Can a Texas home-rule city require a vote before raising property taxes?

Plain-English summary

Henderson County Auditor Ann Marie Lee asked the Attorney General whether a home-rule city's charter could require a vote of the people before the city imposes a property (ad valorem) tax. The question arose from Gun Barrel City, whose charter authorizes the city to impose lawful municipal taxes but adds that no ad valorem tax may be imposed "without the approval of the electorate." The concern was that this voter-approval requirement might conflict with, or be preempted by, chapter 26 of the Tax Code, particularly section 26.05.

The AG laid out the ground rules for home-rule cities. Under article XI, section 5 of the Texas Constitution, a home-rule city has full power of self-government, but that power yields to the Legislature. A city charter cannot conflict with state law or regulate a field that a state statute preempts. The bar for preemption is high: the Legislature must speak with "unmistakable clarity" to oust a home-rule city from a subject normally within its authority. And courts try to avoid finding a conflict at all; if a charter provision and a statute can both be given effect under a reasonable reading, that is the reading a court will adopt.

Applying those rules, the AG looked at section 26.05, which spells out how a taxing unit's governing body adopts a tax rate and which never mentions voter approval. If the charter were read to swap an election in for one of chapter 26's required steps, that would conflict with the statute. But the charter does not have to be read that way. It can be read as adding a voter-approval requirement on top of the state procedures, not in place of them. On that reading, the city council could go through the chapter 26 process to set a tax rate and then submit the result to the voters as the charter requires, giving full effect to both. Because that harmonizing reading leaves the charter and the Tax Code both fully in force, the AG said it is the reading a court would most likely choose.

The AG added a broader point. Section 1.02 of the Tax Code does say that title 1 of the code (which includes chapter 26) supersedes municipal charter provisions "relating to property taxation," but the same section preserves voters' right to use municipal initiative and referendum to set limits on tax increases. That carve-out signaled a legislative intent not to wipe out municipal tax-increase elections, and chapter 26 as a whole showed no intent to bar a city from layering on a voter-approval requirement. The AG declined to resolve a further question the auditor raised, whether the charter and chapter 26 might require two separate elections, explaining that the city council should decide in the first instance how to construe and implement its own charter consistently with state law.

Currency note

This opinion was issued in 2014. 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

County Auditor Lee (as the opinion described it): The opinion concluded that a court would likely give effect to both a home-rule charter's voter-approval requirement and chapter 26 of the Tax Code, and would likely conclude that chapter 26 does not conflict with or preempt such a charter provision. It declined to decide whether two separate elections would be required, leaving that to the city council in the first instance.

Gun Barrel City and other home-rule cities (as the opinion described it): The opinion described a home-rule charter as able to require voter approval as an additional step before imposing ad valorem taxes, so long as the charter is read to supplement rather than replace the chapter 26 rate-adoption procedures. It described section 1.02 of the Tax Code as preserving voters' initiative and referendum rights on tax-increase limits.

Taxpayers and voters (as the opinion described it): The opinion described the charter's election requirement as a valid additional protection, so it treated the voters' role in approving an ad valorem tax as consistent with state law under the harmonizing construction it expected a court to adopt.

Common questions

Can a Texas home-rule city make voters approve a property tax?
The AG concluded a court would likely uphold such a charter requirement. Read as an additional step on top of the Tax Code's rate-adoption process rather than a substitute for it, the charter provision and chapter 26 can both be given full effect.

Does the Tax Code preempt a city charter on property taxes?
Not necessarily. The AG explained that preemption requires the Legislature to act with "unmistakable clarity," and that courts avoid finding a conflict if a reasonable reading leaves both the charter and the statute in effect.

What does section 26.05 of the Tax Code actually require?
The AG described section 26.05 as setting procedures for a taxing unit's governing body to adopt a tax rate, with no mention of voter approval. Because it does not address an election, a charter can add one without contradicting the statute.

Does the charter's voter requirement replace the Tax Code steps?
No, and the AG said reading it that way would create a conflict. Instead the charter can require voter approval in addition to the chapter 26 procedures, so the city council follows both.

Would the city have to hold two separate elections?
The AG did not answer that. The office expressed no opinion and said the city council should decide in the first instance how to construe and implement the charter consistently with chapter 26 and other state law.

Background and statutory framework

Home-rule taxing authority comes from article XI, section 5(a), which lets home-rule cities levy taxes authorized by law or by their charters (Tex. Const. art. XI, § 5(a)), and from the Legislature's grant allowing such cities to levy property taxes for lawful purposes (Tex. Tax Code Ann. § 302.001(c) (West 2008)). Gun Barrel City adopted its charter under article XI, section 5, and the charter both grants broad taxing power and conditions ad valorem taxes on electorate approval (Gun Barrel, Tex., Charter art. VII, § 7.19(1) (1996)).

The AG framed the analysis around the limits on home-rule power (Tex. Const. art. XI, § 5; S. Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676, 678 (Tex. 2013)) and the preemption standard requiring "unmistakable clarity" and a preference for harmonizing constructions (In re Sanchez, 81 S.W.3d 794, 796 (Tex. 2002), quoting Dallas Merch.'s & Concessionaire's Ass'n v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993)). It compared the charter to section 26.05, which prescribes rate-adoption procedures without an election (Tex. Tax Code Ann. § 26.05 (West Supp. 2013)), and reasoned that reading the charter as a substitute would conflict (Tex. Att'y Gen. Op. No. GA-1031 (2013) at 3), while reading it as an additional requirement would not (City of Richardson v. Responsible Dog Owners of Tex., 794 S.W.2d 17, 19 (Tex. 1990)).

The AG then pointed to section 1.02, which supersedes municipal charter provisions relating to property taxation but preserves voters' initiative and referendum rights to limit tax increases (Tex. Tax Code Ann. § 1.02 (West 2008)), and found nothing in chapter 26 as a whole barring an added voter-approval requirement (id. §§ 26.01-.16 (West 2008 & Supp. 2013)). It declined to address the possibility of two elections, deferring to the city council's authority to construe its own charter (Tex. Att'y Gen. Op. No. GA-0449 (2006) at 1).

Citations

Constitutional, statutory, and charter provisions:

• Tex. Const. art. XI, § 5(a) (home-rule taxing authority)
• Tex. Const. art. XI, § 5 (home-rule self-government subject to legislative limitation)
• Tex. Tax Code Ann. § 302.001(c) (West 2008) (home-rule cities may levy property taxes)
• Tex. Tax Code Ann. § 26.05 (West Supp. 2013) (tax-rate adoption procedures)
• Tex. Tax Code Ann. § 1.02 (West 2008) (title 1 supersedes charter provisions; preserves initiative/referendum)
• Tex. Tax Code Ann. §§ 26.01-.16 (West 2008 & Supp. 2013) (chapter 26 rate-adoption provisions)
• Gun Barrel, Tex., Charter art. VII, § 7.19(1) (1996) (voter-approval requirement)

Cases:

• S. Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676, 678 (Tex. 2013)
• In re Sanchez, 81 S.W.3d 794, 796 (Tex. 2002)
• Dallas Merch.'s & Concessionaire's Ass'n v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993)
• City of Richardson v. Responsible Dog Owners of Tex., 794 S.W.2d 17, 19 (Tex. 1990)

Prior Attorney General opinions:

• Tex. Att'y Gen. Op. No. GA-1031 (2013)
• Tex. Att'y Gen. Op. No. GA-0449 (2006)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-1073
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2014/ga1073.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

August 4, 2014

Ms. Ann Marie Lee, CPA Opinion No. GA-1073
Henderson County Auditor
125 North Prairieville Street, Room 202 Re: Whether a home-rule municipal charter
Athens, Texas 75751 provision may require voter approval to
impose an ad valorem tax (RQ-1183-GA)

Dear Ms. Lee:

You ask whether a home-rule municipal charter provision may require voter approval to impose an ad valorem tax.[1] You inform us that Gun Barrel City (the "City") adopted a home-rule charter that authorizes the City to impose lawful municipal taxes but provides that "[n]o ad valorem or additional sales tax or assessments may be imposed ... without the approval of the electorate." Request Letter at 1 (emphasis omitted) (further explaining that the City adopted the charter under article XI, section 5 of the Texas Constitution, the municipal home-rule provision); GUN BARREL, TEX., CHARTER art. VII, § 7.19(1) (1996). You inquire as to the validity of this charter provision. Request Letter at 1-2.

Article XI, section 5(a) of the Texas Constitution authorizes home-rule municipalities to "levy, assess and collect such taxes as may be authorized by law or by their charters." TEX. CONST. art. XI, § 5(a). The Legislature has authorized home-rule municipalities to "levy special or general property taxes for lawful purposes." TEX. TAX CODE ANN. § 302.001(c) (West 2008). You state that the charter grants the City "the power to levy, assess and collect taxes of every character and type for any municipal purpose not prohibited by the Constitution and laws of the State of Texas." Request Letter at 1; GUN BARREL, TEX., CHARTER art. VII, § 7.19(1) (1996). From your statement of the facts, we will assume that the City possesses the predicate authority necessary to impose an ad valorem tax. The charter provision about which you ask limits that authority by requiring voter approval before it may be exercised. Request Letter at 1. You are concerned that this provision may conflict with or be preempted by chapter 26 of the Tax Code, specifically section 26.05. Id. at 3.

A municipality that has adopted a home-rule charter possesses the full power of self-governance, subject to legislative limitation. TEX. CONST. art. XI, § 5; S. Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676, 678 (Tex. 2013). A city charter provision may not conflict with state law, nor may it regulate a subject matter that a state statute preempts. In re Sanchez, 81 S.W.3d 794, 796 (Tex. 2002). To preempt subject matter normally within a home-rule municipality's authority, however, the Legislature must do so with "unmistakable clarity." Id. (quoting Dallas Merch.'s & Concessionaire's Ass'n v. City of Dallas, 852 S.W.2d 489, 491 (Tex. 1993)). Moreover, courts will not hold that a municipal charter conflicts with or is preempted by a state law "if they can reach a reasonable construction leaving both in effect." In re Sanchez, 81 S.W.3d at 796.

Section 26.05 of the Tax Code provides procedures for the governing body of a tax unit to adopt a tax rate and does not mention voter approval as part of the process. See TEX. TAX CODE ANN. § 26.05 (West Supp. 2013). The City's charter requires voter approval before any tax may be imposed. Interpreting the charter as substituting an election for any of the procedures in chapter 26 would necessarily conflict with the chapter. See generally Tex. Att'y Gen. Op. No. GA-1031 (2013) at 3 (determining that a charter provision is unenforceable to the extent it is inconsistent with the governing body's statutory authority). However, the charter can be read as requiring voter approval in addition to, not in replacement of, any state statutory requirements, so that the charter does not conflict with chapter 26. See City of Richardson v. Responsible Dog Owners of Tex., 794 S.W.2d 17, 19 (Tex. 1990) (holding that "the mere fact that the legislature has enacted a law addressing a subject does not mean that the subject matter is completely preempted").[2] The City Council could adopt a tax rate under chapter 26 of the Tax Code subject to voter approval as required by the charter, giving full effect to both the Tax Code and the charter. Because this interpretation leaves both the charter provision and chapter 26 in full effect, it is the interpretation most likely to be adopted by a court. See In re Sanchez, 81 S.W.3d at 796 (harmonizing home-rule city charter with the Election Code).

More broadly, section 1.02 of the Tax Code states that title 1 of the code, which includes chapter 26, supersedes municipal charter provisions and ordinances "relating to property taxation." TEX. TAX CODE ANN. § 1.02 (West 2008). Section 1.02 further explains, however, that "[n]othing in [title 1] invalidates or restricts the right of voters to utilize municipal-level initiative and referendum to set a ... limitation on [a] tax increase for that municipality." Id. Section 1.02 suggests a general legislative intent to limit the preclusive effect of state Tax Code requirements on municipal tax increase elections. Moreover, while chapter 26 prescribes procedures for adopting the taxing unit's ad valorem tax rate, the chapter as a whole does not reveal a legislative intent to preclude municipalities from requiring voter approval as an additional requirement before the tax may be implemented. See id. §§ 26.01-.16 (West 2008 & Supp. 2013).

A court would likely construe a city charter provision requiring voter approval of municipal ad valorem taxes in a manner that gives full effect to both the charter provision and chapter 26 of the Tax Code. Accordingly, a court would likely conclude that chapter 26 of the Tax Code does not conflict with or preempt such a city charter provision.

SUMMARY

A court would likely conclude that chapter 26 of the Tax Code does not conflict with or preempt a city charter provision that requires voter approval before municipal ad valorem taxes may be imposed.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

William A. Hill
Assistant Attorney General, Opinion Committee

[1] See Letter from Ms. Ann Marie Lee, CPA, Henderson County Auditor, to Honorable Greg Abbott, Attorney General of Texas at 1 (Feb. 4, 2014), https://www.oag.state.tx.us/opin/index_rq.shtml ("Request Letter").

[2] You state that the City's charter and chapter 26 of the Tax Code might be construed as requiring two elections, one to impose a tax rate and another for a rollback election. Request Letter at 5-6. We express no opinion about the issue because the City Council should decide in the first instance how the municipal charter provision may be construed and implemented consistently with chapter 26 and other state law. See Tex. Att'y Gen. Op. No. GA-0449 (2006) at 1 (explaining that this office refrains from construing city charter or ordinances "[i]n deference to municipal officials' authority to interpret their [own] charters and ordinances").