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Texas Taxes on Homestead Value, Proposition 2 (2009)

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The Texas Taxes on Homestead Value Amendment, also known as Proposition 2, was on the November 3, 2009 ballot in Texas as a legislatively-referred constitutional amendment, where it was approved.

The measure allowed the legislature to tax a residence homestead based on the value of that property. According to the text of the bill, the homestead would be taxed this way "regardless of whether the residential use of property by the owner is considered to be the highest and best use of the property."[1][2][3]

The bill was authored by Representatives John Otto, Ryan Guillen and Patrick Rose. Sponsors of the proposed measure were Sens. Tommy Williams and Dan Patrick.

Election results

Texas Proposition 2 (2009)
ResultVotesPercentage
Approveda Yes 722,427 68.22%
No336,55931.78%

Election results via: Legislative Reference Library of Texas

Text of measure

Ballot title

The short ballot summary Texas voters saw on their ballot read as:[4]

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.

[5]

Full text

The full text of the measure can be read here.

Constitutional changes

See also: Amending the Texas Constitution

Proposition 2 amended Article 8 in the Texas Constitution by adding Subsection J of Section 1 to read as follows:[1]

The Legislature by general law may provide for the taxation of real property that is the residence homestead of the property owner solely on the basis of the property's value as a residence homestead, regardless of whether the residential use of the property by the owner is considered to be the highest and best use of the property.

Support

Arguments

Proponents of Proposition 2 argued that the measure would not tax homesteads for their “highest and best uses” as potential businesses, according to the Home Research Organization, a Texas-based institute. Instead, the proposed amendment would tax them as residences in proportion to their market value, thus lessening the burden on property owners during the down economy.[6]

In a joint statement by Representative Leo Berman and Senator Kevin Eltife on October 14, 2009, the legislators attempted to calm concerned voters who are worried that Proposition 2 would allow the state to directly tax properties:

  • Eltife and Berman insisted that the measure would not allow appraisal districts to continue to apply the "highest and best" use valuations on homesteads.
  • According to the joint statement: "We agree the ballot language for the propositions could have been better; however, Proposition 2 in no way implies a property tax increase by the state of Texas. In fact, the state is prohibited from raising property taxes by the Texas Constitution. Proposition 2 does exactly the opposite. It prohibits tax appraisal districts from using commercial property values in the process of appraising residential properties. By getting commercial property values out of the formula, residential appraisals should be lower than in the past."[7]

State Representative Allen Vaught addressed concerns he received through emails that if Proposition 2 is passed, they would expand statewide property tax:

  • Vaught explained to the public that this information was untrue and that the constitution prohibits the state government from assessing property taxes.
  • Vaught also stated that the passage of Proposition 2, and 3, would not eliminate this constitutional restriction.
  • According to Vaught: "I would encourage everyone to research each of the 11 Propositions on the Nov. 3 ballot in order to make an informed decision when voting."[8]

The National Taxpayers Union supported Proposition 2 stating that it would amend the constitution to ensure that a residence would be assessed property taxes as a residence, and not as commercial property or other methods. The group also believed this would prevent assessors from taxing property as something other than a homestead. NTU gave it a positive rating in their 2009 General Election Ballot Guide.

Campaign contributions

No committees or contributions to campaigns in favor of Proposition 2 were reported.[9]

Opposition

Arguments

According to reports, opponents of Proposition 2 argued that if passed the state would have had the ability to impose a state property tax, reduce the control held by local entities and increase the power of the state.[10]

Other arguments included:[11]

  • create a loophole in which property would be valued for its current use instead of according to its "highest and best use"
  • residents currently benefit from several exemptions, for example a 10-percent limitation on the annual increase in taxable value, appraisal rules should not be changed
  • Proposition 2 would deprive school districts from property tax revenue because property owners will be allowed to pay taxes on "below-market valuations"
  • "Proposition 2 would increase the inequities in property taxation"

Campaign contributions

No committees or contributions to campaigns in opposition to Proposition 2 were reported.[9]

Media editorial positions

Main article: Endorsements of Texas ballot measures, 2009

Support

  • The Houston Chronicle said, "This protection is particularly important in no-zoning cities such as Houston, where such development can occur quickly and with potentially difficult consequences for homeowners. The measure would be strictly limited to residences qualifying for the home-owners exemption, thus eliminating the potential for use by speculators."[12]
  • The El Paso Times said Proposition 2 "would help partially reform the out-of-control residential appraisal system."[13]

Opposition

  • The Star-Telegram said, "It sounds good, but there’s no logical reason why someone who can sell their property for a higher value (say, for a pending commercial development) shouldn’t be taxed according to fair market value. The appraisal appeals process is designed to rectify special cases that fall outside of this general rule (say, the pending commercial development has flopped, and nearby property values remain unfairly high)," said the editorial board.[14][15]
  • The Austin Chronicle said, "Just another backdoor way to slash taxes on valuable property, thereby undermining the public schools and other community needs."[16]

Path to the ballot

See also: Laws governing direct democracy in Texas

The measure was filed with Secretary of State Hope Andrade on June 3, 2009. The Texas House of Representatives approved the proposed amendment on April 27, 2009 with a vote of 142-0, followed by the State Senate on May 26, 2009 with a vote of 31-0.[17]

As laid out in Article 17 of the Texas Constitution, in order for a proposed constitutional amendment to be placed on the ballot, the Texas State Legislature must propose the amendment in a joint resolution of both the Texas State Senate and the Texas House of Representatives. The joint resolution can originate in either the House or the Senate. The resolution must be adopted by a vote of at least two-thirds of the membership of each house of the legislature. That amounts to a minimum of 100 votes in the House of Representatives and 21 votes in the Senate.

See also

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Suggest a link

External links

Additional reading

References

  1. 1.0 1.1 Texas Legislature Online, "Enrolled Version of HJR 36," accessed January 20, 2015
  2. Legislative Reference Library of Texas, "Constitutional amendment election dates," accessed January 20, 2015
  3. Texas Legislative Council, "Amendments to the Texas Constitution Since 1876," accessed January 20, 2015
  4. Texas Secretary of State, "Official Ballot Language and Order for the Nov.3, 2009 Constitutional Amendment Election," July 28, 2009
  5. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  6. Gainesville Daily Register, "11 amendments to Texas Constitution to appear on Nov. 3 ballot," October 7, 2009 (dead link)
  7. tylerpaper.com, "Berman, Eltife Address Concerns Over Amendments," October 14, 2009
  8. Pegasus News, "State representative addresses Propositions 2 and 3 on constitutional amendments ballot," October 28, 2009
  9. 9.0 9.1 Follow the Money, Proposition 2"
  10. KCBD, "Some voters confused by Propositions 2 and 3," October 21, 2009
  11. San Antonia Express-News, "Flawed Proposition 2 merits opposition," October 15, 2009
  12. Houston Chronicle, "State constitutional amendments would streamline, equalize appraisal process," October 14, 2009
  13. El Paso Times, "Propositions: Appraisal reform on November ballot," October 18, 2009
  14. Star-Telegram, "Texas voters should reject property tax proposals," October 12, 2009 (dead link)
  15. Star-Telegram, "Nov. 3 election recommendations," October 16, 2009 (dead link)
  16. The Austin Chronicle, "The Austin Chronicle' Endorsements," October 16, 2009
  17. HJR 36-1 History

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