation, for the content of the 

notice of the public meetings held prior to the adoption of the tax 

rate, and for the tax rate rollback petition and election procedures, 

respectively, with which taxing units must comply. You ask us three 

questions regarding the effect of the act and its amendatory 

provisions. 

Section 26.04 of the Tax Code sets forth the method by which the 

so-called “effective tax’rate” is calculated by each taxing unit prior 

to the adoption of its ad valorem tax rate. The “effective tax rate” 

is that tax rate which, when imposed upon the property that was taxed. 

last year but using this year’s appraised values, will produce 

approximately the amount of revenue that was produced last year. See 

Tex. Const. art. VIII, section 21; Attorney General Opinion MW-m 

(1982). Section 26.05 of the Tax Code provides that, if a taxing unit 

adopts a tax rate that exceeds the effective tax rate by more than 

three percent, the taxing unit must hold a public hearing on the 

proposed increase and publish a specified public notice of the meeting 

prior to Its being held. See Tax Code 126.06. Section 26.07 of the 

Tax Code permits qualifiedxters of the taxing unit by petition to 

require that a tax rate rollback election be held if the adopted rate 

exceeds the effective rate by more than eight percent. If the 

election is successful, the adopted rate is reduced to “a rate that 

exceeds the rate calculated by section 26.04 of this code by only 

eight percent .I’ Tax Code 526.07(a). 

p. 2900 
Ronorable Bevil B. Wright - Page 2 (JM-641) 

The amendments to sections 26.04, 26.06, and 26.07 of the Tax 

Code contained in the act effectively segregate out the amount of the 

tax rate increase attributable to the costs of providing in the first 

year the health services required by the act. Section 26.04(e) was 

amended by the act to include among the Items of information that the 

taxing unit is required to publicize in connection with the calculation of its effective tax rate 

a schedule of the unit’s expenses in providing 

services required by the Indigent Health Care and 

Treatment Act . . . showing the amount of required 

expense which will be paid in the next year from 

property tax revenues, the amount of required 

expense paid in the preceding year from property 

tax revenues, and the amounts of state 

reimbursement, if any, received or expected for 

either year. 

Tax Code 926.04(e) (4). 

Section 26.06 was amended by the addition of subsection (f). 

vhich lists the items of information that the published notices for 

the ad valorem tax rate increase and for the vote on the adoption of 

the tax rate must contain for those taxing units that offer health 

services as required by the act. Each notice is required to specify 

explicitly the percentage of the tax rate increase which is attributable to the costs of providing the required indigent health care 

services. Each such notice must contain the following: 

(Percentage of increase over the tax rate required 

to levy amount needed for Indigent health care 

services) percent of the increase will be used to 

pay’for services required by the Texas Legislature in the Indigent Health Care and Treatment 

Act. . . . 

Tax Code 126,06(f). 

Finally. section 26.07 was amended by the addition of subsection 

(h) . 

It is with this section that you are concerned. Section 26.07. 

as amended, provides the folloving in pertinent part: 

Sec. 26.07. Election to Repeal Increase. 

(a) If the governing body of a taxing unit 

other than a school district adopts a tax rate that 

exceeds the rate calculated as provided by Section 

26.04 of this 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 

p. 2901 
Honorable Bevil B. Wright - Page 3 (JM-641) 

the current year to a rate that exceeds the rate 

calculated as provided by Section 26.04 of this 

code by only eight percent. 

. . . . 

(d) If the governing body finds that the 

petition is valid (or fails to act within the time 

allowed), it shall order that an election be held 

in the taxing unit on a date not less than 30 or 

more than 90 days after the last day on which it 

could have acted to approve or disapprove the 

petition. A state law requiring local elections to 

be held on a specified date does not apply to the 

election unless a specified date falls within the 

time permitted by this section. At the election, 

the ballots shall be prepared to permit voting for 

or against the proposition: ‘Reducing the tax rate 

in (name of taxing unit) for the current year from 

(the rate adopted) to (the rate that is only eight 

percent greater than the 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 tax rate that is eight percent 

greater than the rate calculated as provided by 

Section 26.04 of this code; othervise, the tax rate 

for the current year is the one adopted by the 

governing body. 

. . . . 

(h) Notwithstanding Subsection (a) of thfs 

section, if in the first year after the effective 

date of this Act the governingbody 

unit other than a school district increases its tax 

. rate to provide health care services that the 

governing body is required to provide to its residents under the Indigent Bealth Care and Treatment 

Act (S.B. 1, Acts of the 69th Legislature, 1st 

Called Session, 1985) the adopted tax rate that 

allows voters to seek to reduce the tax rate under 

this section must exceed the rate calculated under 

Section 26.04 of this code by eight percent plus 

that rate which, applied to the total taxable value 

submitted to the governing body, would impose taxes 

in an amount equal to the amount vhich the 

governing body would be required to pay out of 

property taxes to provide services requlred.by the, 

p. 2902 
Honorable Bevil B. Wright - Page 4 (JM-641) 

Indigent Health Care and Treatment Act less the 

amount the governing body paid out of property 

taxes to provide the equivalent services In the 

preceding year and less any state reimbursement 

which the governing body expects to receive 

pursuant to Subtitle D of Title 2 of the Indigent 

Eealth Care and Treatment Act. (Emphasis added). 

You first ask us 

(wlhether Bardin County is entitled to include in 

its adopted tax rate for 1986 an increase to 

provide for the additional cost of indigent health 

care services required under the Indigent iiealth 

Care and Treatment Act and If such increase would 

be subject to a rollback under amended section 

26.07 of the Property Tax Code. 

We addressed your first question In Attorney General Opinion 

JM-528 (1986). In that opinion, the question posed was: 

tIln an instance in which there has been a 

successful tax rate rollback election and In which 

the adopted rate includes a rate increase 

attributable to the additional costs incurred by 

providing the indigent health care services 

required by the act, whether the rate increase for 

providing those health fare services is also 

rolled back. 

We set out the amendments to each section of the Tax Code and 

discussed the legislative history of the portions of the bill at 

issue. We then concluded: 

It is clear from a reading of the act that the 

provisions amending the Tax Code, taken together. 

were meant to isolate that portion of the tax rate 

increase attributable to providing the services 

required by the act. It would make little sense 

for the legislature to require certain taxing 

units to offer specified health care services to 

indigents, to set forth tax rate calculation and 

notice procedures segregating from a tax rate 

increase that portion of the rate increase attrlbutable to the costs of providing such services, 

and to make that percentage rate increase necessary to trigger the rollback provisions in the 

first place eight percent over the effective rate 

plus the portion of the rate increase attributable 

to the costs of providing the services, and then 

to intend that the ‘rolled-back’ rate be set at 

p. 2903 
Honorable Bevil 8. Wright - Page 5 (JM-641) 

eight percent over the effective rate. The 

. legislature did not intend a construction that 

would impair the ability of taxing units to 

provide the services required by the act. 

Attorney General Opinion Jl4-528 at 5-6. It is clear from an even 

cursory reading of the amendments to the .Tax Code that Hardln County 

is not merely “entitled” to include in its adopted tax rate for 1986 

an increase in tax rate attributable to the additional costs incurred 

by the county of complying with the Indigent Health Care and Treatment 

Act; the county is required to do so. And it is equally clear that 

any such 1986 percentage rate increase would not be subject to a 

rollback if a successful election were held pursuant to section 26.07 

of the Tax Code. The rollback limitations applicable to health care 

taxation apply only “in the first year after the effective date of 

[the act],” 1985. Tax Code 126.07(h). 

You next ask 

[wlhether the Commissioners Court of Hardin County 

is required to order an election under amended 

section 26.07 of the Property Tax Code if Hardin 

County is entitled to include in its adopted tax 

rate for 1986 an increase to provide for the 

additional cost of indigent health care services 

required under the Indigent Eealth Care and 

Treatment Act and if so what tax rate should be 

set. 

Again, we implicitly answered the first part of your second 

question in Attorney General Opinion m-528 (1986). Therein we 

declared that 

[i]n an instance in which a taxing unit provides 

services as required by the Indigent Health Care 

and Treatment Act and in which there has been a 

successful tax rate rollback election in the first 

year in which those services are provided, 

subsection 26.07(a), when construed with 

subsection 26.07(h), sets the ‘rolled-back’ rate 

at eight percent over the effective rate plus the 

additional percentage increase attributable to the 

costs of providing the services required by the 

act. 

A corollary to this proposition is that the tax rate percentage 

increase that triggers the rollback provisions in .the first place is 

eight percent over the effective rate irrespective of any rate 

percentage increase attributable to the costs of providing indigent 

p. 2904 
Bonorable~Bevil B. Wright - Page 6 (J&641) 

health care and treatment; the laygent health care portion is simply 

. segregated out of the calculation. 

Your final question is: 

[wlhether the effective tax rate as calculated by 

the County Tax Assessor according to section 26.04 

of the Property Tax Code must be corrected if 

there has been an error made by the appraisal 

office in its Information provided to the County 

Tax Assessor after (1) the tax rate has been 

publicized as provided by section 26.04(e) of the 

Property Tax Code; (2) adopted by the county 

commissioners court; (3) Tax Statements have been 

sent; (4) the deadline of January 31 has passed 

for the payment of taxes without penalty.. 

We understand you to ask whether the county tax assessor is affirmatively required to re-calculate the effective tax rate after the tax 

plan has already been put into effect if the appraisal office has 

supplied to the assessor erroneous information upon which he based 

his effective tax rate calculation. We answer your question in the 

negative. 

Section 26.01 of the Tax Code requires the chief appraiser to 

prepare and certify to the assessor for each taxing unit that part of 

the appraisal roll for the appraisal district that lists the property 

taxable by the taxing unit. Subsections 26.04(a) and (b) provide the 

following: 

(a) On receipt of the appraisal roll, the 

assessor for a taxing unit shall determine the 

total appraised value. the total assessed value, 

and the total taxable value of property taxable by 

1. For example, if the county’s effective tax rate were 

$.50/$100 valuation, the amount of tax rate increase attributable to 

indigent health care costs were $.05/$100 valuation, and the amount of 

tax rate increase attributable to increased expenditures other than 

indigent health care were $.06/$100 valuation, the raterhat the 

county would seek to adopt is $.50 + 5.05 + S.06. $.61/$100 valuation, 

a 22% increase over the effective tax rate. The proposed rate 

increase percentage that would trigger the rollback provisions. 

however, is 12X, i.e. the $.06/$100 valuation increase attributable to 

non-indigent heal=are costs. 

p. 2905 
Honorable Bevil B. Wright - Page 7 (JPI-641) 

the unit. Re shall also determine, using information provided by the appraisal office, the 

appraised, assessed, and taxable value of property 

added to the appraisal roll since the preceding 

tax year by annexation of territory and the 

appraised, assessed, and taxable value of the 

improvements on the roll that were made after 

January 1 of the preceding tax year. The sum of 

the taxable value of annexed property and the 

taxable value of improvements made after January 1 

of the preceding tax year is the taxable value of 

new property. 

(b) The assessor shall submit the appraisal 

roll for the unit showing the total appraised, 

assessed, and taxable values of all property and 

the total taxable value of new property to the 

governing body of the unit by August 1 or as soon 

thereafter as practicable. 

Subsections (c) and (d) of section 26.04 of the Tax Code then set 

forth the elaborate effective tax rate calculation required by article 

VIII, section 21, of the Texas Constitution. 

The only affirmative obligations imposed by chapter 26 of the 

code on the taxing units’ assessors regarding the rate calculation 

are specifically set forth therein. The code imposes no further 

affirmative obligation on the assessors. Indeed, the code offers no 

mechanism or procedure by means of which a taxing unit’s assessor 

could re-calculate the effective rate. The legislature has created at 

subsection (h) of section 26.04 of the Tax Code a remedy in the event 

that the requirements of section 26.04 are not complied with. This 

provision sets forth the following: 

A person who owns taxable property is entitled to 

an injunction prohibiting the taxing unit in which 

the property is taxable from adopting a tax rate 

if the assessor or designated officer or employee 

of the unit, as applicable. has not complied with 

the computation or publication requirements of 

this section and the failure to comply was not in 

good faith. 

After the tax plan has been put into effect, the only remedy lies with 

an aggrieved taxpayer seeking to enjoin enactment of the tax scheme. 

See. e.a.. I _ State ~~~~ v. Whittenburg, 265 S.W.2d 569 (Tex. 1954); Citv of 

Arlington v. Ca=, 2 171 S.W.2d 414 (Tex. 1954); Jackson v. 1 tiypearl 

Independent SC ,hool Districf, 392 S.W.2d 892 (Tex. Civ. 1- iPP - - Waco 

1965, no writ). We conclu de, then, that the assessor is not empowered 

to re-calculate the effective tax after the tax plan has been put into 

p. 2906 
Aonorable Bevil B. Wright - Page 8 (JM-641) 

effect; the exclusive statutory remedy is that created by the 

legislature in subsection (h) 06 section 26.04. 

SUMMARY 

The county is required to include in its 

adopted tax rate for 1986 an increase sufficient 

to provide for the additional costs incurred 

because of the Indigent Health Care and Treatment 

Act. Any such increase would not be subject to 

the tax rate rollback provisions of section 26.07 

of the Tax Code. The county commissioners are not 

authorized to accept a rollback election petition 

unless the rate adopted exceeds the effective tax 

rate by more than eight percent, calculated 

without regard for any percentage increase 

attributable to costs incurred by complying with 

the Indigent Eealth Care and Treatment Act. The 

tax assessor is not empowered to re-calculate the 

effective tax rate after the tax plan is in effect 

in the event that the effective rate was incorrectly calculated. The only remedy which the 

legislature created in such an instance is set 

forth in subsection (h) of section 26.04 of the 

Tax Code and provides that a person who owns 

taxable property is entitled to an injunction in 

certain instances. 

Attorney General of Texas 

JACK EIGETOWER 

First Assistant Attorney General 

WARY RRLLER 

ExeqR.ive Assistant Attorney General 

RICE GILPIN 

Chairman, Opinion Cossaittee 

Prepared by Jim Moellinger 

Assistant Attorney General 

p. 2907