Can a Tennessee special school district lower its property tax rate below what the private act says, and can the legislature delegate rate-setting flexibility to the district?

Plain-English summary

A Tennessee special school district is a school district created by a private act of the General Assembly. Its taxing power, if any, comes from that private act, and it does not have the independent constitutional taxing authority that counties and cities have. Opinion 14-76 was asked whether such a district could set its tax rate at a level below the rate fixed in the private act, and whether the General Assembly could write a private act that simply gave the district a range to choose from.

The AG concluded no to both. A special school district had no authority to deviate from the tax rate set in its private act. The only adjustment mechanism was Tenn. Code Ann. § 67-5-1704, which directs a mathematical recalculation after a general reappraisal of property so that the district receives the same ad valorem revenue as in the previous year. That is a ministerial calculation done by the county trustee, not a discretionary choice.

The AG also concluded that the General Assembly could not write a private act that delegated rate-setting discretion to the district, such as a "not less than nor in excess of" range. The Tennessee Constitution vests the taxing power in the legislature and allows delegation only to counties and cities under Article II, Section 29. Special school districts are not on that list.

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Why can't the General Assembly just let a special school district pick its own tax rate?
A: The Tennessee Constitution vests the taxing power in the General Assembly at Article II, Section 28, and Section 29 permits delegation only to counties and incorporated towns. Tennessee courts have long held that this delegation cannot be extended to other special districts. West Tennessee Flood Control District v. Wyatt, 247 S.W.2d 56 (Tenn. 1952), and the earlier authorities cited in the opinion (Williamson v. McClain; Smith v. Carter; Ballentine v. Mayor of Pulaski; Luehrman v. Taxing District) are the foundation of that rule. The AG had previously applied the same logic to special school districts in 1983, 2001, and 2002 opinions.

Q: What about a reappraisal year, doesn't the rate move then?
A: Yes, but through a recalculation, not a policy choice. Section 67-5-1704(a) provides that after a general reappraisal of property as determined by the State Board of Equalization, the rate set in the general law or private act is adjusted to produce the same ad valorem revenue as the previous year (exclusive of new construction, improvements, and deletions). The county trustee performs the calculation. The AG has long treated this as a permissible ministerial function rather than an improper delegation of taxing power, because the trustee exercises no discretion.

Q: What if a county trustee actually collected at a different rate?
A: The AG advised that the trustee should return to the rate set in the private act or the recalculated rate under § 67-5-1704. The opinion did not address refund mechanics.

Q: Could the legislature draft the private act to say "not less than X and not more than Y" so that the district can pick within the band?
A: No. The AG concluded that such a range delegates legislative taxing discretion in a way that Sections 28 and 29 do not permit. Tennessee Att'y Gen. Op. 01-034 had already reached the same conclusion about that exact "not less than nor in excess of" structure.

Q: Do counties have to follow the same rule?
A: No. Counties (and cities) have constitutional delegated taxing authority under Article II, Section 29. The opinion's no-delegation conclusion applies to special school districts, which sit outside that delegation.

Background and statutory framework

Tennessee uses several different school-governance models, including county school systems, city school systems, and special school districts created by private act. Special school districts are statutory creatures, not constitutional ones, and they hold only the powers the General Assembly gives them. When the private act sets a property tax rate, that rate is the law for that district until the legislature amends the private act.

Two structural features matter. First, Article II, Section 28 vests the taxing power in the General Assembly, and Section 29 permits delegation to counties and incorporated towns. Anything outside that delegation, including special school districts, depends on direct legislative action. Second, § 67-5-1704 provides a mechanical reappraisal adjustment that keeps revenue constant after a property revaluation. The AG has consistently treated that adjustment as a ministerial recalculation rather than a discretionary delegation, because the trustee performs arithmetic without exercising judgment.

The opinion also reflects the AG's prior treatment of attempted delegations to special school districts, including Tenn. Att'y Gen. Op. 83-195 (1983), Op. 01-034 (2001), and Op. 02-043 (2002), each concluding that giving a special school district rate-setting flexibility crosses the constitutional line.

Citations and references

Statutes and constitutional provisions:

• Tenn. Code Ann. § 67-5-1704 (post-reappraisal rate adjustment)

Cases:

• West Tennessee Flood Control District v. Wyatt, 247 S.W.2d 56 (Tenn. 1952) (Tennessee Supreme Court)
• Williamson v. McClain, 249 S.W. 811 (Tenn. 1922) (Tennessee Supreme Court)
• Smith v. Carter, 173 S.W. 430 (Tenn. 1914) (Tennessee Supreme Court)
• Ballentine v. Mayor of Pulaski, 83 Tenn. 633 (1885) (Tennessee Supreme Court)
• Luehrman v. Taxing District, 70 Tenn. 425 (1879) (Tennessee Supreme Court)
• Gibson Cnty. Special Sch. Dist. v. Palmer, 691 S.W.2d 544 (Tenn. 1985) (Tennessee Supreme Court)
• City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005) (Tennessee Court of Appeals; permission to appeal denied)

Earlier AG opinions:

• Tenn. Att'y Gen. Op. 83-195 (Apr. 20, 1983)
• Tenn. Att'y Gen. Op. 01-034 (Mar. 12, 2001)
• Tenn. Att'y Gen. Op. 02-043 (Apr. 9, 2002)

Subject

Opinion No. 14-76, Special School District Tax Rate, August 14, 2014

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2014/op14-076.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
August 14, 2014
Opinion No. 14-76
Special School District Tax Rate

QUESTIONS

1. If a private act creating a special school district levies a property tax at a specific rate, under what circumstances may the district set a lower tax rate than that set forth in the act?

2. Can the language of a private act be tailored to allow a special school district to set a tax rate less than that authorized or within a numerical range of "not less than nor in excess of" that authorized by the act?

OPINIONS

1. A special school district does not have authority to vary from the tax rate set forth in the applicable private act. In the event of a property reappraisal, the State Board of Equalization has the authority to revise the district's tax rate pursuant to Tenn. Code Ann. § 67-5-1704.

2. No. The General Assembly must establish a single specific tax rate for a special school district in the private act and may not delegate its taxing power by granting rate-setting discretion to a special school district.

ANALYSIS

1. The principle is well established that special school districts are creatures of the General Assembly, with powers and duties strictly limited to those set forth in private acts. A special school district does not have authority or discretion to set tax rates.

It is settled beyond dispute that only the General Assembly can levy taxes in a special school district it has created. While the Constitution, at Article II, Section 29, allows cities and counties, upon legislative authorization, to impose taxes, this power does not extend to special school districts. See West Tennessee Flood Control District v. Wyatt, 193 Tenn. 566, 247 S.W.2d 56 (1952); Williamson v. McClain, 147 Tenn. 491, 249 S.W. 811 (1922); Smith v. Carter, 131 Tenn. 1, 173 S.W. 430 (1914). Article II, Section 28, of the Constitution vests the power of taxation in the General Assembly. This power cannot be delegated, except to counties and cities as specifically mentioned in Section 29. See Ballentine v. Mayor of Pulaski, 83 Tenn. 633 (1885); Luehrman v. Taxing District, 70 Tenn. 425 (1879). Thus, the legislature must impose taxes for special school districts; it cannot permit such districts to set their own tax rates.

Tenn. Att'y. Gen. Op. 83-195 (Apr. 20, 1983). See Gibson Cnty. Special Sch. Dist. v. Palmer, 691 S.W.2d 544, 549 (Tenn. 1985); City of Humboldt v. McKnight, No. M2002-02639-COA-R3-CV, 2005 WL 2051284, at *24 (Tenn. Ct. App. Aug. 25, 2005), perm. app. denied (Tenn. Feb. 21, 2006); see also Tenn. Att'y. Gen. Op. 02-043 (Apr. 9, 2002) (proposed bill allowing special school district to set and change tax rate without legislative approval is constitutionally suspect); Tenn. Att'y. Gen. Op. 01-034 (Mar. 12, 2001) (private act permitting special school district to set a tax rate below but not exceeding that established in the act is an unconstitutional delegation of General Assembly's taxing power).

Tenn. Code Ann. § 67-5-1704 provides for the adjustment of a special-school-district tax rate, "as established in any . . . general law or private act," upon a reappraisal of property as determined by the State Board of Equalization.

(a)(1) Notwithstanding the provisions of the general law or a private act to the contrary which creates a special school district, upon a general reappraisal of property as determined by the state board of equalization, the tax rate as established in any such general law or private act shall be adjusted to provide the same ad valorem revenue for such special school district as was levied during the previous year prior to such general reappraisal.

(2) The county assessor of property shall certify to the appropriate county trustee the total assessed value of taxable property within the jurisdiction of the special school district.

(3) The assessor shall also furnish such county trustee an estimate of the total assessed value of all new construction and improvements not included on the previous assessment roll and the assessed value of deletions from the previous assessment roll.

(4) Exclusive of such new construction, improvements and deletions, the county trustee, in the event of a general reappraisal as determined by the state board of equalization, shall determine and certify the adjusted tax rate pursuant to this section.

. . . .

Tenn. Code Ann. § 67-5-1704(a). This Office has previously opined that this procedure does not amount to an improper delegation of taxing authority because the trustee's role does not involve the exercise of any discretion in setting tax rates, the trustee merely carries out the ministerial function of performing mathematical calculations. See Tenn. Att'y. Gen. Op. 83-195.

2. Because the legislature may not delegate its taxing power to a special school district, it also may not craft the language of a private act in such a way as to allow a special school district to set a tax rate lower than, or within a numerical range of "not less than nor in excess of," that authorized by the act. Legislative language conferring such rate-setting discretion upon a special school district would run afoul of Sections 28 and 29 of Article II of the Tennessee Constitution, as discussed above.

In the event taxes have been collected on behalf of a special school district at a rate that varies from either the rate established by private act or the adjusted rate set pursuant to Tenn. Code Ann. § 67-5-1704, the county trustee should return to the rate established by the private act or § 67-5-1704, as applicable.

ROBERT E. COOPER, JR.
Attorney General and Reporter

JOSEPH F. WHALEN
Acting Solicitor General

KEVIN STEILING
Deputy Attorney General

Requested by:
The Honorable Curtis Halford
State Representative
108 War Memorial Building
Nashville, Tennessee 37243