Case Information
*1 OFFICE OF THE ATTORNEY GENERAL OFTEXAS AUSTIN
gonoreble Gee. ii. Sheppard
Comptroller df I%blic Amounts
Austin,, Texas
Dear E.ir: S Tuly 15, 1939, mad-
le receired your 0 ing am Sollows: i&a passed br the
*Please rei
Stats taxes donated 0 ho5esteade in ity of Port ethllr rrom 3, page 636, Regolar Session Bistriot In Ccll.2n County, 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, ccmmenoing eith the fiscal year beginning September 1, 1920, there be and hereby sre donated and granted 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 iti the county of San Patricia, including the.rolling stoak be- longing to railroad oom?anies whioh shall be ascertained and apportioned as 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 constructing and maintaining seawalle, breakwaters and shore protections out into Red Fish Bay, land to fill in the space between the shore and such sea%alls, breakwaters and shore pro- tections in order that said alty be removed rrom calamitous orerilows. The use and diveralon of suoh moneys ror ar.y=other purpose 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 shipping distriot 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 inundating valuable property, and the iaot that the hurricanes of 193.6 and 1919 have demonstrated that without proteation.#he City oi Araneas Pass is in Imminent danger of destruction, 0r again sulferlng great damage and loss of life, create an emergenap and an imperative public necessity that the Constitutional rule requiring bills to be read on three several days b,e suspended and this Act take eifeot and be in foraa from and after its passage, and it is so enacted.*
The constitutionality of 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 inh ited by Constitution, the Supreme Court in s
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 oorporation or for payment of the liabilities of such a corporation. Under the legisiative act, the city of Aran8as ?a88 alone i!:sues and promises to pay the bonds, 'Ehile~the state 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 completely dlsoharged by surrendering to the proper.oftiaials of 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 construction of 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'aollected by 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 Constitution of Texas, in 1933, reads as follows: adopted
*Three Thousand Dollars ($3,000.00) of the assessed taxable value of.all residence homestead8 a8 now defined law shall be exempt rrom all taxation ror all State purposes; provided that tbis exemption shall not appli- cable to that portion of the State ad valorem taxes levied for State purposes remitted within those counties or other
litioal subdivisions now reoelving any remission of ate taxes, until the expiration of such period of re- mission, unless before the expiration of such period the board or troverning body of any one or more of such aounties or political subdlvlsions shall have certified to the State Comptroller that tb8 need for auoh remiseion of taxes has ceased to exist in such county or political SUbdiviS%OZt; then this Section shall become applicable to each Oounty or polltiaal subdivision as and vihen it shall beaom% within the provision8 hereof."
From the express wording of the Constitution it alearly, appear8 that a county or other political subdivision is notto be
551
Hon. Gee. h. Sheppard, Page 4
deprived of the homeatead exemption, unless at the time of the adop- tion of said Article 8, deation l-a, such county or political sub- division WaS receiving a remission or State taxes. kte have already seen that San Patricia County, as such, was not receiving such a re- *se are clear in the o~lnlon that so much of that County mission. as lies uithcut the boundaries of the City of Aransas Pass cannot be denied the homestead exemption.
be now arrive at the situation within the corporate limits Pass, and as to which the answer is a different one. As of Araneas said by Chief Justice Philiips, in Corporation of San Pellpe de Austin vs. State, 229 S. Ti. 845, "the municipalities of the State are polftical subdivisions of the Stete." Under the Act in question eight-ninths (8/9) of the State ad valorem taxes aolleated in the Cityof Aransas Pass was graIIt8$ 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 Constitution in 1993. lie think this constitutes a *remission* or such taxes within the m-aning of the exaeptfon to the exemption. The result fill nsoessarily be that the burden will be heavier in the City of Aransas Pass, through denial of the exemption, but such is the language 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 consequently that of the people of Texas in voting it, that the special benerlta received, such alties as kransas Paes from the construotion of aoastal improvements within their boundaries was sufficient reason- for denying them the exemption until the expiration of 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 acqnainted with 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, supported by of the United &ate8 Supreme Court, the .iSSWiinOe dimisions of bonds or the incurring of other obligations by a munici- pality under the authority of a statute providing for an annual tax on the 'taxable property* in the municipality for the payment thereof, does not give rise to a cOntraOtUa1 obligation not to exempt thereafter any property ?romthe *5 non. Gee. Ii. shcppard, Page 5
class of taxable property existing at the time of incurring the obllgatlona; and hence such an exemption, \rhlch would othrwlsc Gthin the poser of the Legls- lature and which doea not unreasonably deplete the se- curity of pra-existing obligationa, dooa not impair the obligation thereof, v.ithin the 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; iSallay v. iutch (1267) 6 Phlla. (Pa.) 408, And see Palo Verde Irrig. Mat. v. F'eeloy (1926) 198 Cai. 477, 245 1'. 1092."
The Lldorado Independent School Elstrict was a oreature or special leglaletlon. It had outstanding bonds 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 ,contractual rights of the bondholders were impaired. lrom Judge Nlchels' opinion, Zldorado Independent sohool 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.future aopuire 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 unoonstltutlonality in the 1925 act of right In the plaintiffs in error to attack the statute on those grounds, are enroroed which the court recognizea ‘Laws frequently as poesibly or probably invalid it attacked by a different interest or 20 a different way.' 'Luong F,ing v. 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 Pass vs. Keeling aase, supra: Aransas
"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- tf::r, of state taxes ior 2D yeara. atate and federal au- thorities are uniform that, when an act of ~a otate Legls- lature, authorizing a band lasue,.creates. or authorizes *6 _. Geo. H. Sheppard, Page 6 lion.
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 subsequent legislation r.ithout the substitution o something of equal efflcaoy. The sub- -ET--
sequent legislation would impair the obligation of the contract, and therefore some under constitutional eon- 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 outstanding the State oould nvke no modfrication, genwral1.y erreotivo, 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 companies which a-hall be ascertained and apportioned as 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 esoertainwd and apportioned as 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 The same prineiplws are applicable. The Pass. homestead exemption must be denied within the limits of Port Lavaaa, and to the extent of 6/9 in i&?ansas.Pawrr and 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, *7 Ii. Sheppard, ?agw 7
lion. Leo.
Chapter 56, par.w 159, 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:.w City GI Devada, in Collie Courrty, - exaa ) to be uatd for eohool bu:l:.lng RuTposes, all of the itate ad valorwrt taxes on all property ih se?d lndwpondnnt Lchool District subject to taxation, are h::rwby donated and granted by the :.Letw of ':exaa to said independent Loho Iilstriot ror 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.ud to 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 Liactlon 51 0r b.rtlclo S of the State Constitution aa erewndwd, end the 4glslaturw hareby dwolerwa, and xakes a lwglslatlvw finding, that said store, tornado or
oyolonw act:,elly ooourmd end caused greet dwstxuotlon ci life and property end destroyed the school building or said sahool distrlot, and that the same constituted is a great pub110 oaleGity juetliylng and euthor-
izlng thin act to be paeaed.”
The above is a remission within the manning of the quoted 6ection of-the Constltutlon end the area within the boundaries of the lndwpondwnt School Diatriat ot Nevada mst denied the wxwmp- tlon during the lirw or the rwolisslon.
k+w advert to our oplnlop No. O-380, dated Sarah 13, 1939, addraeswd to 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.lon provided 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 Chapter 136, pegs 270, General Lewa, 37th Legislature.
Yours very truly A~&~E~.AUG 15, 1939
hsSi8tallt ATTOmEY GENERAL OF T==8