With early voting beginning Monday and the general or “constitutional amendment election” Nov. 7, the Progress Times takes a look at the seven amendments to the Texas constitution in as many ballot propositions. The overview is based on information obtained from The League of Women Voters of Texas, Ballotpedia and published reports.
When not otherwise attributed, the majority of the arguments presented for and against a proposition were authored by the Texas House Research Organization and published by the League of Woman Voters and Ballotpedia. The HRO is a nonpartisan, independent department of the Texas House of Representatives comprised of 15 House members elected by the House membership. It provides impartial information on legislation and issues before the Texas Legislature.
Proposition 1 would allow the Texas State Legislature to pass bills to provide partially-disabled veterans or their surviving spouses with a property tax exemption if the veterans paid 50 percent or less of the market value for the house donated to them. The measure would also keep the existing tax exemption for partially disabled veterans who received their homes at no cost from a charity.
The tax exemption would be equal to the percentage that the veteran is partially disabled. Proposition 1 would not itself provide a tax exemption, but would authorize the legislature to create one.
In an Oct. 8 Op/Ed piece supporting the measure, State Rep. Bobby Guerra said the action was needed because as war veterans return to their communities, some, who have become disabled during service, will work with nonprofit groups and community groups to assist them in acquiring a home that will accommodate their specific needs. In some of these instances, part of the cost of the home is donated with the veterans paying some amount, as well. Currently, if a veteran receives a fully donated house, they receive a property tax exemption. However, the veteran who has paid some amount doesn’t receive the same benefit.
Guerra said the goal of Prop 1 is to correct the oversight and allow veterans who have been able to pay for part of their home to receive the benefit of a property tax exemption. Guerra said that would help such disabled veterans and their families afford to stay in their homes.
According to the HRO, unlike a partially disabled veteran whose home is donated in full, a veteran who paid part of the cost of a donated home receives no property tax exemption on its taxable value. This can lead to a sizable property tax bill that the recipient may not have anticipated and an ongoing cost that the veteran may not have the income to offset. Veterans in this situation are at risk of losing a donated home to unpaid property taxes, even if that home was built or renovated specifically for the individual’s disabilities, with features such as wheelchair-accessibility.
In its argument against the amendment the HRO said it would continue a pattern of giving “carve-outs and exemptions” to specific groups of people, when instead the Legislature should focus its efforts on reducing the tax burden on everyone. The HRO said reducing taxes on specific groups usually means other groups must absorb more of the tax burden.
However, Guerra opined if there is one group deserving of a tax exemption it is the disabled veteran who has served their country in wartime.
Guerra’s legislative director, Justin Cantú, said both the State Comptroller’s Office and Veteran’s Commission said it would be premature to estimate the number of veterans the change would impact but said the number would be “relatively small.”
There have been no published reports citing the numbers of veterans the amendment may effect nor the impact its passage might have on the state’s $217 billion two-year budget passed in May. But according to a 2016 report to the governor’s office by the Texas Workforce Investment Council, of the 19,259,717 veterans in the U.S., 19.5 percent (3,756,131 individuals) have a service connected disability rating.
With more than 1.5 million veterans, Texas has the second highest number of veterans in the U.S. with California coming in first with 1.6 million. In 2014, the last year for which statistics are available, veterans comprised 8.2 percent of the state’s population. And according to the 2016 report to the governor, approximately 28 percent of Texas veterans (426,566 individuals) report having a disability compared to 13 percent of the 18 and older non-veteran population (2,446,412 individuals).
Proposition 2 would amend Article 16, Section 50(a)(6) of the Texas Constitution that governs home equity loans, or money borrowed against the value of a home by its owner using the property as a guarantee to repay the loan. The amendment proposes changes to the state constitution in the following four areas:
Passage of Prop 2 would lower the maximum limit on fees that can be charged to borrowers from 3 percent to 2 percent of the loan principal but excludes the cost of appraisals, property surveys, title insurance premiums, title insurance, and title examination reports from calculation of the maximum limit on fees.
In opposition to the change the HRO argued adding the costs for appraisals, surveys, title insurance and reports on top of the maximum fee limit of 2 percent of the loan principal would likely be higher than the current 3 percent cap on all fees. The HRO stated in support of the measure lenders will be able to make loans under $100,000 more easily because the fee cap will not included fees by third parties while still protecting consumers against extreme fees by lenders.
Passage of Prop 2 would allow a home equity loan to be refinanced as a non-home equity loan secured with a lien against the property if certain conditions are met. This is currently prohibited.
The HRO stated in support of the measure the change would allow a home equity loan to be refinanced into a non-home equity loan within reasonable restrictions increasing consumer choice because the borrower could combine a home equity loan with another loan to have one payment or to obtain a lower interest rate.
In arguing against the change the HRO notes home equity loans have important protections related to judicial foreclosure and protection against loss of non-home assets. A new home equity loan with the consumer protections is a better option than a non-home equity loan without those protections, the HRO argues.
2) Home equity lines of credit
If passed, Prop 2 would repeal a provision of the sate constitution that prevents additional advances on a home equity line of credit if the unpaid principal exceeds 50 percent of the fair market value of the home. The amendment would allow advances under a home equity line of credit at any time as long as the principal amount of the debt remained at or below 80 percent of the fair market value of the house.
Currently, a borrower can take out a home equity line of credit of up to 80 percent of the fair market value of the house, but no further draws can be made on that line of credit unless the principal amount owed is no more than 50 percent of the fair market value of the house. At that point, an additional draw can be made that increases the principal amount owed back up to no more than 80 percent of the fair market value of the house.
Under the amendment, the owner of a $250,000 could take out a home equity line of credit of up to $200,000. The owner could then draw on that line of credit freely as long as the principal amount never exceeded $200,000.
Going into 2017, the owner of such a house could take out a home equity line of credit of $200,000, but the owner could not take any additional advances under the home equity line of credit unless the principal was paid down to below $125,000. If, for example, the owner paid the principal down to $120,000, he or she would then be allowed to request an advance of up to $80,000 (i.e. enough to bring the principal amount back up to $200,000).
The HRO notes the pros of the change are allowing borrowers to initially take out a smaller loan and pay less interest before borrowing more against the line of credit by repealing an unnecessary restriction on home equity lines of credit, which has resulted in consumers being unable to access funds for which they had been approved. In such instances, owners must repay funds in order to access the remaining line of credit. Proponents say this can result in consumers taking out larger loans sooner than they would like and paying more interest.
The amendment would eliminate the 50 percent limit on the amount that can be outstanding before making additional withdrawals, but lines of credit would continue to be covered by provisions that limit loans to 80 percent of fair market value. This would make conditions on lines of credit consistent with regular home equity loans, while continuing the same protections with these loans.
In opposition to the measure the HRO argues that allowing home equity loans to be refinanced as non-home equity loans would be counter to the ideas and protections embedded in the Texas home equity laws. These laws deliberately encompassed the idea of “once-a-home-equity-loan, always-a-home-equity-loan” so that homeowners who borrowed against the equity in their homes would have certain protections.
Consumers would lose important protections if home equity loans were refinanced as non-home equity loans. These protections include requiring judicial foreclosure on home equity loans and making home equity loans non-recourse so that a borrower’s other assets are not at risk in a default. Requiring judicial foreclosure is especially important as it ensures the involvement of a court and that homeowners are afforded certain rights in the foreclosure process, the HRO said.
The HRO also argues that allowing this type of refinancing also could give lenders incentives to push the refinancing of loans both to earn the fees and to bring a loan out from under the protections given to home equity borrowers. Home equity loan borrowers interested in refinancing their loans already can do so with a new home equity loan that carries with it all the protections, and this would be a better option than the change, the HRO said.
3) Agricultural homesteads
Passage of Prop 2 would allow a home equity loan for a homestead designated for agricultural use, which is currently prohibited.
In support of the measure the HRO argues it would allow home equity loans to be made on agricultural homesteads to give these consumers the same choice as other Texans. The original home equity laws broadly prohibited such loans, but the HRO notes there have been no problems in the more than 20 years of home equity lending in Texas that would support continuing a prohibition on loans to one class of homesteads. In addition to shutting owners of larger farms and ranches out from home equity loans, the current prohibition keeps smaller, hobby agricultural homesteads from having the option of taking out home equity loans. All of the current consumer protections would continue to cover these loans.
The HRO notes the negatives of the proposed measure are that home equity loans and lines of credit for agricultural properties are costlier than farm operating loans and lines of credit due to the added large costs for appraisals, surveys, title insurance and reports.
4) Approved lenders
If Prop 2 is approved it would expand the list of approved home equity lenders by adding subsidiaries of banks, savings and loan associations, savings banks, and credit unions; and replace mortgage brokers with mortgage bankers and mortgage companies.
Neither the League of Women Voters or Ballotpedia included HRO arguments for or against this change.
If passed, Prop 3 would limit the service of certain office holders appointed by the governor and confirmed by the senate after the expiration of the person’s term of office.
Proposition 3 would modify the holdover provisions for all unsalaried officers appointed by the governor such as appointees to volunteer boards and commissions. Current law, known as the “holdover” provision, allows all unsalaried appointees to continue to perform the duties of their office until a successor is duly qualified. “Holdovers” ensure continuation of functions but have been used to serve as extensions of terms of office.
According to the HRO, Prop 3 makes it clear that if a term expires when the legislature is not in regular session, the officer will continue to serve only until the last day of the next regular session of the legislature. These unsalaried officials would not continue to serve in office past the expiration even if no successor has been appointed. If a new official is not appointed by the end of the session, then the office would become vacant.
In support of the amendment the HRO notes it would limit the amount of time a governor’s appointee can serve and would address concerns about some gubernatorial appointees being held over in their positions long after their terms have expired. Placing the limit at the end of a regular legislative session allows Senate confirmation hearings of appointees. The HRO also notes that placing a limit on how long an appointee could continue serving in office would ensure that these unsalaried volunteer positions are rotated among qualified Texans.
In opposition to the measure the HRO notes the Governor has many appointed positions to fill; the existing law allows flexibility for appointees to continue serving until qualified replacements are found. Said the HRO: “This amendment could result in many important appointed positions remaining vacant if a qualified replacement is not found within a certain time frame.”
Proposition 4 would authorize the Texas State Legislature to require courts to inform the state attorney general of a legal challenge to the constitutionality of a state law. The measure would also allow the legislature to require a waiting period of not more than 45 days after a judge notifies the attorney general before the judge can rule a state law unconstitutional.
In favor of the measure the HRO argues Proposition 4 ensures the state has an opportunity to defend the constitutionality of its laws and that the proposed amendment would not alter the state’s separation of powers doctrine nor restrict the ability of courts to strike down laws as unconstitutional. The HRO says the amendment would only provide the attorney general with notice so the attorney general could offer assistance to defend a state law. It would not change the authority of the attorney general’s office over criminal matters.
In presenting the case against the measure the HRO argues the constitution should not be amended in a way that could undermine the state’s separation of powers doctrine. Each branch of the government should be able to exercise its powers without interference from another branch.
The HRO argues the legislature should not establish procedures that delay a Texan’s right to pursue and receive relief from unconstitutional laws and that under current law, in criminal cases the state prosecuting attorney, not the attorney general, represents the state. This law could create confusion regarding the attorney general’s role in criminal cases, the HRO argues.
Proposition 5 would amend Article 3, Section 47(d-1) of the Texas Constitution, enabling certain professional sports team charitable foundations to conduct charitable raffles. Voters approved a constitutional amendment in 2016 to allow certain professional sports team charitable foundations that existed on January 1, 2016, to conduct charitable raffles at home games. It authorized the 10 Texas major league sports franchises that had charitable foundations on that date to conduct charitable raffles.
Proposition 5 and its enabling legislation, HB 3125, would expand the number of professional sports team charitable foundations that are eligible to hold charitable raffles at home sports games. The amendment proposes to remove the restriction that only charitable foundations existing on January 1, 2016 may conduct charitable raffles. It also seeks to define “professional sports teams” eligible to conduct charitable raffles to allow professional hockey, basketball, football, baseball, soccer, motorsports, and golf teams, including minor leagues as well as major leagues.
In arguing for the change the HRO said Proposition 5, in expanding the number of eligible sports teams, allows more teams to capitalize on the large and supportive crowds at sporting events, which increases the amount of charitable funds to support their charitable programs. The HRO also said it would add minor league sports teams representing more rural and suburban communities, bringing charitable revenue to new and different parts of the state and uniting sports teams and their communities to assist disadvantaged Texans. The HRO also concluded the proposed amendment only expands the number of sports teams that could participate in charitable raffles; it would make no other change and would not remove safeguards that were established to protect against improperly conducted raffles.
On the other hand the HRO said the proposed amendment expands gambling in Texas by increasing the number of raffles that sports team foundations can conduct, which could lead to other groups requesting authority to offer such raffles by opening the door to further expansion of charitable raffles conducted by the foundations of less well-established teams. The HRO said current law, which applies only to the 10 Texas major league sports franchises, protects against the creation of entities solely to take advantage of charitable raffles.
“By increasing the number of such raffles that sports team foundations could conduct…could prompt other groups to request expanded authority to offer such raffles,” the HRO concluded.
Proposition 6 would allow the state legislature to create a property tax exemption for the surviving spouses of police officers, firefighters, and other first responders killed in the line of duty. Proposition 6 would not itself provide a tax exemption, but would authorize the legislature to create one. In May 2017, the legislature passed Senate Bill 15 (SB 15) to authorize a tax exemption that would take effect if voters approve Proposition 6 on November 7, 2017. SB 15 would entitle a surviving spouse to a 100 percent exemption from taxes on the value of his or her house. SB 15 would also define terms used in Proposition 6 such as first responder, and allow surviving spouses to move into new homes with the same exemption as their houses at the time of the first responder’s death. Both Proposition 6 and SB 15 would make a surviving spouse who remarried after the first responder’s death ineligible for the tax exemption.
SB 14 would define the following individuals as first responders for the purpose of the tax exemption: police and peace officers, probation officers, parole officers, jailers, members of police reserves who regularly assist officers in enforcing criminal laws, custodial personnel of the Texas Board of Criminal Justice, guards of county jails, juvenile correctional employees, employees of the Department of Aging and Disability Services or Department of State Health Services who perform maximum-security work or on-site services for the Texas Department of Criminal Justice; employees subject to certification by the Texas Commission on Fire Protection, aircraft crash and rescue firefighters and members of an organized volunteer fire-fighting unit.
According to FBI statistics, Texas has had more law enforcement officers killed in the line of duty than any other state with 457 officers killed since 1980. Five Dallas police officers were killed in July 2016 when they were ambushed by an Army ReserveAfghan War veteran who was reportedly angry over police shootings of black men.
More than 100 state lawmakers have supported the change because it would extend the same “well-deserved” property tax exemption given to surviving spouses of veterans and disabled veterans to surviving spouses of first responders. The HRO notes “the spouse of a fallen first responder loses a source of income, which can jeopardize his or her ability to pay property taxes and may ultimately affect the ability of surviving spouses to maintain their homesteads.” The HRO said the measure “would help ensure that families in these situations were not forced to sell their homes due to this sudden property tax burden. The tax exemption would be appropriate considering the significant sacrifices made by these families.”
The HRO’s opposing argument states the change “would continue a pattern of giving tax exemptions to specialized groups, when instead the Legislature should focus its efforts on reducing the aggregate property tax burden. Exempting a specific category of people, regardless of how deserving, results in an increased tax burden on other homeowners.”
As of 2017, the Texas Constitution bans lotteries in the state. To make an exception to this ban, the legislature needed to refer a constitutional amendment providing for an exception to the ballot for voter approval. If voters approve this amendment, the legislature would be authorized to allow financial institutions to conduct savings promotion raffles.
Prop 7 does not itself legalize these raffles. Rather, House Bill 471 (HB 471), which the legislature approved, would allow savings promotion raffles and provide rules for them if voters approved the amendment. HB 471 is referred to as the implementing legislation . If voters reject this amendment, HB 471 would not go into effect.
In its argument for the proposed change the HRO notes that allowing banks and credit unions to host savings promotion raffles, also known as prize-linked savings accounts (PLSAs), offer incentives to save rather than spend or gamble away earnings. The HRO argued savings incentives are needed in the state, as more than one-third of Texas households lack a savings account, and about half do not have a three-month emergency fund.
The HRO said many states have removed legal barriers to PLSAs and seen millions of dollars in consumer savings and thousands of new accounts as a result. These savings can allow households to weather financial emergencies such as car repairs or medical bills or to accumulate wealth over time to pursue retirement, higher education, or home ownership. Savings also reduce reliance on sometimes destructive short-term lending. The HRO said savings promotion raffles are not gambling, as they require no form of payment or consideration. They are unlike other raffles, in that they directly benefit the consumer even if the consumer does not win a prize. Depositors could withdraw their money at any time and thus could not lose as in a raffle in any other industry.
As explained by the HRO, bill would prescribe specific rules for savings promotion raffles conducted by credit unions and other financial institutions, such as banks, savings banks, and savings associations. The criteria for being entered into a savings promotion raffle would be a deposit of a specific amount into a savings account or savings program. HB 471 would establish the following rules for savings promotion raffles:
Each entry in a raffle would have an equal chance of being drawn.
A raffle would not be permitted to jeopardize a financial institution’s safe and sound operation.
A raffle would not be allowed to mislead customers or depositors.
A financial institution would not be allowed to require additional fees to enter a savings promotion raffle.
A financial institution would not be allowed to limit how much money a customer can withdraw from a savings account subject to a raffle, unless the limit would have been applied without a raffle. However, an institution may require that a deposit subject to a raffle be in a savings account for a specific period of time to be counted as an entry in a raffle.
A financial institution would be required to pay interest or dividends on a savings account subject to a raffle at a similar rate to what would be paid if there was no raffle.
A financial institution would be required to maintain records on savings promotion raffles.
In its argument against the measure, the HRO argues the change is unnecessary “because a savings promotion raffle merely requires a deposit into an ordinary savings account, it would not be subject to the constitutional prohibition or challenge, and thus…would have no functional effect.”
The HRO also argues it is not equitable to allow only one industry to conduct raffles and that passage of Prop 7 would permit one industry to do a raffle and would be the only non-charitable raffle allowed in the state. Doing so, the HRO argues, “could lead to other industries requesting permission to hold raffles and to more serious forms of gambling.”