Untitled Texas Attorney General Opinion: KP-0515

February 5, 2026

The Honorable Matthew A. Mills
Hood County Attorney
1200 West Pearl Street
Granbury, Texas 76048

Opinion No. KP-0515

Re: Interpretation and application of certain provisions in Tax Code chapter 26 and Special
District Local Laws Code chapter 1042 to a hospital district (RQ-0593-KP)

Dear Mr. Mills:

You ask about Hood County Hospital District’s statutory authority in relation to a Tax
Code requirement. 1 You tell us that, under the Special District Local Laws Code, the District is
charged with providing indigent care and is authorized to impose an ad valorem tax. Request Letter
at 1. You say that “[o]n December 31, 1996, the” District entered into a lease that transferred
control of certain District facilities to another entity “in exchange for an up-front payment to the
District.” Id. “After that time, the District did not impose ad valorem taxes, and it used the lease
money to provide indigent care.” Id. But “the [lease] money is nearly out” so, in 2024, the District
set an ad valorem tax rate above zero and called an election to obtain voter approval on the new
rate. 2 Id. at 1–2. You explain the District called the election because of a requirement in the Tax
Code. Id. at 2. “However, the measure was defeated, leaving the District” with an ad valorem tax
rate of zero and “limited options before running out of money in about a year.” Id.

Against that backdrop, you suggest “tension” exists between the Special District Laws
Code and the Tax Code as to the imposition of ad valorem taxes. Id. at 1. You first ask which
statute controls—the District’s authority to impose a tax under the Special District Laws Code or
the Tax Code’s requirement to “secure voter approval before raising ad valorem taxes above a
certain rate.” Id. at 2. If “the Tax Code controls,” you next ask whether the “responsibilities of the
District” fall on Hood County. Id.

1
See Letter from Hon. Matthew A. Mills, Hood Cnty. Att’y, to Hon. Ken Paxton, Tex. Att’y Gen. at 2 (Apr.
3, 2025), https://www.texasattorneygeneral.gov/sites/default/files/request-files/request/2025/RQ0593KP.pdf
(“Request Letter”).
Information on its website indicates the District set the tax rate at $0.02 per $100 valuation. See
2

HOOD CNTY., HOOD COUNTY HOSPITAL DISTRICT BOARD PROPOSED TAX INCREASE INFORMATION PACKET (Sept.
25, 2024), https://hoodcountytx.documents-on-demand.com/document/cc471798-477b-ef11-a41f-000c29a59557/
Hood%20County%20Hospital%20District%20QA%2009.25.2024%20QA%20v5 (on file with the Op. Comm.).
The Honorable Matthew A. Mills - Page 2

The District’s board of directors shall impose a tax on property in the District at a
rate not to exceed seventy-five cents on each $100 valuation.

We begin with some general information about the District and its authority to impose a
property tax. The Legislature created the District under its authority to “creat[e], establish[],
maint[ain] and operat[e] . . . hospital districts” in article IX, section 9 of the Texas Constitution.
TEX. CONST. art. IX, § 9; see TEX. SPEC. DIST. CODE § 1042.002. The District’s enabling
legislation is codified at Chapter 1042 of the Special District Local Laws Code. See TEX. SPEC.
DIST. CODE §§ 1042.001‒.253. Pursuant to Chapter 1042, a board of directors manages and
controls the District, id. §§ 1042.001, .103, which is charged with the responsibility of providing
medical and hospital care for the District’s needy inhabitants, id. § 1042.101. To help carry out
this and its other functions, “[t]he board shall impose a tax on all property in the district subject to
district taxation,” id. § 1042.251(a), “at a rate not to exceed [seventy-five] cents on each $100
valuation,” id. § 1042.252. Cf. Gilbert v. El Paso Cnty. Hosp. Dist., 38 S.W.3d 85, 87 (Tex. 2001)
(stating that a different hospital district was authorized to assess a property tax to discharge its
responsibility to furnish care for the indigent and needy and perform other functions).

The Tax Code gives voters a method to limit a tax rate increase to the extent it exceeds
the voter-approval tax rate.

We next consider the Tax Code requirement at issue. You tell us the Tax Code requires
“taxing entities to secure voter approval before raising ad valorem taxes above a certain rate.”
Request Letter at 2. We understand you to refer to section 26.07 of the Tax Code, a truth-in-
taxation provision. See id.; Tex. Att’y Gen. Op. No. KP-0444 (2023) at 8. See generally TEX. TAX
CODE § 26.07.

Section 26.07 provides that “[i]f the governing body of a special taxing unit . . . adopts a
tax rate that exceeds the taxing unit’s voter-approval tax rate, . . . the registered voters of the taxing
unit at an election held for that purpose must determine whether to approve the adopted tax rate.”
TEX. TAX CODE § 26.07(b). A “special taxing unit” includes a hospital district. Id. § 26.012(19)(C).
If the voters do not approve the proposition, the “tax rate for the current tax year is the taxing unit’s
voter-approval tax rate.” Id. § 26.07(e); see also id. § 26.04(c) (prescribing how to calculate the
“voter-approval tax rate”).

This means that raising a previously approved tax rate from zero requires a voter approval
election, and rejection of that proposed increase leaves the “rate for the current tax year [at] the
taxing unit’s voter-approval tax rate,” id. § 26.07(b), (e); see also Tex. Att’y Gen. Op. No. GA-
1070 (2014) at 2 (referencing what was previously called the rollback rate)—i.e., the original zero.
We understand this is the situation the District faces. 3 See Request Letter at 1.

3
Information on the District’s website indicates that, in 2024, the District calculated its voter-approval tax
rate to be zero. See HOOD CNTY., HOOD COUNTY HOSPITAL DISTRICT NOTICE OF PUBLIC HEARING ON TAX INCREASE,
https://hoodcad.net/wp-content/uploads/2024/08/Hospital-District-Notice-of-tax-rate.pdf (last visited Sept. 5, 2025)
(on file with the Op. Comm.).
The Honorable Matthew A. Mills - Page 3

The District’s authority to impose a tax does not conflict with the voters’ ability to
limit a tax-rate increase.

Your first question asks whether the Special District Local Laws Code or the Tax Code
controls—suggesting the two codes are in conflict. See id. at 1–2. “When construing a statute, our
chief objective is effectuating the Legislature’s intent, and ordinarily, the truest manifestation of
what lawmakers intended is what they enacted.” Combs v. Roark Amusement & Vending, L.P., 422
S.W.3d 632, 635 (Tex. 2013). “Two statutes irreconcilably conflict when only one of them can
apply to a particular situation.” Love v. State, 706 S.W.3d 584, 609 (Tex. App.—Austin 2024, pet.
ref’d) (quoting Lomax v. State, 233 S.W.3d 302, 312 (Tex. Crim. App. 2007)). In situations where
a conflict exists, one statute may prevail over another. See, e.g., TEX. GOV’T CODE §§ 311.025(a),
.026(b). But we “read statutes to avoid conflict and superfluities if possible.” Bd. of Adjustment of
City of San Antonio v. Wende, 92 S.W.3d 424, 432 (Tex. 2002). We determine if a conflict exists
by focusing first on the enacted language. See Combs, 422 S.W.3d at 635.

You correctly observe that both the District’s enabling legislation and Tax Code section
26.07 concern the District’s tax rate. See Request Letter at 1–2. The provisions differ, however, in
purpose and application. Sections 1042.251 and 1042.252 of the Special District Local Laws Code
are special laws that command the board of directors to adopt a tax rate within a permissible
range—that is, “a rate not to exceed [seventy-five] cents on each $100 valuation.” TEX. SPEC. DIST.
CODE §§ 1042.251–.252. By comparison, section 26.07 is a general statute which affords voters
the opportunity to limit tax increases through disapproval of rates above those previously
approved. TEX. TAX CODE § 26.07(e); Tex. Att’y Gen. Op. No. KP-0444 (2023) at 8; see also, e.g.,
Vinson v. Burgess, 773 S.W.2d 263, 264 n.1 (Tex. 1989) (using the “rollback tax rate”
terminology). Thus, sections 1042.251 and 1042.252 authorize the District’s board of directors to
impose a tax within an enumerated range of rates and section 26.07 permits voters to limit the
extent of a tax-rate increase. Compare TEX. SPEC. DIST. CODE §§ 1042.251, .252, with TEX. TAX
CODE § 26.07(e).

Even were we to assume that a zero percent tax rate is within the prescribed statutory range
of rates which the board may impose, 4 Tax Code section 26.07 simply authorizes voters to refuse
to raise property taxes “as far as the taxing unit’s governing body proposes.” Gilbert, 38 S.W.3d
at 91. Section 26.07 does not itself prohibit the board from imposing a rate within the permissible
range of tax rates. Cf. id. at 88 (concluding another truth-in-taxation statute did not limit a
governmental unit’s power to levy taxes). The District’s enabling legislation can, in that case,
apply alongside those in the Tax Code without conflict. If a zero percent tax rate is not within the
prescribed statutory range of rates that the board may impose, of course, the dilemma you describe
arises from an ultra vires act of the board. See Request Letter at 1. Indeed, a hospital district “may
exercise only those powers expressly delegated to it by the Legislature, or which exist by clear and
unquestioned implication.” Jackson Cnty. Hosp. Dist. v. Jackson Cnty. Citizens for Continued
Hosp. Care, 669 S.W.2d 147, 154 (Tex. App.—Corpus Christi 1984, no writ). This belies the need
to conclude whether a zero percent tax rate is valid when, either way, the dilemma you describe

4
We find no judicial opinion addressing whether the board of directors of a hospital district may set its ad
valorem tax rate at zero. Nor has the issue been addressed in an Attorney General opinion. See, e.g., Tex. Att’y Gen.
Op. No. GA-0798 (2010) at 1 n.2.
The Honorable Matthew A. Mills - Page 4

does not follow from statutory conflict. Put simply, there is no conflict between sections 1042.251
and 1042.252 of the Special District Local Laws Code and section 26.07 of the Tax Code—
meaning neither “controls” over the other. See Request Letter at 2.

A county’s obligation to provide health care services and assistance pursuant to
Health and Safety Code section 61.022 does not apply to a person who resides in the
service area of a hospital district.

You also ask whether the District’s responsibilities “automatically fall upon” the County,
under section 61.022 of the Health and Safety Code, if the District continues to have an ad valorem
tax rate of zero. Id. That section requires a county to “provide health care assistance . . . to each of
its eligible county residents.” TEX. HEALTH & SAFETY CODE § 61.022(a). But this obligation
applies only “to a person who does not reside in the service area of a public hospital or hospital
district.” Id. § 61.021; see also id. § 61.002(2) (defining “eligible county resident”). Here, of
course, “[t]he boundaries of the [D]istrict are coextensive with the boundaries of Hood County.”
TEX. SPEC. DIST. CODE § 1042.003. Thus section 61.022 does not require the County to provide
health care services and assistance to eligible residents when all County residents necessarily
reside in the District. See Tex. Att’y Gen. Op. No. JM-0722 (1987) at 2–3. Said differently, the
District is responsible for these “needy inhabitants.” TEX. SPEC. DIST. CODE § 1042.101; see also
TEX. CONST. art. IX, § 9 (requiring a district to “assume full responsibility for providing medical
and hospital care for its needy inhabitants”); TEX. HEALTH & SAFETY CODE §§ 61.051–.068
(emphasizing the District’s responsibility).

We cannot predict other possible repercussions for a county if a hospital district’s ad
valorem tax rate is set at zero. In some instances, a hospital district might receive revenue from
sources other than property tax, such as sales and use tax or patient payments. See, e.g., TEX.
HEALTH & SAFETY CODE § 285.061 (authorizing certain hospital districts to hold an election to
adopt a sales and use tax); TEX. SPEC. DIST. CODE § 1042.111(d)–(g) (addressing the District’s
authority to hold a patient liable for payment of treatment); Gilbert, 38 S.W.3d at 87 (“In addition
to property taxes, the District receives money from paying patients, its cafeteria, and Medicaid.”).
A hospital district facing financial distress might, in other instances, have to declare bankruptcy or
seek dissolution. See, e.g., In re Hardeman Cnty. Hosp. Dist., 540 B.R. 229, 231–33 (Bankr. N.D.
Tex. 2015); Tex. Att’y Gen. Op. No. JC-0268 (2000) at 3. In sum, the long-term consequences for
the County depend on the District’s future actions.
The Honorable Matthew A. Mills - Page 5

S U M M A R Y

Hood County Hospital District’s authority to impose a
property tax under Special District Local Laws Code Chapter 1042
does not conflict with the voters’ ability to limit a tax-rate increase
under Tax Code section 26.07.

A county’s obligation to provide health care services and
assistance pursuant to Health and Safety Code section 61.022 does
not apply to a person who resides in the service area of a hospital
district.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT WEBSTER
First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

D. FORREST BRUMBAUGH
Deputy Attorney General for Legal Counsel

JOSHUA C. FIVESON
Chair, Opinion Committee

CHRISTY DRAKE-ADAMS
Assistant Attorney General, Opinion Committee