September 2, 1955 

Dr. J. W. Edgar Opinion No. S-171 

Commissioner of Education 

Texas Education Asency Re: Constitutionality and conAustin, Texas struction of SenateBill 

116, 54th Legislature&- 

tiele 2784e-1, V.C.S.).,regula.&glevy of taxes by 

school~districts formainDear Dr. Edgar: tenance-and bond purposes. 

Your letter requesting an opinion of this.offiee~~assumes that 

no actlion may be takenunder.Cbapter 528, Acts of.thfi.54th 

Legislature, 1955 (Senate Bill 116) until.the lawbecon+eti. 

effective. '. Your aseumptlod~ia correct. Then Senate ~concurred 

In the House.AmendmeRts by a voice vote, thus .maklng the bill 

effective September 6, 1955, which la 90 days after adjournment. 

Your questions' are as follows: 

“(1) 

“(2) 

“(3) 

Is Senate Bill No. 116 constitutional? 

Will bonds voted prior to the effective 

date of 'such statute, which bonds were 

voted under statutes applicable at the 

time of the election, including Article 

2784e, continue.to be limited by the 50$? 

tax provision of Article q84e, and If 

your answer is in the affirmative, will 

the 50# tax limitation apply to (a) bonds 

outstanding on the effective date of Senate Bill No. 116, (b) bonds voted prior 

to such effective date but not issued 

until thereafter, and (c) bonds issued to 

refund bonds voted prior to such effective 

date? 

Can a district lawfully elect to continue 

to vote and levy maintenance taxes and 
- 

Dr. J. W. Edgar, page 2 (S-171) 

“.,( 4.) 

“(5) 

“(6) 

vote and Issue bonds pursuant to ArtlcIe 2784e, or wlIi aI1 maintenance tax 

and bond elections sfter the effective 

date of Senate Bill No. 116 automatically be held under the terms of said Senate Bill? 

After the effective date of Senate Bill 

No. 116, may a district lawfully vote 

the maximum $1.50 maintenance tax provided by Senate Bill No. 1'3.6, even though 

at the time of the election it has in excess of 7.5% bonded indebtedness? 

Once a district has lawfully voted malntenance taxes and bonds under Senate Bill 

No. 1.16, 1s there any means whereby the 

district can revert to Its status prior to 

the electionand thus be governed by the 

tax limitations Imposed by Article 2784e? 

If a district lawfully votes a maintenance 

tax in the maximum amount provided by Senate Bill No. I16, and lf such district 

validly votes and Issues bonds, the amount 

of which bonds when added to outstanding 

bonds 1s less than.lO$, but because of a 

subsequent decrease In assessed valuations 

of taxable property in the,year or years 

following the Issuance of said bonds, the 

ratio Is Increased to ll$, is the maximum 

maintenance tax tbatthe district may levy 

reduced to $1.10 on the one hundred ~dollars 

assessed value of taxable property within 

the district, or could the district under 

the statute levy a,malntenance tax of $1.20. 

In other words, pursuant to the schedules set 

forth in Subdivision I of Section 1, will a 

school district which has validly come wlthin the operation of the act always be able 

to levy a maintenance tax of at least $1.20 

regardless of its outstanding bonded indebtedness (assuming, of course, that the 

tax in such amount has lawfully been voted 

and authorized)?" 
. - 

Dr. J. W. Edgar, page 3 (S-171) 

your first question la whether S. B. 116 Is constitutional. 

The amount of tax which may be levied by a schools district 

Is prescribed in Article 7, Section 3, of the Constitution 

of Texas in the following language:; 

," i . . the'Legislature may.author,ise an 

additional ad'valorem~.tax to be.levled and 

collected withinall school dlstrlcte heretofore formed or hereafterformed., for the 

further maintenance ~of pub3l~e'free scboo1s, 

and for the erection and equipment -of school 

buildings therein; provided that a majority 

of the qualified property taxpaying voters 

of the district voting at an~election to~~be 

held for that purpose., shall vote ,suc,h tax 

not to exceed In any one year one ~($1.00) 

dollar on the one hundred~dollars valuation 

of the property subject to taxation in such 

district, but the limitation upon the amount 

of school district tax herein authorized shall 

not apply to incorporated cltles,or ~towns cons.titutlng separate and independent school dlstrlcts, nor to independent or common school 

districts created by general or special law." 

As to whether a municipally controlled school district with 

extended boundaries comes within the above exception so as 

to permit the adoption of this Act is not now passed upon. 

As to all other districts specified, however, it is found 

.;l,.that S.B. 116 properly prescribes the qualification of 

voters and manner of conducting the election for malntenance and bond purposes. 

The'only other questions which might arise are to be found 

in the language of Section 3 of the Act, which section reads 

as follows: 

"It is the intention of the Legislature that 

the provisions of this Act shall be cumulative 

of all other laws and it is further intended 

that the provisions hereof shall not apply to 

any district until such time as the provisions 

of this Act have been adopted by a majority 
- . 

Dr. J. W. Edgar, page 4 (S-171) 

vote of the qualified voters of such district who own property which has been duly 

rendered for taxation on the tax rolls of 

the county for that purpose." 

The Supreme Court of Texas has previously ruled that the 

Attorney General should approve bonds sought to be issued 

by municipal and quasi-municipal corporations where the 

law and his resultant duties are clear; otherwise, the proposed issue should be disapproved since any question must 

be resolved against the Issuing agency. 

Section 3 of Senate Bill 116 presents questions concerning 

the sufficiency of the caption, proper quallflcatlons of 

voters, proper rolls for rendition purposes and the proper 

interpretation of some of its language. While it is lmportant that school finance not become stagnant, it is more lmportant that no posslblllty exist that a school district 

issue unlimited tax bonds when it has not complied with all 

of the conditions precedent. Section 3, if constltutlonal, 

requires then adoption of the .provlslons of the Act in order 

for the district to have the power to issue unlimited tax 

bonds. 

The procedure hereinafter set out is cumbersome, and is recommended solely because it takes into account the possible 

constructions of the provisions of Section 3 and thereby removes any doubt as .to the meaning of the Act., If this procedure la followed, the duty of the Attorney General will be 

clear. 

Three separate election orders should be entered calling an 

election to determine if the district should adopt the provlslons of S.B. 116. The elections could be held at the same 

time and place with the same election officials. Such election 

orders, however, would vary as to the proper qualifications of 

the voters as follows: 

(1) Submission to the "qualified voters of such district 

who own property which has been duly rendered for taxation on 

the tax rolls of the county" as required by Section 3 of Senate Bill 116. 

(2) Submission to the "qualified.electors who own taxable property in the . s . district . e . and who have duly 

rendered the same for taxation' on the district rolIs, as 
Dr. J. W. Edgar, page 5 (S-171) 

contemplated by-ArtFcle 6, Sectlon 3(a) land perhaps Article 

7, Section 3, of the Constitution of Texas-. 

(3) Submission to the poll tax holders as contemplated 

by Article 6, Section 2, of the Constitution of Texas* 

(As to common school districts , only methods 1 and 3 would 

be required in .the light of Subsection 4 of Section 1 of 

S.B. 116). 

If all of these propositions carry, there can be no question 

but that the district has lawfully adopted the provisions of 

the Act. 

It would a&o be possible to enter still another election 

order (or as a~ part-of number 2 above) to submit to the resldent qualifled~property taxpaying voters who have duly rendered 

their property for taxation on the district .rolls two addl-~ 

tlonal proposltlons, i.e., the adoptlon of the~maintenance tax 

provislon'as authorized by Subsection 1 of Section 1 of S.B. 

116, and a proposition for the issuance of additional bonds 

under the unlimited tax provisions, as authorized by Section 1, 

Subsection 2 of S.B:116. Of course,. it would not be mandatory 

to vote addItiona bonds, but lf the,maFntenance tax provisions 

of S.B. 116 are adopted, It necessarily follows that future 

issues of bonds must come under Subsection 2 of Section 1 as 

unlimited tax bonds. 

It should be noted that Section 3 also speaks of a "majority 

vote of the qualified voters of such district" but in so doing 

does not specially provide for an election. Section 2, however, 

supplies this deficiency by saying that the general,laws appllcable to calling and holding bond and tax elections "shall 

govern such district in the calling and holding of the election 

permitted or required under this Act." Thus, all of the propositions may be submitted at a single election which should be 

called in the time and manner prescribed by Article 2785. 

Your second question is whether the tax which may be levied 

for the payment of bonds voted prior to the effective date of 

Senate Bill 116 will be limited to 50# per one hundred dollars taxable valuation as provided by Article 2784e. It is an 

elemental principle of law that all statutes, decisions, and 

constitutional provisions which are in effect at the time of 

the issuance of the bonds form an integral part of the contract 

between the issuing agency and the bondholder. Norton v. Tom 
- 1 

Dr. J. W. Edgar, page 6 (S-171) 

182 S.W. 2d 849, 851(Tex.Clv.App., 1944, writ 

C:F 48); of

den. 325 U.S. 861, 65 S. Ct. 1200, 89 L. Ed. 1928; 

McAIlen City of Houston v. Danlel,~147 v. Allred, Tex. 123 62, Tex. 211S.W. 334,71 2dS.W. 944,947 2d 

251,259 

247 S.W. 

11934);~City of Aransas Pass v. Keeling, 112 Tex. 339, 

818 (1923). 

It is equally well established that where the Constitution 

authorizes the levy of a special tax by the qualified property taxpaying voters, such tax is not levied by the school 

district or munlclpallty but by the delegated taxing power 

of the owners of the propert 

School District, IO5 Tex. 19 r 

Crabb v. Celeste Indenendent 

, I46 

130 Tex. 54, 108 :::I 

81 

County v. McGraw, 

1 

C.J;S., p. 666. 

?d 20~g~9~7s~- 

In the Crabb case, sunra, the court said (at page 530): 

"It is safe and proper to say that no special 

tax authorized by the Constitution to be levied 

by the vote of the qualified property taxpaying 

paying voters of any munlclpallty or school dlstrlct can ever'lawfully be levied without offering the opportunity to 

dent in such territory 

such property owners reslliege of the ballot." 

of exercising their prlv- 

;;tthegza;o;;lba case, sunra, we find the following statement 

"In the case at bar the qualified taxpaying 

voters of San Saba County voted under a law 

that secured to them the right to vote off 

such tax in two years, and, further, such 

voters voted under a law that guaranteed to 

them that the proceeds of such tax could never 

be charged with a bond issue. This law was 

passed for the purpose of putting into effect 

the constitutional provision authorizing such 

tax. Now, after .such tax is voted, the LeglsIature, without the consent of the voters, has -- attempted to impair and destroy their rights 

existing at the time of the vote. To our minds 

such a legislative act not only violates the very 

constitutional provisions authorizing the tax to 

be voted, but violates section 16 of article 1 

of our State Constitution as well." (Emphasis 

supplied) 
Dr. J. W. Edgar, page 7 (S-171) 

The case of David v. Timon, 183 S.W. 88 (Tex.Clv.App., 1916) 

Involved a~ situation where 'the law In existence at the t-w 

of the voting of certain bonds required that the bonds be 

sold at grand accrued interest. The statute was amended 

after the vote of the people but before the bonds were issued so as to permit the bonds to be sold at a discount. 

The court,stated (at page 91): 

"There can be no doubt ,that the provlslon of law 

i,n effect when~the bonds were~voted was mandatory and binding upon every one concerned. It 

became a nart of the contract for the issuance 

.andsaIe of the'bonde, and was a pz& of the 

consideration for'= au~orlzation cTh= 

Issuance." (Bmphasls supplied) 

Thus, It is clear that in voting bonds prior to the effective date of Senate Bill 116, the resident qualified property taxpaying voters authorized the issuance of the bonds 

and that the 50$ limitation contained in Article 2784e 

became a part of the, contract ,which may not be changed 

without the express consent of the quaIlfled property 

taxpaying voters who have duly rendered their property for 

taxation. 

Another reason for answering your second question in the 

affirmative 1s found in the PrOVisiOnS of Senate Bill 116. 

Section 2 of the Act provides that the school district "may 

issue bonds and may levy ad valorem taxes . . .", clearly 

showing that the Act is prospective in operation only. The 

caption of the Act reads, in part: 

11 and providing that said districts may 

li& ad valorem taxes in an amount sufficient 

to pay the interest and principal of all bonds 

hereafter issued for such purpose . . ." (Emphasis supplied) 

Thus, the caption and.body of the bill conform as required 

by Article III, Section 35, of the Constltutlon of the State 

of Texas, and your second question is answered in the affirxative. 

For the reasons above stated, the remainder of your questions 

are thus answered: Bonds voted under the provisions of 
- . 

Dr. J. W. Edgar, page 8 (S-171) 

Article 2784e, wbether~ " issued or not, ~~111 be subject to 

the 50# tax llmltatlon. .There is no provision to permit 

the resident qualified proDerty taxpaying voters to vote 

upon t.be issuance,of refunding bonds under the unlimited 

tax statute,'and for.the reasons heretofore stated, bonds 

to refund'llmlted tax obllgatlons will necessarily be 

limited tax bonds. Article 2789 V.C.S. The power to issue 

refundlne bonds is not hIDlied. but must be obtained from 

the Legislature." San Antonio Union Junior College Dlst. v. 

Daniel, 146 Tex. 241, 206 S.W. 2d $395 (1947). 

As to your third and fifth questions, a reading of the entire Act clearly lndlcates that the Legislature co~ntemplated 

that Senate Bill 116 and Article 2784e, Vernon's Civil Statutes, will be considered as alternative methods of securing 

school.bonds which are voted after the ~effective date of the 

Act. T.hus, the districts could choose not to accept theprovisions of the' new.Act and vote;and issue~llmlted tax bonds, 

or it could adopt t,he provisions of Senate Bill 116 (assuming' 

ellgibillty to. do so by debt,structure) and thereafter issue. T 

unlimited taxbonds. Once.the district has adopted the provisions of~senate Bill 116,'there is no provision for it to 

return to its former status under Article 2784e. 

Your fourth questlo,nls whether the district may vote the 

maximum maintenance tax of $1.50 even though by reason of its 

debt ~structure the, district would.have authority to levy a. 

tax'of only. $1.40, accordin' to the f0rmul.a contalned In 

Section 1 of Senate Bill 11 2 . Your.queation ~~ ,ls answered in 

the affirmative. The' Act of ~the Legislature contemplates .' 

the voting of a maintenance tax of not to exceed a certain 

amount and then restricts or limits the amount which may,be 

levied in accordance'with the formula which is based on the 

debt structure. ',~ ~. 

In addition to this interrelation and dependence of the malntenance tax upon the debt structure, it should be noted that 

Section 3 apea@ of adopting "the provisions of this Act.". ~ 

Thus, it ,would not be possible .to adopt the unlimited tax 

bond provisions without the.adoption of the maintenance tax 

provisions undoer S.B. 116. The provisions limiting the 

number of maintenance tax electlons (Article 2792) would not 

be applicable.to the,flrst maintenance tax eLection under 

S.B. 116 since the new ~statute confers a new and original 

authority. That restriction, however, thereafter would become applicable. 
. . 

Dr. J. W. Edgar, page 9 (S-171) 

Your sixth question is, as follows: 

"If a district, lawfully-votes a~mslntenance. tax 

in the maximum amount provided by Senate Bill 

No. 116, and if such district validly votes and 

issues bonds,~ the amount of~which bonds when ' 

added.to outstanding bonds ~1s less than lO$, 

but becau,se of a subsequent decrease ln'assessed 

valuations of taxable property ln.the year or 

years following the issuance of said bonds, the 

ratio .is increased to ll$, is the maximum maintenance tax that the district may levy reduced to 

$1.10 on the one hundred dollera assessed value. 

of taxable property within ~the district, or could 

the di~strlct under the statute levy a maintenance 

tax of $1.20. In other words, pursuant to the 

schedule set forth in Subdivision 1 of Section 1, 

will a school district which has validly come 

within the operation of the act always be able 

to levy a maintenance tax of at least $1.20~ 

regardless,of its outstanding bonded Indebtedness 

(assuming, of course, that the tax in such amount 

has.IawfuIIy been voted and authorlzed)?ni 

Section 1 of the Act reads, &part, as follows: 

"Incommon and independent school dlstricts, 

rural high school districts, and cities and 

towns constituting independent school districts, 

and.ln all other school districts for ,the further 

maintenance of public free schools, an annual ad 1 

valorem tax may be levied not to exceed, in districts having a bonded indebtedness of seven per 

cent (7%) or less of its total assessed value of 

taxable property, One Dollar and Fifty Cents 

($1.50) on the One Hundred Dollars ($100.00) 

assessed value of taxable property in the district. For each one per cent (1s) or major 

fraction thereof, increase in bonded lndebtedness beyond seven ner cent (7%) of the assessed 

value of taxable property in such school district, 

the maximum maintenance rate shall be decreased 

bv Ten Cents (log!). The maximum maintenance 

rates which may be levled,annually in any district 

shall conform to the following schedule: 
Dr. J. W. Edgar, page 10 (S-171) 

Bonded indebtedness in the amount of 

seven per cent (7%) or less of the 

assessed value of taxable property $1.50 

Bonded'indebtedness in the amount of 

eight per cent (8%) of the assessed 

value of taxable property $1.40 

Bonded indebtedness in the amount of 

nine per cent (9%) of the assessed 

value of taxable property $1.30 

Bonded indebtedness in the amount of 

ten per cent (10%) of the assessed 

value of taxable property $1.20 

. . . " (Emphasis supplied). 

All of the language of the Act must be given effect, and the 

underlined language demonstrates that an increase in the 

bonded debt .must have a direct effect upon the amount of 

maintenance tax which may be levied. The next sentence does 

not modify or change the rule, but merely sets forth a schedule for purposes of illustration. This view is strengthened 

when it is remembered that the first sentence speaks of "fractions" of one per cent and the schedule makes no such allowantes. Thus, if a district has a bonded debt of 9.9 of the 

assessed value of taxable property, but because of a decrease 

in the taxable values, the ratio becomes ll$, the maximum 

maintenance tax which could be levied would be $1.10 ~$r one 

hundred dollars valuation. 

The constitutional 

tion .3, are met by 

116. Section 3 of 

nlte and uncertain 

requirements of Article 7, Secthe provisions of Senate Bill 

that Act, however, Is lndeflin meaning, but the prescribed 

procedure will permit operation under the Act. 

The provisions of Senate Bill 116 are to be considered as an alternate method of school finance, 

but once this method is adopted, It must be followed for all purposes-and there is no provision 

SUMMARY 
Dr. J. W. Edgar, page 11 (S-171) 

to return to Its former status. The amount of 

tax which may be levied for maintenance-purposes 

has a direct relation to the amount of bonds outstanding and may~be less thah $1.20 per one bundrqd doLlara valuation. 

Very truly yours, 

Elbert M. Moftiow 

:. Assistant 

EMM-a 

Frank Pinedo 

Assistant