## ATTORNEY GENERAL OF TEXAS GREG ABBOTT

July 30,2004

The Honorable Frank Madla Opinion No. GA-0222 Chair, Intergovernmental Relations Committee Texas State Senate Re: Implementing atax freeze by acounty, city or Post Office Box 12068 town, orjunior college district for persons with Austin, Texas 787 1l-2068 disabilities or persons sixty-five years of age or older (RQ-0 171-GA) The Honorable Robert E. Talton Chair, Urban Affairs Committee Texas House of Representatives Post Office Box 2910 Austin, Texas 78768-29 10

Dear Senator Madla and Representative Talton:
Article VIII, Section l-b(h) of the Texas Constitution, added in 2003, authorizes “a county, a city or town, or ajunior college district” to freeze the total amount of ad valorem taxes imposed on the homesteads ofpersons with disabilities or persons sixty-five years of age or older. See TEX. CONST. art. VIII, 3 1-b(h). You ask (1) whether the governing body ofahome-rule municipality may call an election to approve or disapprove of such atax freeze without apetition from the voters; (2) whether a tax freeze implemented by a home-rule municipality may be repealed by an election initiated by voter petition and if so, by what procedure; and (3) whether a municipality that has adopted atax freeze may use a year prior to its adoption as the tax base year.’ 

### I. AdoptionofTaxFreezebvElection
Pertinent to the first question, article VIII, section l-b(h) provides that “a county, a city or town, or ajunior college district” may adopt a tax freeze as follows:

(h) The governing body ofacounty, acity ortown, or ajunior college district by official action may provide that ifaperson who is disabled

‘SeeLetter fromFrank Madla, Chair, Intergovernmental Relations Committee, Texas State Senate, toHonorable Greg Abbott, Texas Attorney General (Jan. 21,2004) [hereinafter Madla Letter]; Letter from Honorable R.D. “Rick” Hurt, Mayor, City of Bedford, to Honorable Kim Brimer, Senate District 10, Texas State Senate (Dec. 10, 2003) (attachment to Madla Letter, supra) [hereinafter Madla Attachment]; Letter fromRobert E. Talton, Chair, Urban Affairs Committee, Texas House of Representatives, to Honorable Greg Abbott, Texas Attorney General (Jan. 20, 2004) [hereinafter Talton Letter] (letters on tile with Opinion Committee, also available at http://www.oag.state.tx.us).The Honorable Frank Madla - Page 2

The Honorable Robert E. Talton (GA-0222)

or is sixty-five (65) years of age or older receives a residence homestead exemption prescribed or authorized by this section, the total amount of ad valorem taxes imposed on that homestead by the county, the city or town, or the junior college district may not be increased while it remains the residence homestead of that person or that person’s spouse who is disabled or sixty-five (65) years of age or older and receives a residence homestead exemption on the homestead. As an alternative, on receipt of apetition signed by five percent (5%) of the registered voters of the county, the city or town, or the junior college district, the governing body of the county, the city or town, or the junior college district shall call an election to determine by majority vote whether to establish a tax limitation provided by this subsection.

. . .The governing body of a county, a city or town, or ajunior college district may not repeal or rescind a tax limitation established under this subsection.
TEX.CONST.art. VIII, 9 1-b(h). The first question is whether article VIII, section 1-b(h) permits a governing body of a home-rule municipality to call for a binding election on whether to adopt the freeze when there has been no proper petition from voters. See Madla Attachment, supra note 1, at 2. Generally, the right to hold an election must be constitutionally or statutorily authorized. See Countz v. Mitchell, 38 S.W.2d 770, 774 (Tex. 1931) (stating that “[tlhe right to hold an election cannot exist or be lawfully exercised without express grant of power by the Constitution or Legislature”); Ellis v.Hanks, 478 S.W.2d 172,176 (Tex. Civ. App.-Dallas 1972, writ ref dn. r. e.) (stating that the right to hold an election “must be derived from the law”); Tex. Att’y Gen. Op. No. GA-0001 (2002) at 3 (stating that “generally the right to hold an election depends upon statutory authorization”). Also, when the constitution expressly grants apower and prescribes the means by which or the manner in which the power is to be exercised, such means or manner is exclusive of all others. See Houchins v. Plainos, 110 S.W.2d 549,553 (Tex. 1937) (concerning procedure for dry area to become wet). Article VIII, section l-b(h) provides two alternative methods for implementing a tax freeze. First, a governing body “by official action may provide” that the total amount of ad valorem taxes for certain taxpayers will not increase - in other words, provide atax freeze. See TEX.CONST.art. VIII, 9 l-b(h) (emphasis added). Alternatively, upon proper petition, the governing body “shall call an election” to determine whether to establish the provision’s tax freeze. See id. (emphasis added).
The first question turns on whether the language in article VIII, section 1-b(h) that allows a governing body to implement a tax freeze by “official action” includes the authority for the governmental body to call for abinding election on its own motion, rather than on aproper petition from voters. Generally, acity council takes “official action” by resolution or ordinance promulgated by majority rule ofthe council. City ofSan Benito v.Rio Grande Valley Gas Co., 109 S.W.3d 750, 757 (Tex. 2003). Compare with TEX.TAXCODEANN.9 11.14(c) (Vernon Supp. 2004) (stating that a “governing body of ataxing unit, by resolution or order, depending upon the method prescribedThe Honorable Frank Madla - Page 3

The Honorable Robert E. Talton (GA-0222)

by law for oficial action by that governing body, may provide for taxation of [certain] tangible personal property”).
The Texas Election Code authorizes governing bodies ofcertain municipalities to call alocal election. See TEX.ELEC.CODEANN. 0 3.004(b) (Vernon 2003). Such a governing body’s call for an election by order, resolution, or other binding measure undoubtedly would constitute official action. Had the framers intended to deny agoverning body the authority to call atax freeze election without avoter petition, article VIII, section l-b(h) could have been worded to that effect. Indeed, the constitutional provision expressly limits a governing body’s authority in another respect - the provision states that a governing body may not repeal or rescind atax freeze once adopted. But by using the phrase “official action” without limitation or qualification, article VIII, section I-(b)h 

### authorizesagoverningbodytocallforataxfreezeelectionindependentofthealternativepetition process. TEX.CONST.art. VIII, $ l-b(h). 

### II. RepealbvElectionInitiatedbvVoterPetition
As discussed above, article VIII, section l-b(h) provides that the “governing body of a county, a city or town, or ajunior college district may not repeal or rescind a tax limitation established under this subsection.” Id. The provision is silent with respect to the authority to repeal an adopted tax freeze by election initiated by voter petition. The second question is whether, once ahome-rule municipality has adopted atax freeze, itmay be repealed by avote initiated by petition. See Madla Attachment, supra note 1, at 2.
Home-rule charters may contain general provisions for enacting ordinances by election pursuant to avoter petition, known as the initiative process. See Quick v. City ofAustin, 7 S.W.3d 109, 123 (Tex. 1998). The power of initiative “‘is the exercise by the people of apower reserved to them, and not the exercise of aright granted.“’ GZassv. Smith, 244 S.W.2d 645,648-49 (Tex. 1951) (quoting Taxpayers ‘ Ass ‘nofHarris County v. City ofHouston, 105 S.W.2d 655,657 (Tex. 1937)). The power of initiative may be limited by acity’s charter and is subject to limitations in the general law. See Glass, 244 S.W.2d at 649. Moreover, the power of initiative is limited by its very nature: “When the people exercise their rights and powers under the initiative provisions of a city charter they are acting as and become in fact the legislative branch of the municipal government.” Id. Thus, ifthe governing body of ahome-rule municipality does not have the authority to adopt an ordinance, the voters ofthe municipality may not do so through the initiative process. See id. at 65 1; City ofHitchcockv. Longmire, 572 S.W.2d 122,127 (Tex. Civ. App.-Houston [1stDist.] 1978, writ ref’d n.r.e.). Here, article VIII, section l-b(h) provides that the “governing body of a county, a city or town, or ajunior college district may not repeal or rescind a tax limitation established under this subsection.” TEX.CONST.art. VIII, 5 l-b(h). Consequently, the voters in an election pursuant to the initiative process, acting as the municipality’s legislative branch, likewise do not have authority to repeal or rescind atax freeze established under article VIII, section 1-b(h). See City ofHitchcock, 572 S.W.2d at 127 (holding that voters did not have authority to repeal annexation ordinance ifthat authority is not first vested in the municipality’s governing body).The Honorable Frank Madla - Page 4

The Honorable Robert E. Talton (GA-0222)



### III. TaxFreezeBaseYear
On January 13,2004, the City ofPasadena enacted an ordinance implementing article VIII, section l-b(h), freezing homestead ad valorem taxes using 2003 records ifthe constitution permits, but if it does not, using 2004 records. See Talton Letter, supra note 1, at 1. The third question is whether acity may use as atax base the year prior to the enactment ofthe ordinance, that is, whether the amount of ad valorem taxes for the 2003 tax year may be used to establish atax base. See id.
Section 11.261(b) ofthe Tax Code, added by House Bill 136, directly answers your question, precluding the use of a year prior to implementation as the base tax year:

The county, municipality, orjunior college district may not increase the total annual amount of advalorem taxes the county, municipality, orjunior college district imposes on the residence homestead of a disabled individual or an individual 65 years ofage or older above the amount ofthe taxes the county, municipality, orjunior college district imposed on the residence homestead in thefirst taxyear, other than
a taxyear preceding the taxyear in which the county, municipality,
orjunior college district established the limitation described by Subsection (a), in which the individual qualified that residence homestead for the exemption provided by Section 11.13(c) for a disabled individual or an individual 65 years of age or older. If the individual qualified that residence homestead for the exemption after the beginning of that first year and the residence homestead remains eligible for the exemption for the next year, and if the county, municipal, orjunior college district taxes imposed on the residence homestead in the next year are less than the amount oftaxes imposed inthat first year, acounty, municipality, orjunior college district may not subsequently increase the total annual amount ofadvalorem taxes it imposes on the residence homestead above the amount it imposed onthe residence homestead intheyear immediatelyfollowing theJirst year, other than a tax year preceding the tax year in which the county, municipality, or junior college district established the Zimitation described by Subsection (a), for which the individual qualified that residence homestead for the exemption.
TEX.TAXCODEANN. 5 11.26 1(b) (Vernon Supp. 2004) (emphasis added). Generally, the base tax year will be the first tax year in which ataxpayer qualifies aresidence for the specified homestead exemption, although adifferent rule may apply should the amount oftaxes imposed decline. In any event, the base tax year may not be the tax year preceding the tax year in which the freeze was adopted. Consequently, article VIII, section l-b(h) does not permit a county, a city or town, or a junior college district implementing that provision to use ayear prior to implementation as the base tax year.The Honorable Frank Madla - Page 5

The Honorable Robert E. Talton (GA-0222)



### SUMMARY
Article VIII, section l-b(h) of the Texas Constitution authorizes a governing body of a home-rule municipality to call an election to adopt atax freeze for persons who are disabled orwho are sixty-five years of age or older by official action on its own motion and without apetition from the city’s voters. A tax freeze adopted by ahome-rule municipality under article VIII, section l-b(h) may not be repealed by an election called pursuant to apetition of the city’s voters. Article VIII, section l-b(h) does not permit a county, city or town, orjunior college district implementing that provision to use a year prior to implementation as the base tax year. Very truly yours,

Attorney General of Texas

BARRY R. MCBEE First Assistant Attorney General
DON R. WILLETT Deputy Attorney General for Legal Counsel
NANCY S. FULLER Chair, Opinion Committee
William A. Hill Assistant Attorney General, Opinion Committee