Court Opinion

ID: 4137035
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:20:17.801866+00
Date Added: 2024-06-11T13:13:23.290478
License: Public Domain

September 2, 1955

Dr. J. W. Edgar                Opinion No. S-171
Commissioner of Education
Texas Education Asency         Re: Constitutionality and con-
Austin, Texas                      struction of SenateBill
                                   116, 54th Legislature&-
                                   tiele 2784e-1, V.C.S.).,regu-
                                   la.&glevy   of taxes by
                                   school~districts formain-
Dear Dr. Edgar:                    tenance-and bond purposes.
Your letter requesting an opinion of this.offiee~~assumesthat
no actlionmay be takenunder.Cbapter 528, Acts of.thfi.54th
Legislature, 1955 (Senate Bill 116) until.the lawbecon+eti.
effective.'.Your aseumptlod~ia correct. ThenSenate ~concurred
In the House.AmendmeRts by a voice vote, thus .maklng the bill
effective September 6, 1955, which la 90 days after adjourn-
ment.
Your questions'are as follows:

      “(1) Is Senate Bill No. 116 constitutional?
      “(2)   Will bonds voted prior to the effective
             date of 'suchstatute, 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 Sen-
             ate 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?

      “(3) Can a district lawfully elect to continue
           to vote and levy maintenance taxes and
                                                            -

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

             vote and Issue bonds pursuant to Artl-
             cIe 2784e, or wlIi aI1 maintenance tax
             and bond elections sfter the effective
             date of Senate Bill No. 116 automatical-
             ly be held under the terms of said Sen-
             ate Bill?
      “.,(
        4.)After the effective date of Senate Bill
           No. 116, may a district lawfully vote
           the maximum $1.50 maintenance tax pro-
           vided by Senate Bill No. 1'3.6,
                                         even though
           at the time of the election it has in ex-
           cess of 7.5% bonded indebtedness?

      “(5) Once a district has lawfully voted malnte-
             nance 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?

      “(6)   If a district lawfully votes a maintenance
             tax in the maximum amount provided by Sen-
             ate 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 schedulesset
             forth in Subdivision I of Section 1, will a
             school district which has validly come wlth-
             in the operation of the act always be able
             to levy a maintenance tax of at least $1.20
             regardless of its outstanding bonded in-
             debtedness (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 schoolsdistrict
        Is prescribed in Article 7, Section 3, of the Constitution
        of Texas in the following language:;
              ," i . . the'Legislature may.author,isean
              additional ad'valorem~.taxto be.levled and
              collected withinall school dlstrlcte here-
              tofore formed or hereafterformed., for the
              further maintenance ~of pub3l~e'freescboo1s,
              and for the erection and equipment -ofschool
              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,htax
              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 con-
              s.titutlngseparate and independent school dls-
              trlcts, 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 malnte-
        nance 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 dis-
      trict 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 pro-
posed 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 lmport-
ant that school finance not become stagnant, it is more lm-
portant 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 thenadoption of the .provlslonsof 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 rec-
ommended solely because it takes into account the possible
constructions of the provisions of Section 3 and thereby re-
moves any doubt as .to the meaning of the Act., If this pro-
cedure 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 provl-
slons 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 Sen-
ate Bill 116.
      (2) Submission to the "qualified.electors who own tax-
able 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 resl-
dent 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 appll-
cable 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 propo-
sitions 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 dol-
lars 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
            den. 325 U.S. 861, 65 S. Ct. 1200, 89 L. Ed. 1928;
     of McAIlen
C:F48); City of Houston
                v. Danlel,~147
                        v. Allred,
                               Tex. 123
                                     62,Tex.
                                         211 S.W.
334, 71
                                                  2d S.W.
                                                     944,947
                                                          2d
251,259 11934);~City of Aransas Pass v. Keeling, 112 Tex. 339,
247 S.W. 818 (1923).
It is equally well established that where the Constitution
authorizes the levy of a special tax by the qualified prop-
erty 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     Crabb v. Celeste Indenendent
School District, IO5 Tex. 19r , I46        81     1
County v. McGraw, 130 Tex. 54, 108 :::I ?d 20~g~9~7s~-
C.J;S., p. 666.
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 dls-
      trlct can ever'lawfully be levied without offer-
      ing the opportunity to such property owners resl-
      dent in such territory of exercising their prlv-
      liege of the ballot."
;;tthegza;o;;lbacase, 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 .suchtax is voted, the Legls-
     Iature, 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 is-
sued so as to permit the bonds to be sold at a discount.
The court,stated (at page 91):
      "There can be no doubt ,thatthe provlslon of law
      i,neffect when~the bonds were~voted was manda-
      tory 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 effec-
 tive date of Senate Bill 116, the resident qualified prop-
 erty taxpaying voters authorized the issuance of the bonds
 and that the 50$ limitation contained in Article 2784e
 became a part of the,contract ,whichmay 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 . . ." (Em-
      phasis 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 affirxa-
 tive.
 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, ~~111be subject to
the 50# tax llmltatlon. .There is no provision to permit
the resident qualified proDerty taxpaying voters to vote
upon t.beissuance,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 en-
tire Act clearly lndlcates that the Legislature co~ntemplated
that Senate Bill 116 and Article 2784e, Vernon's Civil Stat-
utes, 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 thepro-
visions of the'new.Act and vote;and issue~llmlted tax bonds,
or it could adopt t,heprovisions of Senate Bill 116 (assuming'
ellgibillty to.do so by debt,structure) and thereafter issue. T
unlimited taxbonds.   Once.the district has adopted the pro-
visions 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 ~structurethe,district would.have authority to levy a.
tax'of only.$1.40, accordin' to the f0rmul.acontalned In
Section 1 of Senate Bill 112 . Your.queation
                                 ~~          ,lsanswered in
the affirmative. The'Act of ~theLegislature 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 maln-
tenance tax upon the debt structure, it should be noted that
Section 3 apea@ of adopting "the provisions of this Act.".    ~
Thus, it ,wouldnot be possible .toadopt the unlimited tax
bond provisions without the.adoption of the maintenance tax
provisions undoerS.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 ~statuteconfers a new and original
authority. That restriction, however, thereafter would be-
come 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$,
             but becau,seof a subsequent decrease ln'assessed
             valuations of taxable property ln.the year or
             years following the issuance of said bonds, the
             ratio .is increased to ll$, is the maximum mainte-
             nance 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~strlctunder 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 dis-
             tricts 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 dis-
             trict. For each one per cent (1s) or major
             fraction thereof, increasein bonded lndebted-
             ness 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 sched-
ule for purposes of illustration. This view is strengthened
when it is remembered that the first sentence speaks of "frac-
tions" of one per cent and the schedule makes no such allow-
antes. 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.

                                  SUMMARY
    The constitutional requirements of Article 7, Sec-
    tion .3, are met by the provisions of Senate Bill
    116. Section 3 of that Act, however, Is lndefl-
    nlte and uncertain in meaning, but the prescribed
    procedure will permit operation under the Act.
    The provisions of Senate Bill 116 are to be con-
    sidered as an alternate method of school finance,
    but once this method is adopted, It must be fol-
    lowed for all purposes-and there is no provision
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 out-
     standing and may~be less thah $1.20 per one bun-
     drqd doLlara valuation.

                                   Very truly yours,

                                   Elbert M. Moftiow
                                           :. Assistant

                                   Frank Pinedo
EMM-a                                         Assistant