Did Texas's 1987 property-tax exemption for non-income-producing recreational boats apply to boats already on the tax rolls?

Texas AG Opinion JM-893: When the 1987 Recreational-Boat Tax Exemption Applied

Plain-English summary

Nueces County Attorney Carlos Valdez asked whether the new local-option property-tax exemption for non-income-producing recreational boats applied to boats already on the 1987 tax rolls or only to boats that would be listed after the law took effect.

The Attorney General concluded that the exemption covered all qualifying boats located in a taxing unit as of January 1, 1987, but only if that taxing unit had not certified its tax rolls by May 26, 1987, the amendment's effective date. The opinion addressed statutory construction and did not decide whether the amendment itself was constitutional.

The key distinction was between appraisal and fixed tax liability. January 1 was the appraisal date, and a tax lien attached then, but listing property did not by itself complete the assessment. A taxpayer's liability became fixed only after the taxing unit carried out the assessment and levy procedures in chapter 26 of the Tax Code, including applying the tax rate to appraised value and determining the amount owed.

Before liability was fixed, the Legislature could extend the exemption to the 1987 tax year without destroying a vested right. Once the tax had matured, constitutional provisions barred releasing the liability or granting away public money. The practical line in the opinion was therefore certification of the tax rolls by the effective date.

Currency note

This opinion was issued in 1988. 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.

Common questions

Did the exemption cover boats already listed for 1987?

Yes, if they otherwise qualified and the taxing unit had not certified its tax rolls by May 26, 1987.

Was January 1 listing enough to create an irrevocable tax liability?

No. The opinion distinguished the appraisal date and lien from the later completion of assessment and levy under chapter 26.

When did the opinion treat the tax as fixed?

When the taxing unit completed the chapter 26 procedures that applied the rate to appraised value and determined the taxpayer's liability.

Could the exemption erase a tax after the rolls were certified?

No. The opinion concluded that constitutional restrictions prevented releasing a matured tax liability.

Did every taxing unit have to exempt recreational boats?

The amended statute created a local-option structure. Boats were exempt unless the taxing unit's governing body acted by the prescribed order or resolution to tax them.

Background and statutory framework

Senate Bill 367 amended Tax Code section 11.14 effective May 26, 1987. It treated boats owned and used by a family or individual for recreation, and not held or used to produce income, as exempt personal effects. A taxing unit could elect to tax all such boats by official action, with appraisal costs assessed to the participating units.

The opinion drew from Attorney General Opinion MW-4 (1979), which had analyzed whether tax-relief legislation could apply during the tax year before liabilities were fixed. Article I, section 16, generally barred retroactive laws but allowed retrospective legislation that did not impair vested rights. Deacon v. City of Euless, 405 S.W.2d 59, 62 (Tex. 1966), supported that distinction.

Other constitutional provisions controlled after tax liability matured. Article III, section 55, prohibited releasing public liabilities, and State v. Pioneer Oil & Refining Co., 292 S.W. 869 (Tex. Comm'n App. 1927, judgment adopted), treated a delinquent tax as such a liability. Article VIII, section 10, restricted release of state or county taxes, while article III, sections 51 and 52, restricted gifts or grants of public money.

Under the Tax Code, the January 1 assessment date and lien did not complete liability. Zglinski v. Hackett, 552 S.W.2d 933 (Tex. Civ. App. - Austin 1977, writ ref'd n.r.e.), and Crocker v. Santo Consolidated I.S.D., 116 S.W.2d 750 (Tex. Civ. App. - Eastland 1938, writ dism'd), supported requiring both assessment and levy. Chapter 26 supplied those procedures.

Citations

Statutory and constitutional authority:

• Tax Code sections 11.14 and 21.01; chapter 26
• Government Code section 311.022
• Texas Constitution article I, section 16
• Texas Constitution article III, sections 51, 52, and 55
• Texas Constitution article VIII, sections 10 and 15

Cases:

• Deacon v. City of Euless, 405 S.W.2d 59, 62 (Tex. 1966)
• State v. Pioneer Oil & Refining Co., 292 S.W. 869 (Tex. Comm'n App. 1927, judgment adopted)
• Bass v. Aransas County I.S.D., 389 S.W.2d 165 (Tex. Civ. App. - Corpus Christi 1965, writ ref'd n.r.e.)
• State v. City of Austin, 331 S.W.2d 737 (Tex. 1960)
• Morris v. Calvert, 329 S.W.2d 117 (Tex. Civ. App. - Austin 1959, writ ref'd n.r.e.)
• Zglinski v. Hackett, 552 S.W.2d 933 (Tex. Civ. App. - Austin 1977, writ ref'd n.r.e.)
• Crocker v. Santo Consolidated I.S.D., 116 S.W.2d 750 (Tex. Civ. App. - Eastland 1938, writ dism'd)

Prior Attorney General materials referenced: MW-11 (1979), MW-4 (1979), H-634 (1975), H-14 (1973), M-413 (1969), M-34 (1967), and C-200 (1963).

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-893
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1988/jm0893.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Obvious character-level OCR errors have been corrected, but minor errors may remain; the linked PDF is authoritative.

April 15, 1988

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 were
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.g., Attorney General Opinion MW-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 JM-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 family or individual for recreational activities and are not held or used
for the production of income are exempt
under this section. A family owns a boat for
purposes of this section if any member of
the family owns the boat.

           (3) '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 governing body of a         taxing
        unit bv ordinary    resolution    or    order,
        depending upon the method prescribed bv law
        for official action bv that governing    body,
        may provide   for taxation of all        boats
        exempted under Subsection      a.    If    the
        governing body of a taxing unit provides for
        taxation of all boats as Drovided bv this
        subsection,  the exemDtion prescribed       bv
        subsection (a) does not apply to that unit.

           (d) The central appraisal district     for
        the countv shall determine the cost of
        aDDraisina boats required bv a aoverninq
        body under the Drovisions of Subsection    (c)
        and shall assess those costs to the taxing
        unit or taxing 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 (JM-893)

1979. The opinion analyzed various constitutional
      provisions and concluded that legislation could constitutionally 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. City of Euless, 405 S.W.2d 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. City of Euless, supra, at 62; cf. Love V. City 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. City of
      Euless, supra at 61; see Gov't Code §311.022 (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 & Refining 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 JM-893

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 County 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. City 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 JM-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 & Refining Co.,
sunra; Zglinski 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 . Clegg 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.2d 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.
  Clegg v. State, sunra at 610-611: Amaimo v. Carter, supra;
  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.2d 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 JM-893)

amount of taxes that he owes. Clegg 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. Crocker v. Santo
Consolidated I.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 "assess"
,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 County I.S.D., supra, the court

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 year's 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 option"
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

LOU 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