@ffice of tfy !Zlttornep @mecal 

Mate of QCexae 

August 14,1997 

DAN MORALES 

,ATTOHSCEY CEXERAL 

The Honorable Garry Mauro 

Commissioner 

Texas General Land Office 

1700 North Congress Avenue 

Austin, Texas 78701-1495 

Opinion No. DM-448 

Re: Whether land designated for “agricultural 

use” is subject to the live-year rollback provisions 

when the property is acquired by the state and 

related questions (RQ-911) 

You ask about the recapture or “‘rollback” of taxes on land appraised for property taxation 

at its value for agricultural use when the property is acquired by the state and other related questions. 

Your questions arise as the General Land Office (the “GLO”) prepares to dispose of the real property 

assets of the Superconducting Super Collider project’ since many of the parcels of land acquired for 

that project were classitied, at the time of acquisition by the state, as “agricultural” for property tax 

purposes. 

Article VIII, sections Id and Id-1 of the Texas Constitution, as implemented by the 

provisions of the Tax Code, allow for the designation of certain land for agricultural use and 

appraisal of such land for property tax purposes on the basis of its productive capacity rather than 

its market value. The special valuation has the effect of reducing substantially the property taxes 

on land that qualifies.* When the use of the land is changed,3 however, an additional tax is imposed 

in an amount equal to the difference between the taxes paid during the past three years or five years 

- depending on which particular provisions are applicable4 -- and the taxes that would have been due 

during that period had the land been appraised at market value. Tex. Const. art. VIII, $5 l-d, l-d-l; 

Tax Code $5 23.46, .55(a). The additional tax imposed is a penalty for taking the land out of 

agricultural production and is commonly called a rollback tax because it recaptures the taxes the 

owner would have paid had the property been taxed at market value for each of the years covered 

by the additional tax. Resolution Trust Corp. v. Tarrant County Appraisal Did., 926 S.W.2d 797, 

‘ma was a project for which Congress failed to appropriate funds. See Gov’t Code 5 2301.001(7) (“‘Super 

collider facility’ means any superconducting super collider high-energy research facility that is or is proposed to be 

sponsored, authorized, and funded in part by the United States government.“). 

‘STATE PROPERIY TAX BOARD, MANUAL FOR THE APPRAISAL OF AGRICULTURAL LAND 1 (1990) [hereinafter 

AG MANUAL]. 
The Honorable Garry Mauro - Page 2 (DM-448) 

by the additional tax. Resolution Tmt Corp. v. Tarrant County Appraisal Dirt., 926 S.W.2d 797, 

799-805 (Tex. App.-Fort Worth 1996, no writ); AG MANUAL, supra note 2, at 31 (The “Rollback’ 

Tax). 

You first wish to know whether the state’s acquisition of a parcel of land subject to the 

special agricultural valuation constitutes a change in use which would trigger the rollback process. 

As alluded to above, land is subject to the provisions, including those with respect to additional 

taxes, of the constitutional amendment under which the land was designated for agricultural use for 

that year. See Tex. Const. art. VIII, $ l-d-l(b); Tax Code 5s 23.52(b), .55(f). Your letter indicates 

that the land at issue qualified for agricultural appraisal under article VIII, section 1 d-l .5 

Article VIII, section l-d-l of the Texas Constitution, adopted in 1978,’ authorizes the 

legislature to provide by general law’ for taxation of open-space land devoted to farm or ranch 

purposes on the basis of its productive capacity. Section Id-1 also authorizes the legislature to 

provide by general law for eligibility limitations and to impose sanctions to further the taxation 

policy of the constitutional amendment. In 1979’ the legislature implemented the eligibility 

limitations and sanctions which are now found in subchapter D, chapter 23 of the Tax Code. See 

Tax Code $5 23.51 - .57. Section 23.55(a) of the Tax Code provides that “[i]f the use of land 

that has been appraised as provided by this subchapter changes, an additional tax is imposed on the 

land. . . .” Open-space land accorded the special valuation by the terms of the statute becomes 

subject to the rollback tax only if the use changes; acquisition alone does not trigger the rollback tax 

provisions. Attorney General Opinion JM-949 (1988) at 3. Change of use occurs when the use of 

%&ions I-d and l-d-l of article VIII both provide for special appraisals of agriculhtral land and are 

implemented by subchapters C and D of chapter 23 of the Tax Code, respectively. Sections l-d and l-d-1, and the Tax 

Code provisions adopted thereunder, differ in their scope and procedures. Letter Opinion No. 95-054 (1995) at 1, n. 

1; see generally Attorney General Opinion m-949 (1988). Under section l-d of article VIII, tbe rollback tax-is 

triggered by diversion of the land to a nonagricultural purpose or a sale of the land. The amount of the rollback tax 

imposed under that section equals the difference between taxes paid and the amount that would have been payable for 

the preceding three years if the land had not been specially appraised. Tex. Coast. art. VIII, g Id(f); see also Tax Code 

5 23.46(c). Under section Id-l and Tax Code section 23.55, however, B rollback is tiggered only by a change in use 

of land designated for agricultural use. Tex. Cm&. art. VIII, 5 l-d-l; Tax Code 5 23.55(a). The Bmount of the tax 

imposed by section 23.55(a) equals the difference between the taxes imposed for the preceding five years and the tax 

that would have been imposed had the land been ap~raisexi at market value for the period. Tax Code 9 23.55(a). Nearly 

all the eligible land in Texas qualifies for the agricultural use designation under section l-d-l of article VIII, and 

subchapter D, chapter 23 of the Tax Code. See AG MANUAL, supra note 2, at 2 (95 percent or more of eligible land in 

Texas qualifies under section l-d-l). 

‘See Act of August 8,1978,65th Leg., 2d C.S., H.J.R. 1,1978 Tex. Gen. Laws 54.54 

‘Sections l-d and Id-1 of article VIII of the Texas Gmstihltion differ in that l-d is self-enacting while section 

Id-l is a grant of legislative authority and requires legislation to implement its provisions. Attorney General Opinion 

M-949 (1988) at 2. 

‘See Act of May 28, 1979,66th Leg., R.S., ch. 302,s 1,1979 Tex. Gen. Laws 680,682-83. 

p. 2509 
The Honorable Garry Mauro - Page 3 (DM-448) 

the land changes from an agricultural use to a nonagricultural use. Resolution Trust Corp., 926 

S.W.2d at 800. Accordingly, cessation of agricultural use constitutes a change of use which triggets 

the rollback tax under section 23.55(a) of the Tax Code. Id. Section 23.55(f) of the Tax Code, 

additionally, provides that “[tlhe sanctions provided by [section 23.55(a)] do not apply if the change 

of use occurs as a result of a sale for right-of-way or a condemnation.” Neither section Id-1 of the 

Texas Constitution nor section 23.55 of the Tax Code provide any exceptions to the rollback 

provisions other than those with respect to land acquired by condemnation or purchased for right-ofway.9 

We begin by noting that insofar as property owned by the state is concerned, exemption from 

taxation is the general rule and not the exception. Attorney General Opinion O-1861 (1940) at 5. 

As explained in Attorney General Opinion 0- 186 1: 

The object of taxation is to produce the revenues with which to conduct the 

business of the state; it is entirely inconsistent with our theory of government 

for the property of the state to be taxed, in order to produce the money to be 

expended by the state. 

The purpose of taxation being only for the raising of money with which 

to carry on the governmental functions, to tax the property of the state would 

only amount to taking money out of one pocket and putting it in another. 

Id. at 4 (citations omitted). Before state property may be subjected to any form of taxation, the 

legislative intent to tax must be demonstrated either by express enactment or clear implication of the 

law. Id. at 5. 

Article VIII, section l(b) of the Texas Constitution declares all real property and tangible 

personal property to be taxable in proportion to its value unless the property is exempt as the 

constitution permits or requires. Attorney General Opinion DM-383 (1996) at 2. Article VIII, 

section 2 provides in relevant part that “the legislature may, by general laws, exempt from taxation 

public property used for public purposes.“‘0 Pursuant to article VIII, section 2, the legislature 

enacted the predecessor to section 11 .l l(a) of the Tax Code governing the taxation of public 

property. Id. Section 11.1 l(a) of the Tax Code states that “[elxcept as provided by Subsections (b) 

%Je understand that the land at issue is approximately 17,000 acres, composed of 2300 separate parcels. It 

is unclear whether all the land was acquired by condemnation or ifany of the. parcels were purchased for right-of-way. 

See also in@ note 13. 

‘OArticle XI, section 9 of the Texas Constitution, exempts “property of counties, cities and towns, owned and 

held only for public purposes, . . and all other properly devoted exclusively to the use and benefit of the public from 

taxation. .” This section is self-executing. Since this last clause has not been construed to apply to prc,perty owned 

by the state, we need not examine this provision. See Attorney General Opinions JM-1085 (1989) at 3 n.1, Jh4-1049 

(1989) at 2 n.1. 

p. 2510 
The Honorable Garry Mauro - Page 4 (DM-448) 

and (c)‘i of this section, property owned by this state or a political subdivision of this state is exempt 

from taxation if the property is used for public purposes.” Thus, as a general matter, by express 

legislative enactment, land owned by the state and used for public purposes is not subject to taxation. 

Accordingly, state-owned land used for public purposes’* is subject to taxation only if provided for 

by another law. See, e.g., Lubbock Indep. Sch. Dist. v. Owens, 217 S.W.2d 186, 189 (Tex. Civ. 

App.-Amarillo 1948, writ ref d n.r.e.) (“There is no statute warranting a fixing of a lien against the 

land for taxes during the time it was held by the State. The contention that taxes acc~ed against the 

property while held by a taxing unit has been rejected by the courts of this state.“). 

We proceed to consider whether the agricultural use provisions provide for the taxation of 

state property exempted by section 11 .l l(a) of the Tax Code. Neither article VIII, section Id-l of 

the Texas Constitution nor section 23.55 of the Tax Code expressly provide for imposition of the 

rollback tax on state-owned land. See Tex. Const. art. VIII, 4 l-d-l; Tax Code 5 23.55. It is also 

true that neither expressly exempts governmentally owned land.‘r We do not believe, however, that 

the failure to specifically exempt such property is significant, or can reasonably be read to imply an 

intent to tax state-owned property exempted by section 11.11 (a). First, we think it unlikely that 

the state, if it chose to tax itself, would do so by other than express enactment. See Owens, 217 

S.W.2d at 189 (need statutory authority to fix tax lien against state property); Attorney General 

Opinion G-1861 (1940) at 5 (state has never held itself subject to taxation except by special 

enactment). Secondly, a specific exemption for state-owned property is unnecessary. A statute is 

presumed to have been enacted by the legislature with complete knowledge of and with reference 

to the existing law. I4 A&r v. Texas Water Comm ‘n. 790 S.W.2d 299,301 (Tex. 1990); McBride 

v. Clayton, 140 Tex. 71, 166 S.W.2d 125, 128 (Tex. 1942). Furthermore, statutory repeal by 

implication is not favored by the law. Acker, 790 S.W.2d at 301; Gordon v. Luke, 356 S.W.2d 138, 

139 (Tex. 1962); see also Eppenauer v. Eppenauer, 831 S.W.2d 30,34 (Tex. App.--El Paso 1992, 

no writ) (repeal by implication will not be declared unless there is no room for doubt and repeal not 

favored by law). Thus, a statute covering the same subject dealt with by the preexisting law but not 

“Subsection (II) of section 11 .I 1 subjects land owned by the Permanent University Fund to county taxes. Tax 

code g 11.1 l@). Subsection (c) of section 11 .l 1 provides that agricultural land owned by a county for the benefit of 

public schools under article VII, section 6, of the Texas Constitution, is taxable for all purposes. Id. $ 11.1 I(c). 

12We do not know the uses made of the parcels of land at issue. For the purposes of tbis opinion, we assume, 

without considering, that the land in question “is used for public purposes,” since the question immediately before us 

is whether, as a general matter, state-owned land is subject to the rollback tax. 

‘%he exemption provided for change of use resulting from condemnation of land does not nor do we believe 

is intended to deal with (or circumscribe) the application of the rollback tax on govemmentally owned land. There. are 

clearly a number of nongovernmental entities, such as utility, railroad, or tramway companies, that have condemnation 

authority. See generally 32 TEX. JUR. 30 Eminent Domain $5 63-80 (1981) (special pwpose enterprises, railroad 

corporations, interurban electric railways, indushical railroads, tramways, individuals and associations). 

‘%he predecessor to section 11.1 l(a) of the Tax Code has existed since 1943. See Act of May 5, 1943,48th 

Leg., R.S., ch. 316, $ 1, 1943 Tex. Gen. Laws 472,473. 

p. 2511 
The Honorable Garry Mauro - Page 5 (DM-448) 

repealing that law is required to be harmonized with the older law in such a way as to give effect to 

both statutes. Acker, 790 S.W.2d at 301; Standard v. Sadler, 383 S.W.2d 391,395 (Tex. 1964); 

Co&y v. Daughters ofthe Republic, 156 S.W. 197,201 (Tex. 1913). Section 23.55 can be easily 

harmonized with section 11.1 l(a) of the Tax Code by exempting state-owned property used for 

public purposes t?om the operation of the rollback tax provisions. Such coordination preserves both 

the purpose of section 23.55 to recapture pmperty taxes and penalize taking land out of agricultural 

use, and the objective of section 11.1 l(a) to exempt publicly owned property used for public 

purposes. See A&r, 790 S.W.2d at 301; Gov’t Code 5 311.021(3) (in enacting statute, it is 

presumed that just and reasonable result is intended). We, therefore, conclude that state-owned land 

exempt under section 11.1 l(a) of the Tax Code is not subject to the rollback tax provisions of section 

23.55 of the Tax Code.‘s 

No Texas court appears to have directly addressed the application of the rollback tax 

provisions to acquisition and change of use of agricultural land by the state or one of its political 

subdivisions.‘6 The State Property Tax Board (the “board”),” the agency charged with enforcing 

the agricultural use provisions has, however, adopted the position that governmental acquisition and 

subsequent change of use of agricultural land triggers the rollback provisions of section 23.55 of the 

Tax Code. Pursuant to the authority granted under section 23.52(d) of the Tax Code,i8 the board 

promulgated rules with respect to appraisal of agricultural land under article VIII, section l-d-l. 

These rules are contained in the Manual For The Appraisal of Agricultural Land (the “mamml”), 

“We note that the legislature has passed Senate Bill 728, amending section 23,55(a), effective as of September 

1.1997, to expressly provide that “If’& the pqxxes of this subsection, the chief appraiser may not consider any period 

during which land is owned by the state in d*crmining whether a change in the use of the land has occurred.” See S.B. 

728, Act of May 14,1997,7Sth Leg., RS. (eff. Sept. 1, 1997). 

‘6Th.e Dallas Court of AppeaLs in Rewlutin Trust Corporation determined that the “rollback tax is a penalty, 

and not merely a tax on real estate” that could not be enforced against the Resolution Trust Company (“RTC’), an 

instrumentality of the United States. Resolution Trust Corp., 926 S.W.2d at 805. The court held that assessment of the 

rollback tax against the RTC was barred based on sovereign immunity. Id. at 798, 805 (construing 12 USC. 

§ 1441=(g)). 

‘%n 1991, the State Property Tax Board~was abolished and its duties and functions transferred to the 

Comptroller ofPublic Accounts. See Act of August 25, 1991,72d Leg., 2d C.S., ch. 6, $5 24,67,68, 1991 Tex. Gen. 

Laws26,31,41. 

‘*See id. 

p. 2512 
The Honorable Garry Mauro - Page 6 (DM-448) 

published in 1990.‘9 With respect to the application of the rollback tax provision, the manual states 

the following: 

Exemptions that apply to ordinary property taxes do not apply to 

rollback taxes. Even if the land might be exempt from ordinary taxes in 

the new owner’s hands, the rollback tax still becomes due if that owner 

takes property out of agricultural use. In most cases, the owner will be 

personally liable for the rollback tax, and the tax lien can be enforced 

against the property. where the state or a political subdivirion buys the 

land and changes the use, the rollback tax will be triggered but the lien 

cannot be foreclosed. The tax can’t be collected unless the 

governmental entity chooses to pay it. However, the lien against the 

land continues and could be enforced against a later buyer. 

AG MANUAL, mpra note 2, at 35 (Does the Rollback Tax Appiy to Land Bought and Changed by 

an Exempt Organization or Government Entity?) (emphasis added). 

Construction of the agricuhural use statutes by the board is entitled to serious consideration, 

but only as long as such construction is reasonable and does not contradict the plain language of the 

statute. See, e.g., Turrant County Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); 

Stanford v. Butler, 181 S.W.2d 269, 273 (Tex. 1944). A construction that imposes additional 

burdens, conditions, or restrictions in excess of or inconsistent with the statutory.provisions will not 

be upheld. See Riess v. Williamson County Appraisal Dist., 735 S.W.2d 633,63?-38 (Tex. App.-- 

Austin 1987, writ denied) (board rule requiring “intensity of use” as part of historical agricultural 

use inconsistent with Tax Code 5 23.51). Based on our discussion of section 23.55 above, we 

believe the board’s construction is neither reasonable nor consistent with the statute. The board’s 

construction imposes the burden of taxation on the state and its political subdivisions when no such 

imposition is required by either the express language of, or clear implication in, the statute. See 

Riess, 735 S.W.2d at 637-38; Moore, 845 S.W.2d at 823. There appears to be nothing in the 

legislative history of article VIII, section la-1 of the Texas Constitution, or of section 23.55 of the 

Tax Code, indicating that the rollback tax was intended to apply to governmentally owned land that 

was otherwise exempt from property taxes. The board’s construction necessarily repeals by 

implication section 11.1 l(a) of the Tax Code without attempting to reconcile section 23.55 with the 

older provision even when there is no manifest inconsistency between the two provisions. See 

A&r, 790 S.W.2d at 301; Eppenauer, 831 S.W. 2d at 34 (presume that legislature desired just and 

reasonable result and contemplated effect of statutes which are, on their face, conflicting, and both 

will be given effect unless manifestly inconsistent). Moreover, the board’s construction is internally 

contradictory in that it posits that the governmentally owned land is subject to the tax because the 

IgAll mles and procedures adopted by the board and in effect on September 1, 1991, remained in effect as if 

adopted by the Comptroller of Public Accounts until amended, repealed, withdrawn, or otherwise superseded by the 

comptxoller. Id. $67(c). The comptroller to date has not amended, repealed, withdrawn, or otherwise superseded the 

1990manual. See34T.AC~9.4001. 

p. 2513 
The Honorable Garry Mauro - Page 7 (DM-448) 

section 11.1 l(a) or similar exemption does not apply, but the tax cannot be enforced or collected 

from the governmental entity, presumably because of the exemption provided in section 11.1 l(a) 

or another provision. *O The result of such construction, that the rollback tax is intended to be 

imposed on land owned by, but never collected horn, governmental entities, is neither reasonable 

nor feasible of execution. See Gov’t Code $5 311.021(3) (’ m enacting statute, presume just and 

reasonable result intended), (4) (presume result feasible of execution intended), .023(5) (in 

construing statute, court may consider consequence of particular construction). We, therefore, 

decline to adopt the board’s construction of section 23.55, with respect to the application of the 

rollback tax provision to state-owned property. 

Unrelated to the rollback tax provision, you also ask whether “government ownership 

suspend[s] the ‘five out of seven years’ agricultural use requirement for qualification for the special 

agricultural valuation’* and “may the appraisal district consider only the last seven years of use in 

private ownership when determining whether a parcel is qualified for the special valuation.“2’ 

Article VIII, section l-d-1 of the constitution authorizes the legislature to provide by general 

law for taxation of “open-space land devoted to farm, ranch, or wildlife management purposes on 

the basis of its productive capacity” and “eligibility limitations.” Section 23.5 I( 1) defines “‘qualified 

open-space land” as 

land that is currently devoted principally to agricultural use to the degree 

of intensity generally accepted in then area and that has been devoted 

principally to agricultural use or to production of timber or forest 

products for five of the preceding Seven years or land that is used 

principally as an ecological laboratory by a public or private college or 

university. 

%xis position is apparently based on Attorney General Opiiion M-1085. That opinion dealt with land 

acquired by the Veterans Land Board subject to l#ns created by the previous owner’s failure to pay property tax+ Tbe 

opinion concluded that taxes may not be imposed on land comprising the Veteran’s Land Fund based on either article 

III, se&on 49-b of the Texas Constitution or section 11.1 l(a) of tbe Tax Code. Attorney General Opinion N-1085 

(1989) at 5-9. The lien searing the taxes owed by the previous owt~e.r, however, remained in force while tbe property 

was owned by tbe Veterans’ Land Bard, but the lien was utxnfonxable against tbe state. Id. at 17. Attorney General 

Opinion JM-1085 and the cases cited therein for the last conclusion would appear to be inapposite to tbe rollback tax 

lien: they involve the usual property taxes from which tbe governmental entity in question is exempt under section 

11.1 l(a) of the Tax Code or another provision, so no taxes accrued while the property was held by the govemmental 

entity; any lien for delinquent taxes that continued when the governmental entity acquired the property but could not 

be enforced against the govemmental entity did not attach while the property was held by or because of action of tbe 

governmental entity. See e.g., State v. City ofSan Antonio, 209 S.W.2d 756,757 (Tex. 1948); Childrew County Y. State, 

92 S.W.Zd 1011, 1016 (Tex.1936); Maverick County Water Control & Improvement Dist. No. I v. State, 456 S.W.2d 

204 (Tex. Civ. App.-San Antonio 1970, writ ref d); State v. Bean-Medina-Atarcosa Counties Water Improvement Dirt., 

310 S.W.2d 641,643 (Tex. Civ. App.--San Antonio, 1958, writ refd); Owens, 217 S.W.2d at 188. 

%iven our conclusion that state-owned land used for public purposes is not subject to tbe rollback tax, we 

need not address your remaining questions relating to tbe operation of the rollback tax. 

p. 2514 
The Honorable Garry Mauro - Page 8 (DM-448) 

Tax Code 5 23.5 l(1) (emphasis added). Section 23.51(2) additionally defines at length the activities 

that may constitute “agricultural use.” 

We assume your questions arise in anticipation of sale of the state-owned land to persons 

who may want the land to qualify for agricultural designation. You do not provide any particular 

factual context for your questions nor any support for the suggestion that intervening governmental 

ownership may be disregarded.= Your questions assume that in all cases the intervening state 

ownership resulted in nonagricultural use of the land for the total period of the ownership, which 

may not necessarily be the case. Also relevant to analysis of the matter may be the period the use 

was changed during the time the land was governmentally owned. In the absence of a specitic 

factual context, and development or briefing of the issues, we decline to address this matter. 

SUMMARY 

State-owned land used for public purposes is not subject to the 

rollback tax under section 23.55 of the Tax Code. 

DAN’MORALES 

Attorney General of Texas 

JORGE VEGA 

First Assistant Attorney General 

SARAH J. SHIRLEY 

Chair, Opinion Committee 

Prepared by Sheela Rai 

Assistant Attorney General 

**You also indicate, however, that the General Land Office does not have a position on this issue. We note 

in regard to tbis matter, that Senate. Bill 728, amending Tax Code section 23.55(a), appears to allow the chief appraiser 

to disregard state. ownership only for the purposes of that subsection in determiniig if change of use of the land has 

occurred. See supra note 15. 

p. 2515