“THE LEGAL CORNER”
By Sam A. Moak
TEXAS’ CONSTITUTIONAL AMENDMENT ELECTION
The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.
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A couple of years ago, October 2009, I wrote an article on some proposed amendments to the Texas Constitution. It was well received and we have ten (10) proposed amendments this year, so I am writing it again.
As a bit of history, the current constitution took effect on February 15, 1876. It is the seventh constitution we Texans have had dating back to the Constitution of the Republic of Texas in 1836.
Our current constitution is one of the longest in the United States. Additionally, it has been amended 467 (as of November, 2009) with another 176 proposed amendments rejected. The primary reason for the number of amendments is the Texas Constitution does not have a Necessary and Proper Clause and thus the State only has those power explicitly stated in the constitution.
Enough history, the purpose of this article is just to help the citizens of Walker County be prepared to cast informed votes on November 8, 2011 (or in the early voting through November 4, 2011). Therefore, I will state the Official Ballot Language and common arguments for and against each proposition.
I will not try to take sides or persuade anyone, other than my Mother (at her request), one way or the other.
The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of all or part of the market value of the residence homestead of the surviving spouse of a 100 percent or totally disabled veteran.
In 2007, Texans amended the constitution to provide an exemption to property (ad valorem) taxes on disabled veteran’s homestead.
The amendment would allow a surviving spouse of a disabled veteran to maintain that exemption.
* Currently, when the disabled veteran passes, the surviving spouse is required to resume paying property taxes. However, this may force the surviving spouse to sell the home. This amendment recognizes the sacrifices made by military families and helps to prevent this situation..
* The state should not continue to grant additional tax exemptions because this would decrease the amount of tax revenues for funding schools, health care and other essential services. Additionally, in order to make up for the foregone tax revenues, the proposed amendment could result in local governments increasing property tax rates on other homeowners.
The constitutional amendment providing for the issuance of additional general obligation bonds by the Texas Water Development Board in an amount not to exceed $6 billion at any time outstanding.
Would amend the constitution to authorize the Texas Water Development Board to issue additional general obligation bonds on a continuing basis (Evergreen) for one or more accounts of the Texas Water Development Fund II, with the restriction that the total amount of bonds outstanding at any time does not exceed $6 billion.
* This program has been successful, and is largely self-supporting through loan repayments. Without additional bond authority, TWDB will run out of elgible funds to provide financial assistance to political subdivisions to meet water and wastewater infrastructure needs.
* Authorizing going “evergreen” bond authority would allow TWDB to continuously fulfill its constitutional mission as well as simplify its bond authorization process. The risk of default is low.
* Although the TWDB bonds could be considered largely self-supporting because the loans are repaid by political subdivisions, and the risk of default is low, the issued bonds are general obligation bonds (GO bonds) and any default would become an obligation of the state.
* This proposed constitutional amendment would provide for perpetual bond issuances and would break from traditional deliberative practice of requiring the legislature and voters to approve new bond issuances.
* If this amendment is approved and fully utilized, total outstanding GO bonds at the TWDB could increase by as much as $6 billion, and total state GO Bonds outstanding could increase above the approximately $14 billion currently outstanding, which is an excessive amount of debt.
The constitutional amendment providing for the issuance of general obligation bonds of the State of Texas to finance educational loans to students.
Would amend the constitution to authorize the Texas Higher Education Coordinating Board (HECB) or its successors to issue and sell general obligation bonds on a continuing basis for the purpose of financing educational loans for students, subject to certain constitutional restrictions, including a restriction as to the maximum principal amount of bonds outstanding at any one time.
* The program has been successful and is self-supporting through student loan repayments that cover the principal and interest on the bonds. Without additional bond authority, the HECB will run out of eligible funds to provide financial aid.
* Authorizing this amendment would provide the HECB continued and uninterrupted authority to provide students with low-interest, stable-rate educational loans.
* Although the risk of default is extremely low, and the HECB bonds are considered self-supporting because the students must repay the loans, the issued bonds are general obligation bonds (GO bonds) and a sudden increase in defaulted student loans beyond what the loan program could cover with reserves would become an obligation of the state.
* If this amendment is approved and fully utilized, total outstanding GO bonds at the HECB could increase by as much as $1.06 billion, and total state GO Bonds outstanding could increase above the approximately $14 billion currently outstanding, which is an excessive amount of debt.
The constitutional amendment authorizing the legislature to permit a county to issue bonds or notes to finance the development or redevelopment of an unproductive, underdeveloped, or blighted area and to pledge for repayment of the bonds or notes increases in ad valorem taxes imposed by the county on property in the area. The amendment does not provide authority for increasing ad valorem taxes.
Would amend the constitution to authorize the legislature to permit a county to issue bonds or notes to finance the development or redevelopment of an unproductive, underdeveloped, or blighted area within the county, and to pledge increases in ad valorem tax revenues imposed on property in the area by the county for repayment of such bonds or notes. The amendment does not provide independent authority for increasing ad valorem tax rates.
* Using increases in ad valorem tax revenues resulting from improvements to an area is a reasonable way to finance the development or redevelopment of the area with out raising tax rates.
* Towns and cities already have this ability and the amendment would simply extend this authority to counties.
* If the finance zone is unsuccessful and increased property tax revenues are insufficient to cover the debt service on the bonds, the taxpayers of the county would be responsible for covering this shortfall should the bonds have to be refinanced and secured by other county tax revenues.
The constitutional amendment authorizing the legislature authorizing the legislature to allow cities or counties to enter into interlocal contracts with other cities or counties without the imposition of a tax or the provision of a sinking fund.
Would amend the constitution to authorize the legislature to allow cities and counties to enter into interlocal contracts with other cities and counties without having to assess an ad valorem tax and set aside a specified amount of funds for the payment of costs under the interlocal contract.
* Allowing cities and counties to enter into interlocal contracts to consolidate and share services is an effective and efficient use of public funds and could result in cost savings to taxpayers. This is not really “debt” in accordance with the general public’s understanding of the term.
* Savings to taxpayers are not guaranteed by the use of interlocal agreements, and multi-year interlocal contracts have the potential to obligate future local governments with financial obligations that must be paid for with local tax revenues. The current law concerning multi-year contracts, taxes, and a sinking fund is meant to limit the number and scope of interlocal contracts and deliberately discourages governments from hastily entering into obligations that last beyond the terms of the elected officials agreeing to them.
* On a local note, we have all seen how well this has worked here.
The constitutional amendment clarifying references to the permanent school fund, allowing the General Land Office (GLO) to distribute revenue from permanent school fund land or other properties to the available school fund to provide additional funding for public education, and providing for an increase in the market value of the permanent school fund for the purpose of allowing increased distributions from the available school fund.
Would amend the constitution to increase the amount of principal that is available for withdrawal from the permanent school fund each year and would also clarify certain references to that fund in the constitution. Increased access to the principal of the state public education trust fund would be based upon the amendment granting the authority to consider alternative market calculations when determining the amount of principal that is available for distribution to the available school fund. The proposed amendment would also provide authority to distribute to the available school fund annual revenue from school fund land or other properties up to $300 million per year.
* Including real assets, investments and cash in the state treasury derived from property managed by the GLO in the total asset base used for calculating fund distributions will more accurately reflect the full value of the Permanent School Fund (PSF) and increase the amount of funds available for distribution from the Available School Fund (ASF).
* The amendment would specifically authorize the GLO to distribute a limited amount of revenue earned on management of PSF properties directly into the ASF, providing a much-needed additional infusion of up to $300 million per year into the ASF for distribution to the state’s public schools.
* Diverting to the ASF any revenue that otherwise would go into the PSF and increasing the corpus would be shortsighted and would violate the principle that all revenues from state lands are reinvested by the School Land Board (SLB) or State Board of Education (SBOE). Only a portion of the interest and earnings from these investments are meant to be distributed to the school children of Texas.
* Diverting up to $300 million per year in revenue that might otherwise go into the PSF and become part of the corpus would be tantamount to liquidating a permanent asset to satisfy a short-term need and would defeat the purpose of the investment fund.
The constitutional amendment authorizing the legislature to permit conservation and reclamation districts in El Paso County to issue bonds supported by ad valorem taxes to fund the development and maintenance of parks and recreational facilities.
Would amend the constitution by adding El Paso County to the list of counties authorized to create conservation and reclamation districts to develop parks and recreational facilities financed by taxes.
* This amendment would give the districts in El Paso County additional flexibility in the financing of certain public projects deemed appropriate by local elected officials and voters.
* Debt backed by property taxes should not be incurred for non-essential purposes like parks and recreation facilities.
The constitutional amendment providing for the appraisal for ad valorem tax purposes of open-space land devoted to water-stewardship purposes on the basis of its productive capacity.
Would amend the constitution by requiring the legislature to provide for taxation of open space land devoted to water stewardship purposes on the basis of its productive capacity.
* Landowners would have an incentive to partner with the state to protect water quality and increase conservation efforts, while receiving a lowered property tax appraisal.
* The state’s overall goal to address water conservation and protect open space and water quality in rivers, streams and aquifers without resorting to taxing and spending.
* While open space and water conservation are laudable goals, it would be more accurate to reduce the taxable value of the land based on the actual value of the water conservation efforts.
* The state should not continue to expand eligibility for tax breaks that ultimately decrease the amount of tax revenue available for schools, health care, and other services, and may result in increased taxes for those who do not receive the tax break.
The constitutional amendment authorizing the governor to grant a pardon to a person who successfully completes a term of deferred adjudication community supervision.
Would amend the constitution to authorize the governor, on the written recommendation and advice of the Board of Pardons and Paroles, to grant a pardon, reprieve, or commutation of punishment to a person who successfully completes a term of deferred adjudication community supervision.
* A person who is actually convicted of certain crimes may seek the benefit of a pardon and a person who is not convicted because the person successfully completes the terms of deferred adjudication should have the same opportunity.
* This amendment may deny to the public, press, potential employers, and others relevant information when checking the background of a person who was charged with a crime.
* Crimes punishable by deferred adjudication represent a level of crime while warranting the ability to avoid a permanent conviction, at the same time being of such nature they are never forgiven. If you have lost someone due to a Driving While Intoxicated (DWI) or theft/embezzlement crime, then you can appreciate that these crimes should not be forgotten.
The constitutional amendment to change the length of the unexpired term that causes the automatic resignation of certain elected county or district officeholders if they become candidates for another office.
Would amend the constitution by extending the length of the unexpired term that causes the automatic resignation of certain local elected officeholders if they announce candidacy or become candidates for another office from one year to one year and 30 days.
* This amendment is needed to reconcile the resign-to-run provision with the new filing deadline for candidates that has been moved up due to the state’s compliance with the federal Military and Overseas Voter Empowerment Act.
* Elected officials should not be distracted by or neglect their current duties because of aspirations for higher office and should resign if they choose to pursue other offices at any time during their unexpired terms. Instead of relaxing this requirement, Texans should expand the resign-to-run provision to cover all elected officials.
I hope you find this information helpful. Tuesday November 8th, take advantage of your right to vote. No matter what your personal choice is, the key is that you exercise this right paid for so dearly by our ancestors and solders today. The fact is, those who care about their cause (right or wrong; normal or crazy) will show up to vote. It is the apathetic 70 to 75% who will not get off their couch to vote, that sway an election. So, be a part of history, VOTE!
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.