Does adopting one county tax rate above its rollback rate trigger a property tax rollback election in Texas?

Plain-English summary

Texas counties levy several separate property taxes, each dedicated to a specific purpose: a farm-to-market road and flood control fund, a cluster of funds that includes the general fund and the road and bridge fund, and a fund for further maintenance of public roads. Before a county sets its rates each year, the Tax Code makes it calculate and publish two benchmark numbers, an "effective tax rate" and a "rollback tax rate." The rollback rate is the ceiling a taxing unit can adopt without giving voters a chance to push it back down; if the county goes above that rollback rate, voters may petition for a rollback election.

The Williamson County Auditor asked a precise question about how that ceiling works when a county has several individual rates. Suppose the county published a rollback rate of $.27 for the general fund and $.03 for farm-to-market and flood control, a combined rollback rate of $.30. Could the county then adopt $.28 for the general fund and $.02 for farm-to-market and flood control, a total of $.30, without triggering the right to a rollback election, even though the general-fund rate ($.28) came in above its own rollback component ($.27)?

The Attorney General concluded the answer was yes. The Tax Code defines the "rollback tax rate for a county" as "the sum of the rollback tax rates calculated for each type of tax the county levies." Because the Legislature defined the term as a sum, the opinion reasoned, the comparison the statute calls for is the total of the adopted rates against the total of the rollback rates, not a fund-by-fund matchup. Had the Legislature wanted each individual adopted rate measured against its own rollback component, it could have said so, and the opinion presumed the Legislature chose its words deliberately. The rollback-election ballot language, which asks voters whether to reduce "the tax rate adopted for the current year" down to the calculated rollback rate, reinforced that reading, since that wording assumes a single adopted figure exceeded a single rollback figure.

The opinion grounded the result in its own prior work. Opinion JM-677 (1987), interpreting the predecessor statute, had reached the same conclusion: the eight percent increase that triggers a rollback election applies to the county's total rate, not to each component. The opinion also set aside Opinion GA-0775 (2010), which had reached a stricter, component-level result for school districts, because that opinion rested on different Tax Code provisions that apply only to school districts and not to counties.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

The Williamson County Auditor (as the opinion described it): The opinion answered the auditor's question directly. Under Tax Code chapter 26 as it stood, the trigger for a petition was the total adopted rate exceeding the combined rollback rate, so a county could exceed the rollback rate for one fund as long as the cumulative rate stayed at or below the combined rollback rate.

County commissioners and budget officers (as the opinion described it): The opinion treated the combined rollback rate as the figure that matters when setting individual fund rates, giving counties room to shift rate across funds without automatically inviting a rollback election, provided the total did not exceed the combined ceiling.

Taxpayers and voters (as the opinion described it): The opinion read the petition right in section 26.07 as keyed to the county's total adopted rate. It did not address any other limits on a county's authority to set the rate for a particular fund; it expressly assumed each individual rate was otherwise lawful.

Common questions

When can voters petition for a county property tax rollback election in Texas?
Under the law the opinion construed, the right to petition arose when the county's total adopted tax rate exceeded the combined rollback rate. The opinion said it was not automatically triggered just because the county set one particular fund's rate above the rollback rate calculated for that fund.

Can a county set one tax rate above its rollback component?
The opinion concluded yes, so long as the sum of all the county's adopted rates did not exceed the combined rollback rate. Its example: a county could adopt $.28 for the general fund (above the $.27 general-fund rollback component) while keeping the $.30 total at or below the combined $.30 rollback rate.

Why does the total matter instead of each individual fund?
Because the Tax Code defined a county's "rollback tax rate" as the sum of the rollback rates for each tax it levies. The opinion read that definition as the Legislature's deliberate choice to make the comparison sum-to-sum.

Doesn't an earlier opinion say school districts can't do this?
GA-0775 (2010) reached a component-level result, but the opinion explained that GA-0775 rested on Tax Code provisions that apply only to school districts, not counties, so it did not control the county question.

Background and statutory framework

The Texas Constitution authorizes counties to levy several individual property taxes dedicated to specific purposes. Tex. Const. art. VIII, §§ 1-a, 9. Chapter 26 of the Tax Code sets up the "truth in taxation" process. A county must calculate and publish an effective tax rate and a rollback tax rate, with an explanation of how each was figured. Tex. Tax Code Ann. § 26.04(a)-(e) (West 2008). If a county adopts a rate that exceeds the rollback tax rate, voters may petition for an election to reduce the adopted rate to the rollback rate. Id. § 26.07(a), (d).

The pivotal definition is in section 26.04(d): the "rollback tax rate for a county" is "the sum of the rollback tax rates calculated for each type of tax the county levies." The opinion paired that definition with the rules of statutory construction (Tex. Gov't Code Ann. § 311.021(3) (West 2005)) and a line of Texas Supreme Court cases on giving every word effect and avoiding absurd results: TGS-NOPEC Geophysical Co. v. Combs, City of Waco v. Kelley, In re M.N., Tex. Lottery Comm'n v. First State Bank of DeQueen, and Jose Carreras, M.D., P.A. v. Marroquin.

The opinion built on Opinion JM-677 (1987), which construed the predecessor of section 26.07 the same way, and distinguished Opinion GA-0775 (2010), a school-district opinion turning on section 26.08(a).

Citations

Cases:

• TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011)
• City of Waco v. Kelley, 309 S.W.3d 536, 542 (Tex. 2010)
• In re M.N., 262 S.W.3d 799, 802 (Tex. 2008)
• Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010)
• Jose Carreras, M.D., P.A. v. Marroquin, 339 S.W.3d 68, 73 (Tex. 2011)

Statutes:

• Tex. Const. art. VIII, §§ 1-a, 9
• Tex. Tax Code Ann. § 26.04(a)-(e) (West 2008)
• Tex. Tax Code Ann. § 26.04(d) (West 2008)
• Tex. Tax Code Ann. § 26.07(a) (West 2008)
• Tex. Tax Code Ann. § 26.07(d) (West 2008)
• Tex. Gov't Code Ann. § 311.021(3) (West 2005)

Prior Attorney General opinions referenced:

• Tex. Att'y Gen. Op. No. JM-677 (1987)
• Tex. Att'y Gen. Op. No. GA-0775 (2010)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0954
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2012/ga0954.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

June 26, 2012

Mr. David U. Flores Opinion No. GA-0954
Williamson County Auditor
Williamson County Courthouse Re: Calculation of a county's rollback tax rate
710 South Main Street, Suite 301 (RQ-1025-GA)
Georgetown, Texas 78626

Dear Mr. Flores:

You ask whether a county may "adopt a tax rate for a particular property tax that is above the calculated rollback tax rate[1] for that tax and not trigger the [right] to petition [for] a rollback election so long as the sum of all the county's adopted property tax rates [does] not exceed the combined rollback tax rate."[2]

The Texas Constitution generally authorizes counties to levy three individual property tax rates for funds dedicated to specific purposes: (1) the farm-to-market road/flood control fund; (2) the general fund, the permanent improvement fund, the road and bridge fund, and the jury fund; and (3) the fund for further maintenance of public roads. TEX. CONST. art. VIII, §§ 1-a, 9. Before adopting its property tax rates, a county must calculate and publish an effective tax rate and a rollback tax rate, including an explanation of how they were calculated.[3] See TEX. TAX CODE ANN. § 26.04(a)-(e) (West 2008). If the county "adopts a tax rate that exceeds the rollback tax rate calculated as provided by [chapter 26 of the Tax Code]," then voters may petition for a rollback election "to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate calculated as provided by [chapter 26]." Id. § 26.07(a).

You illustrate your question with the following example:

[I]f a county ... has calculated and published a rollback tax rate of $.27 for general fund purposes, and a rollback tax rate of $.03 for farm to market and flood control, for a total rollback tax rate of $.30, may it thereafter adopt a tax rate of $.28 for general fund purposes, and $.02 for farm to market and flood control, for a total tax rate of $.30 ... [?]

Request Letter at 2. Your question is whether the right to petition for a tax rollback election is triggered by the adoption of a total, cumulative rate that exceeds the total rollback rate, rather than by the adoption of any particular tax rate that exceeds its rollback counterpart.[4]

Our responsibility when construing a statute is to ascertain the Legislature's expressed intent. TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011). If the Legislature provides definitions for words it uses in a statute, then we use those definitions to construe the statute. City of Waco v. Kelley, 309 S.W.3d 536, 542 (Tex. 2010). The statutory term "rollback tax rate for a county" is specifically defined as "the sum of the rollback tax rates calculated for each type of tax the county levies." TEX. TAX CODE ANN. § 26.04(d) (West 2008) (emphasis added). Given the clear statutory definition of this term, the relevant inquiry is whether the sum total of the adopted tax rates exceeds the sum total of the rollback tax rates. Had the Legislature intended each individual adopted rate to be compared to each individual rollback rate, it would not have defined the term "rollback tax rate for a county" in this way. We presume that the Legislature chose its words deliberately. See In re M.N., 262 S.W.3d 799, 802 (Tex. 2008) (when construing a statute, the court presumes that "the Legislature included each word in the statute for a purpose ... and that words not included were purposefully omitted"). See also TEX. GOV'T CODE ANN. § 311.021(3) (West 2005).

A reference in section 26.07(a) to a rollback election also supports the conclusion that the event triggering the right to petition for a tax rollback election is the adoption of a total, cumulative rate that exceeds the total rollback rate. In a rollback election, voters determine whether to "reduce the tax rate adopted for the current year to the rollback tax rate calculated as provided by [chapter 26]." TEX. TAX CODE ANN. § 26.07(a), (d) (West 2008) (emphasis added).[5] A statute giving a voter the option of reducing the adopted rate to the rollback rate is premised on the assumption that the adopted rate is higher than the rollback rate, suggesting that the term "adopted rate" must refer to a cumulative quantity and not an individual component of the whole. See Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex. 2010) (the court "presume[s] the Legislature selected language in a statute with care and that every word or phrase was used with a purpose in mind"). See also Jose Carreras, M.D., P.A. v. Marroquin, 339 S.W.3d 68, 73 (Tex. 2011) ("Statutes are interpreted to avoid an absurd result.").

This office has previously opined on a similar question involving the statutory predecessor to Tax Code section 26.07.[6] Attorney General Opinion JM-677 (1987) considered whether an increase in either the general fund, the permanent improvement fund, the road and bridge fund, or the jury fund component of the tax rate that exceeded the effective tax rate for that fund by eight percent or more would trigger the tax rate rollback election provision. Tex. Att'y Gen. Op. No. JM-677 (1987). Citing multiple references in chapter 26 to the county's adopted rate as "the tax rate" and "a tax rate," the opinion concluded that the clear terms of the statute dictated that the eight percent tax rate increase triggering the right to petition for a tax rate rollback election applied to the county's effective rate, not to the effective rate of each component of a county's rate. Id. at 2. As the opinion explained, "[a] reading of chapter 26, as a whole, indicates that the tax rate rollback election provisions of section 26.07 may be invoked only in an instance in which the total tax rate adopted exceeds the total effective tax rate by eight percent or more. If the legislature had intended that a county's component rates individually be limited to the three percent-eight percent rate increase limitations, it could have easily so provided. But it did not." Id. at 4. Although chapter 26 has been amended since JM-677 was issued, the opinion's reasoning applies with equal force to the current version of chapter 26.

In sum, chapter 26 of the Tax Code authorizes a petition for a rollback election when the sum of a county's individually adopted tax rates exceeds the combined rollback rate, but under chapter 26's plain terms, the right to petition for a rollback election is not automatically triggered when a county adopts a rate for a particular tax that is above the rollback rate for that particular tax.[7]

SUMMARY

Chapter 26 of the Tax Code authorizes a petition for a rollback election when the sum of a county's individually adopted tax rates exceeds the combined rollback rate, but under chapter 26's plain terms, the right to petition for a rollback election is not automatically triggered when a county adopts a rate for a particular tax that is above the rollback rate for that particular tax.

Very truly yours,

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Becky P. Casares
Assistant Attorney General, Opinion Committee

[1] Each tax year, a local taxing unit examines its operating budget in relation to the total taxable value of properties located in the taxing unit's jurisdiction in preparation for producing a property tax levy sufficient to meet the unit's budgeted revenue needs. The procedures used to determine tax rates depend on two benchmark rates known as the effective tax rate and the rollback tax rate. The effective tax rate is the rate that would provide the taxing unit with approximately the same amount of revenue it had the year before on properties taxed in both years. The rollback rate, which is the maximum rate allowed by law without a voter approval process, is the rate that would provide the taxing unit approximately the same amount of revenue it spent in the previous year for day-to-day operations plus an extra eight percent cushion, and sufficient funds to pay its debts in the coming year. See generally TEX. COMPTROLLER OF PUB. ACCOUNTS, Truth in Taxation for Taxing Units Other Than School Districts (July 2011).

[2] Letter from Mr. David U. Flores, Williamson Cnty. Auditor, to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (Dec. 5, 2011), http://www.texasattorneygeneral.gov/opin ("Request Letter").

[3] See TEX. COMPTROLLER OF PUB. ACCOUNTS, Form 50-211 (Rev. 05-06/8), Notice of Effective Tax Rate (for use by counties); Truth in Taxation for Taxing Units Other Than School Districts at 8 (July 2011).

[4] We assume for purposes of this opinion that a county's adoption of any particular tax rate is otherwise authorized and consistent with applicable law. You do not ask about, and we do not address, other legal limitations on a county's authority to set tax rates.

[5] "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 adopted) to (the rollback tax rate calculated as provided by this chapter).'" TEX. TAX CODE ANN. § 26.07(d) (West 2008) (emphasis added).

[6] The previous language of Tax Code section 26.07 stated: "(a) If the governing body of a taxing unit other than a school district adopts a tax rate that exceeds the rate calculated as provided by Section 26.04 of this code 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 to reduce the tax rate adopted for the current year to a rate that exceeds the rate calculated as provided by Section 26.04 of this code by only eight percent." Act of Aug. 10, 1981, 67th Leg., 1st C.S., ch. 13, § 119, 1981 Tex. Gen. Laws 117, 165.

[7] You refer us to Attorney General Opinion GA-0775 (2010), in which we concluded that a school district may not increase the adopted maintenance and operation ("M&O") tax rate above the district's rollback M&O tax rate component without triggering a rollback election pursuant to section 26.08(a) of the Tax Code. We note that the analysis in GA-0775 is based on different Tax Code provisions applicable only to school districts and not counties. Tex. Att'y Gen. Op. No. GA-0775 (2010) at 1. Thus, GA-0775 is not applicable to your inquiry.