Jl*I Blxrrox 

July 22, 1988 

*TroRNan- OEXEIIAL 

Honorable Terra1 R. Smith Opinion No. JW-938. 

Chairman 

Natural Resources Committee Re: Whether a city and a 

Texas House of Representatives utility district may impose 

P.O. Box 2910 taxes for overlapping serAustin, Texas 78769 vices (RQ-1307). 

Dear Representative Smith: 

You ask whether a recent amendment to the Municipal 

Annexation Act has the effect of subjecting residents of a 

special district, such as a municipal utility district, to 

the unconstitutional burden of double taxation when the 

district is annexed to a city but has not been dissolved. 

We conclude that the amendment does not expose the residents 

P of an annexed political subdivision to the threat of double 

taxation by the city and the political subdivision. It 

does, hovever, create a conflict with section 43.075 of the 

Local Government Code, which governs the annexation of 

certain special districts. 

The legislation that prompted your request is section 8 

of Acts 1987, 70th Deg., ch. 1077, at 7397 (Senate Bill No. 

962). The bill amends section 8 of former V.T.C.S. article 

970a, the Municipal Annexation Act. Section 8, however, was 

repealed and codified as sections 42.041 and 42.042 of the 

Local Government Code during the regular session of the 70th 

Legislature. Section 311.031(c) of the Government Code 

provides that the repeal of a statute by a code does not 

affect an amendment of the statute by the same legislature 

which enacted the code and that an amendment is preserved 

and given effect as part of the code. 

The specific portion of Senate Bill No. 962 which draws 

your concern adds subsection F to section 8: 

F. Subject to the provisions of this 

Subsection, a city may annex a political 

subdivision for full or limited purposes 

and the political subdivision, its taxing 

p. 4665 
Honorable Terra1 Smith - Pago 2 (JW-930) 

authority, and its board of directors may 

continue to exist for a period not to exceed 

ten (10) year8 from the date of such annexation; provided that at the time of such 

annexation at least ninety percent (902) of 

the water, wastewater, roads, and drainage 

improvements for which district bonds are to 

be issued have been installed and are 

complete in accordance with the plans of such 

political subdivision to serve all of the 

area within its boundaries. 

Acts 1987, Suorg, at 7399-7400. For convenience, we shall 

refer to this provision as subsection F. Your concern is 

that subsection F authorizes cities to annex political 

subdivisions such as municipal utility districts without 

abolishing the districts and assuming their bonded indebtedness. The residents of the annexed area would thus become 

subject to the taxing authority of both the city and the 

annexed political subdivision without an increase in the 

level of services provided to the area. You ask whether 

the residents would thereby be subjected to the unconstitutional burden of double taxation. 

We note at this point that section 7(c) of article 

97Oc, V.T.C.S., prohibits a city from imposing taxes on 

the property or residents of an area annexed for limited 

purposes on or after September 1, 1987. Article 97Oc was 

enacted as part of Senate Bill No. 962. m Acts 1987, 

sluxar at 7396. We also note that your guestion is preceded 

by a reference to a municipal utility district that lies 

wholly within the extraterritorial jurisdiction of a home 

rule city. We will therefore assume that your question 

concerns the "full purposeM annexation of the entire area of 

a municipal utility district. a Local Gov*t Code S 43.071 

(city must annex entire area of district created under Tex. 

Const. art. XVI, 0 59, outside city's boundaries if no part 

of district is within extraterritorial jurisdiction of 

another city): Water Code 2 54.011 (municipal utility district may be created under art. XVI, 6 59). 

The constitution of this state does not expressly 

condemn double taxation. Article VIII, section 1, of the 

constitution, however, commands that taxationbe "equal and 

uniform.* It is this constitutional principle that is 

invoked in cases concerning claims of double taxation. 

Under this provision, the courts have held that property 

lying within the boundaries of both a city and a special 

p. 4666 
Honorable Torral Smith - Page 3 (JM-939) 

district and subject to taxation by both for the same kinds 

of services does not constitute unconstitutional double 

taxation or taxation that is not equal and uniform. w 

is m Water -01 rove 

wt No. 2, 198 S.W.Zd 450 (Tex. 1946ev. z 

449 S.W.Zd 508 (Tex. Civ. App. - Corpus 

ref'd n.r.e.): 

Q, 51 S.W.ld 784 (Tex. 

APP. - Galveston 1932, writ refed). See alsg Attorne; 

General Opinions JW-626 (1987); JM-400 (1985). The courts 

applied this rule where the taxing entities were created as 

separate entities under separate provisions of the constitution, and both were delegated the power to assess and 

collect taxes to accomplish their respective purposes. It 

also appears that the courts were persuaded by the fact that 

while both entities had the authority to provide the same 

services to the same area, only one of the entities could 

actually provide such services. 

at 454. 

s.eaCitvof -I 

Though this rule bears potentially harsh consequences 

for the residents of an annexed political subdivision, it is 

a rule that finds acceptance in a number of other states. 

ze;6$eEi;len, &&&Dal Corooratk f 44.23 and cases 

. Subsection F of section 8 imposes no greater 

a burden on these taxpayers than the courts have sanctioned. 

Subsection F does not require the annexing city to assume 

either the liabilities or duties of the political subdivision, nor does it divest the political subdivision of 

its lawful authority for 

following the annexation.1 

a period not to exceed ten 

If the legislature had req%ii 

the city to immediately assume the duties and liabilities 

of the political subdivision, yet allowed the subdivision 

to retain its taxing authority, then a clear threat of 

double taxation would exist. m Wheeler v. Citv of 

Brownsva, 220 S.W.Zd 457 (Tex. 1949) (statute requiring 

city to assume indebtedness attributable to part of water 

district annexed by city did not violate article VIII, 

1. The ten-year limitation may be intended to allow 

the political subdivision to phase out its operations, 

retire its bonded indebtedness, and delay the city's assumption of the duties of the district. The legislative history 

of this provision, however, provides little insight into the 

factors motivating the adoption of the ten-year limitation. 

p. 4667 
Honorable Terra1 Smith - Page 4 (JM-930) 

section 1, of the Texas Constitution, where district 

continued to operate over and assess taxes on the annexed 

area) . 

The possibility that the residents of the annexed 

political subdivision will not receive a reciprocal amount 

of services from the city upon annexation does not render 

unconstitutional the statute authorizing the annexation of 

the political subdivision. The principle of equality and 

uniformity in taxation does not require that each person 

derive the same benefit as others from the expenditure of 

funds raised by taxation. Wheeler v. Citv of Broe 

220 S.W.Zd 457 (Tex. 1949). This may operate harshly 0; 

even unjustly against some taxpayers: however, this result 

does not offend the "equal and uniform* provision of article 

VIII, section 1, of the constitution. mris v. Citv of 

m, 57 Tex. 635 (1882). 

Though we do not believe that subsection F imposes an 

unconstitutional burden of double taxation on the residents 

of a political subdivision annexed by a city pursuant to its 

provisions, we believe it creates a conflict with another 

statute affecting the authority of a city to annex the 

territory within certain kinds of special districts. In the 

years following the Citv of Pelly and m cases, the 

legislature sought to spread the burden of retiring the 

indebtedness of certain kinds of special districts to the 

taxpayers of home rule cities that annexed such districts. 

In 1947 it enacted article 1182c-1, V.T.C.S., codified in 

pa* as section 43.075 of the Local Government Code. 

Section 43.075 applies to a municipality that annexes all or 

part of the area of a water control and improvement 

district, a fresh water supply district, or a municipal 

utility district if the district does not include any area 

located in another municipality. Local Gov't Code 

5 43.075(a)(l), (b). It applies also to municipalities that 

incorporate over all or part of the area of such districts 

and adopt an ordinance making section 43.075 applicable to 

the municipality. & 9 43.075(a)(Z). &g Attorney General 

Opinion JW-565 (1986). If all the area of the district is 

annexed, the municipality is required to take over all the 

property and other assets of the district, assume all debts, 

liabilities, and obligations of the district, and perform 

all functions of the district, including the provision of 

services. & 5 43.075(d). This transfer of duties and 

obligations must take place by ordinance of the municipality 

within 90 days after the date the area becomes part of the 

municipality, or on the 91st day by operation of law. & 

P. 4668 
", * Honorable Terra1 Smith - Page 5 (JM-930) 

5 43.075(e). The district is abolished once this transfer 

occurs. & The remainder of the statute details the 

conditions under which and the methods whereby the 

municipelity discharges the obligations of the district and 

acquires its assets and faoilities. 

Section 43.075 reflects a longstanding and consistent 

public policy of requiring cities to assume the bonded 

indebtedness of the annexed portions of water-related 

special purpose districts. This policy is carried forth in 

a number of provisions relating to the annexation of water 

control and improvement districts, 

districts, municipal 

fresh water supply 

utility districts, irrigation districts, and conservation and reclamation districts. m 

Local Gov't Code 55 43.022(d); 43.074(d); 43.076(b); 

43.077(b). The courts have determined that the purpose of 

section 43.075 was to avoid the duplication of functions by 

a city and an annexed district. 

270 S.W.ld 235, 239 (Tex. 

ref'd n.r.e.) (construing former article 1182c-1, V.T:C.S.). 

But these provisions also appear to be inspired by a desire 

to equitably adjust the tax burdens of the lesser and 

greater areas. Ford v. Town of ConoelJ 

r S.W.Zd 304 (Texm - Dallas 1966, writ 're",$ 

n.r.e.). Section 43.075, then, addresses the 

described in your letter requesting this opinion. 

problem 

Subsection F creates an apparent conflict with section 

43.075. Subsection F deals with the annexation of territory 

of any political subdivision by a city, while section 43.075 

deals with the annexation of enumerated special districts, 

including municipal utility districts, the focus of your 

inquiry. Because section 43.075 is the more specific but 

earlier enactment, we must determine whether subsection F 

governs the annexation of the special districts enumerated 

in section 43.075. 

Section 311.026 of the Government Code provides that in 

the event a general provision in a code conflicts with a 

special provision, the two shall be construed, if possible, 

so that both may be given effect. If the conflict is 

irreconcilable, the special provision prevails as an exception to the general, "unless the general provision is the 

later enactment 

provision orevu? 

th manifest 

(knphasis addyd.) 

ent is that the aeneral 

Although both articles 970a and 1182c-1 were repealed 

and codified simultaneously, the amendment to article 970a 

p. 4669 
Honorable Terra1 Smith - Page 6 (JM-930) 

was approved nearly one month aZter the approval of the 

Local Government Code. m Acts 1987, 70th Leg., ch. 

149, at 2548 (approved Way 21, 1987), l&th Acts 1987, 70th 

Leg., ch. 1077, at 7403 (approved June 20,1987). It happens 

that the more general provision is the later enactment, but 

our review of the legislative history of Senate Bill No. 962 

reveals no intention to override the more specific provision 

governing the annexation of water districts. Indeed, in the 

tape recordings of the legislative hearings that were made 

available to this office in the preparation of this opinion, 

no mention was made of section 43.075 or its predecessor, 

article 1182c-1. 

The legislative history of Senate Bill No. 962 suggests 

that it was a compromise bill designed to accommodate a 

variety of competing interests. As originally introduced, 

the bill gave cities the authority to engage in limited 

purpose annexation. At approximately the same time, the 

House of Representatives adopted House Bill No. 1193, which 

sought to circumscribe the authority of cities to annex 

territory for limited purposes. H.J. of Tex., 70th Deg., 

Reg. Sess. 497 (1987). The engrossed versions of both bills 

contained virtually identical versions of article 97Oc. 

L; S.J. of Tex., 70th Leg., Reg. Sess. 1739 (1987). 

Neither, however, contained subsection F. The latter was 

added as a floor amendment to Senate Bill No. 962 in the 

House of Representatives. &g H.J. of Tex., 70th Leg., Reg. 

Sess. 3907 (1987). 

House Bill No. 1193 was tabled in the Senate, but the 

substance of the bill was incorporated into Senate Bill No. 

962. The senate bill thus appears to be the product of 

legislative compromise. We think that the floor amendment 

adding subsection F to the bill may also reflect an attempt 

to strike a happy medium between the interested parties. 

&S Debate on Tex. S.B. 962 on the Floor of the House of 

Representatives, 70th Leg. Way 29, 1987) (tape recording 

available from House Staff Services). Still, there is no 

indication in the available legislative history that the 

legislature considered section 43.075. Thus, we cannot 

conclude that the wmanifest intent" of the legislature was 

that the general provisions of subsection F govern a city's 

annexation of all or part of the area of a water control and 

improvement district, fresh water supply district, 

municipal utility district. Accordingly, we conclude thit 

section 43.075 of the Local Government Code governs the 

annexation of such special districts by a city. Gov't Code 

5 311.026(b). 

p. 4670 
, Honorable Terra1 Smith - Page 7 (JM-930) 

Section 8 of Acts 1987, 70th Leg., ch. 

1077, at 7397 (amending section 8 of former 

article 970a, V.T.C.S.) does not impose the 

burden of double taxation on residents of a 

political subdivision annexed by a city 

pursuant to its provisions. This provision 

does not govern the annexation of the kinds 

of special districts described in section 

43.075 of the Local Government Code. 

JIM MATTOX 

Attorney General of Texas 

MARYKELLER 

First Assistant Attorney General 

Lou MccREARY 

F Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Steve Aragon 

Assistant Attorney General 

p. 4671