Constitutional Amendment Election: Five Propositions to Affect Counties

During the 81st Legislative Session, 11 joint resolutions were passed proposing constitutional amendments to the state constitution. Five of these are of specific interest to counties. On Tuesday, Nov. 3, 2009, voters will go to the polls to vote for or against the proposed amendments.

Listed below are the five propositions with informational analysis from county officials. A sample ballot of the propositions can be found on the Texas Secretary of State’s Web site at www.sos.state.tx.us.

Proposition 1 – (HJR 132, Article III) by Corte (Wentworth)

“The constitutional amendment authorizing the financing, including through tax increment financing, of the acquisition by municipalities and counties of buffer areas or open spaces adjacent to a military installation for the prevention of encroachment or for the construction of roadways, utilities, or other infrastructure to protect or promote the mission of the military installation.”

There are numerous military bases in Texas that contribute billions of dollars to the state’s economy. As population growth continues in areas where military installations are domiciled, they risk infringement by
surrounding developments that could inhibit the installations’ expansion or operation. In order to protect these areas, the proposition would give counties and municipalities the authority to issue bonds or notes to purchase land contiguous to the military installations to allow for their growth and provide infrastructure, if needed.

In Amendments Proposed for November 2009 Ballot, a publication put out by the House Research Organization (HRO), a research arm of the Texas House of Representatives, supporters say, “Proposition 1 is necessary to grant clear, specific authorization for cities and counties to use bonds or notes to buy land to create buffer areas around military installations.” The opposition states that they are not denying the advantages and benefits of having military installations in their areas but “cities and counties should not be given another reason to increase property taxes.”

Taylor County Judge George Newman referred to the proposition as “an interesting piece of legislation.” Taylor County is home to Dyess Air Force Base.

The judge’s main concern is where the state’s responsibilities fall.

“Once again legislation is pushed down to the local level from the state,” Newman said. “Financing at the local level does increase property taxes and the state is constantly on counties to reduce property taxes.”

Also, if Proposition 1 passes, it will still be necessary for area citizens to vote on whether bonds will be issued for the purpose of purchasing property to serve as a buffer around defense bases.

Newman expressed additional concerns as to what laws will be passed by the Legislature to enable cities and counties to implement Proposition 1. If eminent domain became a factor, “Katie, bar the door,” Newman said, suggesting the real possibility of investors snatching up property to increase its value before selling it off to governmental entities.

HJR 132 was referred to the House Committee on Defense and Veteran’s Affairs and Senate Committee on Veteran Affairs/Military Installation. No testimony was offered on the bill in either committee. The enabling legislation for Proposition 1, HB 4130 by Corte, did not pass the 81st Legislative Session. If Proposition 1 is passed by the voters on Nov. 3, the bonds and notes cannot be issued until enabling legislation is passed in a later session.

Proposition 2 – (HJR 36, Article VIII) by Otto (Williams et al)

“The constitutional amendment authorizing the Legislature to provide for the ad valorem taxation of a residence homestead solely on the basis of the property’s value as a residence homestead.”

Kristeen Roe, Brazos County tax assessor collector, explained that the proposition comes in response to commercial industry moving into areas and impacting market values of residential properties.

“Homeowners are often pushed out of their homes because of drastic spikes in value that increase their property taxes to the point they are unable to continue living in the home,” Roe said.

Property being valued at its “highest and best use” has led to many hardships for homeowners. Proposition 2 seeks to remedy the situation.

“This amendment limits the appraisal of residence homestead to its value as a residence homestead, regardless of whether its residential use is the highest or best use,” said David G. Valle, chief appraiser for the Hays Central Appraisal District. “Its highest or best use could be commercial, but with this amendment, we have to value it as residential.”

Hays County Tax Assessor-Collector Luanne Caraway added that if the property is a homestead, it should be treated as such — regardless of the possible best use.

“The taxpayer is not benefiting from the ‘best use’ until the time that he sells his property,” Caraway said. “If it is his homestead, then his benefit is the same as any other person’s homestead, so why should he be penalized if the property where he has lived changes to commercial simply because of what happens around him?”

The cost of implementing the legislation should be minimal or no costs to counties. However, the county could lose value to tax under the new legislation in Proposition 2.

“If any costs are associated with this amendment, it will be at the appraisal district level,” Valle said.

The enabling legislation for Proposition 2 — HB 3613 by Otto — will take effect on Jan. 1, 2010, but only if HJR 36 is approved by the voters.

Proposition 3 – (HJR 36, Article VIII) by Otto (Williams)

“The constitutional amendment providing for uniform standards and procedures for the appraisal of property for ad valorem tax purposes.”

The Texas Constitution requires the administrative and judicial enforcement of uniform standards for property appraisals to originate in the counties where the taxes are imposed. Proposition 3 would shift that enforcement and appraisal procedures to the legislature.

The majority of appraisal districts currently follow International Association of Assessing Officers standards for appraisal.

“From recent discussions, it seems that this legislation may be attempting to also standardize appraisal office practices from county to county, such as specifics within agricultural use appraisal, or frequency of renewal of homestead applications,” Roe said.

Some smaller counties anticipate adding additional staff to implement procedures. But it is difficult to determine the true fiscal impact on counties because the enabling legislation will not be addressed until the 82nd Legislative Session.

Proposition 5 – (HJR 36, Article VIII) by Otto (Williams)

“The constitutional amendment authorizing the Legislature to authorize a single board of equalization for two or more adjoining appraisal entities that elect to provide for consolidated equalizations.”

Most appraisal districts are established in each county and appraise property located within that jurisdiction. There are more than 250 appraisal districts in this state and two counties, Randall and Potter, have a consolidated appraisal district and separate appraisal review boards. Proposition 5 will allow adjoining appraisal districts to consolidate and have one appraisal review board.

Deborah Hunt, Williamson County tax assessor collector, said she felt the idea could work. Consolidation could create a cost savings for counties because “smaller county appraisal districts … can operate with a combined revenue source, allowing funding for mapping and computer aided appraisal software,” according to Hunt.

Smaller counties sometimes experience difficulty finding individuals qualified or willing to serve on appraisal review boards.

“By making the option of joining districts available, the pool of qualified eligible applicants is increased,” Roe said.

The enabling legislation for Proposition 5, HB 3611 by Otto, will take effect Jan. 1, 2010, but only if HJR 36 is approved by the voters.

Proposition 11 – (HJR 14, Article 1, sec. 17) by Corte (Duncan)

“The constitutional amendment to prohibit the taking, damaging, or destroying of private property for public use unless the action is for the ownership, use, and enjoyment of the property by the State, a political subdivision of the State, the public at large, or entities granted the power of eminent domain under law or for the elimination of urban blight on a particular parcel of property, but not for certain economic development or enhancement of tax revenue purposes, and to limit the legislature’s authority to grant the power of eminent domain to an entity.”

In the 79th Second Called Session (2005), the Legislature passed SB 7 which related to limits on the use of the power of eminent domain. The purpose of the legislation was to prevent governments from obtaining private property by eminent domain for economic development, with certain limitations.

According to the Analysis of Proposed Constitutional Amendments published by the Texas Legislative Council (TLC), supporters say, “The proposed amendment would enhance the property protections established statutorily in 2005 by placing in the Texas Constitution clear restrictions on the use of eminent domain and by specifying that ‘public use’ excludes the taking of property for the primary purpose of economic development or enhancement of tax revenues.”

The HRO published additional comments on the subject in its publication <i>Amendments Proposed for November 2009 Ballot</i>. Supporter viewpoints summarized in the publication say, “Proposition 11 would add key protections against abuses of the power of eminent domain by defining in the Constitution the legitimate purposes for which property may be taken.”

However, opposition has expressed concerns that the amendment could create ambiguity surrounding legitimate uses of eminent domain, causing additional risks of litigation expenses to counties. In the TLC publication, the opposition argues the following:

“The proposed language referring to the ‘ownership, use, and enjoyment’ of condemned property is unclear and would leave to the courts the power to determine the legitimate scope of eminent domain in Texas. That language could lead to future litigation and give rise to varying court interpretations that might differ from the legislature’s intent, undermining decades of judicial precedent and costing taxpayer dollars. Statutory law, not the constitution, is the proper forum for testing experimental terms with uncertain implications.”

Paul Sugg with the Texas Association Counties’ Legislative Department agreed: “In addition to creating a higher constitutional standard for counties and other condemning entities to follow, the possibility of additional litigation could well add to the public’s cost of condemnation proceedings.”

The HRO and TLC publications are available in their entirety at www.hro.house.state.tx.us and www.tlc.state.tx.us. For more information on this topic, contact Nanette Forbes at (800) 456-5974 or nanettef@county.org.