2007 Constitutional Amendment Election Endorsements: Amendments 5 - 9

[This is the second in a four-part series on constitutional amendments on the ballot on November 6]

Proposition 5

The ballot language:

The constitutional amendment authorizing the legislature to permit the voters of a municipality having a population of les than 10,000 to authorize the governing body of the municipality to enter into an agreement with an owner of real property in or adjacent to an area in the municipality that has been approved for funding under certain programs administered by the Texas Department of Agriculture under which the parties agree that all ad valorem taxes imposed on the owner’s property may not be increased for the first five tax years after the tax year in which the agreement is entered into.

Capitol Annex Recommends: A “No” Vote On Proposition 5.

While this sounds like a program dedicated to agricultural land use, the fact is that this amendment, which was not accompanied by any enabling legislation, is designed to assist small cities with downtown revitalization and Main Street Program funding by allowing the offering of tax abatements to owners.

While this sounds wonderful and historic preservation is always a good thing, such tax abatements amount to corporate and small business welfare. The simple reality is that not every building in a small town’s downtown revitalization zones is owned by a struggling small business or individual. Many are owned by wealthy investors, wealthy businesses, or even multi-national corporations. Either way, it amounts to a subsidy for business. Property owners who already receive one form of subsidy–the Department of Agriculture grants–should be required to pay taxes on the improvements this business subsidy provides. Otherwise, you risk teetering on the verge of a tax-shift in many small communities.

Proposition 6

The ballot language:

The constitutional amendment authorizing the legislature to exempt from ad valorem taxation one motor vehicle owned by an individual and used in the course of the owner’s occupation or profession and also for personal activities of the owner.

Capitol Annex Recommends: A “Yes” vote on Proposition 6

This amendment is designed to clarify legislation passed in 2005 which exempted personal vehicles from property taxes. However, a loophole allowed some taxing entities to continue to levy against them.

Proposition 7

Language on the ballot:

The constitutional amendment to allow governmental entities to sell property acquired through eminent domain back to the previous owners at the price the entities paid to acquire the property.

Capitol Annex Recommends: A “Yes” Vote On Propisition 7

This amendment is about fairness. If a government body acquires property through eminent domain and later doesn’t need it, it can go back into the hands of the original owner with no money lost, save whatever the appreciation was during the time the body held it. It also serves as encouragement to government bodies not to take more property than necessary for infrastructure projects through eminent domain.

Proposition 8

Ballot language:

The constitutional amendment to clarify certain provisions relating to the making of a home equity loan and use of home equity loan proceeds.

Capitol Annex Recommends: A “YES” Vote On Proposition 8, with reservations

This amendment is in part a result of litigation styled ACORN et al v. Finance Commission of Texas, et al.

Association of Community Organizations for Reform
Now (ACORN) et al. v. Finance Commission of Texas et al. While this legislation adds some much needed consumer protections to Texas’ home equity lending laws, it does not go far enough. It fails to address what charges are subject to the constitutional fee cap, whether an application may be taken orally, and fails to adequately regulate the use of preprinted checks to take out home equity line of credit advances. Further, the amendment doesn’t require lenders to provide homeowners with all of the information in their files.

Proposition 9

Here is the ballot language:

The constitutional amendment authorizing the legislature to exempt all or part of the residence homesteads of certain totally disabled veterans from ad valorem taxation and authorizing a change in the manner of determining the amount of the existing exemption from ad valorem taxation to which a disabled veteran is entitled.

Capitol Annex Recommends: A “NO” Vote On Proposition 9
While this is a marvelous gesture on the part of the state of Texas, two things will cause this to become a serious burden upon local government entities. Total exemption from ad valorem taxes on residence homesteads of vets who are totally disabled will sharply reduce revenue available to local governments and shift that burden back, ultimately, to other taxpayers or the state. In addition, with the increasing number of Iraq and Afghanistan conflict veterans who are coming home disabled, this will cause the burden to worsen and last for a not insignificant amount of time.

Without significant reform of the entire tax system in Texas, this amendment is simply not sound fiscal policy. Further, totally disabled vets are already entitled to the same tax freeze as other disabled persons and the elderly.

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