                              ATTORNEY GENERAL OF TEXAS
                                           GREG        ABBOTT




                                               February 9, 2010



The Honorable Rene O. Oliveira                        Opinion No. GA-0758
Chair, Committee on Ways & Means
Texas House of Representatives                        Re: Whether the South Texas Water Authority may
Post Office Box 2910                                  adopt an effective tax rate under the provisions of
Austin, Texas 78768-2910                              chapter 26 of the Tax Code (RQ-0815-GA)

Dear Representative Oliveira:

        You ask whether the South Texas Water Authority ("STWA") may adopt its taxes pursuant
to the provisions of sections 26.04, 26.05, and 26.07 of the Tax Code. l You explain that the STWA
currently calculates and adopts its effective tax rate pursuant to chapter 49 of the Water Code but
would instead like to use these specific provisions within the Tax Code. Request Letter at 1-2. You
suggest that the STWA enabling statute may allow it to do so. Id. at 2.

        The STWA is a conservation and reclamation district created pursuant to article XVI, section
59 of the Texas Constitution. Act of May 24, 1979, 66th Leg., R.S., ch. 436, § 1, 1979 Tex. Gen.
Laws 984, 984-85. "District" is defined for purposes of chapter 49 of the Water Code to include,
with certain exceptions not relevant here, "any district or authority created by authority of ... Section
59, Article XVI, Texas Constitution." TEx. WATER CODE ANN. § 49.001(a)(1) (Vernon 2008).
Thus, STWA qualifies as a district, and it is subject to chapter 49 of the Water Code except to the
extent that chapter 49 "directly conflict[ s] with a provision in any other chapter of [the Water Code]
or any Act creating or affecting a special law district," whereupon "the specific provisions in such
other chapter or Act shall control." Id. § 49.002(a).

        Section 49.l07 of the Water Code addresses operations and maintenance taxes levied by
districts and certain procedures associated with the levy and collection of both operation and
maintenance taxes and debt service taxes. Id. § 49.107(a). Specifically, subsection (g) of that
section states that "[s]ections 26.04,26.05, and 26.07, Tax Code, do not apply to a tax levied and
collected under this section or an ad valorem tax levied and collected for the payment of the interest
on and principal of bonds issued by a district." Id. § 49.107(g); but see id. § 49.236(d)




        lRequest Letter at 2 (available at http://www.texasattomeygeneral.gov).
The Honorable Rene O. Oliveira - Page 2                   (GA-0758)



(incorporating procedures under Tax Code section 26.07(b)--(g) in certain circumstances)?
Therefore, unless another provision of the Water Code or the act creating STWA directly conflicts
with this provision, STWA may not utilize the procedures set forth in sections 26.04, 26.05, and
26.07 of the Tax Code when adopting its tax rate.

        You indicate that the language in the act creating STWA may conflict with subsection
49.107(g) such that the provisions of the Tax Code may be used by STWA when adopting its tax
rate. Request Letter at 1-2. In particular, you point to section 24 of the act creating STWA, which
addresses taxation and states, "[t]he laws of this state applicable to general law cities and towns may
be adopted and shall be used to the extent pertinent and practicable." Act of May 24, 1979, 66th
Leg., R.S., ch. 436, § 24(c), 1979 Tex. Gen. Laws 984, 996. Sections 26.04,26.05, and 26.07 of the
Tax Code establish procedures to be utilized by certain taxing entities when calculating effective and
rollback tax rates, adopting a tax rate, and holding a rollback election. The provisions are applicable
to general law cities. As a result, you suggest that the language in section 24 is in direct conflict with
subsection 49.107 (g) of the Water Code and may trump the application of subsection 49.107 (g) to
STWA. Request Letter at 2.

         We disagree that the language in the act creating STWA directly conflicts with subsection
49.107(g) such that STWA may utilize the procedures set forth in sections 26.04, 26.05, and 26.07
of the Tax Code. Where possible, we are to construe language used in statutes so as to harmonize
all relevant laws, not create conflicts. See La Sara Grain Co. v. First Nat 'I Bank ofMercedes, 673
S.W.2d 558, 565 (Tex. 1984). In creating STWA in 1979, the Legislature in general terms
authorized it to adopt laws "applicable to general law cities" as well as laws "applicable to levy,
assessment, and collection of county taxes ... to the extent pertinent and practicable." Act of May
24, 1979, 66th Leg., R.S., ch. 436, § 24(c)--(d), 1979 Tex. Gen. Laws 996 (emphasis added). By its
later enactment of subsection 49.1 07(g) and section 49.236, the Legislature established a separate
set of procedures by which taxing entities that are defined as districts under section 49.001 of the
Water Code set their tax rates. In adopting this separate set of procedures, the Legislature implicitly
determined that it was not "pertinent and practicable" for districts like STWA to utilize Tax Code
sections 26.04, 26.05, and 26.07. Section 24 of the act creating the STWA and Water Code




          2Section 26.04 provides a method for governing bodies to calculate the effective tax rate and publish that rate
to property owners within the taxing unit. TEx. TAX CODE ANN. § 26.04(c)-{e) (Vernon 2008). Section 26.05 outlines
the procedures for governing bodies to adopt a tax rate each year and outlines notice requirements before that adoption
takes place. Id. § 26.05 (Vernon Supp. 2009). Section 26.07 authorizes the qualified voters ofa taxing unit to petition
for an election to reduce the tax rate if the adopted rate exceeds the rollback rate calculated under section 26.04. Id. §
26.07 (Vernon 2008). The Water Code establishes a separate set of calculations and procedures for water .districts
subject to chapter 49 to utilize in adopting a proposed tax rate, and those procedures differ from the procedures set out
in seetions 26.04, 26.05, and 26.07 of the Tax Code. See TEX. WATER CODE ANN. §§ 49.107(b)-{d) (Vernon 2008)
(requiring a district's operation and maintenance tax be approved by voters); 49.236 (outlining the notice requirements
for a district before it adopts a tax rate); compare TEX. TAX CODE ANN. §§ 26.04 (Vernon 2008), 26.05 (Vernon SUpp.
2009),26.07 (Vernon 2008).
The Honorable Rene O. Oliveira - Page 3                    (GA-0758)



subsection 49.107(g) can be harmonized by construing subsection 49.107(g) to create a limited
exception to the STWA's general ability to adopt laws applicable to general law cities and towns. 3

         The legislative history associated with the adoption of chapter 49 of the Water Code, and
section 49.107 (g) in particular,supports this construction. In 1995, sixteen years after the creation
of STWA, the Legislature enacted chapter 49 of the Water Code to address the "lack of procedural
uniformity between the different types of local water districts," recognizing that the procedural
"inconsistencies [led] to confusion among citizens, district board members, and state agency
personnel." SENATE COMM. ON NATURAL RESOURCES, BILL ANALYSIS, Tex. S.B. 626, 74th Leg.,
R.S. (1995). It enacted section 49.107(g) to specifically provide that "certain procedures for
calculating tax rates and levying taxes do not apply to any district's or authority's maintenance tax
or taxes levied and collected for the payment of the interest on and principal of bonds issued by a
district." SENATECOMM.ONNATURALREsOURCES,BILLANALYSIS, Tex. S.B.1444, 77thLeg.,R.S.
(2001) (emphasis added). Instead, the Legislature created a separate set of procedures and
calculations for districts subject to chapter 49 to utilize in adopting tax rates. See TEx. WATER CODE
ANN. § 49.236(a)(2)(D)--(F) (Vernon 2008). Pursuant to section 49.107(g), the Legislature has
required STWA to utilize these separate procedures and calculations rather than those outlined in
Tax Code sections 26.04, 26.05, and ~6.07 in adopting its tax rate.




          3The Texas Comptroller ofPublic Accounts has similarly interpreted subsection 49.1 07(g) to prohibit authorities
such as the STWA from using Tax Code sections 26.04, 26.05, and 26.07 to calculate an effective rate, adopt a tax rate,
and have a rollback election. See Truth-in-Taxation: A Guide for Setting Tax Rates for Taxing Units Other Than School
Districts, TEx. COMPTROLLER OF PUBLIC ACCOUNTS (available athttp://www.window.state.tx.usJtaxinfo/proptaxitnt091)
("The taxing units to which Tax Code Sections 26.04,26.05, and 26.07 do not apply are defined in Water Code Section
49.001 and include any district or authority created by ... Section 59, Article XVI, Texas Constitution.").
The Honorable Rene O. Oliveira - Page 4        (GA-0758)



                                      SUMMARY

                      Pursuant to subsection 49.107(g) of the Water Code, the
              Legislature has prohibited the South Texas Water Authority from
              utilizing the procedures and calculations in sections 26.04, 26.05, and
              26.07 of the Tax Code to adopt its tax rate.




ANDREW WEBER
First Assistant Attorney General

JONATHAN K. FRELS
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee
