Untitled Texas Attorney General Opinion

OFFICE OF THE ATTORNEY GENERAL OFTEXAS
AUSTIN

gonoreble Gee. ii.Sheppard
Comptrollerdf I%blic Amounts
Austin,,Texas
Dear E.ir:

le receired your 0 S Tuly 15, 1939, mad-
ing am Sollows:
*Please rei i&a passed br the
Stats taxes donated
0 ho5esteade in

ity of Port ethllr rrom
3, page 636, Regolar Session

Bistriot In Ccll.2nCounty, Chapter 36, page First
Called Session of the 40th Legislature.*
Chapter 33, page 32, 3rd Called Session; 36th LegislatWe,
reads in part as follcwa: .
Hon. Gee. B. Sheppard, Page 2

"Section 1 . That for a period of twenty years,
ccmmenoingeith the fiscal year beginning September 1,
1920, there be and hereby sre donated and granted by the
State of'Texas to the City of Aransas Pass, eight-ninths
i&/Q) the net amounts of the State ad valorem tares
collected upon the property and from persons itithe
county of San Patricia, including the.rollingstoak be-
longing to railroad oom?anieswhioh shall be ascertained
and apportionedas now provided.by law.
"Sec. 5. The moneys herein and hereby granted and
donated to the City of Aransas Pass are deolared to be
trust funds for the purpose of aiding the City ot
Aransas Pass in paying the interest and sinking funU
upon an issue or issues of bonds, the proceeds of which
bonds are to be used exolusively in constructingand
maintaining seawalle,breakwatersand shore protections
out into Red Fish Bay, landto fill in the space between
the shore and such sea%alls, breakwatersand shore pro-
tections in order that said alty be removed rrom
calamitousorerilows. The use and diveralon of suoh
moneys ror ar.y=otherpurpose whatsoever is hereby pro-
hibitea; . . .
Tea. 6. The fact that the greater portion of the
business part of the City of Aransas Pass an6 all of the
shippingdistriot is looated near the shore line of
Red Fish Bay, only-a few feet above sea level.,and the.
faot that the waves are dally eroding the shore line of
said bay~and inundatingvaluable property, and the iaot
that the hurricanesof 193.6and 1919 have demonstrated
that without proteation.#heCity oi Araneas Pass is in
Imminent danger of destruction,0r again sulferlnggreat
damage and loss of life, create an emergenap and an
imperativepublic necessity that the Constitutional
rule requiringbills to be read on three several days
b,esuspendedand this Act take eifeot and be in foraa
from and after its passage, and it is so enacted.*
The constitutionalityof the grant to Araneas Pass.was SUB-
tained in the ease of City of kransae Pass vs. Keeling, 247 S. b.
818, by the Supreme Court. After pointing out that the use of
oftfes and counties as ents of the.State In the dfseharge or the
Staters duty is not inhs ited by Constitution,the Supreme Court in
the course of its opinion said: .
Eon. Geo. H. Sheppard, Page S

"To the extent that the state aids in protaoting
Aransas Pass from the menace of storms through the grant
of part of the state taxes, she discharges a state obliga-
tion, and hence ho question arises as to lending or plddg-
ing the state's credit to E municipal oorporationor for
payment of the liabilitiesof such a corporation. Under
the legisiativeact, the city of Aran8as ?a88 alone i!:sues
and promises to pay the bonds, 'Ehile~thestate under-
takes to aid hransas Pass to meet the bonds by granting
the city certain taxes, yet the state does not guarantee,
payment of the bonds. The state's aredit is in no wise
involved. The State's obligation is completelydlsoharged
by surrenderingto the proper.oftiaialsof the city eight-
ninths of Sen Patricia County*s.stat%taxes ior So years.W
Prom this opinion of th% Supreme Court holding that the
grant to Aransas Pass was for a State purpose, we think It follows
that in the constructionof such shore .proteations Aransas Pass
was not performing a county purpose in behalf of San Patrioio County.
Stated difterently, such State ad valorem taxes were not remitted to
San Patrloio County by the above Act, but were'aollectedby the State
and delivered by~it to an agent of the State to be expended for a
State purpose.

Article 8, Section l-a, of the Constitutionof Texas,
adopted in 1933, reads as follows:
*Three Thousand Dollars ($3,000.00) of the assessed
taxable value of.all residence homestead8 a8 now defined
by law shall be exempt rrom all taxation ror all State
purposes; provided that tbis exemption shall not be appli-
cable to that portion of the State ad valorem taxes levied
for State purposes remitted within those counties or other
litioal subdivisionsnow reoelving any remission of
ate taxes, until the expiration of such period of re-
mission, unless before the expiration of such period the
board or troverningbody of any one or more of such aounties
or political subdlvlsionsshall have certified to the
State Comptrollerthat tb8 need for auoh remiseion of taxes
has ceased to exist in such county or political SUbdiviS%OZt;
then this Section shall become applicable to each Oounty
or polltiaal subdivisionas and vihenit shall beaom% within
the provision8 hereof."
From the express wording of the Constitutionit alearly,
appear8 that a county or other political subdivisionis notto be
 551

Hon. Gee. h. Sheppard, Page 4

deprived of the homeatead exemption,unless at the time of the adop-
tion of said Article 8, deation l-a, such county or political sub-
division WaS receiving a remission or State taxes. ktehave already
seen that San Patricia County, as such, was not receiving such a re-
mission. *seare clear in the o~lnlon that so much of that County
as lies uithcut the boundaries of the City of Aransas Pass cannot be
denied the homestead exemption.
be now arrive at the situationwithin the corporate limits
of Araneas Pass, and as to which the answer is a different one. As
said by Chief Justice Philiips, in Corporationof San Pellpe de
Austin vs. State, 229 S. Ti.845, "the municipalitiesof the State
are polftical subdivisionsof the Stete." Under the Act in question
eight-ninths(8/9) of the State ad valorem taxes aolleated in the
Cityof Aransas Pass was graIIt8$baak to the City for a period of
twenty years, for the purposes therein set forth. Aransas Pass was
reaeivlng such grant of taxes at the time of the adoption of suoh
Seation of the Constitutionin 1993. liethink this constitutesa
*remission*or such taxes within the m-aning of the exaeptfon to
the exemption. The result fill nsoessarilybe that the burden will
be heavier in the City of Aransas Pass, through denial of the
exemption,but such is the language and manliest purpose of the
Constitution. tie quote from the 8uprene Court*s opinion in City of
Aransas Pass vs. Keelins, supra, further as follows: "It is because
of the speoial benefits to particular alties and counties that
special bnrdens on property within their boundaries, through'taxa-
tion, are jnstitied.R It was doubtless the view of the framera
of this Section of the %nstltution, and consequentlythat of the
people of Texas in voting it, that the special benerlta received,
by such alties as kransas Paes from the construotionof aoastal
improvementswithin their boundarieswas sufficient reason-for
denying them the exemption until the expirationof the respeotfve
periods of remission.
We are aware, 0r course, that bonds were issued by Aransas
Pass subsequent to the date of the grant. We are not acqnaintedwith
the sxact amounts and condition Or any such bonds. Prom the annota-
tion found at 109 A.L.R., p. 818, we quote as follows:
"Acoording to the weight of authority, supportedby
dimisions of the United &ate8 Supreme Court, the .iSSWiinOe
of bonds or the incurring of other obligationsby a munici-
pality under the authority of a statute providing for an
annual tax on the 'taxableproperty* in the municipality
for the payment thereof, does not give rise to a cOntraOtUa1
obligationnot to exempt thereafter any property ?romthe
non. Gee. Ii.shcppard, Page 5

class of taxable property existing at the time of
incurring the obllgatlona; and hence such an exemption,
\rhlchwould othrwlsc be Gthin the poser of the Legls-
lature and which doea not unreasonablydeplete the se-
curity of pra-existing obligationa,dooa not impair
the obligation thereof, v.ithinthe prohibition of the
ccntrect clause of the Federal Ct?LWJtitUtiOE. Gilman v.
theboygan (1863) 2 tilack.(U.S.) 510, 17 L. ed. 305;
Arkansas 2. Ii.Co. v. Louisiana 8.L. R. Cc. (1910) 218
u. z. 431, 64 L. ed. 1097, 31 :..Ct. 56; &tats, hall,
Prosecutor, v. Parker (1869) 33 C.J. i. 312; iSallayv.
iutch (1267) 6 Phlla. (Pa.) 408, And see Palo Verde
Irrig. Mat. v. F'eeloy(1926) 198 Cai. 477, 245 1'.
1092."
The Lldorado IndependentSchool Elstrict was a oreature or
special leglaletlon. It had outstandingbonds at the tine the Leeis-
lature passed a apccial act reducing its area. The histrict thore-
after sought to collect tax08 upon the territory thus left out of
ita boundaries. Tcrpeyers sought to enjoin such oo&lection. The
District urged that the ,contractualrights of the bondholderswere
impaired. lrom Judge Nlchels' opinion, Zldorado Independentsohool
District vs. Tladale, 3 2. R. (2d) 420, we Quote:
We do no: mean to hold that bondholdors (or other
taxpayers) do not have or may not in the.futureaopuire
praotlcally justiciable rights agalnot the exclusion
iron the district of the properties or defendants in
error. de have oommentod upon their poaslbilitles
merely by nay of negativing present showing of palpable
unoonstltutlonalityin the 1925 act and of right In the
plaintiffs in error to attack the statute on those grounds,
‘Laws frequently are enroroed which the court recognizea
as poesibly or probably invalid it attacked by a different
interest or 20 a different way.' 'LuongF,ingv. Klrkendall,
223 u. s. 59, 64, 32 s. ct. 192, 163 (66 L. 1-a.3SO)r
Weaver v. Palmer Eros. Co., 230 U. 5. 4C2,,46 5. Ct. 320,
70 L, Td. 654, 658."

WO nctice the further languag6 or the ccurt in the City of
Aransas Pass vs. Keeling aase, supra:
"The objection Is not tenable that reasonable pro-
vision Is Kanting to redeem the bonds becauee the Legis-
lature, eltor the sale of.the bondn8 can repeal the dona-
of state taxes ior 2D yeara. atate and federal au-
tf::r,
thorities are uniform that, when an act of ~a otate Legls-
lature, authorizing a band lasue,.creates. or authorizes
lion.
_. Geo. H. Sheppard, Page 6

the creation of, a aertain fund for thw bond's paymwnt,
such provision of the-act enters into the contract be-
tween the debtor and the holders of the bonds, so that it
carnot be re ewled by subsequentlegislationr.ithoutthe
substitution
-ET--
o something of equal efflcaoy. The sub-
sequent legislationwould impair the obligation of the
contract, and therefore some under constitutionaleon-
dwmnatlon."
The above language brd reference to a oomplwte repeal of
the tar donation. The aourt did not mean to say, and did not say
that so long as such a grant should be outstandingthe State oould
nvke no modfrication,genwral1.yerreotivo, or its tax laws.
Cheptwr 24, page 57, 3rd Called Swaaion, 36th Legislature,
~meds in-part as r0il0wa:
*Swotlon 1. That ror a period or twenty ywara,
oommwnolng with the fieeal year beginning September the
firat, A. D. 1920, there be and are hereby donated and
graqtwd by the State of Yexaa to the City or Port
Laraaa the net amounts of the State ad valorwm taxwa
to be aollectwd on all property and from all persons
own- property in Calhoun County, lwxas, including the
rolling atook belonging to railroad companieswhich
a-hallbe ascertained and apportionedas now provided
by law."
Chapter 292, page 666, Regular Session, 4lat Legislature,
reads as r0ii0w8:
wSection-f. That ror a period or Imnty yearn,
eommwnolng with the fiscal year ‘beginning September 1,
1929, there be and hereby are donated and granted by the
Stats ot Texas to the City of Port Arthur, Texas, situated
in %mmisaionera* Preeinat Dumber 2 or Jefferson County,
Texas, eight-ninths (8/9) tbw net amount6 or the State
& Valorwm taXW6 oollsoted on all property,both real
and personal, in Commissioners’ Preainct Number 2 of
Jwfrwrson county, Texas, whioh shall be esoertainwdand
apportionedas now provlded by lay.R
Tbe grants to the City ot Part Iavaoa and Port iwtti are
similar in other reapwcts to the one quoted morw fully above to the
City or hransas Pass. The same prineiplws are applicable. The
homestead exemption must be denied within the limits of Port Lavaaa,
and to the extent of 6/9 in i&?ansas.Pawrrand Port Arthur during the
rtispwctlve terms 0r the grants. The other areas in Calhoun County,
San Patricia County, and Cor~&seionere*Preoinot Do. 2 in Jsrrereon
County should receive the exemption,
lion. Leo. Ii. Sheppard, ?agw 7

Chapter 56, par.w159, let Cr?llwd lesion, 40th bgi~le-
ture, reads i:!part es followe:
"Lectlor.1. ror the ;urgose of eid!q tba independent
-ahool Diotr!ct.of t:.wCity GI Devada, in Collie Courrty,
-exaa) to be uatd for eohool bu:l:.lngRuTposes, all of the
itate ad valorwrttaxes on all property ih se?d lndwpondnnt
Lchool District subject to taxation,are h::rwbydonated
and granted by the :.Letwof ':exaato said independent
Loho Iilstriotror a period of hug-rive years Zrom the
tiae this act take8 amot, to be used by mid district aa
provided ir this RO:. %he said tax-8 shall tom tte basis
of a bond iosuw as provided herwin end shall be used to
pay interest and craata a s'nklng ru.udto pay said bonds.
Xbe proawwds of sold bonds, when sold, may he used by
neid district to construotend equip a aohool building or
uchool bulldinEs.
Tea.5. This grant end donation is aadw *under
Liactlon51 0r b.rtlcloS of the State Constitutionaa
erewndwd,end the 4glslaturw hareby dwolerwa, and xakes
a lwglslatlvwfinding, that said store, tornado or
oyolonw act:,ellyooourmd end caused greet dwstxuotlon
ci life and property end destroyed the school building
or said sahool distrlot, and that the same constituted
and is a great pub110 oaleGity juetliylngand euthor-
izlng thin act to be paeaed.”
The above is a remissionwithin the manning of the quoted
6ection of-the Constltutlonend the area within the boundaries of
the lndwpondwntSchool Diatriat ot Nevada mst be denied the wxwmp-
tlon during the lirw or the rwolisslon.
k+wadvert to our oplnlop No. O-380, dated Sarah 13, 1939,
addraeswdto Eohorablw Jexws +a.jtrwwn, County kttornwy of Nuaaes
County, atnrein we advised that the citieens of Xllleoy, Jin, ialls,
Brooks, Llwbwrg, Nval, Jim ?oge and Sueowe Countlo~ are entitled
to the exe:kpt.lonprovided In said Artlole 8, Section l-e or the
Csnstitution. The araa xltbin the limit8 of the City of Corpus
Christ1 is not entitled to suoh exemption during the life Of the
grant mdw by Chapter 136, pegs 270, General Lewa, 37th Legislature.
Yours very truly

A~&~E~.AUG 15, 1939
hsSi8tallt

ATTOmEY GENERAL OF T==8