December 28, 1989
Honorable A. J. Hartel Opinion No. JM-1128
Liberty County Attorney
P. 0. Box 9127 Re: Authority of a rural fire
Liberty, Texas 77575-9127 prevention district to borrow
money without holding an elec-
tion (RQ-1704)
Dear Mr. Hartel:
Your letter requesting an opinion of this office asks:
Does a Rural Fire District have the authority
to borrow Money from a bank, without a public
election to approve the loan, if the amount
of repayment per year is less than the
revenues to be received per year from 3
cent[s] per $100 evaluation ad valorem taxes?
(No additional taxes will be raised to
support the loan.)
If the above question is yes, can the bank
secure the loan with a lien on the financed
property or must it be secured with a pledge
of tax receipts?
Rural fire prevention districts were formerly regulated
by article 2351a-6, V.T.C.S. In 1989, a non-substantive re-
vision of the law carried the provisions of that statute
into the new Health and Safety Code as chapter 794 thereof.
See Acts 1989, 71st Leg., ch. 678, at 2230, 3122. Sub-
chapter E of chapter 794 concerns the financial transactions
of such districts. The new code became effective September
1, 1989. Id. ch. 678, § 15, at 3165.1
1. The 71st Legislature repealed article 2351a-6,
V.T.C.S., when its provisions were incorporated into the
Health and Safety Code, but it also passed an amendment to
(Footnote Continued)
P. 5937
Honorable A. J. Hartel - Page 2 (JM-1128)
We understand that the district intends to borrow an
amount considerably in excess of its funds on hand or the
amount anticipated to be on hand from tax collections (or
other sources) for a single year. It is to be repaid over a
ten year period, but the amount scheduled to be repaid in a
single year would not exceed the amount anticipated to be
collected in taxes for that year.
Section 794.071 of the Health and Safety Code provides:
Except as provided by Section 794.072 and
Sections 794.076-794.081, a district may not
contract for an amount of indebtedness in any
one year that is in excess of the funds ~then
on hand or that may be paid from current
revenues for the year.
This provision prevents the proposed transaction, unless it
is authorized by one of the sections mentioned, because the
indebtedness incurred would exceed the funds of the district
then on hand or that might be paid from anticipated current
revenues for the year.
We have examined sections 794.072 and 794.076 through
794.081, and there is no provision in any of them that would
permit the district to obligate itself by contract to assume
a monetary obligation payable over several years from future
ad valorem taxes without first securing the approval of the
(Footnote Continued)
the repealed statute. The amendatory provision has been
saved notwithstanding the repeal because section 311.031(c)
of the Government Code provides:
(C) The repeal of a statute by a code
does not affect an amendment, revision, or
reenactment of the statute by the same legis-
lature that enacted the code. The amendment,
revision, or reenactment is preserved and
given effect as part of the code provision
that revised the statute so amended, revised,
or reenacted.
Although the amendment is tangentially pe~rtinent to the
issue at hand, it does not affect the conclusion we reach.
See Acts 1989, 71st Leg., ch. 1132, at 4676.
p. 5938
Honorable A. J. Hartel - Page 3 (JM-1128)
electorate. See Attorney General Opinion JM-453 (1986).
Section 794.077(a) expressly states:
A district may not authorize bonds and
notes secured in whole or in part by taxes
unless a majority~ of the district's qualified
voters who vote at an election called for
that purpose approve the issuance of the
bonds and notes.
cf. Tex. Const. art. III, 9 52(d).-
We advise that a rural fire prevention district does
not possess authority to borrow money repayable from ad
valorem taxes to be collected in future years without first
securing the approval therefor from the electorate. We do
not reach your second question.
SUMMARY
Without first securing approval therefor
from the electorate, a rural fire prevention
district is not authorized to borrow money
repayable from ad valorem taxes to be col-
J/a
lected in future years.
J
Very truly yo
&
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCREARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Bruce Youngblood
Assistant Attorney General
p. 5939