If a city council member also works for the state, can the city still pay them per-meeting compensation?

Plain-English summary

A Hutto city council member took an employment position with a state college system, paid from state funds. That triggered a constitutional wrinkle. Article XVI, section 40(b) of the Texas Constitution says state employees (and others paid directly or indirectly from state funds, who are not state officers) are not barred from serving on the governing bodies of school districts, cities, towns, or local districts, but "may not receive a salary" for that service, subject to listed exceptions. Hutto's charter (section 3.04) pays each council member $400 for attendance at each regular council meeting, with no pay for more than two meetings in a month, and separately allows reimbursement of necessary expenses. On behalf of the city, the Williamson County Attorney asked whether the per-meeting payment is a "salary" under section 40(b), and whether the council could by ordinance treat that payment as the minimum necessary expense amount.

The AG flagged two limits up front. It does not ordinarily construe city charter provisions, and whether a payment is really reimbursement of expenses is a fact question for the city in the first instance. Within those limits, it offered guidance on the legal principles.

On the meaning of "salary": courts read the constitution to give effect to the voters' intent and rely heavily on plain text. "Salary" commonly means fixed compensation paid at regular intervals for services, and a payment that is not fixed but contingent on being earned for work done is not a salary under that common meaning (Wichita County v. Robinson; Keszenheimer, per diem and auto allowances that vary monthly were not salary). So focused only on common meaning, a court would likely find a per-meeting payment contingent on attendance is not a salary. But courts can also look at context and history, and a prior AG letter opinion (LO-94-072) concluded the Legislature used "salary" and "compensation" interchangeably in section 40(b), with "compensation" being the broader term. Because no court has directly resolved whether the two terms are synonymous in section 40(b), the AG could not predict with certainty how a court would come out.

On the second question: a mere reimbursement of legitimate expenses is not a "salary" under section 40(b), but simply labeling a payment as an expense does not change its real nature. Whether the per-meeting payment is actually expense reimbursement is a fact question for the city. And there is a structural limit: Hutto is a home-rule city whose authority comes from the constitution and its voter-adopted charter, so an ordinance cannot conflict with state law or the charter and cannot amend the charter, which only the city's voters can do. The proper interpretation of section 3.04 is for city officials in the first instance, subject to judicial review, and a court would construe it using ordinary rules of interpretation, giving undefined terms their common meaning in context.

What this means for you

If you serve on a city council while employed by the state

Based on this opinion, section 40(b) lets you serve, but bars you from receiving a "salary" for that service (subject to the constitutional exceptions). Whether a per-meeting payment like Hutto's counts as a barred "salary" is unsettled; the AG could not say for certain how a court would treat it.

If you advise a home-rule city on council pay

The AG confirms an ordinance cannot amend the charter or conflict with the charter or state law; only the voters amend the charter. The city may interpret its own charter in the first instance, but that interpretation is subject to judicial review, and merely relabeling a payment as "expenses" does not change what it actually is. A reimbursement must be for legitimate expenses.

If you are a council member paid per meeting

The opinion notes that under the common meaning, a payment contingent on attending a meeting looks unlike a fixed salary. But it stops short of a definitive answer because a prior AG opinion treated "salary" and "compensation" as interchangeable in section 40(b) and no court has decided the point. Treat the question as open and get specific legal advice.

Common questions

Q: Can a state employee serve on a Texas city council?
A: Yes. Article XVI, section 40(b) expressly says state employees and others paid from state funds (who are not state officers) are not barred from serving on city and other local governing bodies. The limit is on receiving a "salary" for that service.

Q: Is Hutto's $400-per-meeting payment a "salary" under section 40(b)?
A: The AG would not decide. Under the common meaning a per-meeting payment contingent on attendance looks unlike a fixed salary, but a prior AG opinion read "salary" and "compensation" as interchangeable in section 40(b), and no court has resolved it.

Q: Can the city council just declare the payment to be "expenses" by ordinance?
A: Only if it really is reimbursement of legitimate expenses. The AG noted that labeling a payment as an expense does not change its nature, and whether the payment is actual expense reimbursement is a fact question for the city, subject to court review.

Q: Can an ordinance change what the charter says about council pay?
A: No. The AG explained an ordinance cannot conflict with or amend the charter; only the city's qualified voters can amend a home-rule charter.

Background and statutory framework

Article XVI, section 40(b) permits state employees and others compensated from state funds (who are not state officers) to serve on local governing bodies but provides they "may not receive a salary" for that service, except in listed circumstances. Hutto's charter section 3.04 (2021) pays $400 per regular meeting attended (capped at two meetings monthly) and separately allows necessary-expense reimbursement. The AG does not ordinarily construe city charters (KP-0231 (2019)). Constitutional interpretation gives effect to the voters' intent and relies on plain text (Degan; Spradlin). "Salary" commonly means fixed compensation paid at regular intervals (City of Houston v. Bates), and a contingent, earned-for-work payment is not a salary under that meaning (Wichita Cnty. v. Robinson; Keszenheimer). But context and history matter too (Degan; Woods v. VanDevender), and a prior AG letter opinion found "salary" and "compensation" used interchangeably in section 40(b), with compensation the broader term (LO-94-072; GA-0449 (2006)). No court has resolved the question.

A reimbursement of expenses is not a "salary" (GA-0530 (2007)), but denominating a payment as an expense does not change its nature (JM-1266 (1990)); whether the per-meeting payment is real reimbursement is a fact question for the city. Hutto is a home-rule city drawing authority from the constitution and its voter-adopted charter (Powell v. City of Houston). An ordinance may not conflict with state law or the charter and may not amend the charter, which requires a voter majority (art. XI, section 5(a); GA-0433 (2006)). Interpreting section 3.04 is for city officials first, subject to judicial review, using ordinary rules of construction and the common meaning of undefined terms in context (Powell; City of Corpus Christi v. O'Brien; Guitar Holding Co. v. Hudspeth Cnty.).

Citations and references

Statutes:

• Tex. Const. art. XVI, § 40 — state employees on local governing bodies; salary limit
• Tex. Const. art. XI, § 5 — home-rule charters; ordinances may not conflict with or amend the charter

Key cases:

• City of Houston v. Bates, 406 S.W.3d 539 (Tex. 2013) — common definition of "salary"
• Wichita Cnty. v. Robinson, 276 S.W.2d 509 (Tex. 1954) — a contingent, earned payment is not a salary
• Powell v. City of Houston, 628 S.W.3d 838 (Tex. 2021) — home-rule authority and charter interpretation

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0414
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2022/kp-0414.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

September 20, 2022

The Honorable Dee Hobbs
Williamson County Attorney
405 M.L.K. Street #7
Georgetown, Texas 78626

Opinion No. KP-0414

Re: Meaning of the term "salary" as used in article XVI, subsection 40(b) of the Texas Constitution (RQ-0447-KP)

Dear Mr. Hobbs:

On behalf of the City of Hutto ("City"), you ask about a scenario where a "city council member accepted an employment position with a state college system and received compensation from state funds."¹ The Texas Constitution places limits on the compensation state employees may receive for concurrent service as members of local governing bodies. You therefore ask "whether 'compensation' received under Section 3.04 of the Hutto City Charter is a 'salary' [for purposes of article XVI, subsection 40(b) of] the Texas Constitution." Request Letter at 2. You also ask whether "the Hutto City Council, as a home-rule municipality, [may] construe by ordinance the compensation amount in its charter to be the actual minimum necessary amount for the performance of the duties of public office related to regular council meeting attendance[.]" Id.

The City of Hutto's charter ("Charter") provides, in relevant part:

b) City Council members shall receive as compensation the sum of four hundred dollars ($400.00) for attendance at each regular City Council meeting; provided, however, that no City Council member shall receive compensation for more than two (2) meetings in any one month.

c) The Mayor and City Council members shall be entitled to all necessary expenses incurred in the performance of their official council duties upon approval by the City Council.

HUTTO, TEX., CITY CHARTER, § 3.04 (2021).

Your questions require the construction of the Charter, an undertaking outside the purview of an attorney general opinion. See, e.g., Tex. Att'y Gen. Op. No. KP-0231 (2019) at 1 (stating "this office does not ordinarily construe city charter provisions in attorney general opinions"). Nevertheless, we can advise you generally as to legal principles pertinent to your questions.

No court has addressed whether the terms "salary" and "compensation" are synonymous in article XVI, subsection 40(b) of the Texas Constitution.

Your first question concerns the meaning of the term "salary" in article XVI, subsection 40(b), which provides in relevant part:

State employees or other individuals who receive all or part of their compensation either directly or indirectly from funds of the State of Texas and who are not State officers, shall not be barred from serving as members of the governing bodies of school districts, cities, towns, or other local governmental districts. Such State employees or other individuals may not receive a salary for serving as members of such governing bodies, except . . . .

TEX. CONST. art. XVI, § 40(b) (emphasis added); see Request Letter at 2.

A court's "guiding principle when interpreting the Texas Constitution is to give effect to the intent of the voters who adopted it." Degan v. Bd. of Trustees of Dallas Police & Fire Pension Sys., 594 S.W.3d 309, 313 (Tex. 2020). "Presuming that the language of the Texas Constitution is carefully selected" a court "construe[s] its words as they are generally understood" and "rel[ies] heavily on the plain language of [its] literal text." Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 580 (Tex. 2000).

With those rules in mind, we first consider the common meaning of the term "salary" as used in the text of article XVI, subsection 40(b). Salary is commonly defined as "'[a]n agreed compensation for services . . . [usually] paid at regular intervals on a yearly basis'" and "'fixed compensation paid regularly . . . for services.'" City of Houston v. Bates, 406 S.W.3d 539, 547 (Tex. 2013) (examining two dictionary definitions of the term salary). A payment that is not fixed and certain but is contingent upon being earned for "work done, labor performed, or money collected" is not a salary under the common meaning of the term. See Wichita Cnty. v. Robinson, 276 S.W.2d 509, 513–14 (Tex. 1954); see also Keszenheimer v. Reliance Standard Life Ins. Co., 402 F.3d 504, 508 (5th Cir. 2005) (concluding that per diem and auto allowance compensation, which vary each month, were not salary under the term's common meaning). Thus, focused solely on the common meaning, a court would likely conclude that a per meeting payment contingent upon attendance at the meeting is not a salary.

At the same time, "[i]n determining the intent of the framers and adopters of a constitutional proposition," a court may also "consider contextual factors such as 'the history of the legislation, the conditions and spirit of the times, the prevailing sentiments of the people, the evils intended to be remedied, and the good to be accomplished.'" Degan, 594 S.W.3d at 313; see also Woods v. VanDevender, 296 S.W.3d 275, 281–82 (Tex. App.—Beaumont 2009, pet. denied) (examining, among other things, information published by the Texas Legislative Council and the language that appeared on the voters' ballot to construe an amendment to the Texas Constitution). Relying on contextual factors as evidence of legislative intent, this office previously concluded the Legislature used the terms "salary" and "compensation" interchangeably in subsection 40(b). See Tex. Att'y Gen. LO-94-072 at 3. As a general rule, compensation is a more comprehensive term than salary. See id.; see also BLACK'S LAW DICTIONARY 342 (10th ed. 2014) (defining compensation to mean "[r]emuneration and other benefits received in return for services rendered"); Tex. Att'y Gen. Op. No. GA-0449 (2006) at 2 (concluding compensation included premium payments for health insurance and car allowances). However, no court has directly addressed the meaning of the terms "salary" and "compensation" in article XVI, subsection 40(b) of the Texas Constitution. Therefore, we cannot predict with certainty whether a court would conclude the Legislature equates the term "salary" with "compensation" in subsection 40(b).

Whether the per meeting compensation in the Charter may be construed to constitute the reimbursement of expenses rather than "salary" for purposes of article XVI, subsection 40(b) is left to the discretion of the appropriate City officials, subject to judicial review.

We understand your second question to ask whether the city council could, by ordinance, construe the per meeting compensation in section 3.04 of the Charter to constitute the reimbursement of expenses. See Request Letter at 2. You raise this issue because a mere reimbursement of expenses does not constitute "salary" for purposes of subsection 40(b). See Tex. Att'y Gen. Op. No. GA-0530 (2007) at 6. But a reimbursement must be for legitimate expenses, and simply denominating a payment as an expense rather than a salary does not alter the nature of the payment. See Tex. Att'y Gen. Op. No. JM-1266 (1990) at 3. A determination as to whether the per meeting compensation constitutes actual reimbursement of expenses will involve fact questions for the City to decide in the first instance, but we offer some general guidance regarding the City's authority to adopt ordinances and construe the Charter.

The City is a home-rule city that derives its authority from the Texas Constitution and the Charter adopted by its voters. See Powell v. City of Houston, 628 S.W.3d 838, 842 (Tex. 2021). A municipal ordinance adopted by the City's governing body may not conflict with state law or the Charter. See TEX. CONST. art. XI, § 5(a) ("[N]o . . . ordinance passed under [a city] charter shall contain any provision inconsistent with the Constitution of the State, or of the general laws enacted by the Legislature of this State."); Powell, 628 S.W.3d at 843 (considering whether an ordinance complied with the city charter and state law). Nor may an ordinance amend a Charter provision. See TEX. CONST. art. XI, § 5(a) (providing a city charter is amended by a majority vote of the qualified voters of the city); see also Tex. Att'y Gen. Op. No. GA-0433 (2006) at 2 ("[T]he City charter provision granting authority to amend the charter by ordinance is invalid because it is inconsistent with the constitutional requirement that all charter amendments be adopted by a majority of a city's qualified voters.").

While the decision as to the proper interpretation of section 3.04 of the Charter is left to the discretion of the appropriate City officials in the first instance, it is subject to judicial review. A court would construe section 3.04 using the general rules of statutory interpretation. See Powell, 628 S.W.3d at 843. If a city charter does not define a term, a court looks "to its common, ordinary meaning unless a contrary meaning is apparent from the" charter's language. Powell, 628 S.W.3d at 843; see also City of Corpus Christi v. O'Brien, No. 13–08–00267–CV, 2009 WL 265281, at *4 (Tex. App.—Corpus Christi, Feb. 5, 2009, pet. denied) (not designated for publication) (interpreting the term "compensation" in a city charter). Courts construe undefined terms within the context used and not in isolation. See Guitar Holding Co., L.P. v. Hudspeth Cnty. Underground Water Conservation Dist. No. 1, 263 S.W.3d 910, 915–16 (Tex. 2008); see also Tex. Att'y Gen. LO-93-33 at 2 (considering a state law that provided for both a per diem payment and a reimbursement of expenses and concluding the per diem payment was necessarily regarded as a salary).

S U M M A R Y

Article XVI, subsection 40(b) expressly permits a state employee or an individual who receives compensation from the state to serve as a member of the governing body of a city but prohibits the person from receiving a salary for the latter unless the person receives compensation from the state for work performed in certain capacities. Because of the multiple possible meanings of these terms, we cannot predict with certainty whether a court would conclude the Legislature equates the term "salary" with "compensation" in subsection 40(b).

Whether the per meeting payment provided under section 3.04 of the Hutto City Charter may be construed to constitute the reimbursement of expenses rather than "salary" for purposes of subsection 40(b) is left to the discretion of the appropriate City officials in the first instance, subject to judicial review.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT E. WEBSTER
First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

D. FORREST BRUMBAUGH
Deputy Attorney General for Legal Counsel

CHARLOTTE M. HARPER
Acting Chair, Opinion Committee

CHRISTY DRAKE-ADAMS
Assistant Attorney General, Opinion Committee

¹ See Letter from Honorable Dee Hobbs, Williamson Cnty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at 2 (Feb. 15, 2022), http://www2.texasattorneygeneral.gov/opinions/opinions/51paxton/rq/2022/pdf/RQ0447KP.pdf ("Request Letter").