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Municipal Technical Advisory Service (MTAS)

Original Author: Hemsley, Sid
Date of Material: 05/24/1991

City council--Procedure

Levying Taxes to Fund the Operation of City Schools and the Methods of School Consolidation

Reviewed Date: 07/20/2021
MTAS was asked whether the City Council can give the school board the authority to levy taxes to fund the operation of city schools and what the methods of school consolidation are in Tennessee.

May 24, 1991

You have two questions related to the City Schools:

1. Can the City Council give the school board the authority to levy taxes to fund the operation of city schools?

2. What are the methods of school consolidation in Tennessee?
Question 1

We shall see in a moment that the power of taxation resides in the state, and that such taxing power as a municipality has is delegated to it by the state. In the absence of authority from the Tennessee General Assembly, the city cannot delegate to the school board its taxing authority. I find no authority under either the general law or under the City Charter for the city to delegate to the school board the taxing authority that has been delegated to it by the Tennessee General Assembly.

However, your question raises the even more fundamental threshold questions of whether the state legislature could, in the future, either authorize the City to make that delegation, or to directly delegate its taxing authority to the school board. Unfortunately, the answer to the both questions is unclear.

The Tennessee Constitution, Article II, Sec. 29 contemplates taxation by municipalities and counties (to the extent authorized by the state) in the following language:

The General Assembly shall have power to authorize the several counties and incorporated towns in this State to impose taxes for County and Corporation purposes, respectively, in such manner as shall be prescribed by law.

The Tennessee Supreme Court made it clear in the recent case of Gibson County Special School District v. Palmer, 691 S.W.2d 544 (1985) that Art. II, Sec. 29 prohibits the legislature from granting taxing power to special school districts. The Court reasoned that:

The power of taxation is one that belongs to the state in its sovereign capacity. The exercise of power is legislative. The legislature has no authority to delegate this power of taxation except in such cases as the constitution authorizes [citing Waterhouse v. Public Schools, 63 Tenn. 398 (1876)].

Elsewhere in the same case the Court said, "No principle of organic law is more firmly embedded in the jurisprudence of Tennessee...than the principle that the legislature cannot delegate the taxing power beyond the extent expressly designated by the constitution." [Citing B.O. Keesee et al. v. The Civil District Board of Education, et al., 46 Tenn. 128 (1868) which we shall later consider in more detail.] [Emphasis mine.] Because there was "no express provision" in the Tennessee Constitution permitting the legislature to delegate its taxing authority to special school districts, such legislation was unconstitutional, concluded the Court.

Art. II, Sec. 29 of the Tennessee Constitution authorizes the delegation of state taxing authority to counties and incorporated towns, but not to school boards or other subdivisions of counties and incorporated towns. At first glance there is not found in that provision "express" authority for the legislature to delegate it taxing powers to municipal school boards.

However, our inquiry on this question does not end there. It can be argued that a municipal school board (or any other subdivision of a city) is the "town" for the purposes of Art. II, Sec. 29. That argument has some weight because the authority to delegate the state's taxing authority to counties and municipalities under that provision can be accomplished "in such manner as may be prescribed by law." In theory, then, the legislature can directly delegate its taxing authority to the city school board on the premise that the delegation is to the town.

But the Tennessee Supreme Court in B.O. Keesee et als. v. The Civil District Board of Eduction, 46 Tenn. (6 Cold.) 127 (1868) flatly rejected the argument that the Tennessee General Assembly could delegate its taxing authority to the 12th civil district school board of Montgomery County. Tracing the history of Art. II, Sec. 29 of the Tennessee Constitution, the Court announced that before the Tennessee Constitution of 1834 was adopted the law on the issue of tax authority delegation was reflected in the 1830 case of Marr v. Enloe. There, said the Court, it was held "that the power of taxation is in its nature, legislative; and is incapable of delegation. So essentially legislative is the power held to be that it can no more be delegated, than can be delegated the power to enact statutory laws." Upon the Tennessee Supreme Court Bench that handed down Marr, according to the Court:

were Robert Whyte, Caton and Greene. The mention of their names, carries with it great authority. It may be said, with a truth which will receive the assent of the enlightened lawyers of Tennessee, that these men, as much and probably more than any other of the judges who have adorned the past history of the Supreme Court, laid the foundations of the jurisprudence of Tennessee, and gave to it the great measure it has, of consistency, solidity and truth.

The reason I included that glowing endorsement of the 1830 Tennessee Supreme Court Bench by the 1868 Tennessee Supreme Court was because the latter made it for a purpose: to illustrate that the framers of the 1834 Constitution of Tennessee were well aware of the decision in Marr handed down by that great body of Supreme Court justices, and had the power to adopt it, abrogate it or modify it. It chose the latter, said the Court, by "authorizing the legislature to delegate the power of taxation to the counties and incorporated towns." However, continued the Court:

The Convention did not mean to go further. The implication is irresistible, that the expression of the authority to delegate the power to the counties and towns, is an absolute exclusion of authority to delegate the power to any other agency...The purpose of the 29th article was, to authorize the Legislature to confer the power of taxation on the counties and incorporated towns, and no other or further. [Emphasis is mine.]

The question remains whether "an absolute exclusion of authority to delegate the power [of taxation] to any other agency meant what it said, including the exclusion of any other county or municipal agency. Ironically, a strong dissent in B.O. Kessee which thought the Court went too far seems to think that it meant precisely that.

Troutman et al. v. Crippen et al., 186 Tenn. 459 (1937) seems to mitigate B.O. Kessee to some extent. In that case plaintiffs challenged a private act which created the Knox County Commission. A provision of the private act required the Board of Commissioners to submit a budget to the Knox County Court, but also made it mandatory that the Knox County Court levy a tax sufficient to accommodate the Knox County Commission's budget. The plaintiffs argued that the legislation had the effect of transferring to the Knox County Commission the taxing authority of the Knox County Court. But even if that was so, responded the Court:

The county, as an arm of the state, can only function through such agencies as the legislature deems fit to appoint, and the constitution imposes no restraint upon the exercise of this power by the legislature. The legislature can designate the County court, or such other agency as it sees fit to create, to administer the affairs of the county...We are furnished no authority for the proposition that it is beyond the power of the legislature to delegate the taxing power to a proper county agency other than the quarterly court, and we would be slow to reach such a conclusion. [Emphasis is mine.]

Similar language is found in several other cases cited in Troutman. However, the language in those cases is inconclusive. Some of them deal with delegation of the state's taxing authority to general purpose local governments rather than subdivisions of local governments. At least one, State ex rel. Ed. Bigham et al. v. W. W. Powers, 124 Tenn. 553 (1911) deals with the delegation of the power to make special assessments to a drainage district, which the Court concluded was subordinate to the county. Language in that case does indicate that the delegation of taxing power can be made by the legislature directly to a subordinate local government agency; however, that case was actually disposed of on the Court's declaration that special assessments were not taxes within the meaning of Art. II, Sec. 29.

Troutman itself dealt with an attempted delegation to a general purpose body. In fact, that case seems to place a conservative definition on the term "agency." Immediately following the quote cited above, the Court continued:

Had the framers of the constitution intended to limit the delegation of the taxing power to the County Court it would have said so, and we are of the opinion that such was not intended; and upon reason we see no cause for designating the County Court as the exclusive agency for administering the affairs of the county if the people prefer some other form of local government. [Citing State ex rel. v. Powers, 124 Tenn. 553 (1911).]

"Agency" in that context meant the county governing body of a general purpose government, not one of the subdivisions of the county. Under a conservative reading of Art. II, Sec. 29, a school board does not qualify as a "town" to which taxing authority can be granted "in such manner as shall be prescribed by law." Conversely, under a liberal reading, a school board might qualify as a "town" for that purpose. I am not sure which reading a court squarely confronted with your question would give it. My opinion is that it would incline to a conservative reading, but I wouldn't take that opinion to the bank.

Question 2

There are several school "consolidation" statutes; however, some of them do not result in a technically unitary county-wide school system. A thumbnail sketch of each one is given below.

- Tennessee Code Annotated, Sections 49-2-1001 authorizes contracts between county and municipal (and special school district) boards of education for the operation of the municipal schools under the county superintendent of education. It specifically provides that the distribution of state and county school funds will not be affected. Technical consolidation is not achieved under this statute.

- Tennessee Code Annotated, section 49-2-1002 permits the municipal governing body to transfer the administration of the town or city school system to the county board of education and superintendent, upon approval of the transfer by referendum. The transfer does create a unified (consolidated) county school system.
- Tennessee Code Annotated, section 49-2-1101--1104 permits the joint operation of school systems by contract entered into between cities and counties (and special school districts). The administration of the schools can be placed under the control of city or county (or special school district) boards of eduction or under control of a separate board created under the contract. "Consolidation" is not technically achieved under this method.

- Tennessee Code Annotated, section 49-2-1201--1208. This is a genuine "consolidation" statute. It permits the consolidation of all schools within a county. It provides for the creation of a unification planning commission by the city and county (and special school district). The planning commission is charged with the creation of a consolidation plan. The matters the planning commission is required to consider, and elements it is required to include in the plan, is outlined in the statute, as is a rather complicated method of approval of the plan. There are several stumbling blocks built into this statute over which consolidation can trip before it ever reaches the referendum stage.

If I can help you further in these or any other matters, please let me know.


Sidney D. Hemsley
Senior Law Consultant