Attorney General Opinion JM-0528

JIM MAlTOX Attorney General The Attorney General of Texas July 28. 1986 Supreme Cairl Building P. 0. BOX 1254s Austin. TX. 76711. 2546 5121475.2Wl’ Telex 910/674-1387 Telecopier 512/4750266 714 Jackson, Suite 70-I Dallas. TX. 75202.4506 214l742-6944 Honorable Ray Farabt,e, Chairman Opinion No. JM-528 Committee on State Affairs Texas State Senate Re: Tax rate of a county after a P.O. Box 12068 successful election under section Austin, Texas 78711 26.07 of the Property Tax Code to rollback an adopted tax rate if Honorable Chet Brooks, Chairman the adopted rate includes an Health and Human Res:ources Committee increase to provide for the addi- Texas State Senate tional cost of indigent health P. 0. Box 12068 care services reauired under the 4624 Al& wla Ave., Suite 160 Austin, Texas 7871,l Indigent Health -Care and Treat- El Paso, TX. 799052793 ment Act 91515221 -.-.--- a464 Honorable John Trae&er, Chairman Committee on Intergwernmental Relations r;c Texas, Suite 700 ston, TX. 77002-3111 2~I.i/223-5666 Texas State Senate P. 0. Box 12068 Austin, Texas 7871,l 806 Broadway, Suite 312 Lubbock, TX. 79401.3479 6W747.5236 4309 N. Tenth, Suite S McAllen. TX. 76501-1665 51216624547 200 MaIn Plan, suite 4w San Anlo?fo, TX. 762052797 512/225.4191 An Equal Opportunity/ Affirmative Action Employer Gentlemen: The Sixty-nint.h Legislature enacted in special session the Indigent Health Carl? and Treatment Act [hereinafter “the act”] which, inter alia, require3 governmental entities to provide certain health care services to ind:.gent residents. Acts 1985, 69th Leg., 1st C.S., ch. 1, at 1. SecUons 2 and 3 of the act amended sections 26.04, 26.06, and 26.07 of the Tax Code, which set forth the requirements for the effective ad valorem tax rate calculation, for notice of the public meetings prit’r to the adoption of the tax rate, and for the tax rate rollback petil:ion and election procedures, respectively, with which taxing units mu,st comply. Your question focuses upon the proper construction of the:,e amendments. Essentially, you wish to know, in an instance in which there has been a successful tax rate rollback election and in whic.b the adopted rate includes a rate increase attri- butable to the add:ltional costs incurred by providing the indigent health care services required by the act, whether the rate increase for providing those, health care services is also rolled back. We conclude that the r;.te increase attributable to the costs of providing the services requi:red by the act is not reduced pursuant to the rollback provision. p. 2428 Honorable Bay Parabee Honorable Chet Brooks Honorable John Traeger Page 2 (JM-528) Section 26.04 of the Tax Code sets forth the method by which the so-called “effective tax ra:e” is calculated by each taxing unit prior to the adoption of its ad Jalorem tax rate. The “effective tax rate” is that tax rate which, when imposed upon the property that was taxed last year but using this; year’s appraised values, will produce approximately the same amout of revenue which was produced last year. See Tex. Const. art. VIII, (1982). section 21; Attorney General Opinion MW-495 Section 26.05 of tie Tax Code provides that, if a taxing unit adopts a tax rate that exceeds the effective tax rate by more than three percent, the taxing unit must hold a public hearing, as provided by section 26.06 of the Tax Code, on the proposed increase and publish a specified public notice of the meeting prior to its being held. Section 26.07 of the Tax Code permits qualified voters of the taxing unit by petition to require that a tax rate rollback election be held if the adopted rate exceelis the effective rate by more than eight percent. If the election is successful. the adopted rate is reduced to “a rate that exceeds ths rate calculated by Section 26.04 of this code by only eight percent.” Tax Code §26.07(a). The amendments to sections 26.04, 26.06, and 26.07 of the Tax Code contained in the act tffectively segregate out the amount of the tax rate increase attributable to the costs of providing in the first year the health services required by the act. Section 26.04(e) was amended by the act to IncluLe among the items of information that the taxing unit is required to .publicise in connection with the calcula- tion of its effective tax rate a schedule of the unit’s expenses in providing services required by the Indigent Health Care and Treatment Act . . . showing that the amount of required expense which will be paid in the next year from property tax revenues, the amount of required expense paid in the preceding year from property tax revenues, and the amounts of state reimbursement, I? any, received or expected for either year. Tax Code 126.04(e) (4). Section 26.06 was am’znded by the addition of subsection (f), which lists the items of :Lnformation that the published notices for the ad valorem tax rate in::cease and for the vote on the adoption of the tax rate must contain for those taxing units that offer health services as required by the? act. Each notice is required to specify explicitly the percentage of the tax rate increase which is attri- butable to the costs of pzoviding the required indigent health care services. Each such notice must contain the following: p. 2429 Honorable Ray Farabee Honorable Chet Brooks Honorable John Traeger Page 3 (JM-528) (Percentage of increase over the tax rate required to levy amount ,loeded for indigent health care services) percent of the increase will be used to pay for services required by the Texas Legislature in the Indigent Bealth Care and Treatment Act. Tax Code 526.06(f). Finally, section 26.0; was amended by the addition of subsection (h) . It is with this section that you are concerned. Section 26.07, as amended, provides the fallowing in pertinent part: Sec. 26.07. Election to Repeal Increase. (a) If the Islverning body of a taxing unit other than a schcol district adopts a tax rate that exceeds the rate ;:alculated as provided by Section 26.04 of this co&! by more than eight percent, the qualified voters of the taxing unit by petition may require that an- election be held to determine whether or not t3 reduce the tax rate adopted for the current year-to a rate that exceeds the rate calculated as p&ided by Section 26.04 of this code by only eigt‘E percent. . . . . (d) If the governing body finds that the petition is valid (or fails to act within the time allowed), it shall order that an election be held in the taxing unit on a date not less than 30 or more than 90 da1.s after the last day on which it could have acted to approve or disapprove the petition. A state law requiring local elections to be held on a spe:cified date does not apply to the election unless a specified date falls within the time permitted by this section. At the election, the ballots shall be prepared to permit voting for or against the proposition: ‘Reducing the tax rate in (name of taxing unit) for the current year from (the rate adopte’i) to (the rate that is only eight percent g;ester than the rate calculated as provided by Section 26.04 of this code).’ (e) If a majo:r:tty of the qualified voters voting on the question in the election favor the proposl- tion, the tax ra.te for the taxing unit for the current year is t’he tax rate that is eight percent greater than the rate calculated as provided by p. 2430 Honorable Ray Farabee Honorable Chet Brooks Honorable John Traeger Page 4 (JM-528) Section 26.04 of for the current governing body. . . . . ,this code ; otherwise, the tax rate year is the one adopted by the (h) Notwithst~rding Subsection (a) of this section, if in tl”! first year after the effective date of this Act the governing body of a taxing unit other than a-school district increases its tax rate’ to provide Ihealth care services that the governing body is required to provide to its resi- dents under the Indigent Health Care and Treatment Act (S.B. 1, ACES of the 69th Legislature, 1st Called Session, F985) the adopted tax rate that allows voters to ;eek to reduce the tax rate under this section must-exceed the rate calculated under Section 26.04 of -this code by eight percent plus that rate which, g>plied to the total taxable value submitted to the governing body, would impose taxes in an amount equal to the amount which the governing body would be required to pay out of property taxes to-provide services required by the Indigent Bealth Fare and Treatment Act less the amount the gover%ng body paid out of property taxes to provide the equivalent services in the preceding year a;id less any state reimbursement which the governi& body paid out of property taxes to provide the equivalent services in the preceding year and less a,, state reimbursement which the governing body expects to receive pursuant to Subtitle D of Ti,zLe 2 of the Indigent liealth Care and Treatment Act. (Emphasis added). Your question arises because the act did not expressly amend subsections 26.07(a) and 26.07(e) of the code. You express conc~ern that, were the election to rollback the tax rate increase, the tax for indigent health care would be rolled back as well. Such an interpre- tation would require an isolated and mechanical reading of subsections 26.07(a) and 26.07(e) and would ignore subsection 26.07(h). We must look to the :ntent of the legislature and construe the statute to give effect to that intent. Knight v. International Harvester Credit Corp., 62;’ S.W.2d 382 (Tex. 1982); State v. Terrell, 588 S.W.2d 784 (Tex. 197!)). If a statute is susceptible to two constructions, one which zill carry out and the other defeat the legislative intent, the statute should receive the former construc- tion. Citizens Bank of Bryan v. First State Bank, Hearne, 560 S.W.2d 334 (Tex. 1979). A statute should be construed as a whole; one ? P. 2431 Honorable Ray Farabee Honorable Chet Brooks Aonorable John Traeger Page 5 (JM-528) provision should not be given a meaning out of harmony or inconsistent with other provisions, even though it might be susceptible to such construction if standing a:lone. Merchants Fast Motor Lines, Inc. V. Railroad Commission of Texaza. 573 S.W.Zd 502 (Tex. 1978); Barr V. Bernhard, 562 S.W.i!d 844 (l’ex. 1978). Noreover, a statute should not be construed so as to lead to a foolish or an absurd result. McKinney V. Blankenshie. 282 S.W.2d 691 (Tex. 1955); State ex rel. Childress v. School Trustees of Shelby Czlnty, 239 S.W.2d 777 (Tex. 1951). In a brief submitted with your request for an opinion, you point out that the legislative h:tstory of the bill supports your construc- tion of the amendments. The bill analysis of the committee substitute to House Bill No. 1843. which was the version of the act introduced in the House during the reguls:c session of the Sixty-ninth Legislature, declares an intent to exclude entirely from the operation of the rollback provisions any tax rate increase attributable to additional costs incurred for providing the services required by the act: County and hosp::tal district spending to meet state mandated mfuimum standards is exempt from tax rollback election requirements. (Emphasis added). See House Committee on Public Health. Bill Analysis, House Bill Littee Substitute, 69th Leg., 1st C.S. (1985). The evident intent of the amendments was alscr indicated in the fiscal notes that were prepared for House Bill No, 1843, stating that the effect of the act on units of local government would include the following: Some counties would be required to increase their expenditures for indigent health care. The bill provides for an *exemption to the tax rollback provision for taxing units to the extent that the tax rate increase is necessary to provide the health care. (Em&asis added). Fiscal Note, H.B. No. 1843, 69th Leg., 1st C.S. (1985). The Fiscal Note for the proposed committee substitute for House Bill No. 1843 and for Eouse Bill No. 1843, as engrossed, both contain the same language. It is clear from a reading of the act that the provisions amending the Tax Code, t&hen together, were meant to isolate that portion of the tax rate increase attributable to providing the services required by the ;%ct. It would make little sense for the legislature to require certain taxing units to offer specified health care services to indigents, to set forth tax rate calculation and notice procedures segregati”8 from a tax rate increase that portion of the rate increase attrlbitable to the costs of providing such services, and to make thiit: percentage rate increase necessary to p. 2432 Ronorable Ray Farabee Honorable Chet Brooks Honorable John Traeger Page 6 (313-528) trigger the rollback provisions in the first place eight percent over the effective rate plus the: portion of the rate increase attributable to the costs of providing the services. and then to intend that the "rolled-back" rate be set at eight percent over the effective rate. The legislature did not intend a construction that would impair the ability of taxing units to provide the services required by the act. Accordingly, we construe the phrase of subsection (h! "[nlotwith- standing [slubsection (a) ',:C this section . . ." to effect an excep- tion to subsection (a): in an instance in which there has been a successful tax rate rollbac,k election in the first year that a taxing unit has incurred additionz;l. costs for providing services as required by the act, the rate is set at eight percent over the effective rate plus the additional perceniage increase attributable to the costs of providing the services required by the act. SUMMARY In an instanw in which a taxing unit provides services as required by the Indigent Health Care' and Treatment Act and in which there has been a successful tax rste rollback election in the first year in which those services are provided, sub- section 26.07(a), when construed with subsection 26.07(h), sets :be "rolled-back" rate at eight percent over he effective rate plus the additional percentage increase attributable to the costs of providing the services required by the act. JACK HIGHTOWER First Assistant Attorney Gwleral NARY KELLER Executive Assistant Attorwy General RICK GILPIN Chairman, Opinion Committela Prepared by Jim Moellinger Assistant Attorney General Very trul yours. L-1 iv% JIM HATTOX Attorney General of Texas p. 2433