ATTORNEY GENERAL OF TEXA 

March 8, 2024 

The Honorable John Fleming 

Nacogdoches County Attorney 

101 West Main Street, Room 230 

Nacogdoches, Texas 75961 

Opinion No. KP-0461 

Re: Calculation of the amount “not to exceed one-fourth of one percent” in Texas Special 

District Code section 1069.211, governing the Nacogdoches County Hospital District’s 

allocation of its sales and use tax revenue for economic development (RQ-0516-KP) 

Dear Mr. Fleming: 

You tell us that the Nacogdoches County Hospital District (“District”) assesses a local sales 

and use tax of one percent in the District.

1 You ask about Special District Local Laws Code section 

1069.211, which authorizes the District to allocate a portion of the sales and use tax revenue for 

economic development. See Request Letter at 1; TEX. SPEC. DIST. CODE § 1069.211 (providing the 

District “may allocate a portion of its annual sales and use tax revenue, not to exceed one-fourth 

of one percent, to encourage economic development”). 

You state that the District has historically interpreted section 1069.211 to mean that it may 

allocate for economic development “up to ‘one-fourth of one percent’ of the one percent sales and 

use tax” revenue. Request Letter at 2. By way of example, you say that under this interpretation, 

“if the District collected $10 million in sales tax revenue for the year, it was able, but not required, 

to allocate no more than $25,000.00 for economic development ($10,000,000.00 x (0.01 x 0.25)).” 

Id. You explain that some individuals assert “that the ‘one percent’ referenced in section 1069.211 

refer[s] to the entire one percent annual sales and use tax received by the District.” Id. You say 

that under this alternative interpretation “the District would potentially have the ability to allocate 

up to $2,500,000.00 for economic development; i.e., one-fourth of $10 million annual sales and 

use tax revenue ($10,000,000.00 x 0.25).” Id. Thus, you seek to confirm the maximum amount of 

annual sales and use tax revenue the District may allocate for economic development. We begin 

with some background information. 

1

Letter from Honorable John Fleming, Nacogdoches Cnty. Att’y, to Honorable Ken Paxton, Tex. Att’y Gen. 

at 2 (Oct. 2, 2023), https://texasattorneygeneral.gov/sites/default/files/request-files/request/2023/RQ0516KP.pdf 

(“Request Letter”). 
 

 

 

 

 

 

 

 

 

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Background regarding the Nacogdoches County Hospital District. 

The District is a special law hospital district created by the Legislature under the authority 

of article IX, section 9 of the Texas Constitution. See Act of May 17, 1967, 60th Leg., R.S., ch. 

431, § 1, 1967 Tex. Gen. Laws 987; TEX. CONST. art. IX, § 9 (providing “[t]he Legislature may by 

general or special law provide for the creation, establishment, maintenance and operation of 

hospital districts”); May v. Nacogdoches Mem’l Hosp., 61 S.W.3d 623, 627 (Tex. App.—Tyler 

2001, no pet.) (recognizing this fact for the purpose of applying sovereign immunity). Chapter 

1069 of the Special District Local Laws Code, titled “Nacogdoches County Hospital District,” is 

the District’s enabling legislation. TEX. SPEC. DIST. CODE §§ 1069.001‒.304. 

Chapter 1069 authorizes the District to impose an ad valorem tax. Id. § 1069.301. You 

explain that, in January of 1992, the voters of the District voted to replace the ad valorem tax with 

a sales and use tax. Request Letter at 2 (explaining that “on January[] 18, 1992, the citizens of 

Nacogdoches County voted to replace the Hospital District’s ad valorem tax assessment with the 

receipt of a portion of the sales and use tax”). For purposes of this opinion, we assume the sales 

and use tax was adopted pursuant to Health and Safety Code section 285.061.2 See Act of May 24, 

1991, 72d Leg., R.S., ch. 658, § 1, 1991 Tex. Gen. Laws 2407 (providing that “[a] hospital district 

that is authorized to impose ad valorem taxes may adopt a sales and use tax”) (current version at 

TEX. HEALTH & SAFETY CODE § 285.061(a)); see also Tex. Att’y Gen. Op. No. JC-0247 (2000) at 

2 (“A hospital district’s authority is limited by applicable constitutional and statutory provisions, 

as well as any special laws enabling a particular district.”). Subject to certain limitations, voters 

could have adopted “the tax at a rate of one-eighth percent, one-fourth percent, one-half percent, 

one percent, one and one-half percent, or two percent.” See Act of May 24, 1991, 72d Leg., R.S., 

ch. 658, § 1, 1991 Tex. Gen. Laws 2407 (amended 1997) (current version at TEX. HEALTH & 

SAFETY CODE § 285.061(a)). You tell us that the District’s voters adopted a rate of one percent. 

See Request Letter at 2. With that background, we consider Special District Local Laws Code 

section 1069.211. 

Special District Local Laws Code section 1069.211 authorizes the District to allocate 

for economic development up to one-fourth of one percent (0.01 x 0.25) of its annual 

sales and use tax revenue. 

A court’s objective when interpretating a statute “is to ascertain and give effect to the 

Legislature’s intent.” Hegar v. Health Care Serv. Corp., 652 S.W.3d 39, 43 (Tex. 2022) (quoting 

In re D.S., 602 S.W.3d 504, 514 (Tex. 2020)). When possible, that intent is discerned from the 

plain meaning of the words chosen. See Maxim Crane Works, L.P. v. Zurich Am. Ins. Co., 642 

S.W.3d 551, 557 (Tex. 2022). Courts also consider punctuation in construing statutes. See Sullivan 

v. Abraham, 488 S.W.3d 294, 297 (Tex. 2016). 

Section 1069.211 authorizes the District to “allocate a portion of its annual sales and use 

tax revenue, not to exceed one-fourth of one percent, to encourage economic development in the 

2

See Email from Jose Castaneda, Nacogdoches Assistant Cnty. Att’y, to Op. Comm. (Feb. 26, 2024) (on file 

with the Op. Comm.) (“[T]his office has no reason to believe that the election was held under any other authority 

except for Health and Safety Code Section 285.061.”) 
 

 

 

 

 

 

 

 

 

 

 

 

The Honorable John Fleming - Page 3 

district as described by Section 52-a, Article III, Texas Constitution.” TEX. SPEC. DIST. CODE 

§ 1069.211. The portion of the sales and use tax revenue that may be used for economic 

development is measured by the annual amount of sales and use taxes collected by the Texas 

Comptroller of Public Accounts and allocated to the District. See TEX. HEALTH & SAFETY CODE 

§ 285.061(b) (providing that “Chapter 323, Tax Code, applies to the application, collection, and 

administration of the tax”); TEX. TAX CODE § 323.301 (providing the comptroller administers and 

collects a tax under chapter 323). The comma before and after the phrase “not to exceed one-fourth 

of one percent” signals that the phrase modifies that “portion” of the annual revenue that may be 

used for economic development. The plain language of the statute thus authorizes the District to 

allocate for economic development up to one-fourth of one percent (0.01 x 0.25) of its annual sales 

and use tax revenue. A court would likely conclude the District’s historical interpretation of section 

1069.211 is consistent with the plain language of the statute. 

The alternative interpretation of section 1069.211 leaves the section ineffective if the 

voters elect to change the sales and use tax rate and overlooks the statute’s plain 

language. 

As previously explained, advocates of the alternative interpretation argue “the ‘one 

percent’ referenced in section 1069.211 refer[s] to the entire one percent annual sales and use tax 

received by the District.” Request Letter at 2. In other words, these individuals argue that the 

Legislature prescribed a calculation that incorporates the one percent sales and use tax rate adopted 

by the voters of the District in 1992. Id. That interpretation makes the statute ineffective if the 

voters ever elect to change the rate to an amount other than one percent. See TEX. HEALTH & 

SAFETY CODE § 285.061(a) (providing that “[a] district may change the rate of the sales and use 

tax”); Hotze v. Turner, 672 S.W.3d 380, 388 (Tex. 2023) (providing that courts “presume that the 

Legislature intends statutes to be effective in their entirety and feasible of execution”); City of Fort 

Worth v. Pridgen, 653 S.W.3d 176, 184 (Tex. 2022) (recognizing courts may look to “the 

consequences of a particular construction” when interpreting statutes). 

Moreover, under the alternative interpretation, you say the District could allocate for 

economic development up to one-fourth of the annual sales and use tax revenue of the District. 

Request Letter at 2. That construction of section 1069.211 overlooks the statute’s plain language, 

as previously discussed. See supra at 3–4. The Legislature knows how to authorize such an amount. 

Cf., e.g., TEX. LOC. GOV’T CODE § 283.053(d)(2) (describing “an amount not to exceed 21 percent 

of the total sales and use tax revenue received”). It has not done so here. See FM Props. Operating 

Co. v. City of Austin, 22 S.W.3d 868, 885 (Tex. 2000) (relying on principle of statutory 

construction that the Legislature knows how to enact laws effectuating its intent). In sum, a court 

would likely reject the alternative interpretation of section 1069.211. 
The Honorable John Fleming - Page 4 

S UMMAR Y 

A court would likely conclude Special District Local Laws 

Code section 1069.211 authorizes the Nacogdoches County 

Hospital District to allocate for economic development up to onefourth of one percent (0.01 x 0.25) of its annual sales and use tax 

revenue. 

Very truly yours, 

KEN PAXTON 

Attorney General of Texas 

BRENT WEBSTER 

First Assistant Attorney General 

LESLEY FRENCH 

Chief of Staff 

D. FORREST BRUMBAUGH 

Deputy Attorney General for Legal Counsel 

AUSTIN KINGHORN 

Chair, Opinion Committee 

CHRISTY DRAKE-ADAMS 

Assistant Attorney General, Opinion Committee