Saturday, November 5, 2011

NOV. 8, 2011 PROPOSITION 1-5

Official Ballot Language:
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 100% or totally disabled veteran.
Currently the Tax Code fully exempts residential homesteads of totally disabled veterans from property taxes.
   Proposition 1 would let the legislature give a property tax exemption to the surviving spouse of a totally disabled veteran a) if the property had been exempted from property taxes under the disabled veteran's tax exemption, b) if it was the residence of the surviving spouse when the veteran died, c) and remained the surviving spouse's residence homestead thereafter, and d) if the surviving spouse had not remarried.   (Note:  it gives no time limit on the "not remarrying").
   This exemption would follow the surviving spouse if a new homestead were purchased and the surviving spouse had not remarried.  The exemption would be limited to the dollar amount of the exemption of the previous qualifying homestead.
   If passed, this exemption would apply to tax years beginning on or after January 1, 2012.

Official Ballot Language
The Constitutional Amendment providing for the issuance of additional obligation bonds by the Texas Water Development Board in an amount not to exceed $6 billion at any time outstanding.
   The Texas Water Development Board (TWDB) makes loans at very low interest rates to cities, towns, water supply corporations and various other political sub-divisions across the state.  These loans are used to fund a variety of local water projects , including infrastructure improvement or water treatment plants.   The TWDB current capacity of bonding of $2 billion is not sufficient to meet the needs of local governments that are upgrading infrastructure to meet the growing demand.  The proposed amendment would authorize the TWDB to issue additional bonds as long as the aggregate amount did not exceed $6 billion.  This ongoing authority is known as "evergreen" authority.
   These bonds, if approved, would be self-supporting and not a detriment to the state budget, would not cost the state any money from the general revenue fund, and would not count toward the state's constitutional debt limit.  The principle and debt limits on the loans would be paid by the political subdivisions.  The interest paid on the loans funds the agency.
   The jump from $2 billion to $6 billion is too large.  The ceiling should be raised in smaller increments, with periodic review from the legislature and voters.
   It is not clear how much development and economic growth our water supply can sustain.  We should determine first how much we should expand our water infrastructure.
   The "evergreen" authority would reauthorize the issuance of bonds previously approved and since paid off and retired.  The legislature and the voters should maintain accountability for the administration of the funds by retaining their authority to approve the issuance of state bonds periodically.
  It seems to me that the government keeps grabbing for more power and no one is ever responsible for the government's actions.
Official Ballot Language
    The constitutional amendment providing for the issuance of general obligation bonds of the State of Texas to finance educational loans to students.
   The Hinson-Hazelwood College Student Loan Program provides low- interest loans to Texas residents who attend public or private higher education institutions in Texas and who have insufficient resources to finance a college education.  The loan program uses general education bonds to finance the loans, which generally must be authorized by constitutional amendment.  Since 1965 Texas voters have approved seven constitutional amendments authorizing $1.86 billion in bonds for the HH loan program.  It is projected that the remaining bonds will be exhausted in 1013.
Arguments against
   This is not a good time to increase state debt.  Even though the program is self-supporting, the bonds are considered an obligation of the state, and the state is ultimately responsible for repaying the money borrowed.
   The current poor economy could increase the rate of default on the loans, affecting the programs ability to be self-supporting.
   The evergreen authority would re-authorize the issuance of bonds originally approved as long as 40 years ago and since paid off and retired.  The legislatures and the voters should maintain accountability of the administration of the funds by retaining their authority to approve the issuance of state bonds periodically.
Official Ballot Language
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 for ad valorem taxes imposed by the county on property in the area.  The amendment does not provide authority for increasing ad valorem taxes.
  Currently the Texas Constitution authorizes the legislature to authorize incorporated cities and towns to use a mechanism called "tax increment financing" to finance the development or redevelopment of unproductive, underdeveloped, or blighted areas.  Under this mechanism the bonds or notes to finance the development are repaid using increases in revenues on the property in the area.  The revenue increases comes from increases in property values in the development area, not from an increased tax rate, which is not authorized.
Proposition 4 would expand the authority to include counties, so that tax increment financing could be used in unincorporated areas.
Argument against:
   Property taxes should not be used to fund transportation and other re-development projects.
   Tax increment financing could create an incentive to increase property appraisals in reinvestment zones to repay the bonds and notes and thus divert funds from other pressing needs.  Because the criteria for the zones are not well-defined, influential developers could get an area designated as a reinvestment zone, and existing businesses in the zone could end up paying higher taxes for development that does not benefit them, or may even benefit their competitors.
Official Ballot Language
The constitutional amendment 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 a provision of a sinking fund.
Currently under the Texas Constitution, cities with a population greater than 5000 and all counties and cities bordering on the coast of the Gulf of Mexico may not create any debt without levying a tax sufficient to pay the interest and provide a sinking fund of at least two percent.  A contract longer than one year between local governments has been interpreted as a debt under certain circumstances, requiring the tax assessment and creation of a sinking fund.
  Proposition 5, along with its enabling legislation would authorize those cities and counties to enter into interlocal contracts longer than one year with other cities or counties without meeting the tax and sinking fund requirement.
Argument for:
 This proposition would give local governments more flexibility to consolidate projects and services over a term longer one year in order to improve efficiency and reduce cost to the taxpayers.
Argument against:
 There may be some cases where multi-year interlocal contracts do constitute a debt and should require a tax and sinking fund; removing this constraint gives too much flexibility to local governments.  And I agree.

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