Do a Texas county's road bonds and a county road district's bonds count against the same debt limit?

Texas AG Opinion JM-568: County Road Bonds

Plain-English summary

The chairman of the House Transportation Committee asked how two kinds of road bonds interact under article III, section 52 of the Texas Constitution: county road bonds issued under subsection (c) and county road district bonds issued under subsection (b). Specifically, does outstanding debt under one subsection eat into the borrowing capacity available under the other? The AG said yes, both draw on the same limit. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Section 52 caps the debt that can be charged against real property at one-fourth of its assessed value. A 1912 Supreme Court case, Simmons v. Lightfoot, held that this limit is an aggregate ceiling on all the overlapping districts that can tax the same property, not a separate quarter for each district or purpose. When subsection (c) was added in 1970, a brief argued it let a county borrow an additional one-fourth on top of subsection (b), so property could be encumbered up to one-half of its value. The AG rejected that. The 1970 amendment's history, its ballot caption, and commentary all show the change was only to let county road bonds pass on a simple majority instead of a two-thirds vote. It did not double the borrowing capacity. So bonds under subsection (b) and subsection (c) limit each other. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Currency note

This opinion was issued in 1986. 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

What is the actual debt limit here?

One-fourth of the assessed value of the real property. Under article III, section 52, a county or a district can issue bonds up to that fraction of the value of the property that will be taxed to repay them. The key point of JM-568 is that this quarter is a shared, aggregate ceiling, not a fresh allowance for each overlapping entity. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

If a county road district has already issued bonds, can the county still issue its own road bonds?

Only up to what is left under the shared one-fourth limit. The AG advised that outstanding road district bonds under subsection (b) limit or affect how much a county can issue under subsection (c), and vice versa. If the district has used up the capacity of the property, the county cannot add more until some of that debt is retired. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Didn't adding subsection (c) in 1970 give counties a new, separate borrowing power?

No. The AG found the 1970 amendment did just one thing: it let a county issue road bonds on a majority vote of property-taxpaying electors instead of the two-thirds vote subsection (b) required. The ballot proposition and the legislative caption both describe only that change, so the amendment did not create a second one-fourth of capacity. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Why read it that way when the text says "notwithstanding" subsection (b)?

Because the AG looked to the intent of the framers and voters, and found no sign they meant to double their property's potential liability. The opinion echoed Simmons v. Lightfoot in reasoning that if the drafters had wanted to authorize an aggregate debt of up to one-half of assessed value, they would have said so. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Background and statutory framework

Article III, section 52 was adopted in 1876 and amended in 1904, 1970, and 1978. Subsection (a) originally barred lending public credit; the 1904 amendment added subsection (b), letting counties and districts issue bonds up to one-fourth of assessed value, on a two-thirds vote, for river improvement, water projects, and roads. The 1970 amendment subdivided the section and added subsection (c) for county road bonds on a majority vote; subsection (d) followed in 1978. The AG traced this history through Vernon's Annotated Constitution. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

The controlling precedent is Simmons v. Lightfoot, which construed the one-fourth limit as an aggregate cap on the joint and separate debt of all the section 52 districts covering the same property, and warned that reading it otherwise would let overlapping districts pile debt above the property's value. The AG also cited San Antonio & A.P. Railway Co. v. State, Munson v. Looney, Collingsworth County v. Allred, and Henderson County v. Allred, along with a 1939 opinion. Because Texas courts had not yet construed subsection (c), the AG relied on that framework plus the 1970 amendment's ballot caption and commentary (including a law review article by Morrow and Braden's treatise) to conclude the amendment changed only the vote threshold. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Citations and references

The opinion cited the following authorities. Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Constitutional provisions:

• Tex. Const. art. III, § 52 (including subsections (a), (b), (c), and (d))
• Tex. Const. art. III, § 52e

Cases:

• Simmons v. Lightfoot, 146 S.W. 871 (Tex. 1912)
• San Antonio & A.P. Railway Co. v. State, 95 S.W.2d 680 (Tex. 1936)
• Munson v. Looney, 172 S.W. 1102 (Tex. 1915)
• Collingsworth County v. Allred, 40 S.W.2d 13 (Tex. 1931)
• Henderson County v. Allred, 40 S.W.2d 17 (Tex. 1931)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0568
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1986/jm0568.pdf

Original opinion text

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

October 23, 1986

Honorable David H. Cain
Chairman
Committee on Transportation
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769

Opinion No. JM-568

Re: Construction of subsection (c) of article III, section 52, of the Texas Constitution relating to county road bonds

Dear Representative Cain:

As chairman of the Committee on Transportation for the Texas House of Representatives you have requested the opinion of this office on two questions:

1. Does the existence of outstanding road bonds of a county issued under article III, section 52(c), of the Texas Constitution limit or otherwise affect the amount of bonds that a county road district located in that county may issue under article III, section 52(b), of the Texas Constitution?

2. Does the existence of outstanding bonds of a county road district issued under article III, section 52(b), of the Texas Constitution limit or otherwise affect the amount of road bonds that the county in which such road district is located may issue under article III, section 52(c), of the Texas Constitution?

Section 52 of article III of the Texas Constitution has been amended three times since its adoption in 1876: in 1904, 1970, and 1978. Acts 1903, 28th Leg., R.S., § 2, at 247; Acts 1969, 61st Leg., R.S., § 1, at 3236; Acts 1977, 65th Leg., R.S., § 1, at 3374. It now reads:

Sec. 52. (a) Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or other political corporation or subdivision of the State to lend its credit or to grant public money or thing of value in aid of, or to any individual, association or corporation whatsoever, or to become a stockholder in such corporation, association or company.

(b) Under Legislative provision, any county, any political subdivision of a county, any number of adjoining counties, or any political subdivision of the State, or any defined district now or hereafter to be described and defined within the State of Texas, and which may or may not include, towns, villages or municipal corporations, upon a vote of two-thirds majority of the resident property taxpayers voting thereon who are qualified electors of such district or territory to be affected thereby, in addition to all other debts, may issue bonds or otherwise lend its credit in any amount not to exceed one-fourth of the assessed valuation of the real property of such district or territory, except that the total bonded indebtedness of any city or town shall never exceed the limits imposed by other provisions of the Constitution, and levy and collect taxes to pay the interest thereon and provide a sinking fund for the redemption thereof, as the Legislature may authorize, and in such manner as it may authorize the same, for the following purposes to wit:

(1) The improvement of rivers, creeks, and streams to prevent overflows, and to permit of navigation thereof, or irrigation thereof, or in aid of such purposes.

(2) The construction and maintenance of pools, lakes, reservoirs, dams, canals and waterways for the purposes of irrigation, drainage or navigation, or in aid thereof.

(3) The construction, maintenance and operation of macadamized, graveled or paved roads and turnpikes, or in aid thereof.

(c) Notwithstanding the provisions of Subsection (b) of this section, bonds may be issued by any county in an amount not to exceed one-fourth of the assessed valuation of the real property in the county, for the construction, maintenance, and operation of macadamized, graveled, or paved roads and turnpikes, or in aid thereof, upon a vote of a majority of the resident property taxpayers voting thereon who are qualified electors of the county, and without the necessity of further or amendatory legislation. The county may levy and collect taxes to pay the interest on the bonds as it becomes due and to provide a sinking fund for redemption of the bonds.

(d) Any defined district created under this section that is authorized to issue bonds or otherwise lend its credit for the purposes stated in Subdivisions (1) and (2) of Subsection (b) of this section may engage in fire-fighting activities and may issue bonds or otherwise lend its credit for fire-fighting purposes as provided by law and this constitution. (Emphasis added).

Tex. Const. art. III, § 52.

Originally, section 52 contained only the unemphasized language set out in subsection (a) above. Later, the substance of subsection (b) was added as a proviso in 1904. In 1970, the existing section was subdivided and the language of subsection (c) was added. Subsection (d) was added in 1978. [See Historical Note, 1A Vernon's Annotated Constitution of the State of Texas 636 (1984).]

The 1904 subsection (b) provision that counties or districts could, upon a proper vote of the people, "in addition to all other debts," issue bonds "in any amount not to exceed one-fourth of the assessed valuation of the real property of such district or territory" was an early source of controversy. In 1912, it was construed by the Texas Supreme Court in Simmons v. Lightfoot, 146 S.W. 871 (Tex. 1912), to mean that the joint and separate authority of the governmental units named by article III, section 52 to create debts against taxable property they embrace jointly "is limited by the Constitution to the aggregate amount of one-fourth of the assessed value of such property." 146 S.W. at 873. (Emphasis added).

Thus, according to the Simmons case, if either the county or a road district, for example, has issued bonds in an amount equalling one-fourth of the assessed value of the taxable property in the road district, neither the county or the road district (nor any other debt-creating district) can issue bonds under article III, section 52 encumbering that property until a portion of the bonding capacity of the property has been restored by the retirement of outstanding obligations.

Noting that the creation of different districts for five distinct purposes was possible under article III, section 52, the Simmons court said:

Under the construction contended for by relators, it would be possible for five districts embracing the same territory and formed for different purposes to create an indebtedness against the real property of such districts one-fourth greater than the assessed value of such real property.

. . . .

If it was the design and purpose of those who framed the section of the Constitution to authorize the creation of a debt not to exceed one-fourth of the assessed value of the real property situated in each of such districts for each of the said purposes, it should have been so written. Since it has not been so written, it is not within the power of this court to interpolate such a meaning.

146 S.W. at 873. See also San Antonio & A.P. Railway Co. v. State, 95 S.W.2d 680 (Tex. 1936); Munson v. Looney, 172 S.W. 1102 (Tex. 1915); Attorney General Opinion O-486 (1939). Cf. Collingsworth County v. Allred, 40 S.W.2d 13 (Tex. 1931); Henderson County v. Allred, 40 S.W.2d 17 (Tex. 1931). That is where the law stood at the time subsection (c) was added to article III, section 52 in 1970.

Subsection (c) begins, "Notwithstanding the provisions of subsection (b) of this section, bonds may be issued. . . ." (Emphasis added). A brief submitted with your request suggests this language allows counties to disregard the "one-fourth of the assessed value" limitation of subsection (b) and to encumber property in the county for an additional road bond debt in the amount of one-fourth of the assessed value of the property. In other words, the brief argues that property in a county can now be encumbered for article III, section 52 purposes in the aggregate amount of one-half of its assessed value [one-fourth under subsection (b), and one-fourth under subsection (c)].

We do not believe the addition of subsection (c) was intended to have that effect. In our opinion, subsection (c) was added to the constitution merely to remove the requirement that county road bonds secure the approval of two-thirds of the electorate rather than of a simple majority.

The 1970 amendment was proposed by House Joint Resolution No. 28 in the Sixty-first Legislature, which carried the following caption:

Proposing an amendment to section 52, article III, Constitution of the State of Texas, to authorize any county, on the vote of a majority of qualified property taxpaying electors, to issue road bonds in an amount not to exceed one-fourth of the assessed valuation of the real property in the county.

The resolution dictated that the proposition be presented on the ballot as a vote for or against:

The constitutional amendment authorizing any county, on the vote of a majority of its qualified property taxpaying electors, to issue road bonds in an amount not to exceed one-fourth of the assessed valuation of the real property in the county.

Acts 1969, 61st Leg., R.S., at 3236.

One commentator has professed uncertainty about the meaning of subsection (c), as added in 1970. See 1 Braden, The Constitution of the State of Texas: An Annotated and Comparative Analysis, 260 (1977). But others have expressed no doubt:

Article III, section 52 of the constitution was last amended as the result of an election held in November 1970. Again we have an illustration of our propensity to attack problems on the fringe without going to the basic problem. As the result of an election held in 1968, Dallas County had been given authority to issue bonds for road purposes upon a majority vote (rather than two-thirds vote) of the resident qualified property taxpaying electors, and this power was given to all counties by the 1970 amendment to article III, section 52. The amendment to article III, section 52 provides no other change. . . .

Morrow, Financing of Capital Improvements by Texas Counties and Cities, 25 Sw. L.J. 373, 391, 392 (1971). Cf. Tex. Const. art. III, § 52e.

Texas courts have not yet construed subsection (c). The paramount task is to ascertain the intent of its framers and the people who adopted it. See 12 Tex. Jur. 3d, Constitutional Law § 24 (1981). Our examination convinces us that no change was contemplated other than a change in the relative size of the vote necessary to authorize the issuance of county road bonds, and that the voters did not intend to increase twofold the potential liability of their property for article III, section 52 debt purposes. To paraphrase the language of the Texas Supreme Court in Simmons v. Lightfoot, supra, if it was the design and purpose of those who framed subsection (c) to authorize the creation of an aggregate debt not to exceed one-half of the assessed value of the real property situated in the county, it should have been so written.

In answer to your questions, we advise that the existence of outstanding county road bonds issued under article III, section 52(c), of the Texas Constitution will limit or affect the amount of bonds that a county road district located in that county may issue under article III, section 52(b) thereof. We also advise that the existence of bonds issued by a road district pursuant to section 52(b) will limit or affect the amount of road bonds that a county may issue pursuant to section 52(c).

SUMMARY

The existence of outstanding road bonds of a county issued under subsection (c) of article III, section 52, of the Texas Constitution will limit or affect the amount of bonds that a county road district may issue under subsection (b) thereof, and the existence of bonds issued by a road district pursuant to subsection (b) will limit or affect the amount of road bonds a county may issue pursuant to subsection (c).

Very truly yours,

Jim Mattox
Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Bruce Youngblood
Assistant Attorney General