Can a Texas city adopt the over-65 and disabled property tax freeze without first giving its own homestead exemption?

TX AG Opinion GA-0363: Can a city adopt the over-65 and disabled tax freeze without its own homestead exemption?

Plain-English summary

In 2003, Texas voters added a "tax freeze" to the constitution. Under article VIII, section 1-b(h), a county, city or town, or junior college district can decide that the property taxes it imposes on the home of a disabled person or someone 65 or older will not rise while that home stays their residence homestead. The City of Windcrest had received a voter petition asking for an election on adopting the freeze, but worried that the freeze might be available only to cities that had already given their own residence homestead exemption. The City had never adopted one. A state senator passed the question to the Attorney General.

The Attorney General said the freeze does not require the city to have its own exemption first. The text of subsection (h) lets the listed entities cap taxes for a disabled or over-65 person who "receives a residence homestead exemption prescribed or authorized by this section." "This section" is all of section 1-b, which prescribes or authorizes several homestead exemptions, including the general school-district exemption that nearly every adult homeowner gets and an extra amount for disabled and over-65 owners. So a city's senior and disabled residents already receive a qualifying homestead exemption through the school-district exemption, and the city can adopt the freeze for them, whether or not it ever granted an exemption from its own taxes. Nothing in the text limits the freeze to cities that adopted the optional local exemptions in subsections (b) and (e).

The companion legislation pointed the same way. The same Legislature that proposed the amendment enacted Tax Code section 11.261, effective only if the voters approved the amendment. That statute ties the freeze to the school-district homestead exemption in Tax Code section 11.13(c), and does not suggest that any other exemption must be in place first. So the opinion concluded that the article VIII, section 1-b(h) limitation is available to entities that have not previously established one of the optional homestead exemptions in section 1-b, and a city can adopt it either by official action of the city council or by an election called on a voter petition.

Currency note

This opinion was issued in 2005. 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.

Who this opinion affected (as of 2005)

Cities, counties, and junior college districts: The opinion told them they could adopt the article VIII, section 1-b(h) tax freeze for disabled and over-65 homeowners even if they had never enacted their own residence homestead exemption, and that they could do so by governing-body action or by a voter-petition election.

Disabled and over-65 homeowners: It confirmed that they could qualify for a local tax freeze through the homestead exemption they already received, without waiting for the city to create a separate exemption.

City attorneys and tax officials: It resolved the ambiguity that had concerned the City of Windcrest, reading subsection (h) as setting the terms of the freeze rather than restricting which entities could adopt it.

Lawyers advising on local property tax: It tied the constitutional freeze to the school-district exemption in Tax Code section 11.13(c) and the implementing statute, Tax Code section 11.261, and noted the opinion did not decide whether an exemption under some other subsection of section 1-b would qualify a residence for the freeze.

Common questions

Could a Texas city adopt the over-65 and disabled tax freeze without first granting its own homestead exemption?
Yes. The Attorney General concluded that article VIII, section 1-b(h) does not limit the freeze to entities that already created their own residence homestead exemption.

If the city has no exemption of its own, how do residents qualify?
Through the statewide school-district homestead exemption. Section 1-b and Tax Code section 11.13 give nearly every adult homeowner a school-district homestead exemption, with an extra amount for disabled and over-65 owners, and that qualifying exemption is enough to support the city's freeze.

What does the section 1-b(h) tax freeze actually do?
It caps the total amount of ad valorem taxes the county, city or town, or junior college district imposes on a disabled or over-65 person's residence homestead, so the tax does not increase while the property stays that person's (or a qualifying spouse's) homestead.

How does a city put the freeze in place?
By official action of the city council, or by an election the council calls after receiving a proper voter petition.

Did the opinion decide exactly which exemption qualifies a homeowner?
No. Because the school-district exemption under section 1-b(c) applies so generally, the opinion relied on it and did not decide whether a homestead exemption under one of the other subsections would also qualify a residence for the freeze.

Background and statutory framework

Article VIII, section 1-b of the Texas Constitution collects a series of residence homestead exemptions and limitations. Subsection (a) is a mandatory $3,000 exemption from state-purpose taxation; subsection (b) is an optional local exemption (at least $3,000) for disabled and over-65 homeowners, adopted by governing-body action or election; subsection (c) is a mandatory $15,000 school-tax exemption for adults, with authority for an added $10,000 for disabled and over-65 owners; subsection (d) freezes school taxes for those receiving the subsection (c) exemption; and subsection (e) lets a political subdivision exempt a percentage of homestead value. Subsection (h), added in 2003, lets a county, city or town, or junior college district freeze the total ad valorem taxes it imposes on the homestead of a disabled or over-65 person who receives a homestead exemption (Tex. Const. art. VIII, § 1-b, 1-b(a), 1-b(b), 1-b(c), 1-b(d), 1-b(e), 1-b(f), 1-b(g), 1-b(h)).

To read subsection (h), the opinion applied the usual rules of constitutional construction: give the provision the effect the legislators and voters intended, rely heavily on the literal text and plain language, and presume the constitution's words were carefully chosen and are used as generally understood (Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342, 344 (Tex. 2001); Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000); Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000)). Read that way, subsection (h) sets the terms of the freeze for a person who "receives a residence homestead exemption prescribed or authorized by this section," and "this section" is all of section 1-b. Because the general school-district exemption under subsection (c), implemented by Tax Code section 11.13(b)-(c), is available to most adult homeowners (with an added amount for disabled and over-65 owners), a city's residents can hold a qualifying exemption even where the city has granted none of its own (Tex. Tax Code Ann. § 11.13(b)-(c) (Vernon Supp. 2004-05)).

The opinion found that reading confirmed by the companion legislation the same Legislature passed. Tax Code section 11.261, effective only if voters adopted the amendment, ties the freeze to a county, municipality, or junior college district that has established a section 1-b(h) limitation and bases the frozen amount on the year the individual first qualified for the school-district exemption under Tax Code section 11.13(c). Nothing in the Tax Code suggests any other exemption must be in place before the section 1-b(h) limitation may be adopted (Tex. Tax Code Ann. § 11.261, 11.261(a), 11.261(b), 11.13(c) (Vernon Supp. 2004-05); Act of May 28, 2003, 78th Leg., R.S., ch. 396, §§ 1, 4, 2003 Tex. Gen. Laws 1642). So the limitation is available to entities that have not previously adopted one of the optional homestead exemptions in section 1-b.

Citations

Constitutional provisions:

• Tex. Const. art. VIII, § 1-b, 1-b(a), 1-b(b), 1-b(c), 1-b(d), 1-b(e), 1-b(f), 1-b(g), 1-b(h)

Statutes:

• Tex. Tax Code Ann. § 11.13(b)-(c), 11.13(c) (Vernon Supp. 2004-05)
• Tex. Tax Code Ann. § 11.261, 11.261(a), 11.261(b) (Vernon Supp. 2004-05)

Cases:

• Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342, 344 (Tex. 2001)
• Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000)
• Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000)

Session law:

• Act of May 28, 2003, 78th Leg., R.S., ch. 396, §§ 1, 4, 2003 Tex. Gen. Laws 1642 (codified as Tax Code § 11.261)

Other authorities:

• Tex. Att'y Gen. Op. Nos. GA-0222 (2004), GA-0244 (2004)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0363
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2005/ga0363.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

October 3, 2005

The Honorable Jeff Wentworth
Chair, Committee on Jurisprudence
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. GA-0363

Re: Whether a city that has not established a residence homestead exemption under article VIII, section 1-b of the Texas Constitution is authorized to establish the property tax limitation under article VIII, section 1-b(h) (RQ-0336-GA)

Dear Senator Wentworth:

You ask whether a city that has not established a residence homestead exemption under Texas Constitution article VIII, section 1-b may establish the property tax limitation allowed under section 1-b(h), either by city council action or by an election called upon receipt of a voter petition.[1]

Article VIII, section 1-b(h), adopted in 2003, authorizes "a county, a city or town, or a junior college district" to limit increases of the total amount of ad valorem taxes imposed on the homesteads of persons with disabilities or persons sixty-five years of age or older. TEX. CONST. art. VIII, § 1-b(h). The limitation is known colloquially as a "tax freeze." The enumerated entities may adopt such a tax limitation either by official action of the governing body or by an election called by the governing body upon receipt of a proper voter petition. Id.; see generally Tex. Att'y Gen. Op. Nos. GA-0222 (2004), GA-0244 (2004). You reference the experience of the City of Windcrest (the "City"). Request Letter, supra note 1, at 2. We are informed that the City has received a voter petition to conduct an election on whether to adopt an article VIII, section 1-b(h) tax limitation, but is concerned that the subsection may be construed as authorizing the tax limitation only for those entities that have established their own residence homestead tax exemption.[2]

Section 1-b contains a number of mandatory and optional tax exemptions and limitations other than the limitation in subsection (h). TEX. CONST. art. VIII, § 1-b. Subsection (a) is a mandatory exemption from state-purpose taxation of $3,000 of the assessed taxable value of the residence homesteads of all adults. Id. art. VIII, § 1-b(a). Subsection (b) authorizes an optional exemption, established either by governmental body action or by voter initiated election, from taxation by a county, city, town, school district, or other political subdivision of not less than $3,000 of the market value of residence homesteads of persons who are disabled or sixty-five years of age or older. Id. art. VIII, § 1-b(b).[3]

Subsection (c) provides a mandatory exemption of $15,000 of the market value of an adult's homestead from ad valorem taxation for general elementary and secondary public school purposes. Id. art. VIII, § 1-b(c). Additionally, subsection (c) authorizes the Legislature by general law to exempt an amount not to exceed $10,000 of the market value from such taxation of the residence homestead of persons who are disabled or sixty-five years of age or older. Id. For persons who receive a subsection (c) exemption, subsection (d) provides a mandatory tax freeze of the total amount of taxes that may be imposed for such school tax purposes. Id. art. VIII, § 1-b(d).[4]

Subsection (e) grants a political subdivision the discretion to exempt from ad valorem taxation a percentage of market value of the residence homestead of an adult. Id. art. VIII, § 1-b(e). Finally, subsection (h) provides in pertinent part:

The governing body of a county, a city or town, or a junior college district by official action may provide that if a person who is disabled or is sixty-five (65) years of age or older receives a residence homestead exemption prescribed or authorized by this section, the total amount of ad valorem taxes imposed on that homestead by the county, the city or town, or the junior college district may not be increased while it remains the residence homestead of that person or that person's spouse who is disabled or sixty-five (65) years of age or older and receives a residence homestead exemption on the homestead.

Id. art. VIII, § 1-b(h). You state that subsection (h) is not clear whether a city that has never adopted a homestead exemption may establish subsection (h)'s tax limitation. Request Letter, supra note 1, at 1-2.

To construe subsection (h), we must adhere to the rules of constitutional construction as articulated by the courts. We must attempt to give the constitutional provision the effect that the legislators and voters intended. Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342, 344 (Tex. 2001). We rely heavily on the provision's literal text and attempt to give effect to its plain language. Id.; Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000). We must presume "that the language of the Texas Constitution is carefully selected, [and must] construe its words as they are generally understood." Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000).

Subsection (h)'s plain language does not purport to restrict the counties, cities, towns, or junior college districts that may promulgate or adopt a subsection (h) tax limitation to only those entities that have previously established their own homestead residence tax exemptions. Rather, the subsection prescribes the terms of the limitation that such entities may establish, either by action of the governmental body or by voter initiative. TEX. CONST. art. VIII, § 1-b(h). Under subsection (h), such entities "may provide that if a person who is disabled or is sixty-five (65) years of age or older receives a residence homestead exemption prescribed or authorized by this section," then the total ad valorem taxes the entity imposes on the property may not increase while it remains the person's residence homestead. Id. (emphasis added). "This section" is section 1-b. Section 1-b prescribes or authorizes residence homestead exemptions in subsections (a), (b), (c), (e), and (f). For example, under article VIII, section 1-b(c), the legislature has enacted enabling legislation that exempts from school district taxation $15,000 of the appraised value of the homestead residence for most adults, plus an additional exemption of $10,000 for persons disabled or sixty-five years of age or older. TEX. TAX CODE ANN. § 11.13(b)-(c) (Vernon Supp. 2004-05). Thus, a city that has never adopted an exemption from its own taxes nevertheless could adopt an effective tax limitation available to its citizens who are disabled or sixty-five years of age or older who receive a residence homestead exemption from school district taxes.[5] We see no textual basis for restricting the availability of the tax limitation in subsection (h) to only persons residing in entities that have established the optional exemptions in subsections (b) and (e).

This construction is confirmed by the companion legislation promulgated by the same legislature that proposed article VIII, section 1-b(h) to the voters. The Seventy-eighth Legislature enacted Tax Code section 11.261, effective only if the voters adopted the constitutional amendment now embodied in article VIII, section 1-b(h). Act of May 28, 2003, 78th Leg., R.S., ch. 396, §§ 1, 4, 2003 Tex. Gen. Laws 1642, 1642-46 (codified as TEX. TAX CODE ANN. § 11.261). Tax Code section 11.261 "applies only to a county, municipality, or junior college district that has established a limitation on the total amount of taxes that [the entity imposes] on the residence homestead of a disabled individual or an individual 65 years of age or older under Section 1-b(h), Article VIII, Texas Constitution." TEX. TAX CODE ANN. § 11.261(a) (Vernon Supp. 2004-05). For implementing the limitation, section 11.261(b) of the Tax Code provides:

The county, municipality, or junior college district may not increase the total annual amount of ad valorem taxes the [entity] imposes on the residence homestead of a disabled individual or an individual 65 years of age or older above the amount . . . imposed on the residence homestead in the first tax year . . . in which the individual qualified that residence homestead for the exemption provided by [Tax Code] Section 11.13(c) for a disabled individual or an individual 65 years of age or older.

TEX. TAX CODE ANN. § 11.261(b) (Vernon Supp. 2004-05). Section 11.13(c) is a tax exemption from school district taxation of a portion of the value of the homestead residence of an adult who is disabled or sixty-five years of age or older. Id. § 11.13(c) (Vernon 2004-05). In other words, the constitutional limitation in article VIII, section 1-b(h) on taxes imposed by a county, municipality, or junior college district may be based on the school district tax exemption in Tax Code section 11.13(c) for persons disabled or sixty-five years of age or older. The Tax Code does not suggest that any other tax exemption is required before the article VIII, section 1-b(h) limitation may be adopted. Consequently, we conclude that the limitation in article VIII, section 1-b(h) is available to entities that have not previously established one of the optional homestead residence exemptions in section 1-b.

SUMMARY

A city is authorized to establish the property tax limitation under article VIII, section 1-b(h) of the Texas Constitution even if it has not previously enacted a residence homestead exemption under article VIII, section 1-b of the Texas Constitution.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

BARRY R. McBEE
First Assistant Attorney General

NANCY S. FULLER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from Honorable Jeff Wentworth, Chair, Senate Committee on Jurisprudence, to Honorable Greg Abbott, Texas Attorney General (Apr. 4, 2005) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].

[2] Letter from Honorable Michael S. Brenan, City Attorney, City of Windcrest, to Nancy S. Fuller, Chair, Opinion Committee, Office of the Attorney General (May 2, 2005) (on file with Opinion Committee).

[3] Additionally, subsection (f) permits a surviving spouse to claim an exemption if the deceased spouse had received the subsection (b) exemption for the homestead residence of a person sixty-five years of age or older. TEX. CONST. art. VIII, § 1-b(f).

[4] Subsection (g) provides for transfer of a subsection (d) limitation on increases of the total amount of taxes for public elementary and secondary school tax purposes for a person who qualifies for the limitation and subsequently establishes a new residential homestead.

[5] Because of the general applicability of the exemption under article VIII, section 1-b(c), we need not decide whether a residence homestead exemption under one of the other subsections, received by a person who is disabled or sixty-five years of age or older, would qualify that residence for the tax limitation under article VIII, section 1-b(h). See TEX. CONST. art. VIII, § 1-b(a)-(c), (e)-(f), (h).