El Paso Cty. Hosp. Dist. v. Gilbert, 08-98-00281-CV

• Decision Date: 16 September 1999
• Docket Number: No. 08-98-00281-CV,08-98-00281-CV
• Citation: 4 S.W.3d 66
• Parties: (Tex.App.-El Paso 1999) EL PASO COUNTY HOSPITAL DISTRICT, COUNTY OF EL PASO OF THE STATE OF TEXAS, COUNTY JUDGE CHARLES MATTOX, COUNTY COMMISSIONERS CHARLES HOOTEN, CARLOS AGUILAR, DANIEL HAGGERTY, and MIGUEL TERAN, ALL AS THE GOVERNING BOARD OF THE EL PASO COUNTY HOSPITAL DISTRICT, Appellants, v. RAY E. GILBERT, JR., MARIO MELGAR, RICHARD MONTEZ, ROBERT GARCIA, and BILL NEWKIRK, Appellees.
• Court: Texas Court of Appeals

Page 66

4 S.W.3d 66 (Tex.App.-El Paso 1999)

EL PASO COUNTY HOSPITAL DISTRICT, COUNTY OF EL PASO OF THE STATE OF TEXAS COUNTY JUDGE CHARLES MATTOX, COUNTY COMMISSIONERS CHARLES HOOTEN, CARLOS AGUILAR, DANIEL HAGGERTY, and MIGUEL TERAN, ALL AS THE GOVERNING BOARD OF THE EL PASO COUNTY HOSPITAL DISTRICT, Appellants, v. RAY E. GILBERT, JR., MARIO MELGAR, RICHARD MONTEZ, ROBERT GARCIA, and BILL NEWKIRK, Appellees.

No. 08-98-00281-CV.

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS.

September 16, 1999.

Appeal from County Court at Law No. 2 of El Paso County, Texas (TC# 97-3105) Before Panel No. 2 Barajas, C.J., McClure, and Chew, JJ.

O P I N I O N

ANN CRAWFORD McCLURE, Justice.

Ray E. Gilbert, Jr., Maria Melgar, Richard Montez, Robert Garcia, and Bill Newkirk, tax-paying property owners in El Paso County (Property Owners), brought suit against the County of El Paso (the County) and the members of the El Paso County Commissioners' Court (the Commissioners' Court) seeking injunctive relief pursuant to TEX.TAX CODE ANN. 26.04(g) (Vernon Supp. 1999). Alleging that the defendants failed to comply with the publication requirements of TEX.TAX CODE ANN. 26.04(e)(2) because the El Paso County Hospital District (Hospital District)¹ did not disclose all required unencumbered fund balances in its "Notice of Effective Tax Rate," the Property Owners sought to prohibit the defendants from adopting or levying 1997 property taxes for the Hospital District. By a subsequent pleading, they additionally sought a declaratory judgment and attorney's fees under the Texas Declaratory Judgment Act. See TEX.CIV.PRAC.&REM.CODE ANN. 37.001 et seq. (Vernon 1997 and Vernon Supp. 1999). Followingsubmission of the case on stipulated facts, the trial court found in favor of the Property Owners. Accordingly, the court below issued a declaratory judgment and permanently enjoined the County and the Commissioners' Court from setting and adopting future tax rates for the Hospital District without including all unencumbered fund balances in the notice of effective tax rate. The court further awarded attorney's fees to the property owners. We reverse.

FACTUAL SUMMARY

The Hospital District is a county-wide hospital district created pursuant to Article IX, 4 of the Texas Constitution and Chapter 281 of the Health and Safety Code to provide medical care to indigent and needy residents of El Paso County.² In addition to property taxes and other sources, the Hospital District also receives revenues from Medicaid Disproportionate Share Funds (Dispro Funds) because it serves a disproportionate share of low-income patients. During the fiscal years ended September 30, 1996 and 1997, nine Texas hospitals which serve a disproportionate share of low-income patients were assessed a monthly state tax of 1.25 percent of non-Medicaid patient revenue. In return, all qualifying Texas hospitals, including the Hospital District, received a federally matched distribution of funds under the Disproportionate Share Program. For 1996 and 1997, the Hospital District paid taxes in the amount of $13,429,000 and $11,548,000 respectively, and received Dispro Funds in the net amount of $26,777,000 and $25,949,000 respectively. Receipt of the Dispro Funds has a substantial impact on the Hospital District's financial status. If the Hospital District had not received the Dispro Funds during the indicated years, it would have suffered losses of $664,000 and $2,014,000.

For fiscal year 1997, the Hospital District anticipated receipt of revenues in excess of $165 million, including property taxes in the sum of $32,128,699 and net Dispro revenue of $22,131,444, with total operating expenses budgeted at $143,298,011.³ If the Dispro Revenue is excluded, total budgeted revenue equals total budgeted expenses for fiscal year 1997. The Hospital District has a policy of segregating Dispro revenue and not investing the funds until the Hospital District, in its discretion, approves projects and expenditures of such funds. Further, the Hospital District allocates and expends all property tax revenues received each fiscal year for maintenance and operations and debt service expenses for that fiscal year.

In Schedule A of the "Notice of Effective Tax Rate" published pursuant to Section 26.04(e), which requires a taxing unit to compute and publish the estimated amount of unencumbered interest and sinking fund balances and maintenance and operations or general fund balances remaining at the end of the current year, the Hospital District did not report the estimated balance of its primary operating account, a general fund which includes Dispro funds and revenues from sources other than property taxes. The Hospital District, relying on guidelines established by the Texas Comptroller, reported only the unencumbered fund balance remaining in the interest and sinking fund (I & S) and maintenance and operations (M & O) property tax accounts. Since the Hospital District expends all property tax revenues it receives each fiscal year for operating and debt service expenses, and no property tax revenues are left in any property tax account at the end of the fiscal year, the Hospital District reported zero ($-0-) as the estimated balances remaining in the I & S and M & O property tax accounts at the end of fiscal year 1997.

CONSTRUCTION OF SECTION 26.04(e)

In their second issue on appeal, the County and the Hospital District urge that the trial court misconstrued Section 26.04(e) of the Property Tax Code to require inclusion of all unencumbered funds, including Dispro funds, rather than only unencumbered fund balances remaining in each ad valorem property tax account at the end of the fiscal year.⁴ We agree.

The Central Issue on Appeal

Section 26.04(e) provides, in relevant part, that:

(e) By August 7 or as soon thereafter as practicable, the designated officer or employee shall submit the rates to the governing body. He shall deliver by mail to each property owner in the unit or publish in a newspaper in the form prescribed by the comptroller:

(1) the effective tax rate, the rollback tax rate, and an explanation of how they were calculated;

(2) the estimated amount of interest and sinking fund balances and the estimated amount of maintenance and operation or general fund balances remaining at the end of the current fiscal year that are not encumbered with or by corresponding existing debt obligation, except that for a school district, estimated funds necessary for the operation of the district prior to the receipt of the first state education aid payment in the succeeding school year shall be subtracted from the estimated fund balances. [Emphasis added.]

TEX.TAX CODE ANN. 26.04(e)(1) & (2).

In accordance with Section 26.04(e)'s directive, the Texas Comptroller of Public Accounts provides to taxing units a detailed and extensive guide for computation of the rates and form for the "Notice of Effective Tax Rate," including the disclosure of these funds in Schedule A. See Tex. Comptroller of Pub. Acc'ts, Truth-in-Taxation Guide: A Guide for Setting Tax Rates, p. 34 (July 1997)(hereinafter referred to as Truth-in-Taxation Guide). The Truth-in-Taxation Guide requires a hospital district to report only the unencumbered funds left in the property tax accounts at the end of the fiscal year. The parties and amicus curiae agree that the central issue on appeal is whether the Texas Comptroller has correctly construed Section 26.04(e)(2), or whether as the trial court concluded, the statute requires a taxing unit to report all of its estimated fund balances regardless of the revenue source.

Rules of Statutory Construction

Several principles guide our inquiry in construing a statute. Our ultimate purpose must be to effect the legislative intent. Texas Water Comm'n v. Brushy Creek Mun. Utility Dist., 917 S.W.2d 19, 21 (Tex. 1996); Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 280 (Tex. 1994); Fidelity & Cas. Co. of New York v. Hailes, 969 S.W.2d 123, 125 (Tex.App.--El Paso 1998, pet. denied). Ordinarily, we resort to rules of construction only when the statute in question is ambiguous. Texas Water Comm'n, 917 S.W.2d at 21; Ex parte Roloff, 510 S.W.2d 913, 915 (Tex. 1974); Hailes, 969 S.W.2d at 125. Regardless of whether the statute is considered ambiguous on its face, we may consider the administrative construction of the statute. TEX.GOV'T CODE ANN. 311.023(6) (Vernon 1998). The construction of a statute by an agency charged with its execution is entitled to serious consideration unless the agency's construction is unreasonable and clearly inconsistent with the legislative intent. Texas Water Comm'n, 917 S.W.2d at 21; Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex. 1993); Hailes, 969 S.W.2d at 125. We give greater deference to an agency interpretation that is long-standing and applied uniformly. Texas Citrus Exchange v. Sharp, 955 S.W.2d 164, 170 (Tex.App.--Austin 1997, no writ); Amarillo Independent School District v. Meno, 854 S.W.2d 950, 954 n.6 (Tex.App.--Austin 1993, writ denied); see also Sharp v. House of Lloyd, Inc., 815 S.W.2d 245, 248 (Tex. 1991).

The County and Hospital District urge us to apply the doctrine of legislative acceptance to the Comptroller's interpretation of Section 26.04(e)(2). According to the doctrine, a statute of doubtful meaning that has been construed by the proper administrative officers, when re-enacted without any substantial change in verbiage, will ordinarily receive the same construction. Sharp, 815 S.W.2d at 248; Humble Oil & Refining Co. v. Calvert, 414 S.W.2d 172, 180 (Tex. 1967). The Comptroller is charged with the duty of prescribing the contents of all forms necessary for the administration of the property tax system and furnishing sufficient copies of model forms to local officials. TEX.TAX CODE ANN. 5.07(a)(Vernon 1992). Section 26.04(e) specifically references this duty by mandating that the taxing unit must utilize the form...