.



## TEE ATTORSEY GEXERAL OF 

## TEXAS

April 14, 1987

Mr. F. E.Williams ChambersCountyAuditor P. 0. Box 910 Anahuac,Texas 77514 opinionNO. .1X-677

Re: Calculationofmaximum tax attributable to the road and bridge fund

DearMr.Williams:
Chapter 26 of the Tax Code sets forth themethod by which each taxingunitmust calculate an "effective tax rate" and theprocedures thateach taxingunit must follow inadoptinga tax rate. The "effective tax rate" is the tax rate that will produce both the revenue necessary to satisfy the taxing unit's debt payment obligations for the year in which the rate is calculated and the same amount of operating revenue levied on properties taxed in the previousyear and taxable in the current year. See Attorney General Opinion m-495 (1982). We understand you to askhree questions about the calculation of the effective tax rate for a county. We will answer each of your questionsin turn.
Generally, the total county tax rate vll result from the tax rates sat for threedifferentproperty taxes. **Article** VIII. **sections** l-a and 9 of theTexas Constitution impose a ceiling on each individual rate and provide that the total rate cannot exceed $1.25/$100 valuation. The three individualtaxesare: (1)the fund for farm-tomarket road/flood control (lateralroad fund),with a rate ceiling of $.30/$100valuation (sectionl-a); (2)thegeneral fund, thepermanent improvementfund, the road and bridge fund. and the jury fund,with a rate coiling of $.80/$100 valuation (section 9); and (3) the fund for the further**maintenance** of publicroads,with a rate ceiling of



## 1.We note that other statutory and constitutional provisions permit counties to 1-Y additional property taxes in certain instances, a, for jails, courthouses, sea wall const.ruction,fire fighting, and other special purposes. For convenience. we are limiting our answer to the first question to the three most widely imposed constitutional taxes. If a county levies any of these additionalproperty taxes, the assessor calculates an effrctive tax rate for each additional tax under the reasoningwe adopt herein and adds it to thecounty's total effectiverate.

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$.lS/$lOO valuation (section 9). We understand you to ask first whether the tax rate rollback electionprovisions set forth in section 26.07 of the Tax Code may be invokedwhen the increase in either the **general** fund, the permanent improvement fund, the road and bridge fund, and the jury fund component of the tax rate exceeds the effective tax rate for that fund by eight percent or more or whether the tax rate rollback electionprovisionscanbe invokedonlywhen the **total** county tax rate exceeds the total county effective tax rate by eight percent or more. For two Gns. we conclude that section 26.07 of the Tax Code may be invoked only when the tocal couuty tax rate exceeds the total county effective tax rate by eight percent or more.
First, courts generally will confer greatweight to an agency's interpretation of a statute, unless it is obviously contrary to the statute'sclear andunambinuousmeaninn. TeacherRetirement Svstemv. Duckworth. 260 S.W.2d 632;~636 (To=.-Civ. App,

. - Fort Worth 1953), aff'd. 264 S.W.2d 98 (Tex. 1954); Pacific Employers Insurance Co. v. Gon. 242 S.W.2d 185, 189 (Tex. 1951); Dallas Title and Guaranty Co. v. Board of Insurance Commissioners, 224 S.W.2d 332, 336 (Tex. civ. ADD. - Austin 1949. writ ref'd). The contemmraneous construction of a statuteby those chargedwith the responsibilityof its **administration** willbe respected, especiallywhen the construction has been sanctioned by long acquiescence. Stanford v. Butler, 181 S.W.Zd 269, 273 (Tex. 1944). The State Property Tax Board has always construed sections 26.05 and 26.07 of the Tax Code to require that each component of the tax rate be calculated as an independent rate and thenadded together fora totalrate.
Second, the clear terms of the Tax Code provisions require that the eight percent tax rate increase triggering the tax rate rollback election apply to the county's effective rate, not to the effective rate of each component of a county's rate. Section 26.04(d) of the Tax Codeprovides inpertinentpart:

The designatedofficer or employee shall calculate the tax rate that if applied to the total taxable value submitted to the governing body leas the taxable value of new property would impose the amountof property taxesdeterminedasprovidedby Subsection (c) of this section [whichessentially determines the amount of operating revenue levied
on properties taxed in the previous year and taxable in the current year].

. . . (Emphasis added).

See alsoTax Code 526.042 (governingcalculationof effective tax rate in a county imposinga sales anduse tax).

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Section 26.05of theTax Codeprovides the following in part:
(a) By September 1 or as soon thereafter as

practicable, the governing body of each taxing unit shall adopt a tax rate for the current tax year and shallnotify the assessorfor theunit of the rate adopted. The tax rate consists of two components, each of which must be approved separately. The componentsare:
(1) the rate that, if applied to the total taxablevalue,will impose the amount of taxes needed to pay the unit's debt service as describedby Section 26.04(e)(3)of this code; and
(2) the rate that, if applied to the total taxablevalue, will impose the amount of taxes needed to fund maintenance and operation expendituresof theunit for thenextyear.
(b) a taxing unit may not impose prop.erty taxes in any year until the governing body has adopted a tax rate for that year, and the annual tax rate must be set by ordinance, resolution or order, depending on the method prescribed by law foradoptionof a lawby the governingbody.

. . .pertinent

(c) The governing body may not adopt a tax rate that exceeds the tax rate calculated as provided by Section 26.04 of this code by more than three-percent until it has held a public hearing on theproposed increaseandhas otherwise complied with Section 26.06 of this code. The governingbody of a taxingunit shallreduce a tax rate set by law or by vote of the electorate to tberate calculated as provided by Section 26.04 of this code and may not adopt a higher rate unless it first complies with Section 26.06 of this code. (Emphasisadded).

And finally. section 26.07 of the Tax Code sets forth the procedures that must be followed in order to conduct a rollback election to repeal the rate increase. The section inpertinentpart:

(a) If the governing body of a taxing unit other than a school district adopts a tax rate that exceeds the rate calculated as provided by **tax** rate provides

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Section 26.04 of this code by more than eight percent, the qualified voters of the taxing unit by petitionmay require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to a rate that exceeds the rate calculated as provided by Section 26.04 of this code by only eight percent. (Emphasisadded).

A reading of chapter 26. as a whole, indicates that the tax rate rollback election provisions of section 26.07may be invoked only in
an instance in which the total tax rate adopted exceeds the total effective tax rate by eight percent or more. If the legislaturehad intended that a county's component rates individually be limited to the three percent-eight percent rate increase lixitations. it could easilyhave soprovided. But it did not. Because we are required to give effect to the evident intent of the legislature,Bernard l-lanyard Enterprises, Inc.v. McBeath. 663 S.W.Zd 639. 643 (Tex.App. - Austin 1983, writ ref'd n.r.e.); Chemical Bank v. Commercial Industries Service Co., 662 S.W.Zd 802. 804 (Tax. App. - Rouston [14th Dist.] 1983),writ ref'dn.r.e., 668 S.W.2d 336 (Tex. 1984).we are compelled to conclude that the tax rate rollback election provisions set forth in section 26.07may be invoked only when the total tax rate adopted pursuant to section 26.05 of the code exceeds the total effective tax rate as calculatedby section 26.04by eightpercent ormore.

We understand your next question to be whether the construction that we have adopted in answer to your first queation permits, in effect, the "transfer" to another fund of taxmoney thatmust be used only for purposes authorizedby the qualifiedvoters of the county in the first election permitting the imposition of the tax. Our answer is that it doesnot. Your coucernapparentlyarises from the language contained in the relevant constitutional provisions authorizing the impositionof the taxes at issue.

ArticleVIII, section l-a,of theTexas Coustitutionprovides the following inpertinentpart:

Sec. l-a. From and after January 1, 1951. uo State ad valorem tax shall be levied upon any property within this State for general revenue purposes. **From** and after January 1. 1951, the several counties of the State are authorized to levy ad valorem taxes upon all property wlthin their respective boundaries for county purposes, except the first Three Thousand Dollars ($3,000) value of residential homesteads of married or uomarried adults. male or female, including those living alone, not to exceed thirty cents (30~) on each One Hundred Dollars ($100) valuation, in

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addition to all other ad valorem taxes authorized by the Constitution of this State, provided the
revenue **derived** therefrom shall be used for construction and maintenance of Farm to Market Roads or for Flood Control, except as herein otherwiseprovided. (Emphasisadded).

Article VIII, section 9. of the Texas Constitution sets forth the following:

Sec. 9. The State tax on property, exclusive

of the tax necessary to pay the public debt, and of the taxes provided for the benefit of the public free schools, shall never exceed **Thirty** fiveCents (35~)on theOneHundredDollars ($100) valuation; and uo county, city or town shall levy
a tax rate in excess of Eighty Cents (80~)on the One Huudred Dollars ($100) valuation in any one (1) year for general fund, permanent improvement fund,road andbridge fund and jury fundpurposes; provided further that at the time the Commissioners Court meets to levy the anuual tax rate for each county it shall levy whatever tax rate way be needed for the four (4) constitutional purposes;namely,general fund,permanent improvement fund, road and bridge fund and jury fund so long as the Court does not impair any outstanding bonds or other obligations and so long as the total of the foregoing tax levies does not exceed Eighty Cents (80~) on the One Hundred Dollars ($100) valuation in any one (1) year. Once the Court has levied the annual tax rate, the same shall remain in force and effect during that taxable year; and the Legislature may also authorize an additional annual ad valorem tax to be levied and collected for the further maintenance of the public roads; provided, that a majority of the qualified property taxpaying voters of the county voting at an election to be held for thatpurpose shallvote such tax. not to exceed Fifteen Cents (15~) on the One Hundred Dollars ($100)valuation of the property subject to taxation in such county. Any county may put all tax money collected by the county into one general fund, without regard to the purpose or source of each tax. And the Legislaturemay pass local laws for themaintenance of thepublic roads and highways, without the local notice required for specialor local laws. This Section shallnot be construed as a limitation of powers delegated

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to counties, cities or townsby any other Section
or Sections of this Constitution. (Emphasis added).

The underscored sentenceof articleVIII, section 9,was addedby
a constitutional amendment in 1967. Acts 1967, 60th Leg.. H.J.R. No. 3. at 2979. Prior to the 1967 amendment itwas well established that the general fund. permanent improvement fund, road and bridge fund, and jury fund, the four so-called "constitutional funds" of article VIII. section 9. could not be comminaled or used for ourooses other than-that for which eachwas levied.- See First State Bank and Trust Company of Rio Grande City v. Starr Couafy, 306 S.W.2d 246 (Tax.Civ. APP. - SanAnconio 1957,nowrit); Carrollv.Williams, 202 S.W.2d 504 (Tax. 1918); Attorney General Opinion Nos. O-6948 (1945): O-5422 (1943);O-4763 (1942): After the-adoption of the 1967 amendment, the courts and this office consistentlv construed the amendment to nermit commingling or consolidation of the article VIII, section 9, funds. Lewis v. Nacogdoches County, 461 S.W.2d 514 (Tex. Civ. App. - Tyler 1970. no writ); Attorney General Opinion Nos. H-530 (1975); h-194 **(1974) ;**  M-1250, M-1195 ~(1972);M-892 (1971); M-369 (1969); M-207 (1968).but not to permit the commingling or consolidation of any of the articleVIII, section 9, fundswith the articlrVIII, section l-a fund. **Attorney** GeneralOpinionNos. H-530 (1975);M-1250 (1972).

The matter of commingling funds is entirely separate from the matter of determining the effective tax rate. As indicated. the county may raise the effective tax rate by eight percent without triggering therollback electionprovisions. There is no requirement, however, that any tax increase be apportioned among the funds for which taxes are raised. All or none of the increase may go to the lateral road fund. Ouce the taxes are assassad and collected for the lateral road fund,however, thatmoney may not be commingledwith the other funds.

Your final question is about the effect of the adoption of article VIII, section 21. of the Texas Constitution on the tax rate ceilings set forth in articleVIII, section l-aand 9. **Article** VIII, section 21provides the following:

Sec. 21. (a) Subject to any exceptions prescribed by general law, the total amount of property taxes imposadby a political subdivision in any year may not exceed the total amount of property taxes imposedby that subdivision in the preceding year unless the governing body of the subdivisiongivesnotice of its intent to consider
an increase in taxesand holds a publichearing on the proposed increase before it incraases those total taxes. The legislature shall prescribe by law the form, content, timing, and methods of

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giving thenoticeand the rules for theconductof thehearing.
(b) In calculating the total amount of taxes imposed iu the current year for the purposes of Subsection (a) of this section, the taxes on property in territory added to the political subdivision since the preceding year and on new improvements that were not taxable in the preceding year are excluded. In calculating the total amount of taxes imposed in the preceding year for the purposes of Subsection (a) of this section. the taxes imposed on real property that is not taxable by the subdivision in the current year are excluded.

(c) m= legislature by general law shall require that, subject to reasonable exceptions. a propertyownerbe givennotice of a revaluationof his property and a reasonable estimate of the **amount** of taxes that would be imposed on his property if the totalamountofproperty taxes for the subdivision were not increased according to any lawenactedpursuant to Subsection (a)of this section. The notice must be given before the procedures required in Subsection (a) are instituted. (Emphasisadded).

The "general law" requiredby articleVIII. section 21 (orrather the "exceptions" to the specific formula calculations set forth therein) is the effective tax rate calculation detailed in section 26.04 of the Tax Code. SeeAttorney General Opinion MW-495 (1982). Your concernapparentlyar=s from therecentdecline in thevalue of real property in Texas. When articleVIII. section 21. of theTexas Constitution and its companion statute, now-repealed article 7244~. V.T.C.S. (thepredecessor statute to section 26.04 of the Tax Code).
were euacted in 1978. real propertyvaluations in Texas were rising. As a result, the effective tax rates generally dropped from year to year. A simple examplewill illustrate (forpurposes of brevity; we will discuss only the **maintenance** and operation component of the tax rate). If in 1978 a taxingunit's tax ratewas $1.50/$100valuation, with the taxableproperty on the tax rollhaving en appraisedvalue of $10 million, the same taxing unit's effective tax in 1979, after a reappraisal that increased the appraisedvalue of taxableproperty on the tax roll to $20million, would be $.75/$100.& the rate that, when applied to the property taxed last year cud taxed this year at thisyear'sappraisedvalue.
revenue produced last year.will produce the same amountof operating Obviously, when the appraised value .of realproperty dropsfrom one year to the next, the effective tax rate will necessarily rise. In those counties **that** suffer significant

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reductions in appraised value of property on their tax roll, it is conceivable that the effective tax rates of thevarious components of the county's total tax rate may exceed the constitutionally imposed tax rate ceilings. We understand you to ask whether article VIII, section 21. acts to supercede or impliedly repeal the tax rate ceilings set forth in articleVIII, sections l-aand 9. The answer is "no."

Article VIII. section 21, of the Texas Constitution is a notice, provision; neither it nor its statutory counterpart prescribes any maximum tax rates. Together, they only requirepublic notice if any tax rate adopted exceeds a certain calculated tax rate (theeffective tax rate) by a specified percent and permit a tax rate roliback election in the event that the adopted rate exceeds the calculated rate by a larger specified percent. The Texas Supreme Court has enunciated the rule that

[t]he Constitution must be read as a whole, and all amendments thereto must be considered as if every part had been adopted at the same time :tmust be given and as one instrument, and effec to each Dart of each clause, exvlained and qualified-byeveryotherpart. [Citationomitted]. Different sections,amendments.orprovisionsof a Constitution which relate to the same subject matter shouldbe construed togetheraud considered in the light of each other. [Citationsomitted].

Purcellv. Lindsey, 314 S.W.2d 283, 284 (Tex. 1958); see also Statev. Clement*. 319 S.W.2d 450 (Tex. Civ. App. - Texarkaua 1958, writ ref'd). We do not perceive any conflict between the two constitutional provisions. mArticle VIII. section 21. requires that each taxing unitmust calculate au effective tax rate and, if the tax rate that the taxingunit finally adopts exceeds a specifiedpercent,must comply with certain public notice and public meeting requirements. The other two constitutional provisions, article VIII, sections l-a and 9, authorize the imposition of certainproperty taxes for certain purposes and imposea tax rate ceiling on each in the event that those taxes are imposed. In this instance,we must construe article VIII, sections l-a. 9. and 21. of the Texas Constitution together; the tax rate ceilings imposedby article VIII that are applicable to the tax rates that are actually adopted remain in effect.

SUMMARY

The tax rate rollback electionprocedures set forth in section 26.07 of the Tax Code way be invoked in a county only when cha total tax rate adopted by a county exceeda the total effective tax rate by a specified percent; it may not be

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invokedwhen the adopted tax rate of a component of the county's total tax rate exceeds that component's effective tax rate by a specified percent. When theadopted tax rate of a component of the county's total tax rate exceeds that component's effective tax rate, no i.mpentissible "transfer" of tax money occur*. Article VIII, sections l-e, 9. and 21 of the Texas Constitution should be construed together. In au instance in which the effective tax rate calculated pursuant to article VIII, section 21, of the Texas Constitution and section 26.04 of the Tax Code exceedsthe tax rate ceilingsset forth in article VIII, sections l-a and 9. the tax rate ceilings imposedby articleVIII thatare applicableto the tax rates that are actually adopted, are still in effect.

Very 

# J trulyyours

A JIM MATTOX AttorneyGeneral ofTexas

JACXHIGHTOWER FirstAssistant**Attorney** General

MARYXELLER ExecutiveAssistantAttorneyGeneral

JUDGE ZOLLIE STEAXLF.T SpecialAssistantAttorneyGeneral

RICK GILPIN Chairman.OpinionCommittee
Preparedby JimMoellinger AssistantAttorneyGeneral

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