                               July 22, 1988
Jl*IBlxrrox
*TroRNan- OEXEIIAL


        Honorable Terra1 R. Smith         Opinion No. JW-938.
        Chairman
        Natural Resources Committee       Re: Whether a city and a
        Texas House of Representatives    utility district may impose
        P.O. Box 2910                     taxes for overlapping ser-
        Austin, Texas 78769               vices (RQ-1307).
        Dear Representative Smith:
             You ask whether a recent amendment to the Municipal
        Annexation Act has the effect of subjecting residents of a
        special district, such as a municipal utility district, to
        the unconstitutional burden of double taxation when the
        district is annexed to a city but has not been dissolved.
        We conclude that the amendment does not expose the residents
P       of an annexed political subdivision to the threat of double
        taxation by the city and the political subdivision.       It
        does, hovever, create a conflict with section 43.075 of the
        Local Government Code, which governs the annexation of
        certain special districts.
             The legislation that prompted your request is section 8
        of Acts 1987, 70th Deg., ch. 1077, at 7397 (Senate Bill No.
        962). The bill amends section 8 of former V.T.C.S. article
        970a, the Municipal Annexation Act. Section 8, however, was
        repealed and codified as sections 42.041 and 42.042 of the
        Local Government Code during the regular session of the 70th
        Legislature. Section 311.031(c) of the Government Code
        provides that the repeal of a statute by a code does not
        affect an amendment of the statute by the same legislature
        which enacted the code and that an amendment is preserved
        and given effect as part of the code.
             The specific portion of Senate Bill No. 962 which draws
        your concern adds subsection F to section 8:
                    F. Subject to the provisions of this
                 Subsection, a city may annex a political
                 subdivision for full or limited purposes
                 and the political subdivision, its taxing




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Honorable Terra1 Smith - Pago 2   (JW-930)




        authority, and its board of directors may
        continue to exist for a period not to exceed
        ten (10) year8 from the date of such annexa-
        tion; provided that at the time of such
        annexation at least ninety percent (902) of
        the water, wastewater, roads, and drainage
        improvements for which district bonds are to
        be issued have     been installed and     are
        complete in accordance with the plans of such
        political subdivision to serve all of the
        area within its boundaries.
Acts 1987, Suorg, at 7399-7400. For convenience, we shall
refer to this provision as subsection F. Your concern is
that subsection F authorizes cities to annex political
subdivisions such as municipal utility districts without
abolishing the districts and assuming their bonded indebted-
ness. The residents of the annexed area would thus become
subject to the taxing authority of both the city and the
annexed political subdivision without an increase in the
level of services provided to the area. You ask whether
the residents would thereby be subjected to the unconstitu-
tional burden of double taxation.
     We note at this point that section 7(c) of article
97Oc, V.T.C.S., prohibits a city from imposing taxes on
the property or residents of an area annexed for limited
purposes on or after September 1, 1987. Article 97Oc was
enacted as part of Senate Bill No. 962.        m   Acts  1987,
sluxar  at 7396.   We also note that your guestion is preceded
by a reference    to a municipal utility district that lies
wholly within the extraterritorial jurisdiction of a home
rule city.     We will therefore assume that your question
concerns the "full purposeM annexation of the entire area of
a municipal utility district. a      Local Gov*t Code S 43.071
 (city must annex entire area of district created under Tex.
Const. art. XVI, 0 59, outside city's boundaries if no part
of district is within extraterritorial jurisdiction of
another city): Water Code 2 54.011 (municipal utility dis-
trict may be created under art. XVI, 6 59).
     The constitution of this state does not expressly
condemn double taxation.   Article VIII, section 1, of the
constitution, however, commands that taxationbe "equal and
uniform.* It is this constitutional principle that is
invoked in cases concerning claims of double taxation.
Under this provision, the courts have held that property
lying within the boundaries of both a city and a special




                        p. 4666
Honorable Torral Smith - Page 3 (JM-939)




district and subject to taxation by both for the same kinds
of services does not constitute unconstitutional double
taxation or taxation that is not equal and uniform. w
               is m        Water -01                rove
wt       No. 2, 198 S.W.Zd 450 (Tex. 1946ev.            z
                   449 S.W.Zd 508 (Tex. Civ. App. - Corpus
                     ref'd n.r.e.):
Q,                                 51 S.W.ld 784 (Tex.
APP. - Galveston 1932, writ refed).      See alsg Attorne;
General Opinions JW-626 (1987); JM-400 (1985). The courts
applied this rule where the taxing entities were created as
separate entities under separate provisions of the constitu-
tion, and both were delegated the power to assess and
collect taxes to accomplish their respective purposes.    It
also appears that the courts were persuaded by the fact that
while both entities had the authority to provide the same
services to the same area, only one of the entities could
actually provide such services.   s.eaCitvof          -I
at 454.
     Though this rule   bears potentially harsh consequences
for the residents of an annexed political subdivision, it is
a rule that finds acceptance in a number of other states.
ze;6$eEi;len,      &&&Dal     Corooratk    f 44.23 and cases
              . Subsection F of section 8 imposes no greater
a burden on these taxpayers than the courts have sanctioned.
Subsection F does not require the annexing city to assume
either the liabilities or duties of the political sub-
division, nor does it divest the political subdivision of
its lawful authority for a period not to exceed ten
following the annexation.1 If the legislature had req%ii
the city to immediately assume the duties and liabilities
of the political subdivision, yet allowed the subdivision
to retain its taxing authority, then a clear threat of
double taxation would exist. m           Wheeler v. Citv of
Brownsva,     220 S.W.Zd 457 (Tex. 1949) (statute requiring
city to assume indebtedness attributable to part of water
district annexed by city did not violate article VIII,


     1. The ten-year limitation may be intended to allow
the political subdivision to phase out its operations,
retire its bonded indebtedness, and delay the city's assump-
tion of the duties of the district. The legislative history
of this provision, however, provides little insight into the
factors motivating the adoption of the ten-year limitation.




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Honorable Terra1 Smith - Page 4 (JM-930)




section 1, of the      Texas Constitution, where   district
continued to operate   over and assess taxes on the annexed
area) .
     The possibility that the residents of the annexed
political subdivision will not receive a reciprocal amount
of services from the city upon annexation does not render
unconstitutional the statute authorizing the annexation of
the political subdivision.   The principle of equality and
uniformity in taxation does not require that each person
derive the same benefit as others from the expenditure of
funds raised by taxation.   Wheeler v. Citv of Broe
220 S.W.Zd 457 (Tex. 1949).    This may operate harshly 0;
even unjustly against some taxpayers: however, this result
does not offend the "equal and uniform* provision of article
VIII, section 1, of the constitution. mris       v. Citv of
m,    57 Tex. 635 (1882).
     Though we do not believe that subsection F imposes an
unconstitutional burden of double taxation on the residents
of a political subdivision annexed by a city pursuant to its
provisions, we believe it creates a conflict with another
statute affecting the authority of a city to annex the
territory within certain kinds of special districts. In the
years following the Citv of Pelly and m           cases, the
legislature sought to spread the burden of retiring the
indebtedness of certain kinds of special districts to the
taxpayers of home rule cities that annexed such districts.
In 1947 it enacted article 1182c-1, V.T.C.S., codified in
pa*    as section 43.075 of the Local Government Code.
Section 43.075 applies to a municipality that annexes all or
part of the area of a water control and improvement
district, a fresh water supply district, or a municipal
utility district if the district does not include any area
located in     another   municipality.   Local   Gov't   Code
5 43.075(a)(l), (b). It applies also to municipalities that
incorporate over all or part of the area of such districts
and adopt an ordinance making section 43.075 applicable to
the municipality. &     9 43.075(a)(Z). &g Attorney General
Opinion JW-565 (1986). If all the area of the district is
annexed, the municipality is required to take over all the
property and other assets of the district, assume all debts,
 liabilities, and obligations of the district, and perform
all functions of the district, including the provision of
 services. &     5 43.075(d). This transfer of duties and
 obligations must take place by ordinance of the municipality
within 90 days after the date the area becomes part of the
municipality, or on the 91st day by operation of law.     &




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    ",* Honorable Terra1 Smith - Page 5 (JM-930)




      5 43.075(e).  The district is abolished once this transfer
      occurs. &      The remainder of the statute details the
      conditions under which     and the    methods whereby   the
      municipelity discharges the obligations of the district and
      acquires its assets and faoilities.
           Section 43.075 reflects a longstanding and consistent
      public policy of requiring cities to assume the bonded
      indebtedness of the annexed portions of        water-related
      special purpose districts. This policy is carried forth in
      a number of provisions relating to the annexation of water
      control and improvement     districts, fresh water supply
      districts, municipal utility districts, irrigation dis-
      tricts, and conservation and reclamation districts.      m
      Local Gov't    Code 55 43.022(d);    43.074(d);   43.076(b);
      43.077(b). The courts have determined that the purpose of
      section 43.075 was to avoid the duplication of functions by
      a city and an annexed district.
      270 S.W.ld 235, 239 (Tex.
      ref'd n.r.e.) (construing former article 1182c-1, V.T:C.S.).
      But these provisions also appear to be inspired by a desire
      to equitably adjust the tax burdens of the lesser and
      greater areas.                Ford v. Town of ConoelJ
r     S.W.Zd 304 (Texm               - Dallas 1966, writ 're",$
      n.r.e.).   Section 43.075, then, addresses the       problem
      described in your letter requesting this opinion.
            Subsection F creates an apparent conflict with section
       43.075. Subsection F deals with the annexation of territory
       of any political subdivision by a city, while section 43.075
       deals with the annexation of enumerated special districts,
       including municipal utility districts, the focus of your
       inquiry. Because section 43.075 is the more specific but
       earlier enactment, we must determine whether subsection F
       governs the annexation of the special districts enumerated
       in section 43.075.
            Section 311.026 of the Government Code provides that in
       the event a general provision in a code conflicts with a
       special provision, the two shall be construed, if possible,
       so that both may be given effect. If the conflict is
       irreconcilable, the special provision prevails as an excep-
       tion to the general, "unless the general provision is the
       later enactment     th manifest     ent is that the aeneral
       provision orevu?     (knphasis addyd.)
            Although both articles 970a   and 1182c-1 were repealed
       and codified simultaneously, the   amendment to article 970a




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Honorable Terra1 Smith - Page 6   (JM-930)




was approved nearly one month aZter the approval of the
Local Government Code.   m       Acts 1987,  70th Leg.,  ch.
149, at 2548 (approved Way 21, 1987), l&th Acts 1987, 70th
Leg., ch. 1077, at 7403 (approved June 20,1987). It happens
that the more general provision is the later enactment, but
our review of the legislative history of Senate Bill No. 962
reveals no intention to override the more specific provision
governing the annexation of water districts. Indeed, in the
tape recordings of the legislative hearings that were made
available to this office in the preparation of this opinion,
no mention was made of section   43.075 or its predecessor,
article 1182c-1.
     The legislative history of Senate Bill No. 962 suggests
that it was a compromise bill designed to accommodate a
variety of competing interests. As originally introduced,
the bill gave cities the authority to engage in limited
purpose annexation.   At approximately the same time, the
House of Representatives adopted House Bill No. 1193, which
sought to circumscribe the authority of cities to annex
territory for limited purposes. H.J. of Tex., 70th Deg.,
Reg. Sess. 497 (1987). The engrossed versions of both bills
contained virtually identical versions of article 97Oc.
L;   S.J. of Tex., 70th Leg., Reg. Sess. 1739 (1987).
Neither, however, contained subsection F.    The latter was
added as a floor amendment to Senate Bill No. 962 in the
House of Representatives. &g H.J. of Tex., 70th Leg., Reg.
Sess. 3907 (1987).
     House Bill No. 1193 was tabled in the Senate, but the
substance of the bill was incorporated into Senate Bill No.
962. The senate bill thus appears to be the product of
legislative compromise. We think that the floor amendment
adding subsection F to the bill may also reflect an attempt
to strike a happy medium between the interested parties.
&S Debate on Tex. S.B. 962 on the Floor of the House of
Representatives, 70th Leg. Way 29, 1987) (tape recording
available from House Staff Services). Still, there is no
indication in the available legislative history that the
legislature considered section 43.075.     Thus, we cannot
conclude that the wmanifest  intent" of the legislature was
that the general provisions of subsection F govern a city's
annexation of all or part of the area of a water control and
improvement district, fresh water supply district,
municipal utility district.   Accordingly, we conclude thit
section 43.075 of the Local Government Code governs the
annexation of such special districts by a city. Gov't Code
5 311.026(b).




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    , Honorable Terra1 Smith - Page 7 (JM-930)




                   Section 8 of Acts  1987, 70th Leg., ch.
              1077, at 7397 (amending section 8 of former
              article 970a, V.T.C.S.) does not impose the
              burden of double taxation on residents of a
              political subdivision annexed by a       city
              pursuant to its provisions. This provision
              does not govern the annexation of the kinds
              of special districts described in section
              43.075 of the Local Government Code.




                                         JIM     MATTOX
                                         Attorney General of Texas
      MARYKELLER
      First Assistant Attorney General
      Lou MccREARY
F     Executive Assistant Attorney General
      JUDGE ZOLLIE STEAKLEY
      Special Assistant Attorney General
      RICK GILPIN
      Chairman, Opinion Committee
      Prepared by Steve Aragon
      Assistant Attorney General




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