                               ATTORNEY GENERAL OF TEXAS
                                             GREG       ABBOTT




                                               October 30, 2008



The Honorable John J. Carona                                 Opinion No. GA-0676
Chair, Committee on Transportation and
  Homeland Security                                          Re: Amount of exemption from ad valorem
Texas State Senate                                           taxation to which certain disabled veterans are
Post Office Box 12068                                        entitled (RQ-0707-GA)
Austin, Texas 78711-2068

Dear Senator Carona:

       You ask about an apparent conflict between Texas Constitution article VIII, section 2(b) and
Tax Code section 11.22(a) authorizing property tax exemptions for disabled veterans in maximum
amounts corresponding to specified ranges of disability ratings. 1 Specifically, you ask whether tax
appraisal districts should use "the schedule, of disability ratings and corresponding maximum
exemption amounts listed in the constitution instead of the schedule listed in the Tax Code[.]"
Request Letter, supra note 1, at 4.

I.       Legal Background

        Before November 2007, article VIII, section 2(b) provided that a veteran with a disability
rating2 of (1) not less than 10 percent but not more than 30 percent could be granted an exemption
of up to $5,000 of the value of the veteran's property, (2) more than 30 percent but not more than
50 percent could be granted an exemption of up to $7,500 of the property value, (3) more than 50
percent but not more than 70 percent could be granted an exemption ofup to $10,000 ofthe property
value, and (4) more than 70 percent could be granted an exemption ofup to $12,000 ofthe property
value. See TEX. CONST. art. VIII, § 2(b) (amended Nov. 6, 2007). Article VIII, section 2(b) was
amended to take into account the rounding off of the disability ratings by the United States




         1See Letter from Honorable John J. Carona, Chair, Committee on Transportation and Homeland Security, Texas

State Senate, to Honorable Greg Abbott, Attorney General of Texas, at I, 4 (Apr. 24, 2008) (on file with the Opinion
Committee, also available at http://www.texasattorneygeneral.gov) [hereinafter Request Letter].

         2See TEX. TAX CODE ANN. § 11.22(h)(2) (Vernon 2008) (defming "disability rating" as "a veteran's percentage
of disability as certified by the Veterans' Administration or its successor").
The Honorable John Carona - Page 2                      (GA-0676)



Department ofVeterans Affairs (the "Department").3 Article VIII, section 2(b) as amended in 2007
provides in relevant part that:

                  A veteran having a disability rating of not less than 10 percent but
                  less than 30 percent may be granted an exemption from taxation for
                  property valued at up to $5,000. A veteran having a disability rating
                  ofnot less than 30percent but less than 50 percent may be granted an
                  exemption from taxation for property valued at up to $7,500. A
                  veteran having a disability rating" of not less than 50 percent but less
                  than 70 percent may be granted an exemption from taxation for
                  property valued at up to $10,000. A veteran who has a disability
                  rating of 70 percent or more . .. may be granted an exemption from
                  taxation for property valued at up to $12,000.

TEX. CaNST. art. VIII, § 2(b) (emphasis added).4 Tax Code section 11.22(a), which implements the
exemptions authorized by article VIII, section 2(b) was not amended,5 and tracks in substance the
pre-2007 article VIII, section 2(b) disability rating categories. See TEX. TAX CODE ANN. § 11.22(a)
(Vernon 2008) (emphasis added). Compare id, with rEX CaNST. art. VIII, § 2(b) (amended Nov.
6,2007).

        Thus, you note, because the Legislature did not amend the section 11.22(a) disability rating
categories consistent with article VIII, section 2(b), it is unclear whether a disabled veteran with a
disability rating of 74 percent rounded down to an official rating of 70 percent is authorized to
receive an exemption of$10,000 or $12,000. Request Letter, supra note 1, at 2.




         3In certifying a veteran's disability percentage, the Department calculates the percentage taking into account
the veteran's specific injuries and symptoms but then rounds off that number to the nearest 10 percent. TEXAS
LEGISLATNE COUNCIL, ANALYSES OF PROPOSED CONSTITUTIONALAMENDMENTS, Nov. 6,2007, ELECTION, at 76-77 (Sept.
2007) (hereinafter TLC CONSTITUTIONAL ANALYSES). Thus, for instance, a veteran with a calculated disability of 34
percent was certified by the Department as having a 30 percent disability. Id at 77. The effect ofthis rounding offunder
the pre-2007 constitutional disability rating categories was that certain disabled veterans received a lesser exemption:
Because of the Department's rounding down to the nearest 10 percent, Le., to 30 percent, the veteran could receive a
maximum exemption of only $5,000 instead of $7,500. See id

         4By shifting veterans to the next higher disability rating category and corresponding maximum tax exemption
amounts, the 2007 amendment's effect is that "the rounding down of a disability rating to the nearest 10 percent will not
reduce the amount of the exemption to which a disabled veteran would otherwise have been entitled." Id at 77. In the
example given above in which the Department rounded down a veteran's disability rating from 34 percent to 30 percent,
the veteran would become eligible for a maximum exemption of $7,500 that he would have been entitled to if the
Department had not rounded down his disability rating. Id

          SHouse Bill 358, proposing corresponding amendments to Tax Code section 11.22, was passed by the House
ofRepresentatives and referred to the Senate Committee on Finance, but no further action was taken with respect to the
bill. See Tex. H.B. 358, 80th Leg., R.S. (2007), available at Texas Legislature Online, http://www.capitol.state.tx.us/
BillLookup/History.aspx?LegSess=80R&Bill=HB358 (last visited Oct. 28, 2008).
The Honorable John Carona - Page 3             (GA-0676)



II.     Analysis

        You suggest that section 2(d), article Vill may address this issue. See Request Letter, supra
note 1, at 3. Article VIII, section 2(d) directs that:

                        Unless otherwise provided by general law enacted after
                January 1, 1995, the amounts of the exemptions from ad valorem
                taxation to which a person is entitled under Section 11.22, Tax Code,
                for a tax year that begins on or after the date this subsection takes
                effect are the maximum amounts permitted under Subsection (b) of
                this section instead of the amounts specified by Section 11.22, Tax
                Code. This subsection may be repealed by the Legislature by general
                law.

TEX. CONST. art. VIII, § 2(d) (emphasis added). In2001, the Legislature amended Tax Code section
11.22 to merely conform the statutorily authorized maximum tax exemptions amounts to those set
out in article VIII, section 2(b) as amended in 1995. See Act of May 22, 2001, 77th Leg., R.S., ch.
1420, § 18.002, sec. 11.22, 2001 Tex. Gen. Laws 4210,4552-53. The Legislature did not thereby
change the applicability ofsection 2(d). Accordingly, following January 1, 1995, the Legislature has
not enacted a general law repealing article VIII, section 2(d) or "otherwise provided" for the
maximum tax exemption amounts.

        Article VIII, section 2(d) by its literal terms mandates that the maximum tax exemption
amounts that a person is permitted under the constitution are to be given effect, rather than the
amounts under Tax Code section 11.22. See Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353,
355 (Tex. 2000) (stating that when interpreting the Texas Constitution, "we rely heavily on its literal
text and must give effect to its plain language"). The maximum amount to which a person may be
entitled is determined by the disability rating category within which a person falls. See TEX. CaNST.
art. VIII, § 2(d); TEX. TAX CODE ANN. § 11.22(a) (Vernon 2008). As your example illustrates,
certain persons would be entitled to different maximum amounts-$12,000 under article VIII,
section 2(b), but $10,000 under Tax Code section 11.22(a)-based on their different categorization
in the two provisions. Thus, the literal text of article VIII, section 2(d) supports its application to
article Vill, section 2(b) such that the disability rating categories found therein apply over those
found in Tax Code section 11.22(a).

         Additionally, application of article VIII, section 2(d) effectuates the intended purpose and
operation of article VIII, section 2(b). See Stringer, 23 S.W.3d at 355 (stating that a court strives "to
give constitutional provisions the effect their makers and adopters intended" and may look at the
provision's legislative history and purpose to achieve that end). First, article Vill, section 2(b)'s
disability rating categories were amended to allow disabled veterans to receive the higher maximum
tax exemption amounts permitted, as evidenced by legislative history as well as by a comparison of
the literal text of section 2(b) before and after the 2007 amendment. See supra note 4; HOUSE
COMM. ON WAYS & MEANS, BILL ANALYSIS, Tex. H.R.J. Res. 37, 80th Leg., R.S. (2007) (describing
the amendment as allowing veterans "to receive the full . . . tax exemptions for which they are
The Honorable John Carona - Page 4                    (GA-0676)



qualified based on their true levels of disability" by "altering the exemption brackets by 1 digit per
bracket to allow our system to align with the [Department's] rounded amounts"). 6 Second, the 2007
amendment to article VIII, section 2(b) was apparently intended to be self-executing, and section
2(b) can be self-executing only by virtue of section 2(d). See TEX. CaNST. art. VIII, § 2(b), (d);
FISCAL NOTE, Tex. H.R.J. Res. 37, 80th Leg., R.S. (2007) ("Since the proposed constitutional
amendment would be self-enacting, adoption of the amendment by Texas voters could result in a
larger property tax exemption for disabled veterans.").

        Based on (i) the literal text of Texas Constitution article VIII, section 2(d) and (ii) the
intended purpose and operation of the 2007 amendments to the article VIII, section 2(b) disability
rating categories, we conclude that the maximum tax exemption brackets permitted under section
2(b) are to be given effect instead of the brackets under Tax Code section 11.22(a). Accordingly,
tax appraisal districts must use the schedule of disability ratings and corresponding maximum tax
exemption amounts provided in article VIII, section 2(b) instead ofthose set out in Tax Code section
11.22(a).




        6 Senate Joint Resolution 29, which proposed the amendment to article VIII, section 2(b) adopted in 2007, was
amended on the floor ofthe Texas House ofRepresentatives to add the substance of proposed House Joint Resolution
37. See H.J. of Tex., 80th Leg., R.S. 5081,5082 (2007); Tex. H.R.J. Res. 37, 80th Leg., R.S. (2007).
The Honorable John Carona - Page 5          (GA-0676)



                                     SUMMARY

                      Tax appraisal ,districts must use the schedule of disability
              ratings and corresponding maximum property tax exemption amounts
              for disabled veterans provided in article VIII, section 2(b) of the
              Texas Constitution instead of those set out in Tax Code section
              11.22(a).




KENT C. SULLIVAN
First Assistant Attorney General

ANDREW WEBER
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

SheelaRai
Assistant Attorney General, Opinion Committee
