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FREE: A Voter’s Guide to the Nov. 5 TX Constitutional Amendments Election
Published October 21, 2013 7:50am by Sentinel Staff
The following Voters Guide, which presents the nine proposed Texas Constitutional Amendments on the Nov. 5, ballot, is funded and published by the League of Women Voters of Texas Education Fund.
For more than 90 years, helping voters cast an informed vote when they go to the polls has been the primary goal of the League of Women Voters.
As an organization that encourages informed and active participation in government, the League believes that all of us are stakeholders in Making Democracy Work. Neither the League nor the Education Fund supports or opposes any political party or candidate.
This guide states the official ballot language for each proposed constitutional amendment, followed by an explanation of the amendment, the arguments for and the arguments against.
The propositions were researched by trustees of the League of Women Voters of Texas Education Fund, who reviewed the legislative history and contacted persons and organizations who have supported and opposed the proposed amendments. See the Constitutional Amendments page at www.lwvtexas.org for links to the legislative history and the list of witnesses for and against each of the proposed amendments.
Check the League’s website for other helpful information about elections, voting and issues: www.lwvtexas.org.
Official Ballot Language: The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of all or part of the market value of the residence homestead of the surviving spouse of a member of the armed services of the United States who is killed in action.
The proposed amendment would allow the surviving spouse of a member of the U.S. armed services who was killed in action to be exempt from paying local property taxes based on all or part of the total appraised value of the homestead. This proposed amendment follows prior amendments that have passed, granting property tax exemptions to veterans who are 100% disabled and their surviving spouses.
Under Proposition 1 and its enabling bill SB 163, a surviving spouse is eligible if he or she has not remarried since the death of the spouse who served in the armed forces and if the qualifying homestead was the residence of the spouse at the time of death. Upon remarriage, the surviving spouse would lose the property tax exemption. The surviving spouse would be able to transfer the exemption to a new homestead, but it would be limited to the dollar amount of the prior homestead exemption.
• The proposed amendment would allow local governments in Texas to assist surviving spouses of U.S. armed services members who have been killed in action by providing valuable relief during such a difficult time. Surviving spouses who qualify would be able to save money on property taxes and could use this money elsewhere.
• Surviving spouses would be able to transfer the exemption to a new residence if the surviving spouse chose to move within the state.
• School districts would receive less revenue from property taxes so the state would have to cover the reduction by pulling from state general revenue, creating a cost to the state.
• Local governments would lose revenue, especially in cities and towns where military families largely populate the area. This would result in a projected yearly loss of up to $84,000 from counties, $93,000 from cities, and $45,000 from school districts by 2018 (SB 163 Fiscal Note). An increase in the number of people who receive property tax exemptions might require local governments to increase taxes for other taxpayers.
Official Ballot Language: The constitutional amendment eliminating an obsolete requirement for a State Medical Education Board and a State Medical Education Fund, neither of which is operational.
In 1952, voters amended the constitution to direct the Texas Legislature to create the State Medical Education Board (SMEB) and a scholarship fund to issue loans to medical students who agreed to practice in rural areas of Texas. In 1973, the Legislature created the SMEB. In 1987, the Legislative Budget Board reported that only 11 percent of loan recipients since 1973 were practicing in rural Texas counties, and only 14 percent of those were in medically underserved areas. No new loans have been issued since January 1988.
In 1989, after a recommendation by the Sunset Advisory Commission, the Legislature attached the SMEB to the Texas Higher Education Coordinating Board (THECB). All existing loans have been serviced or turned over to the attorney general for default collection. Loan repayment programs are now used instead of direct loans to medical students to attract physicians to practice in rural Texas.
The proposed constitutional amendment, and its enabling bill HB 1061, would remove references to these defunct entities in the constitution and state law.
• Since the SMEB and its education fund are no longer operational, references to them should be removed from the state’s unwieldy constitution.
• The SMEB and its education fund are obsolete and no loans have been issued since 1988, so a constitutional amendment to remove references to them is unnecessary.
Official Ballot Language: The constitutional amendment to authorize a political subdivision of this state to extend the number of days that aircraft parts that are exempt from ad valorem taxation due to their location in this state for a temporary period may be located in this state for purposes of qualifying for the tax exemption.
Currently, in order to promote economic development in the state, the Texas Constitution allows local taxing authorities to exempt from ad valorem taxation property that is in Texas temporarily. This tax exemption is commonly referred to as a “freeport exemption.” Eligible property includes goods, wares, merchandise, other tangible property, and ores, other than oil, natural gas, and other petroleum products. To be eligible for the exemption, the property must be acquired in or imported into Texas for export; detained for assembly, storage, manufacturing, processing, or fabrication; and shipped out of Texas no later than 175 days after acquisition or importation.
Eligible property currently includes aircraft and aircraft parts used for maintenance or repairs by certified air carriers. The proposed amendment and its enabling bill HB 3121 authorize the governing body of a political subdivision that already grants a freeport exemption to extend, up to 730 days (two years) after acquisition or importation, the date when aircraft parts with an exemption have to be transported outside of the state. The extension would apply only to the political subdivision that grants it.
If passed, the amendment would take effect January 1, 2014, and apply only to a tax year that begins on or after that date.
• The proposed extension of the freeport exemption would provide an economic development tool designed to make Texas competitive in the aerospace industry that contributes billions to the state’s economy. Texas is one of only a few states with a tax on inventory. Since aerospace suppliers often require inventory to be onsite for much longer than 175 days, at least one aerospace company has moved its storage or operations to another state because of the inventory tax.
• Granting an extension would be totally at the option of each local government already granting an exemption.
• Loss of tax revenue to a school district that grants a freeport exemption may be offset by additional state aid, since the amount of the exemption is subtracted from the market value of inventory or property to determine the taxable value for the taxing authority. Any extra cost to the state could be offset by additional revenues from increased economic development and jobs.
• Singling out one group for special tax exemption status raises issues of uniformity in taxation. If the extension is authorized for aircraft parts, similar industries that make specialized parts and have a high portion of idle inventory may seek similar extensions.
• Granting an extension reduces tax revenues for local governments.
• An increase in exemptions by school districts could result in higher costs to the state.
Official Ballot Language: The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of part of the market value of the residence homestead of a partially disabled veteran or the surviving spouse of a partially disabled veteran if the residence homestead was donated to the disabled veteran by a charitable organization.
Currently, the Texas Constitution provides that a 100 percent or totally disabled veteran, or the veteran’s surviving spouse, is entitled to an exemption from ad valorem taxation of the market value of the disabled veteran’s resident homestead, subject to certain restrictions.
This proposed amendment, and its enabling legislation HB 97, would provide a similar exemption to a partially disabled veteran or surviving spouse, if the homestead has been donated by a charitable organization at no cost to the veteran. The amount of the exemption would be a percentage of the market value of the residence homestead that is equal to the percentage of disability of the veteran. Proposition 4 would allow the legislature to provide additional eligibility requirements for the exemption, and would not affect whether a qualified disabled veteran was entitled to another exemption for veterans for which he or she may qualify. It also allows partially disabled veterans to be added to the list of individuals authorized to pay property taxes in installments as provided by current law.
• Texas charitable organizations have given homes to disabled veterans, but in some cases the veteran is unable to pay the property taxes, resulting in an unintended consequence of foreclosure. These veterans have sacrificed for our country and are deserving of help. The cost of the exemption is small because only a dozen or so homes per year are donated cost-free to disabled veterans.
• Partially disabled veterans who receive these homes are not likely to return to full employment and need help with their taxes.
• Singling out one group for special tax exemption status, even though deserving, raises issues of uniformity in taxation and could open the door to continued erosion of the tax base.
• If the purpose of the bill is to help partially disabled veterans keep their homes while they are unable to pay property taxes, the exemption should not be permanent. It should expire when the veteran can afford to pay property taxes.
Official Ballot Language: The constitutional amendment to authorize the making of a reverse mortgage loan for the purchase of homestead property and to amend lender disclosures and other requirements in connection with a reverse mortgage loan.
A “reverse mortgage for purchase” allows a senior aged 62 or older to purchase a new principal residence and obtain a reverse mortgage within a single transaction. Texas is the second largest market in the country for reverse mortgages, but the only state that does not offer the “reverse mortgage for purchase” because it is not authorized in the state constitution.
A reverse mortgage is a form of home equity loan that does not require a monthly payment. During the course of the loan, the debt increases with the addition of various costs such as interest, mortgage insurance premiums, and servicing fees, while the homeowner’s equity decreases. Repayment of the loan is deferred until the borrower dies, sells, or moves out of the residence. While reverse mortgages are a small market nationally, approximately 70,000 originated per year, it could grow dramatically in the decades ahead spurred by an aging baby boomer population.
Proposition 5 would enable Texas seniors to use “reverse mortgages for purchase” to acquire a new residence. It would also require reverse mortgage lenders to expand currently required counseling to borrowers to include disclosure of the specific behaviors that can lead to foreclosure on a property.
• This proposition saves costs for seniors by allowing a reverse mortgage loan to be set up as part of a purchase rather than after a purchase to eliminate duplicative processes.
• Using a “reverse mortgage for purchase,” the homeowner can occupy a new residence without making a single mortgage payment. This helps seniors relocate to other geographical areas or downsize to homes that better meet their needs.
• Reverse mortgage loans are typically easier to qualify for than traditional loans, which have income and credit score requirements to support the borrower’s ability to meet repayment commitments.
• All reverse mortgages are complex financial products. Surveys have found that consumers struggle to understand and make good decisions even after required counseling.
• Homeowners can lose a lifetime of home equity as a result of fraud, scams, misleading advertising, aggressive sales tactics and discriminatory practices sometimes associated with reverse mortgages. This risk increases significantly when state regulation and enforcement are weak.
• As baby boomers consider the reverse mortgage market, their choices may put them at considerable risk at a time in their lives when making a financial recovery is unlikely.
Official Ballot Language: The constitutional amendment providing for the creation of the State Water Implementation Fund for Texas and the State Water Implementation Revenue Fund for Texas to assist in the financing of priority projects in the state water plan to ensure the availability of adequate water resources.
The Texas Water Development Board (TWDB) develops a state water plan based on information from each of 16 regional water-planning groups. Existing state funding relies primarily on issuance of general obligation bonds, legislative appropriations, and federal grants that finance loans to local and regional water suppliers. In November 2011, voters approved a constitutional amendment that authorized the TWDB to issue additional general obligation bonds not to exceed $6 billion at any time.
Proposition 6 establishes two funds to finance water plan projects: the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). The two funds would receive financial resources for water projects, including revenue authorized by the state legislature, investment earnings and interest, and proceeds from the sale of bonds. The two funds would be part of the state treasury but outside the general revenue fund, a constitutional requirement to give the legislature control over disbursements.
Under Proposition 6, TWDB would have the power to enter into bond enhancement agreements to make bonds more attractive to purchasers. If the legislature provides authorization and the Legislative Budget Board approves, TWDB would have the authority to issue bonds and related credit agreements and to make direct loans for water projects in the state water plan. Repayment of loans would provide a revolving cash flow for additional loans.
HB 1025 authorizes the transfer of $2 billion from the economic stabilization fund, commonly known as the Rainy Day Fund, if the amendment passes. Money in the fund would be available to provide support for low-interest loans, longer repayment terms for loans, incremental repurchase terms for projects in which the state owns an interest, and deferral of loan payments. The enabling legislation for the proposed amendment, HB 4, prescribes how the funds are to be invested and how they may be apportioned within the state water plan. At least 10 percent of funds would be applied to projects designed to serve rural areas and 20 percent for water conservation or reuse.
• Ensuring an adequate water supply is essential to the public and economic health of Texas. These two funds provide a sustainable mechanism for funding water development projects with an initial transfer of $2 billion from the Rainy Day Fund to seed a revolving cash flow for making loans for water projects.
• Responding to the current drought emergency is an appropriate use of the Rainy Day Fund and will provide a better return on investment than if the money were left in that fund.
• Without the necessary funding for priority projects in the state water plan, Texas stands to lose millions of jobs and suffer reduced economic activity and decreased tax revenues.
• These two new funds are unnecessary as there is already available funding for water development projects administered by TWDB.
• While TWDB needs to proceed with priority projects, taking money from the Rainy Day Fund is inappropriate. Reducing the amount in this fund could reduce the state’s excellent credit rating and affect the state’s ability to respond to a natural disaster or other emergency situations. The legislature should make a separate appropriation from the general fund.
• The state should not take on the financing of water plan projects. Financing should be provided by those benefiting from the projects.
Official Ballot Language: The constitutional amendment authorizing a home-rule municipality to provide in its charter the procedure to fill a vacancy on its governing body for which the unexpired term is 12 months or less.
Almost all Texas cities of more than 5,000 population have adopted a home rule or an independent city charter. A home rule city can pass any regulations or laws it deems necessary as long as they are consistent with the state constitution and statutes.
Section 11, Article XI of the Texas Constitution prohibits a city with terms of office between two and four years from filling vacancies by appointment. These cities must fill vacancies by majority vote during a special election held within 120 days after the start of the vacancy.
The proposed constitutional amendment and its enabling bill HB 1372 would authorize a home rule city to provide in its charter a procedure other than a special election to fill a vacancy in its governing body for which the unexpired term is 12 months or less.
• Proposition 7 would cut taxpayer costs. When an elected city official passes away or otherwise leaves office, the Constitution requires the city to hold a special election within 120 days even if only a few months remain in the term. Taxpayers pay thousands of dollars to hold special elections only a few months before a regular election.
• This proposition would provide parity in election regulations. Vacancies for elected city officials with terms of office of less than two years can be filled by appointment. This proposition would allow vacancies to be filled by the same process for all elected officials. It would preserve democratic accountability because cities would have to hold elections as usual after the expiration of an appointed official’s term.
• Proposition 7 might increase the opportunity for corruption by allowing city officials to appoint one another.
• Voting and elections are the best way to ensure democratic accountability. The cost of special elections is a small price to pay to ensure accountability.
Official Ballot Language: The constitutional amendment repealing Section 7, Article IX, Texas Constitution, which relates to the creation of a hospital district in Hidalgo County.
Proposition 8 would remove from the Texas Constitution a 1960 amendment that authorized the creation of a hospital district in Hidalgo County with a maximum tax rate of 10 cents per $100 valuation of taxable property. This limit is below all other counties in Texas, and no hospital district has been created in Hidalgo County. Repealing the 1960 amendment, which applies only to Hidalgo County, would allow it to come under Section 4 of the Texas Constitution which provides for hospital districts in all counties, with a maximum tax rate of 75 cents per $100 valuation of all taxable property.
If Proposition 8 is passed, the formation of a hospital district in Hidalgo County and the district’s tax rate would require approval from the county’s voters during an election.
o Arguments For
• Hidalgo is the only county in the state with a tax limitation of 10 cents per $100 property valuation. It is also the largest county without a hospital district. The existing limitation hinders its ability to create and operate a sustainable district. Passage of Proposition 8 would allow Hidalgo County the same taxing rate that other counties have.
• Hidalgo County has a high rate of uninsured residents, and this proposition could help the county establish a hospital district and obtain federal funds for much-needed emergency care for the poor.
o Arguments Against
• Passage of this proposition would likely increase the taxes for property owners in Hidalgo County, since a hospital district could be created with a tax rate as high as 75 cents per $100 valuation of all property.
• An increase in taxes could hurt the very people this proposition is hoping to serve: the poor.
Official Ballot Language: The constitutional amendment relating to expanding the types of sanctions that may be assessed against a judge or justice following a formal proceeding instituted by the State Commission on Judicial Contact.
The State Commission on Judicial Conduct (SCJC) was created in 1965, through a constitutional amendment, to investigate allegations of judicial misconduct or disability and to discipline judges. The SCJC is responsible for ensuring that Texas judges comply with standards of conduct established in the Texas Constitution and by the Texas Supreme Court. Currently, after a formal disciplinary proceeding, the SCJC may issue an order of public censure or recommend removal or retirement of the judge/justice.
During its review of the SCJC, the Sunset Advisory Commission recommended that the SCJC be authorized to use its full range of disciplinary actions following a formal proceeding. If this proposed amendment passes, the SCJC may at its discretion issue a private or public admonition, warning, reprimand, or requirement that the person obtain additional training or education, as well as the censure or formal recommendations of resignation or retirement.
• Proposition 9 would lead to greater public accountability for judges and justices; continue to promote public confidence in the integrity, independence, competence, and impartiality of the judiciary, and encourage judges to maintain high standards of conduct both on and off the bench.
• Stronger measures than those provided by Proposition 9 are needed to reinforce the SCJC’s authority to discipline judges and hold them accountable for judicial misconduct.
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