# TheAttorney GeneralofTexas

November 29, 1917

The Honorable Johnny W.Actkinson Opinion No. H-1098

Attorney Parmer County P/O. Box 286 Farwell, Texas 79325

The Honorable Oscar H.Mauzy Chairman, Senate Committee on Education Senate Chamber State Capitol Austin, Texas 78711 Re: Constitutionality of House Bill 22permitting an income capitalixation valuation of open space land used for agricultural purposes.

Dear Mr. Actkinson and Senator Mauzy:

You have asked whether House Bill 22of the 65th Legislature, Acts 1977, 65th Leg., ch. 318, at 847, codified as article 7150k, V.T.C.S., can be given effect without the people voting on acompanion constitutional amendment. Each ofyou has submitted abrief with your request and each has concluded that aconstitutional amendment isrequired before the bill can be effective.

InAttorney General Opinion H-1022 (1977). which was issued onJuly 6, 1977, we answered a similar inquiry from our State legislative leadership in the negative. Inasmuch
as the controlling constitutional provisions and the controlling judicial decisions remain the same, our answer must remain the same. Once again wewill set forward those controlling provisions and decisions.

The constitutional questions surrounding House Bill 22 involve article 8, section 1of the Texas Constitution which provides inpart:

Taxation shall be equal and uniform. All property in this State, whether owned by natural persons or corporations, other than municipal, shall be taxed inproportion to its value, which shall be ascertained asmay be provided by law.

p. 4504The Honorable Johnny W.Actkinson

The Honorable Oscar H.Mauzy -Page 2 (H-1098)

Article 8, section l-d of the Constitution provides for special assessment of certain agricultural land, but there isnodispute that House Bill 22provides for abroader program than that authorized by article 8, section l-d.

When House Bill 22was introduced itobviously was the view of the sponsors that aconstitutional amendment would be necessary toauthorize this broader program of appraisal of open space land. The bill provided that itwould become effective only ifand when the companion constitutional amendment
was adopted. In fact, the contingent effective date provision
was inHouse Bill 22as itpassed the House and Senate and as itwas referred to conference committee. Itwas only on **May 25,**  1977, when the conference committee reported its version of the bill, that House Bill 22emerged without being explicitly dependent on the passage of the constitutional amendment. House Journal, 65th Leg., R.S., at 3922 (May 25, 1977). The proposed constitutional amendment was defeated in the House ofRepresentatives when it lacked one vote of obtaining the one hundred votes necessary for passage. House Journal, 65th Leg., R.S., at 3923 (May 25, 1977). The vote was 99yeas, 48nays and 3not voting.

Since House Bill 22had, therefore, been passed but the companion constitutional amendment had been defeated, the legislative leadership requested an opinion prior to the special session on the constitutionality of aprogram ofvaluation of agricultural land on **a**basis other than market value. While the opinion request did not specifically mention House Bill 22, the same constitutional issue raised by that legislation was involved. Attorney General Opinion H-1022 (1977) was issued
onJuly 6, 1977, and stated that aconstitutional amendment would be required before the Legislature could provide for the valuation of one type of property at asmaller percentage of market value than other types of property. Thereafter, certain legislators and this office, all ofwhom had supported the program sought tobe enacted by House Bill 22, urged that the subject of such aconstitutional amendment be included inthe call of the special session which convened onJuly 11, 1977. However, the subject was not included by the Governor in the proclamation calling the special session.

In spite of this clear history, additional arguments have been advanced inan effort touphold the bill without the necessity of aconstitutional amendment. The arguments can be grouped under two general headings. First, it is argued that such an amendment would not be necessary because the income capitalization method ofvaluation provided byHouse Bill 22 ismerely a means of ascertaining market value. We believe House Bill 22

P. 4505The Honorable Johnny W.Actkinson

The Honorable Oscar H.Mauzy -Page 3 (H-1098)

indicates on its face that something other than market value isproduced by the formulas set out inthe bill. While an income capitalization method ofvaluation may sometimes beuseful indetermining market value, it is clear that House Bill 22 isdesigned toproduce avaluation which does not represent market value. The bill provides that the value produced by the income capitalization method will be less than market value. The assessor isrequired torecord both market value and an income capitalization value. He isalso required to roll back the assessments for the four years prior to achange in the use of agricultural land and to collect the taxes for those years as if they had been levied onmarket value assessments. Additionally, the legislative debates leave nodoubt that the legislation isdesigned toproduce valuations which do not reflect market value.

The other argument isthat an amendment isunnecessary because the Constitution gives the Legislature broad authority topermit valuation of property on abasis other than market value. This argument has been rejected by our highest legal authority on State constitutional issues. The Supreme Court of Texas has addressed the requirement of article 8, section 1 of the Constitution. The court said:

Article 8, 91,of the Constitution, contains this language: "All property in this state, whether owned bynatural persons or corporations, other than municipal, shall be taxed inproportion to itsvalue, which shall be ascertained asmay beprovided by law." The rule announced by that provision is "equality and uniformity." To secure this "uniform and equal" taxation, the same sentence prescribes that the property of all persons and corporations, other than municipal, "shall be taxed inproportion to its value, which shall be ascertained as may be provided by law." This isaclearly expressed purpose, that the officers charged with the assessment ofproperty shall in the manner prescribed by law ascertain its value. "The value of the property is to be determined bywhat itcan bebought and sold for." New York State v. Barker, 179 U.S. 287, 21Sup. Ct. 124, 45L. Ed. 194. If itmeans full market value when applied to the intangible assets of arailroad company, itmeans the same thing when applied to land, horses, etc. The standard of uniformity prescribed by the

p. 4506The Honorable Johnny W. Actkinson

The Honorable Oscar H.Mauzy -Page 4 (H-1098)

Constitution being the value of the property, taxation cannot be in the same proportion to the value of the property unless the value of all property isascertained by the same standard. Lively v.Missouri, K. &T. Ry. Co. of Texas, 120 S.W. 852, 856 (Tex. 1909) (Emphasis added).

On numerous occasions Texas courts have specifically indicated that it is settled that the Texas Constitution, unless amended by the people toprovide otherwise, requires appraisal
on the basis ofmarket value. Rowland v. C S.W.2d 756, 760.(Tex. Comm'n App. 1928, jd Richfield Co. v.Warren Ind. Sch. Dist., 4 (Tex. Civ. App. -- Beaumont 1970, writ ref'd n.r.e.1; Dietrich ~~g~3~~~~~~;';'~~~lf~~e~~~."~~;,*A~~,t~-v~~~~~p~'~~6
S.W.2d 235, 237 (Tex. Civ. App. -- San Antonio 1940, writ ref'd); Porter v. Langley, 155 S.W. 1042 (Tex. Civ. App. --Dallas 1913, writ ref'd). See also City ofArlington v. Cannon, 271 S.W.2d 414 (Tex. 19541; City of Houston v. Baker, 178 S.W. 820 (Tex. Civ. App. --Galveston 1915, writ ref'd); Attorney General Opinion H-1022 (1977).

Laudable as the purposes of House Bill 22are in lessening the severe economic problems facing our farmers and ranchers, we are not at liberty to ignore the substantial and long established judicial authority that aconstitutional amendment is necessary to implement such purposes. Accordingly, it is still
our opinion, as itwas prior to the special session, that to bring about the desired purposes of House Bill 22an amendment to the Texas Constitution will have tobeproposed by the Legislature and approved by amajority of Texas voters.

SUMMARY

House Bill 22of the 65th Legislature (article 7150k, V.T.C.S.), which would establish anew program ofvaluing agricultural land on abasis other than market value, cannot beplaced ineffect without approval of the companion constitutional amendment by amajority of Texas voters.

P. 4507The Honorable Johnny W.Actkinson The Honorable Oscar H.Mauzy -Page 5 (H-1098)

DAVID M. KENDALL, First Assistant

C. ROBERT HEATK, Chairman Opinion Committee
jst

p. 4508