Municipal Drainage Fees
State Senator Royce West of Dallas requested an opinion from the attorney general asking whether a school district is exempt from the assessment of a municipal drainage fee under the Municipal Drainage Utility Systems Act (Texas Local Government Code Chapter 552, Subchapter C). In general, the Act gives municipalities the authority to: establish a municipal drainage utility system; provide rules for the use, operation, and financing of the system; assess, levy, and collect fees to fund the system; and provide exemptions of certain persons from its rules.
Section 552.053 states that a municipality may exempt a school district from ordinances, resolutions, and rules of a municipal drainage utility system. Only property owned by a school district located wholly or partly in El Paso is statutorily exempt.
Texas Tax Code section 11.11(a) states that property owned by a political subdivision of the state is exempt from taxation if the property is used for public purposes. If the municipal drainage fee is considered a tax, a school district should be exempt.
LAF filed a brief with the Texas Attorney General arguing that the Act exempts school districts from paying municipal drainage fees and that such fees are taxes from which school districts are exempt. The attorney general issued opinion GA-1080, opining that a court would likely conclude that the exemption in the Act is permissive, not mandatory, and that a municipality has the discretion to decide whether to grant an exemption. Further the attorney general opined that a court would likely conclude that a reasonable drainage charge under the Act is not a tax from which school districts are exempt. Op. Tex. Att’y Gen. No. GA-1080 (Sept. 22, 2014). LAF’s Attorney: Thomas E. Myers, Brackett & Ellis, P.C., Fort Worth.