. 

The Attorney General of Texas 

.~uly 22, 1983 

JIM MATTOX 

Attorney General 

Supreme Court Building 

P. 0. Box 12548 

Austin. TX. 78711. 2548 

5121475.2501 

Telex 9101674-1367 

Telecopier 512/475-0266 

1607 Main St., Suite 1400 

Dallas, TX. 75201-4709 

2141742-8944 

4824 Alberta Ave., Suite 160 

El Paso. TX. 79905-2793 

9151533.3464 

x20 Dallas Ave., Suite 202 

rlouston, TX. 77002.6986 

806 Broadway, Suite 312 

Lubbock, TX. 79401-3479 

806/747.5236 

4309 N. Tenth. Suite 8 

McAllen. TX. 78501.1685 

5121682-4547 

200 Main Plaza, Suite 400 

San Antonio. TX. 78205.2797 

512/225-4191 

A” Equal Opportunityl 

Affirmative Action Employer 

Mr. Kenneth E. Graeber 

Executive Director 

State Property Tax Board 

9501 North Ill-35 

Austin, Texas 78761 

opinion No. m-43 

Re: Constitutionality of 

section 115 of House Bill No. 

30 enacted by the first ~called 

session of the Sixty-seventh 

Legislature 

Dear Mr. Graeber: 

You have requested our opinion regarding the constitutionality of 

section 115 of House Bill No. 30 enacted by the first called session 

of the Sixty-seventh Legislature. Section 115 amended the Property 

Tax Code by adding section 26.011, which became effective on January 

1, 1982. 

Section 115 provides the following: 

Sec. 26.011. LIMITATION 

REAPPRAISED VALUES. 

ON APPLICATION OF 

(a) If the appraised value of a property in 

any year from 1982 through 1985, after subtracting 

the appraised value of any new or previously 

undiscovered improvements, increases for the first 

time above its assessed value on s taxing unit’s 

1981 tax roll, the assessor for the unit shall 

limit the appraised value in the year of the 

reappraisal, if the percentage of the increase is 

greater than l-1/2 times the percentage of 

increase above the 1981 value of all other 

property on the unit’s tax roll in both 1981 and 

the current year, to an amount that is only l-112 

times greater than the percentage of increase in 

the value of all other property. 

(b) If the appraised value submitted by the 

appraisal district is less than the value required 

to be substituted under Subsection (a) of this 

section, the assessor shall retain the appraised 

p. 185 
. . 

Mr. Kenneth E. Graeber - Page 2 (JM-43) 

value submitted by the district instead of 

substituting a value pursuant to this section. 

(c) A tax assessor shall limit increases in 

market values of land appraised as provided by 

Subchapters C, D, E, and F or Chapter 23 of this 

code in the same manner as increases in appraised 

value are limited and shall substitute the limited 

values in the records for purposes of calculating 

additional taxes. 

(d) To be entitled to limitation of an 

increase in appraised value of personal property 

as prescribed by this section, a person must 

present to the tax assessor records establishing 

the kinds, amounts, and values of personal 

property he owned on January 1, 1981, and on 

January 1 of the year in which the increase 

occurs. 

(e) In this section, a new improvement is a* 

improvement made after January 1, 1981, and a 

previously undiscovered improvement is an 

improvement that was made on or before January 1, 

1981, but was not included on the taxing unit's 

1981 tax roll. 

(f) This section does not apply to a taxing 

unit unless the unit, by ordinance, order, or 

resolution (depending on the requirements of law 

for adoption of a law by that unit), provides that 

it applies. 

(g) The State Property Tax Board shall issue 

rules and regulations necessary for the effective 

implementation of this section. 

(h) This section expires January 1, 1987. 

Acts 1981. 67th Leg., 1st C.S., ch. 13, §115, at 163. In other words, 

if section 26.011 is adopted by the governing body of a taxing unit, 

the appraised value of any individual property in that unit may not 

increase by more than one hundred and fifty percent of the average 

percentage increase in value of all property in the taxing unit in any 

year from 1982 through 1985. 

You submit that the statute could properly be construed in any 

one of three different ways -- as a special valuation provision, as a 

partial exemption, or as a "reasonable classification of property 

p. 186 
Mr. Kenneth E. Graeber - Page 3 (JM-43) 

within the inherent powers of the legislature." You ask whether, 

under any of these.constr"ctions, section 26.011 is constitutional. 

It is clearly the rule that, when a law is attacked as being 

unconstitutional, there is a presumption that the law is valid and 

doubts as to its constitutionality should be resolved in favor of its 

constitutionality. Smith v. Davis, 426 S.W.2d 827, 831 (Tex. 1968); 

Key Western Life Insurance Company v. State Board of Insurance, 350 

S.W.2d 839. 849 (Tex. 1961). Moreover, no act of the legislature will 

be declared unconstitutional unless some provision of the constitution 

can be cited which clearly demonstrates the invalidity of the act. 

Duncan v. Gabler, 215 S.W.2d 155, 159 (Tex. 1948); Texas National 

Guard Armory Board v. McGraw. 126 S.W.2d 627, 634 (Tex. 1939). 

Nevertheless. the lenislature mav not authorize that which the 

constitution-prohibits-, Maher v. Lasater, 354 S.W.2d 923, 925 (Tex. 

1962), nor may it lawfully act beyond the limitations set out in the 

constitution. Travelers' Insurance Company v. Marshall, 76 S.W.2d 

1007, 1009 (Tex. 1934). We conclude that section 26.011 of the 

Property Tax Code contravenes article VIII, sections 1 and 2 of the 

Texas Constitution and would be held unconstitutional by the courts. 

First, we address the contention that section 26.011 should 

properly be construed as a special valuation provision. Article VIII, 

section 1 of the Texas Constitution provides in pertinent part: 

Taxation shall be equal and uniform. All property 

and tangible personal property in this State, 

whether owned by natural persons or corporations, 

other than municipal, shall be taxed in proportion 

to its value, which shall be ascertained as may be 

provided by law. 

Texas courts have repeatedly declared that the term "value" as 

employed in article VIII, section 1 means "market value" or the 

"reasonable cash market value." Rowland v. City of Tyler, 5 S.W.2d 

756, 760 (Tex. Comm'n App. 1928); z tlantic Richfield Company v. Warren 

Independent School District, 453 S.W.2d 19 10. 197 (Tex. Cl". App. - 

Beaumont 1970, writ ref'd n.r.e.); Harlingen Independent School 

District v. Dunlap, 146 S.W.2d 235, 237 (Tex. Civ. App. - San Antonio 

1940, writ ref'd). See also Whelan v. State, 282 S.W.2d 378, 380 

(Tex. 1955); State v. Whittenburg, 265 S.W.2d 569, 572 (Tex. 1954). 

The Texas Supreme Court declared in Lively v. Missouri, K. & T. 

Railway Company of Texas, 120 S.W. 852, 856 (Tex. 1909): 

Article 8, 51, of the Constitution, contains this 

language: 'All property in this state, whether 

owned by natural persons or corporations, other 

than municipal, shall be taxed in proportion to 

its value, which shall be ascertained as may be 

p. 187 
Mr. Kenneth E. Graeber - Page 4 (JM-43) 

provided by law.' The rule announced by that 

provision is 'equality and uniformity.' To secure 

this 'uniform and equal' taxatio", the ssme 

sentence prescribes that the property of all 

persons and corporations, other than municipal, 

'shall be taxed in proportion to its value, which 

shall be ascertained as may be provided by law.' 

This is a clearly expressed purpose, that the 

officers charged with the assessment of property 

shall in the manner prescribed by law ascertain 

its value. 'The value of the property is to be 

determined by what it can be bought and sold for.' 

New York State v. Barker, 179 U.S. 287, 21 Sup. 

ct. 124, 45 L. Ed. 194. If it means full market 

value when applied to the intangible assets of a 

railroad company, it means the same thing when 

applied to land, horses, etc. The standard of 

uniformity prescribed by the 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 is ascertained by 

the same standard. 

"Market value" has been defined as "the amount of money that a person 

desiring to sell, but not bound to do so, could, within a reasonable 

time procure for such property from a person who desires and is able 

to buy, but is not bound to purchase such property." West Texas Hotel 

Company v. City of El Paso, 83 S.W.2d 772, 775 (Tex. Cl". App. - El 

Paso 1935, writ dism'd). See also Property Tax Code §1.04(7). As 

this office has already declared: 

While it can be argued that the portion of article 

8, section 1, which refers to ascertainment of 

value 'as provided by law' permits the Legislature 

to establish a standard of value for taxation 

purposes other than market value, the courts have 

clearly ruled otherwise. See also Tex. Const. 

art. 8, 520. Accordingly, it is our opinion that 

article 8, section 1 of the Constitution does not 

permit the Legislature to provide for the taxation 

of property other than in proportion to its market 

value. 

Attorney General Opinion H-1022 (1977). Exceptions to this market 

value standard are found in article VIII, sections l-d and l-d-(a) 

providing for the special valuation of agricultural and open space 

land. Absent these specific constitutional amendments, however, such 

property would have to be valued in accordance with the standard set 

forth in article VIII, section 1. Attorney General Opinion H-1022 

p. 188 
Mr. Kenneth E. Graeber - Page 5 (JM-43) 

(1977). Accordingly, we conclude that, absent a specific 

constitutional provision permitting the special valuation authorized 

by section 26.011 of the Property Tax Code, the Texas courts would 

declare the code provision unconstitutional. 

Second, you suggest that section 26.011 of the Property Tax Code 

could properly be construed in the alternative as a partial exemption 

rather than as a special valuation provision. Section 1.04(11) of the 

Property Tax Code states that "'[plartial exemption' means an 

exemption of part of the value of taxable property." The Texas 

Constitution does not provide for or permit any partial exemption 

other than those set forth in article VIII, sections l-a (partial 

exemption for residential homestead for county taxes if county levies 

tax for farm to market roads or for flood control), l-b (residence 

homestead partial exemptions), and 2 (disabled veterans' partial 

exemption). "[Elxemptions are subject to strict construction since 

they are the antithesis of equality and uniformity." Hilltop Village, 

Inc. v. Kerrville Independent School District, 426 S.W.2d 943, 948 

(Tex. 1968). The legislature is without power to broaden exemptions 

beyond those permitted by the constitution. Tex. Const. art. VIII, 

section 2; Leander Independent School District v. Cedar Park Water 

Supply Corporation, 479 S.W.2d 908, 910 (Tex. 1972); City of Amarillo 

v. Love, 356 S.W.2d 325, 327 (Tex. Civ. App. - Amarillo 1962, writ 

ref'd n.r.e.). If section 26.011 of the Property Tax Code were 

construed to authorize a partial exemption, it would be declared by 

the courts to be unconstitutional. 

Third, you suggest that section 26.011 constitutes "s reasonable 

classification of property within the inherent powers of the 

Legislature." While the legislature is empowered to make 

classifications of property for purposes of taxation so long as such 

classifications are not unreasonable, arbitrary or capricious, Bullock 

v. ABC Interstate Theatres, Inc., 557 S.W.2d 337, 341 (Tex. Civ. App. 

- Austin 1977, writ ref'd n.r.e.), cert. denied, 439 U.S. 894 (1978); 

American Transfer and Storage Company v. Bullock, 525 S.W.2d 918 (Tex. 

Cl". App. - Austin 1975, writ ref'd), reliance on such a principle in 

support of the constitutionality of section 26.011 would be misplaced. 

The cases which rely on the principle are concerned with the power of 

the legislature to specify . . the objects of taxation, not with the 

standard e mnloved _ to value oroner' ty so taxed. See . _e.g.. Tex. Const. 

art. VIII, §li; Bullock v: ABC . Interstate Theatres, inc. , 

Calvert v. Capital Southwest Corporation, 441 S.W.2d 247 (Tex 

APP. - Austin 1969, writ ref'd n 

(1970); Grayson County State Bank V. Calvert 

Cl". App. - Austin 1962, writ ref'd n. 

I.r.e.), appeal dismissed, 397 U.S. 321 

:, 357 S.W.Zd 160 (Tex. 

r.e.); Lockhart v. American 

Mutual Life Insurance Company, 194 S.W.2d 285 (Tex. Civ. App. - Austin 

1946, no writ); Gulf States Utilities Company v. State, 46 S.W.2d 1018 

(Tex. Cl". App. - Austin 1932, writ ref'd). Indeed, the principle is 

trnditionally coupled with the principle requiring equality and 

supra; 

. Civ. 

P. 189 
Mr. Kenneth E. Graeber - Page 6 (JM-43) 

uniformity in taxation as set forth in article VIII, section 1 of the 

Texas Constitution. The legislature is empowered to make such 

classifications when the legislation is reasonable and when within the 

class the legislation operates equally. Grayson County State Bank v. 

Calvert, supra, at 162; San Jacinto National Bank V. Sheppard, 125 

S.W.2d 715, 716-17 (Tex. Civ. App. - Austin 1938, no writ); Dallas Gas 

Corn p an y v. State, 261 S.W. 1063, 1069 (Tex. Civ. App. - Austin 1924, 

writ ref'd); Raymond V. Kibbe, 95 S.W. 727 (Tex. Civ. App. 1906, writ 

ref'd). The Texas Supreme Court has in fact declared that, as to the 

question of equality and uniformity of taxes within different classes 

created by the state, the requirements of the equal protection clause 

of the fourteenth amendment to the U.S. Constitution are essentially 

the same as the requirements imposed by the Texas Constitution. 

Each requires that all persons falling within the 

same class must be taxed alike. Each recognizes 

the power of the Legislature to make 

classifications, and each requires that such 

classifications, when made. must not be unreasonable, arbitrary, or capricious. 

Hurt V. Cooper, 110 S.W.2d 896, 901 (Tex. 1937). Again, however, 

issue as to the permissibility of any classificatory scheme 

taxation imposed by the state is different from the issue as to 

standard by,which property so taxed is valued. 

the 

of 

the 

Finally, in connection with this discussion, it has been 

suggested that the following underscored language of article VIII, 

section 18 of the Texas Constitution empowers the legislature to pass 

such a statute: 

(a) The Legislature shall provide for 

equalizing, as near as may be, the valuation of 

all property subject to or rendered for taxation, 

and may also provide for the classification of all 

lands with reference to their value in the several 

counties. (Emphasis added). 

The above underscored language was included in the Texas 

Constitution of 1876; however, it has never been construed by Texas 

courts. The statute implementing section 18 was, however, twice 

construed. Article 7206, V.T.C.S., contained the following: 

3. They shall equalize improved lands in three 

classes, first-class to embrace the better quality 

of land and improvements, the second-class to 

embrace the second quality of lands and 

improvements, and the third-class to embrace lands 

of but small value or inferior improvements. The 

P. 190 
. , 

Mr. Kenneth E. Graeber - Page 7 (JM-43) 

unimproved lands shall embrace first, second and 

third class, and all other property made as nearly 

uniform as possible. 

In both State v. Mallet Land & Cattle Company, Inc., 88 S.W.Zd 

471 (Tex. 1935) and Taylor v. Alanreed Independent School District, 

138 S.W.2d 149 (Tex. Civ. App. - Amarillo 1940, no writ), a taxpayer 

alleged that the failure of a board of equalization to strictly comply 

with subdivision 3 of article 7206, V.T.C.S., resulted in an illegal 

assessment and in excessive, non-uniform, unequal and discriminatory 

valuation. In both instances, the courts declared that compliance 

with subdivision 3 was permissible, that the requirements of article 

VIII, section 1 effectively supercede the requirements of article 

7206. "It is our opinion that where the equalization is equal and 

uniform, and in proportion to value, and no discrimination is shown, 

as found by the jury in this case, the mere failure to follow the 

statute in detail would not render the Iudament of the board of 

equalization void." state V. Mallet Land- &-Cattle Company, Inc., 

supra, at 432. See also Taylor v. Alanreed Independent School 

District, supra, at 150. 

While the mere failure to adopt a classification scheme will not 

result in an illegal assessment if the valuation is equal, uniform, 

and in proportion to market value, the failure to value property in 

accordance with article VIII, section 1 principles will result in an 

illegal assessment even though a classification scheme is adopted. 

The constitutional guarantee of equality and uniformity of taxation 

controls of the method the legislature may prescribe for ascertaining 

taxable values under the statutes providing for equalization of 

assessments. Aycock v. City of Fort Worth, 371 S.W.Zd 712, 715 (Tex. 

Civ. App. - Fort Worth 1963, writ ref'd n.r.e.). Courts have 

repeatedly held assessments illegal and void when such assessments 

were the result of classification schemes which Droduced values which 

were not in accord with market values. See, 'e.g., Sierra Blanca 

Independent School District v. Sierra Blanca Corporation, 514 S.W.Zd 

782 (Tex. Civ. App. - El Paso 1974, writ ref'd n.r.e.); Duffey v. 

Union Hill Independent School District, 490 S.W.Zd 201 (Tex. Civ. App. 

- Texarkana 1973, writ ref'd n.r.e.); Atlantic Richfield Company v. 

Warren Independent School District, 453 S.W.2d 190 (Tex. Civ. APP. - 

Beaumont 1970, writ ref'd n.r.e.); Dietrich v. Phipps, 438 S.W.2d.900 

(Tex. Civ. App. - Houston [lst Dist.] 1969, no writ); City of Saginaw 

v. Garvey Elevators, Inc., 431 S.W.2d 575 (Tex. Civ. App. - Fort Worth 

1968, writ ref'd n.r.e.). 

It should be noted that article 7206, V.T.C.S., was repealed by 

the Property Tax Code, effective January 1, 1982. Acts 1979, 66th 

Leg., ch. 841, §6 at 2329. There is presently no implementation of 

article VIII, section 18 in the code. Arguably, the land 

classification scheme imposed by section 23.52 of the Property Tax 

p. 191 
Mr. Kenneth E. Graeber - Page 8 (JM-43) 

. . . 

Code upon land receiving special valuation as "open-space land" is 

authorized by article VIII, section 18, but it is important to note 

that any classificatory scheme which results in a value other than 

market value is unconstitutional absent a specific constitutional 

provision permitting it. See Attorney General Opinions H-1220 (1978); 

H-1022 (1977). In orderx meet this requirement, article VIII, 

sections l-d and l-d-(a) were proposed and adopted. 

While the legislature may establish classifications for purposes 

of taxation, it clearly may not use such a means to circumvent the 

constitutional principle that all property must be valued for purposes 

of taxation at market value, unless the constitution otherwise 

permits. 

SUMMARY 

Section 115 of House Bill No. 30 enacted by the 

first called session of the Sixty-seventh 

Legislature amending the Property Tax Code by 

adding section 26.011 is unconstit~utional. 

Very truly your J--w a 

f 

-JIM MATTOX 

Attorney General of Texas 

TOM GREEN 

First Assistant Attorney General 

DAVID R. RICHARDS 

Executive Assistant Attorney General 

Prepared by Jim Moellinger 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Rick Gilpin, Acting Chairman 

Jon Bible 

Susan Garrison 

Ben Harrison 

Jim Moellinger 

p. 192