Can a Texas county choose between an industrial commission and a board of development to promote economic growth?

Texas AG Opinion JM-1097: Industrial Commission or Board of Development for a County?

Plain-English summary

Johnson County wanted to promote local business and industry, and its county attorney asked the Attorney General whether the county had to use one particular legal tool or could pick between two. State law offered two ways for a county to set up an economic-development agency: a county industrial commission under section 381.001 of the Local Government Code, or a board of development under section 381.002. The county attorney thought the choice might depend on the county's size, because the board-of-development statute had historically been limited to counties above a population threshold.

The timing of the request mattered. The questions were framed under the old law, but the 71st Legislature had just amended section 381.002 through Senate Bill 24, effective in late August 1989, and that amendment deleted the population brackets that had limited the board-of-development statute to counties with more than 50,000 people. With those brackets gone, the Attorney General concluded that any county may act under either section. Johnson County, with a 1980 census figure around 67,000, was not locked into one path.

The two tools differ in how they are run and funded. Under section 381.001, the county judge appoints a county industrial commission to investigate and undertake ways of promoting business, industry, and commerce, and the county may pay the commission's necessary expenses without holding an election. Under section 381.002, the commissioners court appoints a board of development to advertise and promote the county's growth, and the county may appropriate funds or levy a tax for that board only with voter approval, subject to a rate ceiling.

There is one important catch that ties the two together. Subsection (g) of the amended section 381.002 extends its appropriation and tax limits to a county operating under any other law authorizing spending for advertising and promotion. So the spending ceiling in section 381.002(a), an amount not to exceed five cents on the $100 of assessed valuation, applies even to a county acting under section 381.001. The Attorney General answered the first two questions (either section is available, and no election is required to pay a section 381.001 commission's expenses) and did not reach the third, which assumed section 381.002 was the only option.

Currency note

This opinion was issued in 1989. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Sections 381.001 and 381.002 of the Local Government Code have been amended since 1989, the Texas Department of Commerce named here has since been reorganized into other state economic-development agencies, and county economic-development tools have expanded considerably. Anyone weighing a present-day county development agency or its funding should work from the current Local Government Code and current agency structure rather than the 1989 provisions described here.

Who this opinion affected (as of 1989)

Johnson County and other mid-sized counties: The opinion meant that, after Senate Bill 24, the county was free to choose either a section 381.001 industrial commission or a section 381.002 board of development to promote economic development, regardless of the old population threshold.

County judges and commissioners courts: The opinion clarified who appoints which body (the county judge appoints the industrial commission; the commissioners court appoints the board of development) and which funding path each triggers.

County taxpayers and voters: The opinion confirmed that spending under either tool was capped at five cents per $100 of assessed valuation, and that appropriating funds or levying a tax under a board of development required advance approval by a majority of the county's voters.

Common questions

Did a Texas county have to use a board of development to promote economic growth?
No. After the 1989 amendment removed the population brackets, the Attorney General concluded a county could use either a county industrial commission under section 381.001 or a board of development under section 381.002.

Does forming a county industrial commission require an election?
No. Section 381.001 does not require an election before the county pays the commission's necessary expenses. The election requirement applies to appropriating funds or levying a tax for a board of development under section 381.002.

Is there a limit on how much a county can spend?
Yes. Any appropriation under either section may not exceed the ceiling in section 381.002(a), an amount not to exceed five cents on the $100 of assessed valuation. Subsection (g) extends that limit to a county spending under another law.

Who appoints each body?
The county judge appoints the county industrial commission under section 381.001. The commissioners court appoints the board of development under section 381.002.

Background and statutory framework

The county attorney asked three questions about applying sections 381.001 and 381.002 of the Local Government Code to a county with a 1980 population figure of about 67,000. Because the questions were framed under the law as it stood before the 71st Legislature acted, the opinion began by noting that Senate Bill 24, Acts 1989, 71st Leg., ch. 1060, § 2, at 4306 (effective August 28, 1989), amended section 381.002 and deleted the population brackets that had limited that section to counties with a population of more than 50,000. The Attorney General therefore concluded that any county may act under either section.

Section 381.001 allows the county judge of any county to appoint a county industrial commission to "investigate and undertake ways of promoting the prosperous development of business, industry, and commerce in the county." Local Gov't Code § 381.001(f). The county may pay the "necessary expenses of the commission." Id. § 381.001(e). The commission must cooperate with and use the services of the Texas Department of Commerce. Id. § 381.001(g), as amended by Acts 1987, 70th Leg., ch. 374, § 8(e), at 1871.

Section 381.002, as amended by Senate Bill 24, creates a board of development in all counties. Id. § 381.002(b). The commissioners court appoints the board's members, and the board must "devote its time and effort to advertising and promoting the growth and development of the county." Id. § 381.002(b), (c). The section allows counties to appropriate funds and levy a tax for the board's purposes, but makes that appropriation or tax subject to a popular vote and sets a rate ceiling. Id. § 381.002(a). Subsection (g) recognizes that "a county may operate under another law authorizing the appropriation of money or levy of a tax for advertising and promotion purposes" but extends the appropriation and tax limitations in subsection (a) to counties operating under another law. Id. § 381.002(g).

The Attorney General had examined the predecessor provisions in Attorney General Opinion JM-516 (1986), which recognized that a county could promote development either through a county industrial commission established under article 1581g-2, V.T.C.S. (now Local Gov't Code § 381.001), or through a board of development established under article 2352d, V.T.C.S. (now Local Gov't Code § 381.002). That earlier opinion did not discuss the section 381.002 population bracket because it was not relevant there. With the 1989 amendment, the opinion concluded, the legislature clearly intended that any county may operate under section 381.002, and section 381.001 already applied to all counties, so Johnson County could act under either. On the second question, section 381.001 does not require an election before the expenditure of funds and allows payment of the commission's necessary expenses, subject to the subsection 381.002(g) caution that the subsection (a) appropriation limit reaches counties operating under another law. The third question was not reached because the county was not confined to section 381.002.

Citations

Statutory authorities:

• Local Gov't Code § 381.001 (county industrial commission; county judge appoints; payment of necessary expenses; cooperation with the Texas Department of Commerce)
• Local Gov't Code § 381.002 (board of development; commissioners court appoints; appropriation or tax subject to popular vote and rate ceiling; subsection (g) extends limits to other-law spending)
• Acts 1989, 71st Leg., ch. 1060, § 2, at 4306 (Senate Bill 24, deleting the section 381.002 population brackets; effective August 28, 1989)
• article 1581g-2, V.T.C.S. (predecessor of § 381.001)
• article 2352d, V.T.C.S. (predecessor of § 381.002)
• Acts 1987, 70th Leg., ch. 374, § 8(e), at 1871 (amendment on cooperation with the Texas Department of Commerce)

Attorney General opinion referenced:

• JM-516 (1986)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1097
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1989/jm1097.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

THE ATTORNEY GENERAL OF TEXAS

September 20, 1989

Honorable Dale Hanna
Johnson County Attorney
First Floor, Courthouse
Cleburne, Texas 76031

Opinion No. JM-1097

Re: Whether Johnson County has the option of creating a county industrial commission instead of a board of development (RQ-1692)

Dear Mr. Hanna:

You ask three questions regarding the application of sections 381.001 and 381.002 of the Local Government Code to Johnson County. Your questions are as follows:

1. Does a County with a population census figure of 67,000 in 1980 have the option of forming a County Industrial Commission under Section 381.001 or is it required to form a Board of Development under Section 381.002?

2. If Section 381.001 is available, can the County expend funds from the general fund to promote industrial development without an election pursuant to Section 381.002?

3. If Section 381.002 is the exclusive choice, what options are available to a County, with a population census figure of 67,000 in 1980, as to appropriating funds for industrial growth and development?

Your questions are based on the law prior to its amendment by the 71st Legislature. The adoption of Senate Bill 24, which amends section 381.002, Acts 1989, 71st Leg., ch. 1060, § 2, at 4306, has changed both the sense of your questions and the answers.[1] Your questions numbered one and three indicate the population of Johnson County, and prior to the amendment the population was a significant consideration. However, the amendment deleted population brackets that had limited the application of section 381.002 to counties with a population of more than 50,000. We now conclude that any county may act under either of the sections.

First, we will examine the provisions of the two statutes about which you inquire. Section 381.001 allows the county judge of any county to appoint a County Industrial Commission to "investigate and undertake ways of promoting the prosperous development of business, industry, and commerce in the county." Local Gov't Code § 381.001(f). That section allows the county to "pay the necessary expenses of the commission." Id. § 381.001(e). The commission is required to cooperate with and use the services of the Texas Department of Commerce. Id. § 381.001(g), as amended by Acts 1987, 70th Leg., ch. 374, § 8(e), at 1871.

We will discuss section 381.002 as amended by Senate Bill 24, and our subsection citations will refer to the section as amended. Section 381.002 creates a board of development in all counties. Local Gov't Code § 381.002(b). The county commissioners court appoints the members of the board, which is required to "devote its time and effort to advertising and promoting the growth and development of the county." Id. § 381.002(b), (c). That section also allows counties to appropriate funds and to levy a tax for the purposes of the board but makes such appropriation or tax subject to a popular vote and sets a ceiling on the rate. Id. § 381.002(a). Subsection (g) recognizes that "a county may operate under another law authorizing the appropriation of money or levy of a tax for advertising and promotion purposes" but extends the appropriation and tax limitations established by subsection (a) to counties operating under another law. Id. § 381.002(g).

This office examined these two provisions prior to their inclusion in the Local Government Code. In Attorney General Opinion JM-516 (1986), we said:

A county has authority to promote the development of businesses and industries in the county through a county industrial commission established under article 1581g-2, V.T.C.S. [now Local Gov't Code § 381.001], or through a board of development established under article 2352d, V.T.C.S. [now Local Gov't Code § 381.002].

Attorney General Opinion JM-516 (1986).

In that earlier opinion we did not discuss the population bracket that had limited the application of section 381.002 because it was not relevant. Now, with the 1989 amendment to section 381.002, the legislature has clearly indicated its intent that any county may operate under that section. Section 381.001, which allows the county judge of any county to appoint a county industrial commission, similarly applies to all counties. It is clear that any county may act under either section.

Your second question is whether a county acting under section 381.001 may expend funds from the general fund to promote development without an election. Section 381.001 does not require an election prior to the expenditure of funds, and it allows the county to pay the "necessary expenses" of the commission. Local Gov't Code § 381.001(e). We caution, however, as noted above, subsection (g) of section 381.002 extends the limit on appropriations found in subsection (a) ("an amount not to exceed five cents on the $100 assessed valuation") to counties operating under another law.

We need not answer your third question because we have concluded that Johnson County may operate under either of the two sections.

SUMMARY

In order to create a county level agency and to appropriate county funds to promote development in Johnson County, the county may operate under either section 381.001 or section 381.002 of the Local Government Code. Any appropriation under either section may not exceed the ceiling established by section 381.002(a). If operating under section 381.002, any appropriation must be approved in advance by a majority vote of the county electorate.

Very truly yours,

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Karen C. Gladney
Assistant Attorney General

Footnotes

[1] The effective date of Senate Bill 24 was August 28, 1989.