The Honorable Jane Nelson 

Chair, Committee on Finance 

Texas State Senate 

Post Office Box 12068 

Austin, Texas 78711-2068 

Dear Senator Nelson: 

KEN PAXTON 

ATTORNEY GENERAL OF TEXAS 

March 17, 2016 

Opinion No. KP-0072 

Re: Whether a school district, municipality, 

or county may reduce or repeal the local 

option homestead exemption from the amount 

that was adopted for the 2014 tax year through 

the 2019 tax year (RQ-0082-KP) 

You seek our opinion on whether a school district, municipality, or county may reduce or 

repeal the local option homestead exemption from the amount that was adopted for the 2014 tax 

year through the 2019 tax year. 1 

Among other things, Senate Bill 1 ("S.B. 1 "), enacted by the Eighty-fourth Legislature, 

amended section 11.13 of the Tax Code. See Act of May 29, 2015, 84th Leg., R.S., ch. 465, § 1, 

2015 Tex. Gen. Laws 1779 (codified at TEX. TAX CODE§ 11.13). Prior to S.B. 1, subsection 

l l.13(b) provided that the amount of homestead exemption was $15,000 for purposes of school 

district taxation.2 Subsection 1 l.13(n) authorizes a governing body of a taxing unit to provide an 

additional homestead exemption. TEX. TAX CODE § 1 l .13(n). In S.B. 1, subsection 11.13(b) was 

amended to increase the amount of homestead tax exemption to $25,000. See id. § 1 l.13(b). S.B: 

1 also added subsection 11.13(n-1 ), which provides that the "governing body of a school district, 

municipality or county that adopted an exemption under Subsection (n) for the 2014 tax year may 

not reduce the amount of or repeal the exemption. This subsection expires December 31, 2019." 

Id. § l l.13(n-1 ). S.,13. 1 provides that th~ Act "applies beginning with the 2015 tax year." Act of 

May 29, 2015, 84th Leg., R.S., ch. 465, § 26, 2015 Tex. Gen. Laws 1779, 1786. Yet, most 

provisions in S.B. 1, including the new subsection 1 l.13(n-1 ), are effective on the date on which 

the "constitutional amendment proposed by S.J.R. 1 ... takes effect." See id. § 27(a)(l) at 1786. 

1

Letter from Honorable Jane Nelson, Chair, Senate Fin. Comm., to Honorable Ken Paxton, Tex. Att'y Gen. 

at I (Dec. 15, 2015), https://www.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter"). 

2

See Act of May 31, 1997, 75th Leg., R.S., ch. 592, § 2.0 I, sec. I 1.13(b ), 1997 Tex. Gen. Laws 2061, 2067, 

amended by Act of May 29, 2015, 84th Leg., R.S., ch. 465, §I, 2015 Tex. Gen. Laws 1779. 
The Honorable Jane Nelson - Page 2 (KP-0072) 

The constitutional amendment proposed by Senate Joint Resolution 1 ("S.R.J. l ")amends 

article VIII, subsection 1-b( c) of the Texas Constitution to increase the amount of the homestead 

exemption from $15,000 to $25,000. See Tex. S.J. Res. 1, 84th Leg., R.S., § 1, 2015 Tex. Gen. 

Laws 5412. The proposed amendment also authorizes the Legislature to prohibit a governing body 

that adopts an exemption from ad valorem taxation of a percentage of the market value of a 

homestead from reducing the amount of or repealing the exemption. See id. at 5413-14. Texas 

voters approved the constitutional amendment on November 3, 2015.3 As a result, S.B. 1 's 

effective date is November 3, 2015. Your question arises from the possibility of a local government 

reducing the amount of or repealing its local option exemption during the 2015 tax year, before 

the effective date of subsection 1l.l3(n-1 ). 

The cardinal rule in statutory construction is to ascertain and effectuate the Legislature's 

intent. See Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013). "The best guide to that determination 

is usually the plain language of the statute." Tex. Adjutant Gen. .'s· Office v. Ngakoue, 408 S. W.3d 

350, 354 (Tex. 2013). Here, the statute's plain language clearly indicates that the Legislature 

intended to set a floor for the local option exemption rates at the level they were in 2014 until the 

end of the 2019 tax year. See TEX. TAX CODE§ 11.13(n-l). Accordingly, any repeal of or reduction 

in the amount of a local option homestead exemption by a school district, municipality, or county 

in 2015 would have no effect under subsection 11.13(n-1 )'s express terms. 

Briefing submitted in response to this request argues that in certain instances application 

of subsection 11.13(n-1) violates article 1, section 16, of the Texas Constitution. 4 The briefing 

explains that prior to the November 3, 2015 election, no statute prevented a taxing unit from 

repealing or reducing the local option homestead exemption. Wood Brief at 2. Thus, if a taxing 

entity took formal action to repeal the exemption prior to July 1, 2015, no homeowner would be 

entitled to the exemption for the 2015 tax year under the law at that time. See id. If effective, 

however, subsection 11.13(n-1) would retroactively void any repeal or reduction in the amount of 

the exemption. 

Article 1, section 16 provides "[n]o bill of attainder, ex post facto law, retroactive law, or 

any law impairing the obligation of contracts, shall be made." TEX. CONST. art. I, § 16. A 

retroactive law is one that "acts on things which are past." Union Carbide Corp. v. Synatzske, 438 

S.W.3d 39, 55 (Tex. 2014). Here, subsection 11.13(n-1) renders ineffective a repeal or reduction 

in the amount of a local homestead exemption made in 2015 by a school district, municipality, or 

county made prior to the subsection's November 3, 2015 effective date. "But retroactive effect 

alone will not make a statute unconstitutional." Id. In addition, a challenge to a statute's 

3See TEX. SEC'Y OF STATE, ELECTION INFORMATION, HISTORICAL ELECTION RESULTS (1992-CURRENT), 

www.sos.state.tx.us://elections.sos.tx.us/ (2015 Constitutional Amendynent Election). 

4See Brief from Randall 8. Wood, Ray & Wood, to Honorable Ken Paxton, Tex. Att'y Gen. at 2-3 (Jan. 14, 

2016) (on file with the Op. Comm.) ("Wood Brief'). 
The Honorable Jane Nelson - Page 3 (KP-0072) 

constitutionality begins with a presumption that the statute is constitutional with the burden to 

establish otherwise on the challenging party. Id. 

The Texas Supreme Court has identified a three-part test for consideration of challenges 

under article I, section 16.5 See Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126, 138-47 

(Tex. 2010) (discussing myriad prior cases and recognizing the difficulty in utilizing the "impairs 

vested rights" test for unconstitutional retroactivity); see also Tenet Hasps. Ltd. v. Rivera, 445 

S.W.3d 698, 707 (Tex. 2014) (following three-part test established in Robinson). In doing so, the 

court stated that constitutional provisions limiting retroactive legislation must be applied to 

achieve "their intended objectives-protecting settled expectations and preventing abuse of 

legislative power." Robinson, 335 S.W.3d at 139. It further recognized that "[n]o bright-line test 

for unconstitutional retroactivity is possible." Id. at 145. In lieu of the "impairs vested rights" 

analysis, the court said that "courts must consider three factors in light of the prohibition's dual 

objectives: the nature and strength of the public interest served by the statute as evidenced by the 

Legislature's factual findings; the nature of the prior right impaired by the statute; and the extent 

of the impairment." Id. The court advised that "[t]he perceived public advantage of a retroactive 

law is not simply to be balanced against its relatively small impact on private interests . . . . There 

must be a compelling public interest to overcome the heavy presumption against retroactive laws." 

Id. at 145-46. The analysis also "encompasses the notion that statutes are not to be set aside 

lightly." Tenet Hasps. Ltd., 445 S.W.3d at 707 (internal quotation marks omitted). 

In accordance with the Robinson opinion, a court would first consider the nature and 

strength of the public interest served by the statute as evidenced by the Legislature's factual 

findings, mindful that the public interest in section 11.13 must also serve a compelling interest. 

See Robinson, 335 S.W.3d at 145-46. The purpose of S.B., 1 was to reduce "the property tax 

burden on homeowners by increasing the homestead exemption for school district taxes" as well 

as to reduce the limitation on school district property taxes that may be imposed on the homestead 

of an elderly or disabled person. See SENATE RESEARCH CTR., BILL ANALYSIS, Tex. S.B. 1, 84th 

Leg., R.S. (2015) at 1, HOUSE RESEARCH 0RG., BILL ANALYSIS, Tex. S.B. 1, 84th Leg., R.S. (2015) 

at 1. It is presumed that a consequence of reducing homeowners' property tax burden is to 

stimulate real economic growth by increasing consumption, which in turn drives job growth. See 

HOUSE RESEARCH ORG., BILL ANALYSIS, Tex. S.B. 1, 84th Leg., R.S. (2015) at 3. "Increasing the 

homestead exemption would put more money in consumers' pockets, allowing more money to be 

used more efficiently in the economy." Id. at 3-4. And reducing the limitation for those who are 

elderly or disabled enhances their ability to be able to stay in their homes instead of being forced 

to sell due to an inability to pay taxes. In contrast to the situation in Robinson, wherein only one 

party was benefited by the challenged statute, the legislative purpose in enacting S.B. 1 is to 

5

The briefing argues that the test for unconstitutional retroactivity is whether a retroactive law destroys or 

impairs a vested right and that a school district has a vested right to the taxes once any exemptions are determined. 

See Wood Brief at 2-3 (stating that "[f]or any school district that repealed or reduced its homestead exemption before 

July 1, 2015, the exemption would have been determined based upon the amount adopted by the school district and 

would have been determined on July 1, 2015," a date prior to the effective date of subsection l l. l 3(n-l )) (citing 

Corpus Christi People's Church, Inc. v. Nueces Cty. Appraisal Dist., 904 S. W.2d 621, 626 (Tex. 1995)). 
The Honorable Jane Nelson - Page 4 (KP-0072) 

address a concern important to all Texas homeowners (and to a degree Texas renters) and to 

improve the state's overall economy. See generally Tenet Hasps. Ltd., 445 S.W.3d at 707 

(contrasting legislation that was a comprehensive overhaul of Texas's medical malpractice laws 

with legislation at issue in Robinson, which was enacted solely to benefit one company); Union 

Carbide Corp., 438 S.W.3d at 58 (contrasting similar comprehensive legislative scheme 

addressing asbestos litigation with legislation benefiting a particular entity). A court would likely 

find that legislation addressing property tax relief for Texas citizens to improve the state's economy 

is a strong public purpose and serves a compelling public interest. 

A court would next consider the nature of the prior right impaired by the statute. See 

Robinson, 335 S.W.3d at 145. Here, the right purportedly affected is that of local taxing entities 

such as school districts, municipalities, and counties to receive additional tax revenues prior to the 

effective date of a law that prohibited them from doing so by reducing or repealing the local option 

homestead exemption. See TEX. TAX CODE § 11.13(n), (n-1 ). However, the extent to which any 

particular local taxing entity had a concrete expectation of exercising its right to reduce or repeal 

its local option homestead exemption is unclear. See TEX. Ass'N OF SCH. Bos., S.J.R. 1, S.B. 1, 

AND THE LOCAL OPTION HOMESTEAD EXEMPTION (2015)6 (noting arguments against attempting to 

repeal or reduce a local option exemption and advising school boards to consult with attorney prior 

to making any changes). Furthermore, given that S.B. 1 was passed by the Legislature on May 29, 

2015, local taxing entities were on notice at thatpoint that the Legislature intended for reductions 

or repeals to be ineffective, and any action taken after that date to reduce or repeal a local option 

homestead exemption would be in direct conflict with that intent. Moreover, to the extent the 

vested rights analysis may still be relevant to this aspect of the inquiry, the taxing authorities' right 

to file suit for property taxes is not ripe until the taxes are delinquent. See Gribble v. Layton, 389 

S.W.3d 882, 890-96 (Tex. App.-Houston [14th Dist.] 2012, pet. denied) (utilizing Robinson 

analysis but still conducting vested rights analysis as part of second prong of three-part test). 

Under the Tax Code, property taxes are not delinquent until they are unpaid by February 1 of the 

following tax year. See TEX. TAX CODE§ 33.41(a) (providing that a taxing entity may file suit to 

collect tax at "any time after its tax on property becomes delinquent"), id. § 3 l.02(a) (providing 

generally that taxes are delinquent "if not paid before February 1 of the year following the year in 

which imposed"). For the 2015 tax year, taxes are not delinquent until they are unpaid by 

February 1, 2016. Accordingly, while a court could determine that a prior right enjoyed by taxing 

entities is impaired by subsection 1 l.13(n-1 ), it would likely also determine that the legislation 

does not have a significant detrimental impact on settled expectations. 

Finally, a court would consider the extent of the impairment. See Robinson, 335 S.W.3d at 

145. Provisions of the Education Code were added by S.B. 1 to require the state to cover certain 

shortfalls that a school district may incur due to the changes to the exemption with state funds. 

See, e.g., TEX. Eouc. CODE§§ 42.2518, 46.071. With the promise ·of additional funds from the 

state to minimize the loss of revenue to the school districts, the extent of the expected impairment, 

at least with respect to school districts, is slight. See FISCAL NOTE, Tex. S.B. 1, 84th Leg., R.S. 

(2015) at 3 (stating that "[n]o fiscal impact to units of local government is anticipated"); FISCAL 

6Available at www.tasb.org/Services/Legal-Services/TASB-School-Law-eSource/Business/documents/local 

_option_ homestead_ exemption June 15.pdf. 
The Honorable Jane Nelson - Page 5 (KP-0072) 

NOTE, Tex. S.J. Res. 1, 84th Leg., R.S. (2015) (acknowledging some reduction in school district 

tax revenue from the constitutional amendment likely offset by additional provisions in S.B. 1 

requiring the state to hold school districts harmless for property tax losses). Moreover, the 

Legislature's provision for making up the shortfall to the school districts mitigates against a finding 

of any abuse of legislative power. 

A court balancing these factors, while also effectuating the presumption against 

unconstitutionality, would likely conclude that subsection 1 l.13(n-1) is not unconstitutionally 

retroactive. Accordingly, subsection 1 l.13(n-1) of the Tax Code prohibits a school district, 

municipality, or county from repealing or reducing the local option homestead exemption from the 

amount that was adopted for the 2014 tax year through the 2019 tax year. 
The Honorable Jane Nelson - Page 6 (KP-0072) 

SUMMARY 

Subsection l 1.13(n-1) of the Tax Code prohibits a school 

district, municipality, or county from repealing or reducing the local 

option homestead exemption from the amount that was adopted for 

the 2014 tax year through the 2019 tax year. 

JEFFREY C. MATEER 

First Assistant Attorney General 

BRANTLEY STARR 

Very truly yours, 

~?~ KEN PAXTON 

Attorney General of Texas 

Deputy Attorney General for Legal Counsel 

VIRGINIA K. HOELSCHER 

Chair, Opinion Committee 

CHARLOTTE M. HARPER 

Assistant Attorney General, Opinion Committee