# The Attorney General of Texas

March 13, 1979 MARK WHITE Utomey Geneml

Honorable Tim VonDohlen

Chairman House Committee cnRegions, Compacts and Districts State Capitol Austin, Texas Dear Representative VonDohlen: OpinionNo. Ml+4
Re: Whether tax exemptions authorized by tax relief amendment may he effective as of January l,1979.

You ask the following question concerning enabling legislation to implement the TaxRelief Amendment:

In passing enabling legislation to implement the ad valorem tax exemptions authorized inthe “Tax Relief Amendment,” may the Legislature make such exemptions effective as ofJanuary l,1979? The ‘l’ax Relief Amendmentv took effect January l,l979. It provides that the Legislature shall exempt from ad valorem taxation household goods and personal effects not,held or used for the production of income and may exempt all or part of the personal property homestead of a family or single adult It shall provide for taxation of farm or ranch land on the ‘basis of productive capacity and may provide for taxation of timberland on the same bask. It may exempt an amount not to exceed $10,000of the homestead of a person who is disabled or over 65 from ad valorem taxation for public schools. However, the exemption may not be implemented where ad valorem tax has been pledged for payment ofa debt if cessation of the levy would impair the obligation of contract. These exemptions will not become effective in the sbsence of 1egIsIation. See Attorney General Opinion H-68 (1973) (implementation of article 8, S2mof the Texas Constitution). Whether or not the leglslature may make these exemptions effective January l, 1979, depends on the application of several other constitutional provisions Article 1,section 16forbids the enactment of retroactive laws, but this prohibition does not extend to all statutes. The legislature may enact retrospective legislation where no impairment of vested rights results.

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Deacon v. City of Euless, 405 S.W.fd 59, 62 (Tex. 1966);Cox v. Rcbiin, 1SO SW. 1149 rex. 1912);

Attorney General Opinions H-634 (l975), H-14(l973). Whereprivate rights are not involved, the legislature may impose retroactive legislation on political subdivisions. Descon v. City of Euless, m at 62; $ Lovev. City of Dallas, 40SW.2d 20 (Tex. 1930 &tstitution protects property which pohtical subdivisionholds ht trust for people). The vested rights of taxpayers will not be injured by the grant of tax exemptions effective January I, 1979, since it creates rather than destroys a right. See Attorney General opinion M-413 (1969);2 Sutherland, Statutory Construction S4LO2qth ed. C.D. Sands 1973). Although statutes are generally presumed to operate prospectively, they will be given retrospective effect where the legislative intention is clear, and where no impairment of vested rights results. Deacon v. City of Eules, s at 61; s Code Construction Act, V.T.C.S. art. 5429b-2, S3.02 (statute presumed to operate prospectively unless expressly made retrospective). Other constitutional provisions prohibit the state from applying a tax exemption retroactively when the tax liability has matured. Article 3, section 55 of the Texas Constitution provides as follows:

The Legtslature shall have no power to release or extinguish, or to authorize the releasing or extinguishiig, in whole or in part, the indebtedness, liability oc &ligation of any corporation cr individual, to thii State or to any county or defied subdivision thereof, or other municipal corporation therein, except delinquent taxes whichhave been due for aperiod ofat least ten years. A delinquent tax is a liability ‘within thii provision. State v. Pioneer oil 61Refining Co., 292 S.W. 869(Tex. Corn. App. 1927,jdgmt adopted). Oncea.tax becomesa liability article 3, section 55 makes it irrevocable, end the legislature cannot extinguish it by repealing the statute whichenacted it. See also Sloan v. Calve& 497 S.W.td 125 (Tex. Civ. App. - Austin 1973,no writ)i Smith v. State, 420 S.W.2d204(Tex. Civ. App.- Austin 1967),aff’d, 434 S.W.2d 342 (Tex 1968); Attorney General Gpiions M-34 U967),C-200 (1963). addition, article 8, section LO prohibits the legislature from releasing the inhabitants of any county, city or town from the payment of taxes &vied for State or county purposes unless in case of great public calamity. See Bassv. Aransas County LS.D., 389S.W.Od 165 (Tex. Civ. App. - CorpusChristi lS65, w%?ef’d n.r.e.j (dicta). Moreover, a statute which attempts to grant an exemption with respect to a tax liability accruing before its effective date might also violate artfcle 3, sectfon 51of the Texas Constitution. This provision prevents the state from making or authorizing a grant of public fund3to any individual, association of individuals or corporatio& in the absence of a public purpose or consideration moving to the state. State v. city of Austin, 331 S.W.Zd737 (Tex. 1960);Attorney General OpinionH-416(19743. Article 3, section 52 also prevents the legislature ‘from authorizing political subdivisions to grant public money to individuals and corporations. In Morris v. Calvert, 329 S.W.2dll7 (Tex. Civ. App. - Austin 1959,writ ref’d n.r.e.), the court held that a statute providing an inheritance tax exemption applied only to estates of persons dying after its effective date. Some

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statutory language indicated that the legislature intended the exemptions to become effective when the governor signed the bill, but the court rejected this interpretation as raising a serious question ofconstitutionality. Inheritance tax k alien uponproperty from the date of death, and to reduce it by a tax exemption that subsequently became effective wouldviolate sections 51and 55of article 3ofthe Texas Constitution. See Inre Voorhees’ Estate, 196A. 365 (N.J. Prerog. Ct. 1938);af A.2d51 (N.J. Ct. of Errors and Appeals 3 A.2d 691(N.J. Sup. Ct 1939);afTd, 16 retroactively exempting taxes to which state’s right was fixed makes unconstitutional gift of public funds). See also m Skinker, 303P.2d 745 (CaL 1956).
In our opinion, sections Sl, 52, and 55 of article 3 will prevent the legislature from enacting a tax exemption applicable to tax liabilities which have already accrued or matured. Thus, the resolution to the issue you raise will require a determination of the date upon which ad valorem tax liabilities accrue, mature, or become fixed. The validity of an ad valorem tax rests uponlevy and assessment. State v. Pioneer

Co su ra; Zglinski v. Hackett, 552 S.W.Bd 933 (Tex. Civ. App - Austin oil & Refining brYkr;e 1977,writ reM h the absence of a valid assessment, there is no liability for the tax within article 3, section 55 of the constitution. State v. Pioneer Oil & Refining Co., supra; Clegg v. State, 42 Tex. 605 (1875);Republic Insurance Company v. Highland Park LS.D.of Dallas County, 57 S.WSd 627 (Tex. Civ. App.- RlPaso 1933,writ dism’dw.o.j.). Article 8, section 15provides that “ftlhe annual assessment made upon landed property shall bc a special lien thereon..

. .” This lien does not exist until assessment k made in accordance with law. State v. Farmer, 59S.W.541(Tex. 1900);Hoge v. Garcia, 296S.W. 982 (Tex. Civ. App. 7 San Antonio 1927, writ rePB; cf. C. R. Carswell & Co. v. Habbersettle, 87 S.W. 911(Tex. Civ. App. - 1905,no at) (lien attaches January 1 although the amount of taxes is not determined until sometime subsequent). Of **coupse,** once the tax liability is established, the lien becomes effective as of January L State of Texas v. Moody’sEstate, 156F.2d 698(5th Cir. 1946). The terms “levy” and “messment” are sometimes used interchangeably. See Kinney v. Zim leman, 36 Tex. 554 582 (1872) Amafmov. Carter, 212S.W.td 950, 9SS(Tex. civ. &mont l948. w& reM n.rle.L Inthe present context, however, “levy” refers tdihe legislative act which imposes a tax andties its rate. Cle& v. State, 42Tex. 605, 610-R (l875); Amaimo v. Carter, su~ra; Sussex County v. Jarratt, 106S.E. 384, 387 (Va. l92D. An order of the commissioners court That the following tax rates be levied” was held to be a valid tax levy. Victo v. Stat Gil ,Co. v. State. 54 SW.Zd 813 Tex. Crv. Ano. - El Paso 1932. writxf’d): Attorney + 158S.W.2d760(Tex. 1942);see Cranfill Bras. General Opinion

7Fi-1235~

ti978,. “Assessment;‘refers to ~the administrative process of applying the tax rate to an individual’s property and thereby determining the amount he owes. Clemzv. State. suora Sussex County v. Jarratt. supra: “It includes the procedure %lued. and. final& the pro on the part of the off&my which the property is ifs=, rata **ddared. ”**  State v. Farmer, supp& See also Republic Insurance Co, v. HighlandPark LSD., e The taxpayer’s liability’ is fixed when these two requirements are met: the assessment has been made and there hasbeen a legal levy. Cracker v. Santo Consolidated

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Attorney General GpmionsC-457 (1965);V-943(1949)(taxes do not accrue LS.D., sue until there has been both an aessment and levy). In Bassv. Aransas County LS.D.,the court discussed article 73454 V.T.C.S., which authorieed the commissioners court to reconsider and adjust current or dalirquent assessments. It stated in dicta that it “would be inclined to hold the act unconstitutional insofar as it authorizes recpenkg and reconsideration of valid Basmentsw as violating article 3, sections 52 and 53and article 8, section 10of thexas Constitution. It noted a series of Attorney General Gpmions ruling the statute void insofar as it applied to valid assessments. Attorney General Opinions V-1517

(1952);G-6257 (1944)(statute, violates article 3, section 55 and article 8, section 10);G-930 (1939). In our opinion,you may constitutionally provide tax exemptions from the current year’s taxes if the enabling legislation becomes effective before ad valorem tax liabilities sre lied by assessment andlevy. However,the legislation maynot constitutionally apply the tax exemptions to tax liabilities which have been fried by assessment and levy prior to the effective date, since the taxpayer wouldthereby receive a gift ofpublic funds and a remission of taxes inviolation of article 3, sections 52 52, and 55, and article 8, section 10of the Texas Constitution. Attorney General Gpinicn B-849 (1976)describes the timetable for assesment of county taxes See V.T.C.S. art. 7244~. The commissioners court meets as a hcsrd of equalization in MT or June. V.T.C,S arts. 7206, 7212,7217,7218. This procedure affects other .taxing authorities which rely on the county’s tax rolls and assessments Attorney General OpinionH-649 (1976). However, all taxing authorities are not necessarily subject to the general taxation statutes Campbell v. City of Houston, 464 S.W.2d 372(Tex.Civ.

- Houston U4th Dkt.) 1971, no writ); Seguin LS.D. v. Blumberg, 402 S.W.2d552 &f&. Civ. App

. - San Antonio 1966,writ ref’d n.r.e.). The relevant statutes or homerule charters must be consulted in individual cases, since the timetables may vary causing some jurisdictions to have tax liability mature before a statute can be enacted. SUMMARY Legislation implementing tax exemptions authorized by the Tax Relief Amendment may constitutionally apply to tax liabilities which have not been fiied by Levyand assessment as of the statute’s effective date. 

# ?iiizTz%,

Attorney General of Texas JOHNW.FAINTER,JR. First Assistant Attorney Genera) TEDL. HARTLEY Executive Assistant Attorney Genera)

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Prepared by SusanGarrison Assistant Attorney General APPROVED: OPINIONCOMMITTEE C. Robert Heath, Chairman David B.Brooks Rick Gilpin William GReid Martha Smiley Bruce Yoongblood

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