         THE       ATTORNEY        GENERAL
                      OF   TEXAS




Honorable Carlos Valdez            Opinion No. JM-893
Nueces County Attorney
Nueces County Courthouse           Re: Whether a tax exemption
Room 206, 901 Leopard              for     non-income-producing
Corpus Christi, Texas 78401        recreational boats applies
                                   to all such boats that we're
                                   on the tax rolls as of
                                   the effective   date of the
                                   statute   (RQ-1188)

Dear Mr. Valdez:

     The 70th Legislature amended section 11.14 of the Tax
Code, to provide what is essentially a "local option"
exemption   from ad valorem taxation     for   recreational
boats. See. e.a     Attorney General Opinion MN-11    (1979)
(authority of the' legislature to permit taxing units to
exempt automobiles   from property tax on a local option
basis). The bill, Senate Bill No. 367, became     effective
on May 26, 1987. Essentially, the amendment provides that
non-income-producing boats are exempt     from ad valorem
taxation.  However, the governing body of any taxing unit
by order or resolution may provide for the taxation       of
such boats. By enacting Senate Bill No. 367, the legisla-
ture chose the so-called "local option" scheme of taxation
in order to enforce uniformity state-wide,    while at the
same time preserving the right of those taxing units that,
all along, have been discovering, listing, and appraising
recreational boats to continue doing so.

      You ask:

         Does the exemption apply to all applicable
       boats which were already on the tax rolls
       before the effective date of the statute, or
       is it only to be applied to boats which
       would have been on the tax rolls after the
       effective date of the act?




                            p. 4380
Honorable Carlos Valdez - Page 2      0X-893)




We conclude that the statutory exemption provisions  apply
to all boats located in a taxing unit as of January     1,
1987 but only in those taxing units that had not certified      -
their tax rolls as of the effective date of the enactment.
Because you do     not ask, we     do not consider     the
constitutionality of the statutory amendments to section
11.14 of the Tax Code; we limit our discussion to matters
of statutory construction only.1


     Section 11.14 of the Tax Code was amended by the 70th
Legislature to read as follows:

       Sec. 11.14.   HOUSEHOLD     GOODS   AND   PERSONAL
       EFFECTS.

          (a) An individual    is entitled to an
       exemption from taxation of his household
       goods and personal effects that are not held
       or used for production of income.

          (b)   In this section:

          (1) 'Household goods' means furnishings,
       appliances,   utensils, and other tangible
       personal property used primarily    in   or
       around a residence by the residents     and
       their guests.




      1. We note that the Bill Analysis for Senate Bill
No. 367 indicates that the legislature was concerned about
the lack of uniformity      in the taxation      of personal
property   in   Texas.   Accordingly,    the House     Select
Committee   on Central Appraisal     Districts,    which was
created in 1985 and charged with the review of certain
aspects of local property taxation, recommended      that all
non-income-producing    tangible    personal    property   be
exempted from taxation.   Therefore, in addition    to Senate
Bill No. 367, the 70th Legislature       passed   a proposed
constitutional amendment, Senate Joint Resolution     No. 12,
that authorizes the legislature to exempt     from ad valorem
taxation   all   non-income-producing    tangible    personal
property, except mobile homes. The proposed         amendment
was passed by the voters at the general election           in
November 1987 and became effective November 3, 1987.




                          p. 4381
     Honorable Carlos Valdez - Page 3   (JM-893)




                (2) 'Personal effects' means tangible
            personal property that normally is worn or
.-          carried by an individual or that is used by
            an individual in personal, recreational,  or
            other activities that do not involve produc-
            tion of income. Boats which are owned and
            used bv a familv or individual f r r cr a
            tional activities and are not heyd ore uze,
            for the Droduction   of income are exemvt
            under this section. A familv owns a boat for
            purDoses of this section if anv member    of
            the familv owns the boar .

               al    'Personal effects' does not include
            a motor vehicle, boat (other than as des-
            cribed in Subdivision      (2) of this sub-
            section), or other means of transportation,
            a trailer that must be registered        for
            operation on a highway, or a mobile home or
            similar vehicle designed for occupancy as a
            dwelling.

                (c) The aovernina bodv of a         taxinq
            unit bv ordinarv    resolution    or    order,
            deDendina uDon the method Drescribed bv law
            for official action bv that aovernina    bodv,
            mav DrOVide   for taxation of all        boats
            exemDted under Subsection      a.    If    the
            aovernina bodv of a taxina unit Drovides for
            taxation of all boats as Drovided bv this
            subsection,  the exemDtion Drescribed       bv
            subsection (a) does not aDD1v to that unit.

               (d) The central aDDraisa1 district     for
            the countv shall determine the cost of
            aDDraisina boats recuired bv a aoverninq
            bodv under the Drovisions of Subsection    (c)
            and shall assess those costs to the taxing
            unit or taxina units which Drovide for the
            taxation of boats.   (Amended language under-
            scored.)

          In Attorney General Opinion MW-4 (1979), this office
     considered whether enabling legislation providing certain
r-   ad valorem tax exemptions could be made effective as of
     January 1, the traditional "assessment date" (see Tax Code
     §21.01), of the year in which the legislation was enacted.
     The tax exemptions  at issue in that opinion constituted
     the enabling  legislation that implemented the so-called
     "Tax Relief Amendment I'that,became effective on January 1,




                              p. 4382
Honorable Carlos Valdez - Page 4    (JR-893)




1979.   The   opinion analyzed    various   constitutional
provisions and concluded that legislation could constitu-
tionally apply to tax liabilities that had not been   fixed    _,
by levy and assessment as of the statute's effective date.

     Article I, section 16, forbids the enactment         of
retroactive laws, but this prohibition does not extend to
all statutes.    The legislature may enact retrospective
legislation where no impairment of vested rights results.
Deacon v. Citv of Euless, 405 S.W.Zd 59, 62 (Tex. 1966);
cox v. Robinson,    150 S.W. 1149   (Tex. 1912); Attorney
General Opinions H-634 (1975); H-14 (1973). Where private
rights are not involved, the legislature        may impose
retroactive legislation on political subdivisions.    Deacon
v. Citv of Euless, m        at 62; cf. Love V.     Citv of
Dallas, 40 S.W.2d 20 (Tex. 1931) (constitution protects
property that political subdivision    holds in trust    for
people). The vested rights of taxpayers       will not be
injured by the grant of tax exemptions effective     January
1, 1987, since such a grant creates rather than destroys
a right.    See Attorney  General Opinion M-413      (1969).
Although   statutes are generally    presumed  to    operate
prospectively, they will be given retrospective       effect
where the legislative intention is clear, and where no
impairment of vested rights results. Deacon v. Citv of
Euless, suora at 61; see Gov't Code 5311.022        (statute
presumed to operate prospectively    unless expressly   made
retrospective).

     Other constitutional   provisions prohibit  the state
from applying a tax exemption retrospectively when the tax
liability has matured.    Article III, section  55, of the
Texas Constitution provides as follows:

       The Legislature   shall have no power to
       release or extinguish,    or to authorize   the
       releasing or extinguishing,    in whole or in
       part, the indebtedness, liability or obliga-
       tion of any corporation     or individual,   to
       this State or to any county or defined     sub-
       division   thereof,    or    other   municipal
       corporation therein, except delinquent taxes
       which have been due for a period of at least
       ten years.

     A delinquent  tax is a liability within    this pro-
vision.  State v. Pioneer Oil & Refinina Co., 292 S.W. 869
(Tex. Comm'n App. 1927, judgmt adopted).      Once a tax
becomes a liability, article   III, section  55, makes  it
irrevocable, and the legislature  cannot extinguish it by




                          p. 4383
Honorable Carlos Valdez - Page 5    Of-8931




repealing the statute that enacted it. See also Sloan v.
Calvert, 497 S.W.2d 125 (Tex. Civ. App. - Austin 1973, no
writ); Smith v. State, 420 S.W.2d 204   (Tex. Civ. App. -
Austin 1967), aff'd, 434 S.W.2d 342 (Tex. 1968); Attorney
General Opinions M-34 (1967); C-200 (1963). In addition,
article VIII, section 10, prohibits the legislature   from
releasing the inhabitants of any county, city, or town
from the payment of taxes levied for state or county
purposes unless  in case of great public calamity.     See
Bass v. Aransas Countv I.S.D., 389 S.W.2d 165 (Tex. Civ.
APP. - Corpus Christi 1965, writ ref'd n.r.e.).
      Moreover, a statute that attempts to grant an exemp-
tion with respect to a tax liability accruing before       its
effective date might also violate article III, section 51,
of the Texas Constitution.     This provision   prevents   the
state from making or authorizing     a grant of public   funds
to any individual, association of individuals or corpora-
tion, in the absence of a public purpose or consideration
moving to the state. State v. Citv of Austin, 331 S.W.2d
737  (Tex. 1960); Attorney General Opinion H-416       (1974).
Article III, section 52, also prevents the legislature
from authorizing    political subdivisions   to grant public
money to individuals     and corporations.     In Morris v.
Calvert, 329 S.W.2d 117 (Tex. Civ. App. - Austin         1959,
writ ref'd n.r.e.), the court held that a              statute
providing an inheritance tax exemption applied only to
estates of persons dying after its effective date.        Some
statutory language indicated that the legislature intended
that the exemption become effective when the governor
signed the bill, but the court rejected this interpreta-
tion as raising a serious question of constitutionality.
An inheritance tax is a lien upon property from the date
of death, and reducing it by a tax exemption that sub-
sequently became effective would violate sections 51 and
55 of article III of the Texas Constitution.       *In       re
Voorhees' Estate, 196 A. 365       (N.J. Prerog. Ct. 1938),
aff'd, 3 A.2d 891 (N.J. Sup. Ct. 1939), aff'd, 10 A.2d 650
(N.J. 1940)    (statute retrospectively   exempting taxes to
which state's right was fixed makes an unconstitutional
gift of public funds). See also In re Skinker, 303 P.2d
745  (Cal. 1956).

     In our opinion consequently, sections 51, 52, and 55
of article III will prevent the legislature from enacting
a tax exemption statute applicable to tax liabilities that
have already accrued or matured. Thus, the resolution   of
the issue that you raise will require a determination   of
the date upon which ad valorem tax liabilities     accrue,
mature, or become fixed.




                          p. 4384
Honorable Carlos Valdez - Page 6   04-893)




     The Tax Code was enacted in 1979. Under pre-code
case law, the validity of an ad valorem tax rested upon
levy and assessment.   State v. Pioneer Oil & Refinina Co.,
sunra; Zalinski v. Hackett, 552 S.W.2d 933 (Tex. Civ. App.      -_'
- Austin 1977, writ ref'd n.r.e.).     In the absence of a
valid assessment,  there was no liability      for the tax
within article III, section . 55,.    of  the  constitution.
State v. Pioneer Oil                            . Cleaa V.
State, 42 Tex. 605   (18:5); ~e~u~lic"%u~'C!omn        v
Hiahland Park I.S.D. of Dallas County 57 S.W.2d 62?(Tez:
Civ. App. - El Paso 1933, writ ref:d).        Article VIII,
section 15, and section 32.01 of the Tax Code provide that
"[t]he annual assessment made upon landed property     shall
be a lien thereon."      This lien does not exist until
assessment is made in accordance with law.         State v.
Farmer, 59 S.W. 541 (Tex. 1900); Hoae v. Garcia, 296 S.W.
982 (Tex. Civ. App. - San Antonio 1927, writ ref'd); cf.
C. B. Carswell & Co. v. Habberzettle,     87 S.W. 911   (Tex.
Civ. App. - 1905, no writ)       (lien attaches January    1,
although the amount of taxes is not determined         until
sometime subsequent).   Of course, once the tax liability
is established, the lien becomes effective as of January
1.   State of Texas v. Moodv's Estat e, 156 F.2d 698     (5th
Cir. 1946).                                                     ?
     The terms "levy" and '*assessment1 were sometimes used
interchangeably.   See Kinnev v. Zimnleman,   36 Tex. 554,
582 (1872); Amaimo   v. Carter, 212 S.W>2d 950, 955    (Tex.
Civ. App. - Beaumont 1948, writ ref'd n.r.e.).    The term
"assess" was     thought to    include the    function    of
appraising.   Attorney General Letter Advisory     No. 117
(1976). But with the 1980 amendment to article VIII,
section 18, of the Texas Constitution, those activities
that comprise the function of "appraising"        were,   in
effect, carved out from the activities      comprising   the
functions of "assessing."     W'sn
                               ~1 o   v. Galveston    Countv
Central A aoraisal  District, 713 S.W.Zd 98   (Tex. 1986);
Attorney General Opinions JM-833 (1987); JM-35       (1983).
Under pre-code   case law, then, qtlevy" referred to the
legislative act that imposes a tax and fixes its rate.
Cleaa v. State, sunra at 610-611: Amaimo v. Carter, suora;
Sussex Countv v. Jarratt, 106 S.E. 384, 387 (Va. 1921).
An order of the commissioners court "that the following
tax rates be levied" was held to be a valid tax levy.
Victorv v. State, 158 S.W.Zd 760 (Tex. 1942); see Cranfill      ?
Bros. Oil Co. v. State, 54 S.W.2d 813 (Tex. Civ. App. - El
Paso 1932, writ ref'd); Attorney General Opinion H-1235
(1978) .   "Assessment"  referred to the     administrative
process of applying the tax rate to the appraised value of
an individual's    property  and thereby determining     the




                         p. 4385
Honorable Carlos Valdez - Page 7   KIM-893)




amount of taxes that he owes.      Cleaa   V.   State,   sunra;
Sussex Countv v. Jarratt, sunra.

      The taxpayer's liability was fixed when these two
requirements   were met: the assessment    had been made
and there had been a legal levy.        Cracker v. Santo
Consolidated 1.S.D    116 S.W.2d 750   (Tex. Civ. App. -
Eastland 1938, writ dism'd); Attorney    General Opinions
C-457  (1965); V-943 (1949) (taxes do not accrue until
there has been both an assessment   and levy). Under the
Tax Code, the statutory authority to @*levy" and l'assess,t'
,in the context in which Attorney    General MW-4    (1979)
employed the terms, is set forth now in chapter 26 of the
Tax Code. Accordingly, we conclude that a taxpayer's    tax
liability is fixed when a taxing unit has performed   those
requirements provided for in chapter 26 of the code.

      In Bass v. Aransas Countv I.S.D.,   sunra, the ;;c~;
discussed  now-repealed   article 7345d, V.T.C.S.,
authorized   the commissioners   court to reconsider     and
adjust current or delinquent assessments.     It stated in
dicta that it "would be inclined to hold the act unconsti-
tutional insofar as it authorizes reopening     and recon-
sideration of valid assessments" as violating article III,
sections 52 and 53, and article VIII, section 10, of the
Texas Constitution.    See also Attorney General Opinions
v-1517 (1952): O-6257    (1944) (statute violates    article
III, section   55, and article VIII, section    10): O-930
(1939). Analogously,    we conclude that the legislature
constitutionally may provide tax exemptions from the 1987
tax yearts taxes if the amending        legislation   became
effective before ad valorem tax liabilities were fixed by
chapter 26 of the Tax Code. However, any such legislation
constitutionally may not apply the tax exemptions to tax
liabilities that have been fixed by chapter 26 of the Tax
Code prior to the effective date of the amending    legisla-
tion, because the taxpayer would receive thereby a gift
of public funds and remission    of taxes in violation    of
article III, sections 51, 52, and 55, and article VIII,
section 10, of the Texas Constitution.

     As we noted earlier,'the amendments to section   11.14
of the Tax Code do not indicate any intention on the part
of the legislature that the statute apply either in the
event that Senate Joint Resolution     12 is adopted or
retrospectively to January 1, 1987. Yet, in this instance
no indication  of any such intention    is necessary.   The
effective date of the statutory amendments     was May 26,
1987. By statute as of that date, all recreational    boats
were exempt from ad valorem taxation,        regardless  of




                         p. 4386
Honorable Carlos Valdez - Page 8     (JM-893)




whether they were then listed on the appraisal       rolls.
Because tax liability is fixed not when property is listed
on the appraisal rolls but when the assessment   procedures
set out in chapter 26 of the Tax Code have been completed,
the legislation   is effective  in those taxing units     in
which tax liability has not been fixed. Accordingly,     we
conclude that the statutory amendments to section 11.14 of
the Tax Code, which provide for a so-called "local optionl'
exemption      from     ad     valorem     taxation     for
non-income-producing recreational   boats, applies to all
boats in a taxing unit that had not certified its tax
rolls as of the effective date of the enactment.

                       SUMMARY

          The statutory amendments to section 11.14
       of the Tax Code, which provide       for   a
       so-called "local option" exemption from ad
       valorem taxation   for non-income-producing
       boats, apply to all boats in a taxing unit
       that had not certified  its tax rolls as of
       the effective date of the enactment.




                                   JIM     MATTOX
                                   Attorney General of Texas

MARY KELLER
First Assistant Attorney General

MU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jim Moellinger
Assistant Attorney General




                        p. 4387
