Seventh Court of Appeals Judge Larry Doss visited Pampa Thursday night to provide a breakdown of the 17 proposed amendments to the Texas Constitution that will be voted on next month, November 4. He unbiasly explained what each amendment meant, whether members of the state legislature were for or against the proposal, as well as different state organizations, and why the proposals were supported or opposed.
Proposition 13: SJR-2
“Ballot Proposition 13 is one you’ve probably heard about the most in the news. If passed, it will increased the general homestead exemption. You may recall that in 1997 going into the elections, we did not have exemptions for our property taxes for your residence. If your home was appraised at $200,000, you paid property taxes on $200,000. In 1997, there was a $15,000 exemption that was put into place and then about 10 years ago that exemption was about $25,000. Two years ago, that exemption was raised to $100,000 and if passed this year, your exemption will be raised to $140,000. The vast majority of that goes to school taxes, 50-60%, and here’s how this works: assuming you have a house that is $200,000, if this passes, they’re going to take the first $140,000 off the top of that and you’re going to only pay the balance of that $60,000 amount. That’s how that is going to work. The supporters include all of the legislators both in the House and in the Senate. The vote was 143-0 in the House of Representatives and the vote was 30-0 in the Senate. As an understanding of how this works, that amount will be exempted from what you pay on your property taxes which like I said 50-60% goes to schools, so you may be asking what happens to the schools. The state is actually going to kick in from its general revenue fund because the state actually has a surplus and they are going to reimburse the school districts for that decline in money. The school districts will be at a net 0 and your tax coffers in Austin are going to take a big hit of about $2.7 billion over the next two years as it pays down everyone’s tax exemption. That’s a substantial amount, not only for the amount that affects you if you own a home, but it’s also a substantial amount for how it’s going to affect the budgets in the state of Texas.”
“The proponents for this measure say that you have to have broad off-setting tax relief in the state of Texas even as home values continue to go up, you have to have those exemptions to pull that amount back because otherwise the exemptions aren’t going to keep pace. Some have indicated as well that although this does not affect other people who pay rent, it might affect them secondarily if their landlords don’t have to pay rent on the property-it might prevent them from raising rent. That’s a conditional argument that has been made. There are people who oppose this proposal because they say they understand lower taxes is a good thing, but renters and commercial property owners aren’t getting any benefit of these funds, and it’s reducing the state revenue that can be used for other services in the tune of $2.7 billion every two years. They are worried about creating an ongoing financial obligation. You’ve got pressure on the one hand to cut property taxes, but on the other hand there are other ballot propositions that is also going to increase spending if those are passed, and you have to decide as voters if you’re okay with both of and if you’re willing to use surplus on for right now, or how it affects future generations and that’s something we need to talk about.”
“The state had a large surplus over the years, some of that is money that was received during the Covid bailout where states received a large amount of money, and the population of Texas is increasing so they’ve been able to bring in revenue in another way. Currently there is no proposal for making up that difference, or what would happen if this proposition stays longer than a two-year period if there are budget shortfalls.”
Proposition 11: SJR-85
“Currently, if you are a citizen over the age of 65 or you have disability, you get an additional $10,000 as an exemption in addition to the amount you get as a homeowner. If you are over 65 and you get $100,000 for your home, you get to add another $10,000. If Proposition 11 is passed in conjunction with Proposition 13, the amount would allow you to exempt as much as $200,000 off the top of your property taxes. It proposes increasing the exemption under Prop 11 from $10,000 to $60,000. You can add those two together and that would allow you to reduce your property taxes pretty substantially-probably $900 to $1,100 a year if you have a $200,000 house. That of course has its own offset as well. That money is being reimbursed to the school districts to the tune of about $1.2 billion that the state is going to use from its general revenue to pay them back. The group that is not getting additional money for that are the counties. Your counties don’t have the ability to recoup that money, so if this goes into effect, then Gray County will actually receive less funds in tax revenue coming in through its property taxes. As a result, many of the counties are the ones who oppose the proposition. Harris County and a number of other counties are in opposition to Propositions 11 and 13. All of your members of the House and all of your members of the Senate have voted in favor of Senate Joint Resolution 85, which is what put Proposition 11 on the ballot. They were all in favor of that, as well as the Texas Association of Builders and the realtor associations. There are opponents to the measure such as the Texas Policy Research Foundation, which is a fiscal conservative-leaning group, and the True Texas Project, which is primarily made up of Republicans, but they’re in opposition to this measure. One of the reasons if they don’t believe it should be used as a carve out. They believe the Texas Legislature is in better position to pass a law to temporarily reduce property taxes if they want to do so, but they’re concerned about the fiscal affect it will make. These amendments do not have expiration dates. The impacts that I have talked about for the general revenue are only projected for two years, but there is no current expiration date for either of these two amendments, so they would go on indefinitely and the state will either have to make money a different way through sales tax or an increase in population.”
Proposition 7: HJR-133
“This is really more of a loophole prevention measure. This is not receiving a lot of opposition from anybody. It currently received support from all senators in the state of Texas and all of your representatives and most groups, such as Texans for Fiscal Responsibility and The American Legion, etc. Current Texas law allows a full property tax exemption if you are a surviving spouse of a veteran who was rated 100% disable due to a service-related incident or died as a result of a service-related incident. So if your spouse was in service and was killed in action or they received 100% disability because of time in action, you are currently entitled to a 100% exemption on your property taxes. More recently though, for certain veterans who have been exposed to toxic substances, such as Agent Orange during Vietnam, burn pits in Iraq, or radiation in Afghanistan, there’s been disagreements about whether those individuals are disabled sufficiently to take advantage of this agreement. The Pact Act that was passed under federal law now recognizes those individuals to be disabled under federal law even though they are still disputing whether the chemical exposure cost the injury or not. All this is doing is to say they are recognized as disabled under federal law under the Pact Act, and they are going to extend the tax exemption for those spouses. It is to cover the loophole between those things. So Proposition 7 would allow the legislature to create a property tax exemption for the surviving spouses of these veterans, those who died under conditions that were presumed to fall under qualifying matters under federal law that were service-connected, even without this disability rating of having presented to them at the time of a physician to say they were 100% disabled. This is a way to try to fix the loophole or disagreement between current Texas law and current federal law. There is essentially only one opposition that I’m aware of and that’s from the True Texas Project who are not opposed to honoring veterans in this way, but they are arguing this is a carve out that should not be recognized through Texas law-that Texas law should not identify certains segments of the population and extend tax benefits to them when they’re not extended to other individuals. Their position is that property taxes should be eliminated for everyone in another way rather than individually address for spouses of surviving spouses.”
Proposition 10: SJR-84
“There may be more support for Prop 10 than any of them. Proposition 10 provides a temporary tax exemption for homes that are destroyed by fire. Why fire and not flood or tornado? I don’t know the answer to that. Under current law, if your house is burned to the ground in March and you receive a tax appraisal coming up later on that, you have to pay the full amount on the property even though your house is no longer there. Proposition 10 if passed will create an exemption for the time your house is no longer on the property until the house is built back. It’s a temporary property tax exemption. There really has not been a registered opponent of this bill.”
Proposition 17: HJR-34
“This is specific to the 14 Texas counties that border Mexico. The argument is the Federal government is coming along and building the wall and they’re providing border security for folks who want to enter from Mexico. For some individuals who receive the benefits of having the wall on their property or a tower or an access road may improve their property value. Under Proposition 17, that authorizes the legislature to create a carve out so they can provide a tax exemption for the value increase of that property created by those border security measures. It merely authorizes the legislature to do so. Why do we need a Constitutional Amendment to tell the legislature that they can pass laws? That is just the way they set up the language that authorizes the legislature to do so. The supporters include the Texas Farm Bureau, the Public Policy Foundation, the True Texas Project, who actually has a bit of a contradiction on this one. Their voter guide shows they support the measure, but their president recently took to some testimony and testified publicly she was opposed to the measure. So there’s a bit of ambiguity about where the True Texas Project actually stands on the matter. The other group that primarily opposes this is an organization called Every Texan out of Austin. There position is they don’t believe Texas should be building a border wall. In our area, all representatives and senators have voted in favor of it.”
Proposition 9: HJR-1
“Currently, if you are a business owner in the state of Texas, you are subject to a potential tax on anything you use in your possession to create income. Your equipment, machinary, tools, computer, furniture, inventory, anything like that. The exemption says if you’re a small business owner and the administrative cost of doing all that inventory and spending all of that time is worth $2,500 or less-that’s not going to cover many people. If you have a computer and a printer as part of running your business, that’s going to be a big chunk of that. So many small businesses are going to still have the adminstrative burden of doing inventory in order to satisfy this tax. Under Proposition 9, if this passes, that would increase that exemption to $125,000 from $2,500, which now means it will bring a lot of people under that exemption umbrella who no longer have to pay personal property taxes on their business. If you are a restaurant with a commercial business, you’ve got tables, chairs, a cash register and things like that, it might eliminate your personal property tax liability because now you’re under the $125,000 threshold.”
“All of your legislators voted for it, Texans for Fiscal Responsibility, the True Texas Project and the Policy Research folks and the National Federation of Independent Business are all in favor. The county commissioners are opposed to it because unlike your school taxes, anything that you’re not paying on your personal property taxes is born by your county. The county can’t go back to your state legislature and tell them to make up the difference in their general revenue. Only school districts can do that. So many county commissioners have taken opposition to that. So you may want to talk to your Gray County Commissioners and ask them what the affect would be.”
Proposition 5: HJR-99
“Currently animal feed of all things is exempt from taxes at every stage of its life cycle-when it’s produced, transported, when farmers use it, except for one thing: if you are a feed store owner and you are buying feed or seed for the upcoming season and tax appraisal time happens, you’re going to be taxed on your inventory because it’s not going in for that purpose. So feed stores are currently still subject to this tax. Proposition 5 would authorize the legislature to close this gap and exempt retail animal feed inventory from property taxes if it chooses to do so. The Texas Farm Bureau is obviously in favor of this, but the argument is being raised by individuals rather than organizations. Their argument is why should feed sellers get an exemption when other businesses don’t. If you are running a retail or hardware store, you’re not getting the exemption on the inventory the same way feed store owners would. But if Prop 9 passes, it may cover up that $125,000 anyway.”
Proposition 2: SJR-18
“There are two different kinds of capital gains taxes that go on in the United States. We’ve got a capital gains tax on realized taxes-something you buy, hold and sell; or there may be unrealized gains tax-you may have money in a 401K that increases in value but you haven’t cashed in on it. We don’t have a state sales tax here in Texas, and if Proposition 2 passes, it will say yes, and you don’t have capital gains taxes either. The state of Washington also does not have a state income tax, but recently the Washington Supreme Court issued a decision that said capital gains taxes are not considered income, and they are an excised tax on transactions. So now they require people living in Seattle to pay capital gains taxes and say they are no longer an income tax. My understanding of what’s going on is the legislature is putting this on as a ballot proposition for Texas voters to decide whether it’s going to be an amendment to permanently ensure we will not have capital gains taxes that will ever be taxed upon the capital gains you have. The tax groups are in favor of this and all of your local legislators have also voted in favor of this. There are not any individuals or organizations that have expressly weighed in on this. The individuals who oppose this said it is unnecessarily limits the flexlibility of the legislature that if it ever wanted to pass a capital gains tax, it could. Things can change in Austin and in state-wide elections.”
Proposition 6: HJR-4
“If you’ve been keeping up with the news for the past week, you’ll know the Securities and Exchange Commission has now approved the Texas Stock Exchange. It will operate in Dallas and compete with the New York Stock Exchange and the NASDAQ. Previously you had Wall Street, and now you have “Y’all Street” as the pundits are now calling it. ‘Come to Y’all Street in Dallas!’ In other states, again not in Texas, the institutions that are buying and selling securities have to pay a tax, a fee to the government on every transaction. If you are working with those companies that are trading securities out of state somewhere else, you have to pay to that company in the form of a fee to manage your funds. What this is doing is trying to encourage companies to trade on the Texas Stock Exchange by saying that you do not have to pay a fee on securities and transaction tax and that is a matter of a Texas Constitutional Amendment. The argument is that even a small tax can deter any activity on a baby stock exchange that is just starting up. Obviously Texas Stock Exchange is one of the proponents. They don’t want to pay the tax or have their brokers pay the tax. The anti-tax groups out of Texas are in favor as well. All of the legislators in this area are for it and no clear opposition on any record. I would think the individual arguments are where are you going to find future money, but if passed, Prop 6 will say you won’t find it in taxes that are imposed for buying or selling securities.”
Part 2 of the forum will be available to read in next Tuesday’s edition.
