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The 2015 State Constitutional Amendments In Review

‘Tis the beginning of October of an odd-numbered year, and as is traditional for this time of year, the Texas electorate is being asked to approve various schemes and notions that will be etched in the bloated, badly-written edifice that we call our state constitution.

As I note below, I have serious concerns about one of the pieces of enabling legislation that was passed in conjunction with Proposition One. Section 8 of S.B. 1 appears to violate the criminal law prohibition against bribery. The potential for abuse is serious, and I am frankly surprised that the provision survived the process of legal analysis prior to passage.

Setting that issue aside, let’s see what the Texas Legislature have cooked up for us this time. (For our raw material, I will draw from that excellent resource, the House Research Organization, which at least historically has tended to post more candid descriptions of proposed constitutional amendments than some other state government agencies. For the HRO’s summary of the November 2015 amendments, see: http://www.hro.house.state.tx.us/pdf/focus/amend84.pdf ). For the text of the actual resolutions, see the Texas Legislature Online (at http://www.capitol.state.tx.us/).

We’ve got seven propositions on the ballot this time, and with some exceptions the broad theme is the same as its been for many years – namely, reducing property tax revenue for school districts, some special-interest driven amendments, and fixing local problems with statewide constitutional language.

“So, Joe,” you say, “I’m a busy person on the go. Without a lot of legalistic mumbo-jumbo, can you just give me an objective and totally unbiased review of the seven proposed amendments to the Texas Constitution?”

To which I say, “Why, sure. Here’s a handy chart explaining each proposition:”

  • Prop. 1 – Throttles back property tax revenue for school districts by adding another $10,000 to the homestead exemption.
  • Prop. 2 – Exempts a handful of surviving spouses of disabled vets from homestead taxes
  • Prop. 3 – Releases statewide elected officials from their historical requirement to reside in Austin, despite the fact that their jobs happen to be located in the capitol.
  • Prop. 4 – Would authorize professional sports team charitable foundations to conduct charitable raffles.
  • Prop. 5 – Would adjust the population cap that prohibits all but the tiniest of counties from using county road crews to build and maintain private roads, so as to ensure that slightly-less tiny counties will be able to use county road crews to build and maintain private roads.
  • Prop. 6 – Would specify that Texans have a fundamental constitutional right to hunt, kill and harvest wildlife and fish, including by “traditional means.” Doesn’t define “traditional means,” but presumably that includes hitting things with rocks.
  • Prop. 7 – Would redirect roughly 10% or more of the state’s annual tax revenue exclusively to transportation projects.

So that’s seven propositions.

But now I hear you ask, “Well, can you tell me just a little bit more about these propositions in detail?”

Sure!

PROPOSITION 1 – SJR 1

This proposition sets out to accomplish a number of tweaks in order to improve the ad valorem tax exemptions for homesteads, while offering the promise of a legislative adjustment in tax revenue redistribution in order to spread the pain around among school districts. More specifically, the resolution proposes that:

  • The current exempt part of a homestead property’s value described in Article 8, Section 1-b(c) of the Texas Constitution will be increased. Meaning the school property property taxes will go down. When calculating the property tax bill for school district taxes, the part of the property value that isn’t taxable would be increased from $15,000 to $25,000, meaning that the first $25,000 of a homestead’s value would be off the table when calculating the school tax bill for that homestead property.
  • To sweeten existing and future exemptions offered to the elderly and the disabled, those homeowners would also have a proportionate amount of their homestead valuations taken off the table prior to applying additional tax breaks. (Another way to put this is that people who enjoy additional exemptions by virtue of their special exemption status will also be treated as if their homesteads were valued at $25,000 less than actual value, so as to further enhance their current and future special-case exemptions, such as tax freezes, abatements, refunds, etc).
  • Local governments (specifically school districts, cities, and counties) would be prohibited from repealing any existing tax reductions;
  • After January 1, 2016, state or local real estate transfer taxes would be illegal. Taxes could still be collected on mineral production or business activity (i.e., sales tax) and on title insurance. So as real estate appraisals increase, and as current owners cash out and reap the benefits of appreciations in the market value of real estate, the proceeds of such sales would be off limits for taxation, and both the state and local governments would be screwed out of capturing any of the market appreciation realized at the time of sale.
  • The amendment applies retroactively to the 2015 tax year. Local appraisers must prepare their tax bills for 2015 on the assumption that this amendment will pass. If the amendment doesn’t pass, then the burden is on the local appraisers to make up any lost revenue by sending out new tax bills.
  • The accompanying enabling legislation (S.B. 1) provides a mechanism whereby school districts would be entitled to some relief by applying for funds from the Foundation School Fund in order to make up lost maintenance and operations tax revenue, and to help service existing eligible debt (i.e., non-capital improvement debt or the sinking fund), but not to cover construction bonds or any new costs based on changes in enrollment, etc.

INDUCEMENTS IN THE FORM OF FINANCIAL INCENTIVES OFFERED TO VOTERS TO FAVOR PASSAGE OF SJR 1 – A SERIOUS LAPSE IN LEGISLATIVE DRAFTING OVERSIGHT

Senate Bill 1 is a particularly nasty piece of work, from a school district’s perspective, because it requires school districts to send out tax bills that serve as advertising to push voters to approve SJR 1. In effect, school districts have to put a note in the 2015 tax bill saying, “Dear voter. The Texas Legislature has cut your tax bill by this much: LOADS OF CASH (Calculated based on an exemption of $25,000 as opposed to your piddly little current exemption of $10,000). But we mustache-twirling villains at the school district will make you pay THIS ENORMOUS TAX WHICH IS TOTALLY UNFAIR if the law doesn’t change. To avoid paying more, make sure that everybody you know votes in favor of SJR 1 at the November 3, 2015 election. Thanks!

I’m exaggerating, but not by much. Here’s the actual text in what Section 8 of S.B. 1 adds to Section 31.01(d-2) of the Texas Tax Code:

  • The tax bill or the separate statement must indicate that the bill is a provisional tax bill and include a statement in substantially the following form:

“If the amount of the exemption from ad valorem taxation by a school district of a residence homestead had not been increased by the Texas Legislature, your tax bill would have been $____ (insert amount equal to the sum of the amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $15,000 and the total amount of taxes imposed by the other taxing units whose taxes are included in the bill).

Because of action by the Texas Legislature increasing the amount of the residence homestead exemption, your tax bill has been lowered by $____ (insert difference between amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $15,000 and amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $25,000), resulting in a lower tax bill of $____ (insert amount equal to the sum of the amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $25,000 and the total amount of taxes imposed by the other taxing units whose taxes are included in the bill), contingent on the approval by the voters at an election to be held November 3, 2015, of a constitutional amendment authorizing the residence homestead exemption increase.

If the constitutional amendment is not approved by the voters at the election, a supplemental school district tax bill in the amount of $____ (insert difference between amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $15,000 and amount calculated under Section 26.09(c-1) based on an exemption under Section 11.13(b) of $25,000) will be mailed to you.

Section 8, S.B. 1, 84th Texas Legislature, Regular Session (May 25, 2015); (implementing SJR 1) (textual emphasis added).

So … why is this a problem?

Take a look at Section 36.02(a) of the Texas Penal Code:

A person commits an offense if he intentionally or knowingly offers, confers, or agrees to confer on another, or solicits, accepts, or agrees to accept from another:

(1) any benefit as consideration for the recipient’s decision, opinion, recommendation, vote, or other exercise of discretion as a public servant, party official, or voter

“Oh,” but you say, “I thought there was an exception to the bribery statute in circumstances where the offer of a benefit is made by a government institution in the form of an official governmental act.”

No. You’re thinking of an exception to prosecution found under Section 36.03(c) of the Penal Code – that exception applies to the separate offense of “coercion” as applied to a public servant or voter. I’ll pass for now on the question whether this exception would even apply to bar prosecution of the author of S.B. 1 for “coercion,” because the potential that S.B. 1 constitutes bribery is a far more serious legal matter.

There is an exception to prosecution in the bribery statute that allows for campaign contributions, but again, that narrowly-drawn exception would not apply in this circumstance.

There’s a reason why you don’t see legislation like this – normally, concerns about targeting taxpayers with financial incentives to favor the passage of a constitutional amendment would be flagged by the Texas Legislative Council. That may well have happened in this case, but the bill shouldn’t even have been drafted like this, much less passed. To quote the character of “Senator Gil John Biggs” (as played by John Goodman) from the opening scene of the first episode of Amazon’s “Alpha House,” “Well, that’s just piss-poor staff work.”

School district attorneys should seriously consider consulting with their local prosecutors regarding the legal implementation of S.B. 1.

There’s more to the proposition, but basically the Legislative Budget Board review tells you everything you need to know about this proposed change – it guts public education funding by another $1.2 billion per legislative biennium, and further limits the options available to local governments to find alternatives to lost revenue.

PROPOSITION 2 – HJR 75

Back in 2009, voters approved a constitutional amendment that gave totally disabled vets a 100% exemption from property taxes. Then in 2011, voters approved an amendment extending that exemption to the surviving spouses of dead totally disabled vets. But whoops! The law didn’t retroactively grant the exemption to the 3,800 or so surviving spouses of dead disabled homeowners who had died before January 1, 2010. So as a corrective, this proposition would eliminate property taxes for those individuals who happened to have been married to all those totally disabled vets that made the mistake of dying before January 1, 2010.

Some political entities might see a hit to revenue, and so Section 25 of H.B. 7 provides that local governments that lose at least two percent of their expected property tax revenue as a consequence of this proposition (i.e., because for whatever reason a bunch of the 3,800 affected spouses of dead totally disabled veterans happen to live within their tax authority) can get relief from the Comptroller in the form of a payment equal to one percent of expected property tax revenue. In other words, the State will reimburse local governments to the tune of no more than 50 cents on the dollar of lost revenue in compensation for those local governments having lots of qualifying surviving spouses.

It’s not a big deal in the grand scheme of things – the number of affected people make this more like a private economic relief bill. But everybody loves vets, right? Except for the homeless ones that ask for spare change – nobody likes those guys.

PROPOSITION 3 – SJR 52

For 140 years, the Texas Constitution has provided that elected state officials (i.e., the Governor, the Lieutenant Governor, etc.) have to personally reside within Austin Texas. The problem is that none of the current elected leadership in the State actually wants to live in Austin – the city is expensive, and is just not the place to see and be seen if you want to get ahead in conservative bastions like Midland-Odessa or Beaumont. So what’s a state official to do?

Most elected officials simply ignore the requirement to “officially reside” in Austin, given that residence is pretty much a ridiculously amorphous legal status. But for those officials who simply can’t stomach the idea that anyone might think they actually willingly reside in Austin, there’s this proposition.

PROPOSITION 4 – HJR 73

Professional sports teams often have charitable functions – for instance, teams might occasionally hand T-shirts out at the local school, or host a sports camp. Given that professional sports teams are for-profit business ventures, this kind of charity never seemed particularly burdensome, nor worthy of much comment or concern.

But people realized that if the Dallas Cowboys Foundation or the San Antonio Spurs Foundation could hold a raffle, they could make a mint.

There was just one problem – state gambling laws restricting the conduct of charitable raffles don’t really have a loophole wide enough for a professional sports team to stride through (oh, excuse me, “a professional sports team foundation.“) Hence there was impetus for this amendment.

If professional sports foundations are allowed to conduct charitable raffles, they’ll be permitted to sell tickets for drawings for prizes. As with other charities, they’ll have to offer prizes worth at least 50 percent of the cash taken in with the raffle sales. In calculating this amount, the sports foundations can set aside up to ten percent of the raffle income to defray the administrative expenses associated with conducting the raffle.

So, the Cowboys, the Spurs, the Rangers, or the Texans could sell, say, $10 million in raffle tickets, bank $1 million to cover the expense of running the raffle, hand out half of the remaining $9 million in raffle income in prizes ($4.5 million in prizes) and then use the remaining $4.5 million to … you know … theoretically make the world a better place. T-shirts for everybody!

PROPOSITION 5 – SJR 17

Once upon a time, governments weren’t supposed to build private roads. It was considered unseemly and an affront to private industry for local governments to gift individuals and businesses with labor and equipment nominally dedicated to the construction, preservation, and maintenance of public roads.

But then in 1980, the voters were convinced to add a provision to the Texas Constitution granting around two-dozen tiny counties (defined as having 5,000 people or less) the right to redirect their resources towards the construction of private infrastructure. The thinking went something like this, “It’s wrong in the abstract for government resources to be used to benefit specific private commercial interests. But frankly, nobody cares who paves the driveways and parking lots in the dinkiest little counties.”

Over the years, some of the dinky counties have declined in population, but a few have grown. Not because anybody wants to live in those counties, but because rural places are great settings for privately managed prisons, whose restive, captive prisoner populations are included in the county census data. So today, 21 counties in Texas that used to have 5,000 or fewer residents now have 7,500 or fewer residents.

Who, pray tell, is going to pave those parking lots in the not-sufficiently-dinky counties that have more than 5,000 people in them?

This amendment would preserve the legal right of those marginally less dinky counties to continue to spread asphalt and fix potholes on privately-owned roads.

The amendment is an administrative adjustment to Article III, Section 52f of the Texas Constitution. If Proposition 5 passes, I’m guessing that sometime around the distant year 2051, voters will have to approve yet another amendment to up the population ceiling for this exception from 7,500 residents to 10,000 residents. And so on, through future generations ad infinitum.

PROPOSITION 6 – SJR 22

Oh, for heaven’s sake. This amendment ensures, enshrines, frames, and underlines the historical right of all red-blooded Texans everywhere to hunt, kill, maim, slaughter, round up, shoot, snare, poison, blow up, stab, bite, scratch, and strangle any creature of the land, sea, or air, in the exercise of dominion over all things that taste like chicken and that aren’t wearing reflective clothing. Subject to … you know … regulations.

Strangely, the companion proposition affirming our right to pee in the bushes did not get out of committee.

PROPOSITION 7 – SJR 5

Traffic in Texas is bad, and only likely to get worse as we descend into a post-apocalyptic Mad Max: Fury Road-style environment resulting from drought, extreme weather events, and a collapse of social order. And if we are going to slide into barbarism typified by reliance on roving gangs of spear-throwing bikers, tumor-ridden Warboys, and the occasional war-rig caravan run to the bullet farms and the guzzle-lene refineries, we’re going to need good roads.

And that’s where Proposition 7 comes in. First, for a period between 2018 and 2032, the amendment would “skim” up to $2.5 billion in state sales tax revenue off of all revenue in excess of $28 billion per fiscal year, and lock that money away to be used solely for highway development. Second, for a period between 2020 and 2029, the amendment would skim 35 percent of all motor vehicle sales, use, and rental tax in excess of $5 billion and similarly restrict that money to highway development.

There would be some built in safety valves allowing the Legislature to enact statutes to adjust the specific highway fund dedications down by one-half in specific fiscal years, on a two-thirds vote. The constitutional dedication of funds could be extended by majority vote for additional 10-year increments.

Here’s the thing – when a sovereign entity declares that it will only use a pile of money for one purpose, that money is suddenly unavailable for all other purposes, some of which might turn into emergencies.

To its credit, the Legislature learned that the phrase “toll road” is dirty, and that it would not be a good idea to dedicate state funds to building toll roads. But why specify that a certain pile of money can only be used to build roads? I sure hope you never need that money to, you know, build hospitals. Or schools. Or high-speed inter-urban commuter rail. Or provide health insurance for retired state employees. Or adequately fund your public pensions. Or whatever.

CONCLUSION

Assuming low voter turnout and almost zero visibility, all of these amendments probably will pass. Our schools will get a little poorer; our state revenue will be a little more strained; and the Dallas Cowboys Foundation will be able to have a raffle.

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6 Comments

  1. I oppose Amendment 7 because there is no need for an amendment to encumber money in such a way. The Lege just needed to vote for that to happen. I hugely dislike state constitutional amendments that result from the Lege refusing to do its job.

  2. Also, how is Amendment 1 not unconstitutional, under the constitution of the USofA?

    >>No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.<<

    Article 1, Section 10.

  3. […] are the 7 constitutional amendments up for vote this year, but his good friend Joe Kulhavy at the Texas Election Law Blog has beat him to the punch and done a much better job of it than Red could have managed.  Only Joe […]

  4. Thanks for the insightful analysis. However, it’s still a mystery to a lot of folks why such matters require a big ol’ fat constitutional amendment and election, and can’t just be handled by typical legislative action – you know, enacting statutes and such.

  5. Red from Texas, I cover that issue more, with Prop 7, and somewhat with others, here: http://socraticgadfly.blogspot.com/2015/10/vote-no-to-txlege-stupidity-oppose-6.html

  6. SEF says:

    Just vote NO to all of these constitutional amendments. Every one of these items can be taken care of through legislation, if needed, without forcing Texas to fund special interest groups now and in the future. That is why they are all “constitutional amendments”, because not one will make it through the legislative process, and several contain provisions that have been shot down by the Texas Supreme Court as unconstitutional. They are crafted to appeal to a cause no one wants to be seen as being against, but will turn around very quickly and rear its true, ugly face.

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