2013 Constitutional Amendments

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1 Proposition 1: HJR 62 by Chris Turner 2013 Constitutional Amendments Allows the surviving spouse of a member of the United States military that was killed in action a complete property tax exemption on their residential homestead until the surviving spouse remarries. The amount of the property tax exemption can be transferred from the home the serviceman and spouse owned at the time of death to another property. This constitutional amendment provides for a way to honor our service members who died in combat by allowing their surviving spouse a property tax exemption. Texas already allows a 100% disabled veteran a homestead exemption and for that exemption to transfer to their surviving spouse, but the law does not currently allow the surviving spouse of a person who was killed in action to receive a similar property tax exemption. The exemption expires when the surviving spouse remarries. This constitutional amendment will provide for another carve out for property taxes, which will shift the burden to other property owners. Proposition 2: HJR 79 by Branch The Texas Constitution currently requires a constitutional State Medical Education Board and State Medical Education Fund. The program, created in 1952, did not ultimately serve its intended purpose so the loans from the fund were discontinued in The Texas Higher Education Coordinating Board absorbed the State Medical Education Fund as part of its overall duties for scholarships and student loans, making the constitutional board and fund obsolete. HJR 79 eliminates the constitutional requirement to continue the board and fund. This constitutional amendment repeals an obsolete provision in the Texas Constitution. The State Medical Education Fund is operated by the Texas Higher Education Coordinating Board, so there is no need to maintain the discontinued program in the constitution. No opposition. Proposition 3: HJR 133 by Harper Brown The Texas Constitution currently allows for what is known as the Freeport Exemption. This

2 exemption allows for goods and tangible property to be exempt from property taxes if the property is used for manufacturing purposes, the property is transported from out of state, and the property is then transported outside of the state within 175 days. In other words, if the goods are a stored in a pass through facility, the goods are tax exempt. This constitutional amendment extends the 175 day Freeport exemption to 730 days for aircraft parts before the parts must be transported outside of the state. Companies that ship aircraft parts currently utilize the Freeport exemption. However, aircraft parts frequently sit on shelves for longer than 175 days and after the 175 days, they are subject to property taxes. Extending the days aircraft parts may sit on the shelves of warehouses and distribution centers from ½ a year to 2 years before being subject to property taxes will allow additional distribution centers for aircraft parts to develop in Texas around our airports. This growth in distribution centers and warehouses will provide additional economic development which would offset any potential revenue decline. The legislature should not single out specific industries for tax breaks without considering other types of pass through distribution centers or warehouses that were excluded by this law. The legislature should instead eliminate the property tax on tangible property and inventory which will then produce even more economic development. Proposition 4: HJR 24 by Charles Perry Allows a disabled veteran to receive a homestead exemption equal to the percentage of their disability rating for a home that has been donated to the veteran by a charitable organization at no cost to the veteran. Home builders and charitable organizations have donated homes to disabled veterans. Veterans who are 100% disabled receive a 100% homestead exemption for this donated home, but a service veteran who is not 100% disabled does not currently receive a partial homestead exemption for the donated home. The law is tailored to only allow service connected disabled veterans the opportunity for a property tax reduction. This constitutional amendment will provide for tax relief for those service connected disabled veterans who had a home donated to them while they are recovering from their injuries. Providing a tax reduction of an equal percentage to their disability rating is consistent with current property tax exemptions for 100% disabled veterans. The law will provide for meaningful property tax relief for the disabled veteran without a cost to the state. This constitutional amendment will provide for another carve out for property taxes, which will

3 shift the burden to other property owners. Proposition 5: SJR 18 by Carona The Texas laws related to home equity loans are contained entirely with the Texas Constitution. Recent federal legislation has allowed a person to purchase a new residential homestead and obtain a reverse mortgage simultaneously in a single transaction. This constitutional amendment would allow for a reverse mortgage in Texas. Reverse mortgages will allow senior citizens more flexibility in meeting their financial needs. The legislation also has safeguards to ensure persons seeking a reverse mortgage have received financial counseling and information regarding the transaction is disclosed to the buyer. Texas is the only state that does not allow for a reverse mortgage for a purchase transaction as the Texas Constitution does not currently allow for it. A person will have to take multiple steps to secure a reverse mortgage under current law. No apparent opposition. Proposition 6: SJR 1 by Williams This constitutional amendment creates the constitutional State Water Implementation Fund for Texas and the State Water Implementation Revenue Fund for Texas. Both of these funds will be special funds in the state treasury and funds will not subject to the state spending limit. These funds will be administered by the Texas Water Development Board and will be used for implementing the state s water plan. The Texas Water Development Board may use the funds to provide direct loans for water projects and enhance the credit of existing bonds to reduce interest rates. The funds are comprised of money appropriated by the legislature, any future tax revenue that is dedicated to the fund, investment earning, and repaid principle and interest on loans. The Texas Water Plan calls for $52 billion in water projects through conservation, added capacity, and water/waste water infrastructure by the year 2050 to keep pace with the expected population growth. House Bill 1025 appropriated $2 billion from the economic stabilization fund (rainy day fund) to capitalize the funds to begin investments in water projects. These funds, along with the $6 billion in authorized bonds the Texas Water Development Board currently has available, will operate as a bank to allow for necessary water projects without creating new state debts from general revenue funds. The importance of water projects is made all the more obvious to Texans due to the recent drought.

4 There is no doubt water is important to Texas and important to fund to state water plan. However, given the high importance for the projects, the legislature should have capitalized the water implementation funds from general revenue within the budget, especially in consideration of the budget surplus. The water implementation funds are also exempt from the state spending limit, so they will be able to grow faster than personal income growth within the state. The economic stabilization fund must remain strong to meet future economic downturns, potential natural disasters, and to maintain a strong state credit rating. Proposition 7: HJR 87 by Munoz Allows for a home rule city to amend its charter to determine its method of filling a vacancy on its governing body through an election to fill a vacancy of a term of under 12 months. Current law requires a city to hold an election within 120 days of the vacancy, regardless of the time of the vacancy. Under current law, if a city has a vacancy in its governing body they must hold an election within 120 days. Hypothetically, if a city has a regularly scheduled election 125 days after the vacancy is declared, the city must hold two separate elections within 5 days of each other. This constitutional amendment provides home rule cities with flexibility in their charters to determine the timing of the elections to fill a vacancy, which would save the city money in election administration. This will only apply to a vacancy that occurs for an unexpired term if there are fewer than 24 months remaining. This constitutional amendment could allow for cities to determine a charter amendment that allows for the appointment of an official instead of an election, which would reduce citizen s representation on the governing body and possibly reduce accountability. Proposition 8: HJR 147 (SJR 54) by Guerra Repeals the Hidalgo County Hospital District from the Texas Constitution. Hidalgo County does not currently operate a hospital district because the Texas Constitution caps the potential hospital district s maximum property tax rate at a rate that is well below the maximum tax rate for every other hospital district in Texas. Hidalgo County is in need of health care services, especially with the high number of uninsured residents, and a hospital district with a the same tax rate cap that other counties operate under would be of service to the county. The hospital district will also provide for an anchor for Medicaid funds and allow Hidalgo County to

5 draw down existing Medicaid funds. This constitutional amendment will likely lead to a property tax rate increase in Hidalgo County up to the cap of 75 cents per $100 in valuation that the other hospital districts operate under. Efforts should be made to reduce healthcare costs and improve access instead of raising taxes to acquire federal funds. Proposition 9: SJR 42 by Huffman The Texas Constitution creates the State Commission on Judicial Conduct which is responsible for ensuring Texas judges comply with constitutional standards of conduct. Current law only allows for the commission to issue an order of public censure of a judge after a formal proceeding. The constitutional amendment will expand the types of sanctions the commission may issue after a formal proceeding to include a public admonition, warning, censure, reprimand or a requirement for a judge to receive additional training. This constitutional amendment will allow the State Commission on Judicial Conduct to use a wide range of disciplinary actions that more appropriately fit the judicial misconduct. The constitution should give the State Commission on Judicial Conduct even further ability to discipline judges. Judges are largely protected from public scrutiny except during their respective election campaigns.