The Attorney General of Texas
March 13, 1979
MARKWHITE
Utomey Geneml
Honorable Tim Von Dohlen Opinion No. Ml+4
Chairman
House Committee cn Regions, Re: Whether tax exemptions
Compacts and Districts authorized by tax relief amend-
State Capitol ment may he effective as of
Austin, Texas January l,1979.
Dear Representative Von Dohlen:
You ask the following question concerning enabling legislation to
implement the Tax Relief Amendment:
In passing enabling legislation to implement the ad
valorem tax exemptions authorized in the “Tax Relief
Amendment,” may the Legislature make such
exemptions effective as of January l,1979?
The ‘l’ax Relief Amendmentv took effect January l,l979. It provides that
the Legislature shall exempt from ad valorem taxation household goods and
personal effects not, held or used for the production of income and may
exempt all or part of the personal property homestead of a family or single
adult It shall provide for taxation of farm or ranch land on the ‘basis of
productive capacity and may provide for taxation of timberland on the same
bask. It may exempt an amount not to exceed $10,000 of the homestead of a
person who is disabled or over 65 from ad valorem taxation for public
schools. However, the exemption may not be implemented where ad
valorem tax has been pledged for payment of a debt if cessation of the levy
would impair the obligation of contract.
These exemptions will not become effective in the sbsence of
1egIsIation. See Attorney General Opinion H-68 (1973) (implementation of
article 8, S 2mof the Texas Constitution). Whether or not the leglslature
may make these exemptions effective January l, 1979, depends on the
application of several other constitutional provisions
Article 1, section 16 forbids the enactment of retroactive laws, but this
prohibition does not extend to all statutes. The legislature may enact
retrospective legislation where no impairment of vested rights results.
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Honorable Tim Van Dohlen - Page Two (m-4 1
Deacon v. City of Euless, 405 S.W.fd 59, 62 (Tex. 1966); Cox v. Rcbiin, 1SOSW. 1149
rex. 1912);Attorney General Opinions H-634 (l975), H-14 (l973). Where private rights are
not involved, the legislature may impose retroactive legislation on political subdivisions.
Descon v. City of Euless, m at 62; $ Love v. City of Dallas, 40 SW.2d 20 (Tex. 1930
&tstitution protects property which pohtical subdivision holds ht trust for people). The
vested rights of taxpayers will not be injured by the grant of tax exemptions effective
January I, 1979, since it creates rather than destroys a right. See Attorney General
opinion M-413 (1969); 2 Sutherland, Statutory Construction S4LO2qth ed. C.D. Sands
1973). Although statutes are generally presumed to operate prospectively, they will be
given retrospective effect where the legislative intention is clear, and where no
impairment of vested rights results. Deacon v. City of Eules, s at 61; s Code
Construction Act, V.T.C.S. art. 5429b-2, S 3.02 (statute presumed to operate
prospectively unless expressly made retrospective).
Other constitutional provisions prohibit the state from applying a tax exemption
retroactively when the tax liability has matured. Article 3, section 55 of the Texas
Constitution provides as follows:
The Legtslature shall have no power to release or extinguish, or to
authorize the releasing or extinguishiig, in whole or in part, the
indebtedness, liability oc &ligation of any corporation cr
individual, to thii State or to any county or defied subdivision
thereof, or other municipal corporation therein, except delinquent
taxes which have been due for a period of at least ten years.
A delinquent tax is a liability ‘within thii provision. State v. Pioneer oil 61 Refining Co.,
292 S.W. 869 (Tex. Corn. App. 1927, jdgmt adopted). Once a. tax becomes a liability article
3, section 55 makes it irrevocable, end the legislature cannot extinguish it by repealing
the statute which enacted it. See also Sloan v. Calve& 497 S.W.td 125(Tex. Civ. App. -
Austin 1973, no writ)i Smith v. State, 420 S.W.2d 204 (Tex. Civ. App. - Austin 1967), aff’d,
434 S.W.2d 342 (Tex 1968); Attorney General Gpiions M-34 U967), C-200 (1963).
addition, article 8, section LOprohibits the legislature from releasing the inhabitants of
any county, city or town from the payment of taxes &vied for State or county purposes
unless in case of great public calamity. See Bass v. Aransas County LS.D., 389 S.W.Od165
(Tex. Civ. App. - Corpus Christi lS65, w%?ef’d n.r.e.j (dicta).
Moreover, a statute which attempts to grant an exemption with respect to a tax
liability accruing before its effective date might also violate artfcle 3, sectfon 51 of the
Texas Constitution. This provision prevents the state from making or authorizing a grant
of public fund3 to any individual, association of individuals or corporatio& in the absence
of a public purpose or consideration moving to the state. State v. city of Austin, 331
S.W.Zd 737 (Tex. 1960); Attorney General Opinion H-416 (19743. Article 3, section 52 also
prevents the legislature ‘from authorizing political subdivisions to grant public money to
individuals and corporations. In Morris v. Calvert, 329 S.W.2d ll7 (Tex. Civ. App. -
Austin 1959, writ ref’d n.r.e.), the court held that a statute providing an inheritance tax
exemption applied only to estates of persons dying after its effective date. Some
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Honorable Tim Von Dohlen - Page Three (Mw-4)
statutory language indicated that the legislature intended the exemptions to become
effective when the governor signed the bill, but the court rejected this interpretation as
raising a serious question of constitutionality. Inheritance tax k a lien upon property from
the date of death, and to reduce it by a tax exemption that subsequently became effective
would violate sections 51 and 55 of article 3 of the Texas Constitution. See In re Voorhees’
Estate, 196 A. 365 (N.J. Prerog. Ct. 1938); af 3 A.2d 691 (N.J. Sup. Ct 1939); afTd, 16
A.2d51 (N.J. Ct. of Errors and Appeals retroactively exempting taxes to
which state’s right was fixed makes unconstitutional gift of public funds). See also m
Skinker, 303 P.2d 745 (CaL 1956).
In our opinion, sections Sl, 52, and 55 of article 3 will prevent the legislature from
enacting a tax exemption applicable to tax liabilities which have already accrued or
matured. Thus, the resolution to the issue you raise will require a determination of the
date upon which ad valorem tax liabilities accrue, mature, or become fixed.
The validity of an ad valorem tax rests upon levy and assessment. State v. Pioneer
Co su ra; Zglinski v. Hackett, 552 S.W.Bd933 (Tex. Civ. App - Austin
oil & Refining brYkr;e
1977, writ reM h the absence of a valid assessment, there is no liability for the
tax within article 3, section 55 of the constitution. State v. Pioneer Oil & Refining Co.,
supra; Clegg v. State, 42 Tex. 605 (1875); Republic Insurance Company v. Highland Park
LS.D. of Dallas County, 57 S.WSd 627 (Tex. Civ. App. - Rl Paso 1933, writ dism’d w.o.j.).
Article 8, section 15 provides that “ftlhe annual assessment made upon landed property
shall bc a special lien thereon.. . . ” This lien does not exist until assessment k made in
accordance with law. State v. Farmer, 59 S.W. 541(Tex. 1900); Hoge v. Garcia, 296 S.W.
982 (Tex. Civ. App. 7 San Antonio 1927, writ rePB; cf. C. R. Carswell & Co. v.
Habbersettle, 87 S.W. 911 (Tex. Civ. App. - 1905, no at) (lien attaches January 1
although the amount of taxes is not determined until sometime subsequent). Of coupse,
once the tax liability is established, the lien becomes effective as of January L State of
Texas v. Moody’s Estate, 156 F.2d 698 (5th Cir. 1946).
The terms “levy” and “messment” are sometimes used interchangeably. See Kinney
v. Zim leman, 36 Tex. 554 582 (1872) Amafmo v. Carter, 212 S.W.td 950, 9SS(Tex. civ.
&mont l948. w& reM n.rle.L In the present context, however, “levy” refers
tdihe legislative act which imposes a tax and ties its rate. Cle& v. State, 42 Tex. 605,
610-R (l875); Amaimo v. Carter, su~ra; Sussex County v. Jarratt, 106 S.E. 384, 387 (Va.
l92D. An order of the commissioners court That the following tax rates be levied” was
held to be a valid tax levy. Victo v. Stat 158 S.W.2d 760 (Tex. 1942); see Cranfill Bras.
Gil ,Co. v. State. 54 SW.Zd+813 Tex. Crv. Ano. - El Paso 1932. writxf’d): Attorney
General Opinion7 Fi-1235~ti978,. “Assessment;‘refers to ~the administrative process of
applying the tax rate to an individual’s property and thereby determining the amount he
owes. Clemz v. State. suora Sussex County v. Jarratt. supra: “It includes the procedure
on the part of the off&my which the property is ifs=, %lued. and. final& the pro
rata ddared.” State v. Farmer, supp& See also Republic Insurance Co, v. Highland Park
LSD., e
The taxpayer’s liability’ is fixed when these two requirements are met: the
assessment has been made and there has been a legal levy. Cracker v. Santo Consolidated
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Honorable Tim Von Dohlen - Page Four (FfN-4)
LS.D., sue Attorney General Gpmions C-457 (1965);V-943 (1949) (taxes do not accrue
until there has been both an aessment and levy). In Bass v. Aransas County LS.D.,the
court discussed article 73454 V.T.C.S., which authorieed the commissioners court to
reconsider and adjust current or dalirquent assessments. It stated in dicta that it “would
be inclined to hold the act unconstitutional insofar as it authorizes recpenkg and
reconsideration of valid Basmentsw as violating article 3, sections 52 and 53 and article
8, section 10 of thexas Constitution. It noted a series of Attorney General Gpmions
ruling the statute void insofar as it applied to valid assessments. Attorney General
Opinions V-1517(1952); G-6257 (1944)(statute, violates article 3, section 55 and article 8,
section 10); G-930 (1939). In our opinion, you may constitutionally provide tax exemptions
from the current year’s taxes if the enabling legislation becomes effective before ad
valorem tax liabilities sre lied by assessment and levy. However, the legislation may not
constitutionally apply the tax exemptions to tax liabilities which have been fried by
assessment and levy prior to the effective date, since the taxpayer would thereby receive
a gift of public funds and a remission of taxes in violation of article 3, sections 52 52, and
55, and article 8, section 10 of the Texas Constitution.
Attorney General Gpinicn B-849 (1976) describes the timetable for assesment of
county taxes See V.T.C.S. art. 7244~. The commissioners court meets as a hcsrd of
equalization in MT or June. V.T.C,S arts. 7206, 7212, 7217,7218. This procedure affects
other .taxing authorities which rely on the county’s tax rolls and assessments Attorney
General Opinion H-649 (1976). However, all taxing authorities are not necessarily subject
to the general taxation statutes Campbell v. City of Houston, 464 S.W.2d 372 (Tex. Civ.
- Houston U4th Dkt.) 1971,no writ); Seguin LS.D. v. Blumberg, 402 S.W.2d 552
&f&. Civ. App. - San Antonio 1966,writ ref’d n.r.e.). The relevant statutes or home rule
charters must be consulted in individual cases, since the timetables may vary causing
some jurisdictions to have tax liability mature before a statute can be enacted.
SUMMARY
Legislation implementing tax exemptions authorized by the
Tax Relief Amendment may constitutionally apply to tax
liabilities which have not been fiied by Levy and assessment
as of the statute’s effective date.
?iiizTz%,
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney Genera)
TED L. HARTLEY
Executive Assistant Attorney Genera)
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Honorable Tim Van Dohlen - Page Five (m-4)
Prepared by Susan Garrison
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
C. Robert Heath, Chairman
David B. Brooks
Rick Gilpin
William G Reid
Martha Smiley
Bruce Yoongblood
p. 13
Untitled Texas Attorney General Opinion
Combined Opinion