The Attorney General of Texas
November 29, 1917
The Honorable Johnny W. Actkinson Opinion No. H-1098
Parmer County Attorney
P/O. Box 286 Re: Constitutionality
Farwell, Texas 79325 of House Bill 22 per-
mitting an income cap-
The Honorable Oscar H. Mauzy italixation valuation
Chairman, Senate Committee on of open space land used
Education for agricultural pur-
Senate Chamber poses.
State Capitol
Austin, Texas 78711
Dear Mr. Actkinson and Senator Mauzy:
You have asked whether House Bill 22 of the 65th
Legislature, Acts 1977, 65th Leg., ch. 318, at 847, codi-
fied as article 7150k, V.T.C.S., can be given effect
without the people voting on a companion constitutional
amendment. Each of you has submitted a brief with your
request and each has concluded that a constitutional
amendment is required before the bill can be effective.
In Attorney General Opinion H-1022 (1977). which was
issued on July 6, 1977, we answered a similar inquiry from
our State legislative leadership in the negative. Inasmuch
as the controlling constitutional provisions and the con-
trolling judicial decisions remain the same, our answer
must remain the same. Once again we will set forward those
controlling provisions and decisions.
The constitutional questions surrounding House Bill
22 involve article 8, section 1 of the Texas Constitution
which provides in part:
Taxation shall be equal and uniform.
All property in this State, whether
owned by natural persons or corpora-
tions, other than municipal, shall
be taxed in proportion to its value,
which shall be ascertained as may be
provided by law.
p. 4504
The Honorable Johnny W. Actkinson
The Honorable Oscar H. Mauzy - Page 2 (H-1098)
Article 8, section l-d of the Constitution provides for special
assessment of certain agricultural land, but there is no dis-
pute that House Bill 22 provides for a broader program than that
authorized by article 8, section l-d.
When House Bill 22 was introduced it obviously was the
view of the sponsors that a constitutional amendment would be
necessary to authorize this broader program of appraisal of
open space land. The bill provided that it would become effec-
tive only if and when the companion constitutional amendment
was adopted. In fact, the contingent effective date provision
was in House Bill 22 as it passed the House and Senate and as
it was referred to conference committee. It was only on May 25,
1977, when the conference committee reported its version of
the bill, that House Bill 22 emerged without being explicitly
dependent on the passage of the constitutional amendment. House
Journal, 65th Leg., R.S., at 3922 (May 25, 1977). The proposed
constitutional amendment was defeated in the House of Representa-
tives when it lacked one vote of obtaining the one hundred votes
necessary for passage. House Journal, 65th Leg., R.S., at 3923
(May 25, 1977). The vote was 99 yeas, 48 nays and 3 not voting.
Since House Bill 22 had, therefore, been passed but the
companion constitutional amendment had been defeated, the legis-
lative leadership requested an opinion prior to the special
session on the constitutionality of a program of valuation of
agricultural land on a basis other than market value. While
the opinion request did not specifically mention House Bill
22, the same constitutional issue raised by that legislation
was involved. Attorney General Opinion H-1022 (1977) was issued
on July 6, 1977, and stated that a constitutional amendment
would be required before the Legislature could provide for the
valuation of one type of property at a smaller percentage of
market value than other types of property. Thereafter, certain
legislators and this office, all of whom had supported the pro-
gram sought to be enacted by House Bill 22, urged that the sub-
ject of such a constitutional amendment be included in the call
of the special session which convened on July 11, 1977. However,
the subject was not included by the Governor in the proclamation
calling the special session.
In spite of this clear history, additional arguments have
been advanced in an effort to uphold the bill without the neces-
sity of a constitutional amendment. The arguments can be grouped
under two general headings. First, it is argued that such an
amendment would not be necessary because the income capitaliza-
tion method of valuation provided by House Bill 22 is merely a
means of ascertaining market value. We believe House Bill 22
P. 4505
The Honorable Johnny W. Actkinson
The Honorable Oscar H. Mauzy - Page 3 (H-1098)
indicates on its face that something other than market value
is produced by the formulas set out in the bill. While an in-
come capitalization method of valuation may sometimes be useful
in determining market value, it is clear that House Bill 22
is designed to produce a valuation which does not represent
market value. The bill provides that the value produced by the
income capitalization method will be less than market value.
The assessor is required to record both market value and an
income capitalization value. He is also required to roll back
the assessments for the four years prior to a change in the use
of agricultural land and to collect the taxes for those years
as if they had been levied on market value assessments. Add-
itionally, the legislative debates leave no doubt that the
legislation is designed to produce valuations which do not
reflect market value.
The other argument is that an amendment is unnecessary
because the Constitution gives the Legislature broad authority
to permit valuation of property on a basis other than market
value. This argument has been rejected by our highest legal
authority on State constitutional issues. The Supreme Court
of Texas has addressed the requirement of article 8, section 1
of the Constitution. The court said:
Article 8, 9 1, of the Constitution, con-
tains this language: "All property in
this state, whether owned by natural persons
or corporations, other than municipal, shall
be taxed in proportion to its value, which
shall be ascertained as may be provided by
law." The rule announced by that provision
is "equality and uniformity." To secure
this "uniform and equal" taxation, the same
sentence prescribes that the property of
all persons and corporations, other than
municipal, "shall be taxed in proportion
to its value, which shall be ascertained as
may be provided by law." This is a clearly
expressed purpose, that the officers charged
with the assessment of property shall in
the manner prescribed by law ascertain its
value. "The value of the property is to
be determined by what it can be bought and
sold for." New York State v. Barker, 179
U.S. 287, 21 Sup. Ct. 124, 45 L. Ed. 194.
If it means full market value when applied
to the intangible assets of a railroad
company, it means the same thing when
applied to land, horses, etc. The stan-
dard of uniformity prescribed by the
p. 4506
The Honorable Johnny W. Actkinson
The Honorable Oscar H. Mauzy - Page 4 (H-1098)
Constitution being the value of the prop-
erty, taxation cannot be in the same pro-
portion to the value of the property unless
the value of all property is ascertained by
the same standard.
Lively v. Missouri, K. & T. Ry. Co. of Texas, 120 S.W. 852,
856 (Tex. 1909) (Emphasis added).
On numerous occasions Texas courts have specifically
indicated that it is settled that the Texas Constitution, unless
amended by the people to provide otherwise, requires appraisal
on the basis of market value. Rowland v. C
S.W.2d 756, 760.(Tex. Comm'n App. 1928, jd
Richfield Co. v. Warren Ind. Sch. Dist., 4
(Tex. Civ. App. -- Beaumont 1970, writ ref'd n.r.e.1; Dietrich
~~g~3~~~~~~;';'~~~lf~~e~~~."~~;,*A~~,t~-v~~~~~p~'~~6
S.W.2d 235, 237 (Tex. Civ. App. -- San Antonio 1940, writ ref'd);
Porter v. Langley, 155 S.W. 1042 (Tex. Civ. App. -- Dallas 1913,
writ ref'd). See also City of Arlington v. Cannon, 271 S.W.2d
414 (Tex. 19541; City of Houston v. Baker, 178 S.W. 820 (Tex.
Civ. App. -- Galveston 1915, writ ref'd); Attorney General
Opinion H-1022 (1977).
Laudable as the purposes of House Bill 22 are in lessening
the severe economic problems facing our farmers and ranchers,
we are not at liberty to ignore the substantial and long estab-
lished judicial authority that a constitutional amendment is
necessary to implement such purposes. Accordingly, it is still
our opinion, as it was prior to the special session, that to
bring about the desired purposes of House Bill 22 an amendment
to the Texas Constitution will have to be proposed by the
Legislature and approved by a majority of Texas voters.
SUMMARY
House Bill 22 of the 65th Legislature
(article 7150k, V.T.C.S.), which would
establish a new program of valuing agri-
cultural land on a basis other than
market value, cannot be placed in effect
without approval of the companion consti-
tutional amendment by a majority of Texas
voters.
P. 4507
The Honorable Johnny W. Actkinson
The Honorable Oscar H. Mauzy - Page 5 (H-1098)
DAVID M. KENDALL, First Assistant
C. ROBERT HEATK, Chairman
Opinion Committee
jst
p. 4508