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Texas Homestead Exemption for School District Property Taxes Amendment, Proposition 1 (2015)

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Proposition 1
Flag of Texas.png
TypeAmendment
OriginTexas Legislature
TopicTaxes
StatusApproved Approveda
Texas 2015 ballot
Proposition 1 - Taxes
Proposition 2 - Taxes
Proposition 3 - Residency
Proposition 4 - Gambling
Proposition 5 - Roads
Proposition 6 - Hunting
Proposition 7 - Taxes
All 2015 U.S. measures

The Texas Homestead Exemption for School District Property Taxes Amendment, Proposition 1 was on the November 3, 2015 ballot in Texas as a legislatively referred constitutional amendment, where it was approved.[1][2]

Voting yes would have increased the homestead exemption from $15,000 to $25,000.
Voting no would have kept the current homestead exemption at $15,000.

Election results

Texas Proposition 1
ResultVotesPercentage
Approveda Yes 1369813 86.38%
No21603213.62%

Election results via: Texas Secretary of State

Introduction

Depending on their district, homeowners save an average of between $120 and $130 per year, which costs the state about $1.2 billion in tax revenue for school districts over two years. Senate Joint Resolution 1, the enabling legislation, makes up for the lost revenue by entitling school districts to additional state aid from the Foundation School Fund. This fund is made up of revenue from land property rights income and fuel taxes.[3][4]

The proposition also maintained the additional $10,000 exemption for seniors and disabled homeowners already awarded under current law, along with the increase for all other homeowners.

Before the amendment was approved, the exemption was last increased in 1997, when voters approved Proposition 1.[5]

The amendment took effect January 1, 2016.[1]

What is a homestead?

A homestead is a structure, manufactured home or condominium that the individual living in the home owns. It can include up to 20 acres of land if it is owned by the homeowner and used for residential purposes. An individual can receive five types of homestead exemptions: school taxes, county taxes, age 65 or older and disabled exemptions, optional percentage exemptions and optional age 65 or older or disabled exemptions. Visit the Texas Comptroller of Public Accounts' frequently asked questions about homestead exemptions for more information, found here.[6]

How did that impact homeowners' tax bills?

How much Texas homeowners saved depended on the tax rate of their school district, averaging between $120 and $130. The Texas Tribune created an interactive database found here that allows users to calculate how much they would save based on their district. The database uses 2014 data collected from the Comptroller's Office and the news organization reported that school districts unlikely changed their rates in 2015. However, because property values are quickly rising, homeowners might not have a lower property tax bill, but one that increased slightly less because of the savings from the homestead exemption.[7]

Text of measure

Ballot title

The official ballot title was:[1]

“ The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $15,000 to $25,000, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from ad valorem taxation from reducing the amount of or repealing the exemption, and prohibiting the enactment of a law that imposes a transfer tax on a transaction that conveys fee simple title to real property.[8] ”

Constitutional changes

See also: Article 8, Texas Constitution

The amendment amended Subsections (c), (d) and (e) to Section 1-b of Article 8 and added Section 29 to Article 8 of the Texas Constitution. The full text can be read below, with added text underlined and deleted text struck-through:[1]

Analysis

The Texas Legislative Council provided a summary analysis and a background and detailed analysis. The full text can be read here.

Summary analysis

The council's summary analysis reads:[9]

“ S.J.R. 1 proposes an amendment to the Texas Constitution to increase the portion of the market value of a residence homestead that is exempt from ad valorem taxation for public school purposes from $15,000 to $25,000. In addition, the proposed amendment provides for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount. The proposed amendment also authorizes the legislature to prohibit the governing body of a political subdivision that has adopted an exemption from ad valorem taxation of a percentage of the market value of a residence homestead from reducing the amount of or repealing the exemption. Finally, the proposed amendment prohibits the legislature from imposing a transfer tax on a transaction that conveys fee simple title to real property.[8] ”

Enabling legislation

The amendment was placed on the ballot via SJR 1. However, Senate Bill 1 was the enabling legislation for SJR 1. SB 1 will become void if voters reject the constitutional amendment.[10] The enabling legislation would amend the Tax Code and Education Code. Changes to the Tax Code would be made to bring the statutes in line with changes made to the constitution. Modifications to the Education Code would primarily address making up revenue reductions caused by increased homestead exemptions by increasing the state's share of education funding.

Tax bill

In Texas, local tax bills are sent out to residents around October 1 each year.[11] However, the amendment applied to the 2015 taxes. To remedy this issue, SB 1 requires a school district's tax assessor to compute a provisional tax bill for property owners using the former $15,000 and the $25,000 homestead exemption. The provisional tax bill is to include a statement about the exemption increase. The tax is slated to read:[10]

“ 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.[8] ”

Education spending

Since SJR 1 increased the homestead exemption on property taxes levied by school districts, schools will lose about $1.24 billion statewide over two years.[12] SB 1 was designed to remedy this funding decrease. A school district would be entitled to additional state aid from the Foundation School Fund. In other words, SB 1 would increase the state government's share of funding education.[10]

Background

Proposition 1

See also: Texas School Property Tax Relief, Proposition 1 (August 1997)

The last time the homestead exemption on school property taxes was increased was 1997. Nearly 94 percent of voters approved Proposition 1. Like the 2016 Proposition 1, this measure was referred to the ballot by the legislature and increased the exemption from $5,000 to $15,000. It costed the state $511 million to keep schools from losing tax revenue.[13][14]

Support

Supporters

Officials

The following state legislators sponsored the measure:[15]

Organizations

  • Texas Public Policy Foundation[16]
  • Texas Association of Realtors
  • Texas Association of Builders

Arguments in favor

Rep. Jane Nelson

Sen. Jane Nelson, who introduced the original legislation, wrote in an opinion article in the Star-Telegram:[17]

“ For far too many years, Texas homeowners have shouldered a disproportionate — and increasing — amount of the overall tax burden. Not only do homeowners pay sales and other taxes, they also bear the brunt of rising property taxes. Homeowners deserve a break. ... This is long overdue. The homestead exemption in our state hasn’t changed since 1997. Over the same period, median home values in Texas have risen from about $86,000 to $186,000. Those escalating values have led to higher tax bills, and property owners all over the state are feeling the pinch. Property tax bills are rising at a much faster pace than family incomes.[8] ”


Gov. Greg Abbott said:[18]

“ If you also want to save on your property taxes, vote for Proposition 1 on the Constitutional Amendment ballot. It’s time for homeowners — not the government — to truly own their own property. And this is a first step.

By voting for Proposition 1 on the statewide ballot, you will be protecting more of your home’s value from being taxed. Your homestead exemption will increase from $15,000 to $25,000. Property tax savings will vary by district, but it’s your money; you should get to keep more of it.[8]

”


Texas Association of Realtors Chairman Scott Kesner said in a press release:[19]

“ As home prices continue to rise, housing affordability could become a greater issue across the state. The Texas Association of Realtors is committed to keeping homeownership affordable and fully supports the property tax exemption increase and the permanent ban on a real estate transfer tax proposed in Proposition 1.[8] ”


Dick Lavine, a senior fiscal analyst for the Center for Public Policy Priorities, said:[14]

“ Schools will get a little less property tax revenue from homeowners and a little more money from the state. At least it’s a small step in the right direction.[8] ”


Austin Real Space, a sales, leasing and residential property management group in Texas, urged voters to approve the proposition on their website. They wrote:[20]

“ Home Owners & Future Home Owners
  • lowers property taxes by increasing the state mandated Homestead Exemption
  • Provides more tax relief to seniors and disabled persons by extending the full benefit of the new Homestead Exemption
  • Prevents the state from undoing the property tax relief the state is offering

Investors and Home Owners Selling a Home

  • Prevents state and local governments from EVER collecting a sales tax on real estate transactions. (Constitutional Amendment)[8]
 ”


The Texas Legislative Council wrote a summary on comments made by supporters. Arguments include:[9]

  • The mandatory school district residence homestead exemption amount has not been updated since 1997, yet appraisals have continued to increase since that time. Residents could be priced out of their homes by rising property taxes.
  • Homeowners would feel the tax relief immediately because the amendment would make the exemption effective for 2015 taxes.
  • The average Texan pays the fifth highest amount in real estate taxes in the country and the proposition offers a tax relief.
  • The amendment would promote economic growth by allowing homeowners to keep more of their money to be used in other ways.
  • The enabling legislation helps school districts make up the lost revenue from the exemption increase while the state remains within its constitutional spending limit.


The House Research Organization provided supporting and opposing arguments in the group's bill analysis. The following is an excerpt from the supporting statement:[21]

“ CSSJR 1 would cut property taxes by increasing the homestead exemption, which is the best possible use of state funds. It would stimulate real economic growth and provide tax relief that voters have asked for and to those who need it most.

Aggregate impacts. This tax cut would result in a broad reduction in the effective tax burden borne by Texans. In so doing, it could stimulate consumption, which drives job growth. Job growth, in turn, stimulates more consumption. The consumer, not the government, is the most economically efficient agent. Increasing the homestead exemption would put more money in consumers’ pockets, allowing more money to be used more efficiently in the economy. ...

Tax cut alternatives. The Legislature should cut the property tax because it is by far the most onerous and noticeable tax. It is a tax upon the ownership of property, one of the most fundamental rights that people have. Voters frequently ask for property tax cuts, but rarely are overly burdened by the sales tax and only see the secondary effects of the franchise tax. ...

Microeconomic impacts. The property tax is not related to income or consumption, so it can have an intensely negative impact on those with fixed incomes. If appraisal values rise significantly and tax rates are not adjusted downward, people on a fixed income could find themselves priced out of their own homes. This phenomenon is particularly common in areas with strong economic growth, where demand for housing is strong. ...

Education. Increasing the homestead exemption in conjunction with the enactment of CSSB 1 would increase the state share of education funding. The Legislature should strive to fulfill its obligations and fully and completely fund public education instead of relying on local funding, which has caused the problem of skyrocketing property taxes. ...

Spending alternatives. Current versions of the state budget include increases to funding in many areas of vital state services. It is likely that both public education and transportation would receive additional funding. The state already is set to invest more, and the revenue lost under this joint resolution would not be needed. ...

Revenue stability. Even with the property tax cut, the state would have sufficient revenue to meet its obligations in future biennia. The budget surplus in this biennium is likely to continue.[8]

”

Opposition

Opponents

  • Texas State Teachers Association[16]

Arguments against

The Texas Legislative Council wrote a summary on comments made by opponents. Arguments against the amendment include:[9]

  • The homestead exemption increase will provide a "nominal" property tax relief— about $126 per year.
  • The amendment does not provide any benefits for those who rent their homes.
  • It would cost the state $1.24 billion every two years to make up the revenue lost for school districts in addition to the $8.4 billion per year Texas already spends on tax relief.


The House Research Organization provided supporting and opposing arguments in the group's bill analysis. The following is an excerpt from the opposing statement:[21]

“ CSSJR 1 and its enabling legislation would increase the homestead exemption at a time when that would not be the best use of state funds. The Legislature instead should cut other state taxes or appropriate the money to infrastructure, education, or other critical needs.

Aggregate impacts. Cutting property taxes would not directly benefit a large number of people. Renters — a sizable proportion of the low-income population — do not benefit from an increase in the homestead exemption. Other uses of these funds would provide more benefits to more Texans. ...

Microeconomic impacts. The Texas Constitution already prohibits increases to the total amount of property tax levied for general elementary and secondary public school purposes on a homestead of a person who is age 65 or older or disabled. A large population of those with fixed incomes are therefore protected from being taxed out of their homes.

Tax cut alternatives. A sales tax cut would be better for the Texas economy than an increase in the homestead exemption. Studies consistently show that sales taxes have a greater negative effect on economic activity than property taxes. The Legislative Budget Board estimates that over five years, a sales tax cut could create more than 42,000 more jobs and spark $5.2 billion more in GDP growth than an equivalent increase in the homestead exemption.

Cutting the franchise tax also would do more for the Texas economy than increasing the homestead exemption. Analysis from the Legislative Budget Board shows that a franchise tax cut would return nearly 40,000 more jobs and $5.7 billion more GDP over five years than an equivalent increase in the homestead exemption.

Local control. This joint resolution would be tantamount to the Legislature taking ownership of what is essentially a local issue. The property tax is a fundamentally local tax necessitated by the fact that the state does not provide sufficient funding toward the state share of education. Voters are feeling pressured by rising property taxes driven by higher appraisals. But this should not be the case, since the cost to run the government is the same. For instance, if appraisals double, then revenue correspondingly increases. Local governments, instead of pocketing this revenue increase, should decrease the effective tax rate. This joint resolution would set a precedent for the state’s responsibility in limiting what should be handled at the local level. ...

Education. This joint resolution, in conjunction with CSSB 1, would increase the state share of education funding but would not actually increase school funding. ...

Spending alternatives. The joint resolution could cost the state more than $1.2 billion in tax revenue during the 2016-17 biennium. This money can and should be spent elsewhere. The state has an obligation to adequately fund basic services that help protect Texas’ future. ...

Revenue stability. This tax cut may not be sustainable. Severance tax revenue from oil and gas sales has increased significantly because of the shale oil boom. However, these severance taxes, as well as the state’s revenue estimates, are heavily reliant on the price of oil rising. There is no guarantee of this happening, and numerous unpredictable geopolitical factors could affect the price of oil.[8]

”

Media editorials

Support

The Dallas Morning News recommended voting for the amendment, arguing:[22]

“ Approval of this constitutional amendment would have other other [sic] benefits for taxpayers. For instance, the proposition also would prohibit enacting a real estate transfer tax. Texas doesn’t have a such a tax now, but the other states that do have found it negatively impacts home affordability.

Lest you think that lawmakers just punched another hole in school district budgets with this tax reduction, fret not. The state will send $1.2 billion to districts to cover the revenue those districts would have given up from the higher homestead exemptions.

Previously, this newspaper warned that the Legislature would better serve Texans by taking care of pressing needs, such as transportation and education, in comprehensive ways before cutting revenue through tax breaks. Instead, the Legislature crafted a grand bargain to reduce the business margins tax and increase the homestead exemption as part of $4 billion tax cut package.

No deal is perfect. Rising local property appraisals still will mean rising property tax bills, even if school boards hold the line on tax rates. That’s another reason voters should approve this constitutional change. If they were to reject it, homeowners would not receive any other property tax break and, with rising valuations, could well face even higher school district tax bills. Also, state funds earmarked to reimburse the districts for the higher exemption would return to the state treasury.[8]

”

Oppose

The San Antonio Express-News editorial argued:[23]

“ Technically, what’s on the ballot will be an expansion of the homestead exemption from the current $15,000 to $25,000 for the purpose of paying the property taxes that school districts impose.

The state, as outlined in separate enabling legislation, will make up that loss to schools from other sources. But, again, that just means funding the status quo, not pumping in the money actually needed to make school financing constitutional. A state district judge has ruled that Texas’ level of school funding is unconstitutional. The state has appealed to the Texas Supreme Court. Property taxes are unpopular and can be a burden, in particular to those on fixed incomes. But there are already fixes in place to help the elderly, and other remedies are possible for others. Moreover, whatever cuts you experience with Prop. 1 will likely be eaten up by higher appraisals in the future.

Texas’ tax code is in dire need of reform, but this cut does little to achieve that. In January, the Institute on Taxation and Economic Policy concluded that Texas was among the top 10 states having the most regressive tax policies. That means those least able pay more of a percentage of their income than do those who are most able.[8]

”

Path to the ballot

See also: Amending the Texas Constitution

The constitutional amendment was filed by a group of 20 senators as Senate Joint Resolution 1 on February 24, 2015.[5]

A two-thirds vote in both chambers of the Texas State Legislature was required to refer this amendment to the ballot. Texas is one of 16 states that require a two-thirds supermajority. On March 25, 2015, the Texas Senate approved SJR 1 for the first time. The Texas House of Representatives unanimously passed the measure with amendments on May 24, 2015. The senate concurred with the house amendments on May 29, 2015. Twenty-five senators voted "yea" and six voted "nay."[5]

House vote

May 24, 2015, House vote

Texas SJR 1 House Vote
ResultVotesPercentage
Approveda Yes 138 100.00%
No00.00%

Senate vote

May 29, 2015, Senate vote

Texas SJR 1 Senate Vote
ResultVotesPercentage
Approveda Yes 25 80.65%
No619.35%

"No" votes

Between the Texas House of Representatives and Texas Senate, six legislators voted against referring the amendment to the ballot. These legislators were:[5]

State profile

Demographic data for Texas
 TexasU.S.
Total population:27,429,639316,515,021
Land area (sq mi):261,2323,531,905
Race and ethnicity**
White:74.9%73.6%
Black/African American:11.9%12.6%
Asian:4.2%5.1%
Native American:0.5%0.8%
Pacific Islander:0.1%0.2%
Two or more:2.5%3%
Hispanic/Latino:38.4%17.1%
Education
High school graduation rate:81.9%86.7%
College graduation rate:27.6%29.8%
Income
Median household income:$53,207$53,889
Persons below poverty level:19.9%11.3%
Source: U.S. Census Bureau, "American Community Survey" (5-year estimates 2010-2015)
Click here for more information on the 2020 census and here for more on its impact on the redistricting process in Texas.
**Note: Percentages for race and ethnicity may add up to more than 100 percent because respondents may report more than one race and the Hispanic/Latino ethnicity may be selected in conjunction with any race. Read more about race and ethnicity in the census here.

Presidential voting pattern

See also: Presidential voting trends in Texas

Texas voted Republican in all seven presidential elections between 2000 and 2024.

Pivot Counties (2016)

Ballotpedia identified 206 counties that voted for Donald Trump (R) in 2016 after voting for Barack Obama (D) in 2008 and 2012. Collectively, Trump won these Pivot Counties by more than 580,000 votes. Of these 206 counties, one is located in Texas, accounting for 0.5 percent of the total pivot counties.[24]

Pivot Counties (2020)

In 2020, Ballotpedia re-examined the 206 Pivot Counties to view their voting patterns following that year's presidential election. Ballotpedia defined those won by Trump won as Retained Pivot Counties and those won by Joe Biden (D) as Boomerang Pivot Counties. Nationwide, there were 181 Retained Pivot Counties and 25 Boomerang Pivot Counties. Texas had one Retained Pivot County, 0.55 percent of all Retained Pivot Counties.

More Texas coverage on Ballotpedia

See also

External links

Additional reading

Footnotes

  1. ↑ 1.0 1.1 1.2 1.3 Texas Legislature, "SJR No. 1," accessed April 20, 2015
  2. ↑ Texas Legislature, "SJR No. 1 Bill Analysis," accessed May 31, 2015
  3. ↑ Austin American‑Statesman, "Texas House gives final approval to property tax break," May 25, 2015
  4. ↑ The Houston Chronicle, "Prop 1 could save Texas homeowners a little, push big burden on to other school funding," October 22, 2015
  5. ↑ 5.0 5.1 5.2 5.3 Texas Legislature, "SJR No. 1 History," accessed April 20, 2015
  6. ↑ Texas Comptroller of Public Accounts, "Residence Homestead Exemption Frequently Asked Questions," accessed October 27, 2015
  7. ↑ The Texas Tribune, "How Much Do You Save if Prop 1 Passes?" October 21, 2015
  8. ↑ 8.00 8.01 8.02 8.03 8.04 8.05 8.06 8.07 8.08 8.09 8.10 8.11 8.12 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source. Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content Cite error: Invalid <ref> tag; name "quotedisclaimer" defined multiple times with different content
  9. ↑ 9.0 9.1 9.2 Texas Legislative Council, "Analyses of Propose Constitutional Amendments," accessed October 5, 2015
  10. ↑ 10.0 10.1 10.2 Texas Legislature, "SB No. 1," accessed June 11, 2015
  11. ↑ Texas Comptroller of Public Accounts, "Property Tax System Basics," accessed June 11, 2015
  12. ↑ The Dallas Morning News, "Texas House advances cut in property taxes," May 24, 2015
  13. ↑ Legislative Reference Library of Texas, "Constitutional amendment election dates," accessed January 13, 2015
  14. ↑ 14.0 14.1 The Texas Tribune, "Property Tax Relief Comes With Big Cost to State," October 4, 2015
  15. ↑ Texas Legislature, "SJR No. 1 Authors," accessed April 20, 2015
  16. ↑ 16.0 16.1 Texas Legislature, "SJR No. 1 Witnesses," accessed April 20, 2015
  17. ↑ Star-Telegram, "Proposition 1 brings property tax relief for Texas homeowners," October 2, 2015
  18. ↑ MyStatesman.com, "Abbott: Vote to save your time and money," October 19, 2015
  19. ↑ The Pasadena Citizen, "Texas home prices hit all-time high," August 3, 2015
  20. ↑ Austin Real Space, "Texas Proposition 1, VOTE Nov 3rd! Property Tax Amendments," October 9, 2015
  21. ↑ 21.0 21.1 Texas House Research Organization, "HRO Analysis of SJR 1," accessed June 9, 2015
  22. ↑ The Dallas Morning News, "Editorial: Why Texas homeowners looking to save money should vote yes on Proposition 1," October 12, 2015
  23. ↑ The San Antonio Express-News, "Prop. 1 is shortsighted, unneeded," October 9, 2015
  24. ↑ The raw data for this study was provided by Dave Leip of Atlas of U.S. Presidential Elections.



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