August 2023
There are lots of details hiding in plain sight in some of the new legislation that was signed during the latest general and special sessions of the Texas House and Senate. I wanted to share some of those with you in the hopes that we can understand exactly what has been done that impacts us in the world of real estate, property taxes, and upcoming propositions on the ballot in November.
When it comes to statewide taxes there are a few terms we need to understand as the legislature deals with making adjustments. Tax Relief is an adjustment to an existing tax that is intended to slow or lower individual taxes especially related to homesteads, seniors, disabled, veterans, and AG exemptions, etc. This is a temporary fix to tax problems. Tax Compression on the other hand directly and intentionally lowers the tax rate and is a longer term fix for the situation. Tax Reform brings transparency to what tax is actually being paid and provides accountability for elected officials Raise taxes – don’t get re-elected!
Local taxes are levied by cities, counties, and school districts. These are increasing in Texas at an alarming rate and erode statewide efforts at tax relief.
Since 2019, voters must approve any increase in a tax that raises the rate 3.5% or more. However, there are currently no limits on issuance of certificates of obligation or tax anticipation notes by local governments (endowments), which means that local entities can raise “taxes” without voter approval.
Senate Bill 2 is a Tax Relief package that totals $12.7 billion. This will be used to buy down or compress the property tax rate and increase the homestead exemption from $40,000 to $100,000. But look out! The dramatic increase in appraised home values means that this additional exemption is already lost for most homeowners. SB 2 also ignores the main reason that taxes keep going up – local government spending.
On the ballot in November there will be 14 Proposed Constitutional Amendments. Note: Propositions 5, 6, 7, 8, and 14 all create additional ENDOWMENTS (hidden taxes) funded by the state surplus (rainy day fund) and are NOT restricted by Constitutional Limitations on spending. This is a hidden tax because the rainy day fund is OUR tax dollars being spent on items for which there is no accountability other than to reject the propositions. These 5 endowments are proposed at a cost of $6.9 Billion.
Here is a quick summary of the propositions. For complete details please visit VoteTexas.gov
Proposition 1 – HJR 126 “The constitutional amendment protecting the right to engage in farming, ranching, timber production, horticulture, and wildlife management.”
Proposition 2 – SJR 64 “The constitutional amendment authorizing a local option exemption from ad valorem taxation by a county or municipality of all or part of the appraised value of real property used to operate a child-care facility.”
Proposition 3 – HJR 132 “The constitutional amendment prohibiting the imposition of an individual wealth or net worth tax, including a tax on the difference between the assets and liabilities of an individual or family.”
Proposition 4 – HJR 2 from the second special session “The constitutional amendment to authorize the legislature to establish a temporary limit on the maximum appraised value of real property other than a residence homestead for ad valorem tax purposes; to increase the amount of the exemption from ad valorem taxation by a school district applicable to residence homesteads from $40,000 to $100,000; to adjust the amount of the limitation on school district ad valorem taxes imposed on the residence homesteads of the elderly or disabled to reflect increases in certain exemption amounts; to except certain appropriations to pay for ad valorem tax relief from the constitutional limitation on the rate of growth of appropriations; and to authorize the legislature to provide for a four-year term of office for a member of the board of directors of certain appraisal districts.”
Proposition 5 – HJR 3 “The constitutional amendment relating to the Texas University Fund, which provides funding to certain institutions of higher education to achieve national prominence as major research universities and drive the state economy.” ($208M)
Proposition 6 – SJR 75 “The constitutional amendment creating the Texas water fund to assist in financing water projects in this state.”
Proposition 7 – SJR 93 “The constitutional amendment providing for the creation of the Texas energy fund to support the construction, maintenance, modernization, and operation of electric generating facilities.”
Proposition 8 – HJR 125 “The constitutional amendment creating the broadband infrastructure fund to expand high-speed broadband access and assist in the financing of connectivity projects.” ($230M)
Proposition 9 – HJR 2, regular session “The constitutional amendment authorizing the 88th Legislature to provide a cost-of-living adjustment to certain annuitants of the Teacher Retirement System of Texas.” ($4.93B)
Proposition 10 – SJR 87 “The constitutional amendment to authorize the legislature to exempt from ad valorem taxation equipment or inventory held by a manufacturer of medical or biomedical products to protect the Texas healthcare network and strengthen our medical supply chain.”
Proposition 11 – SJR 32 “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.”
Proposition 12 – HJR 134 “The constitutional amendment providing for the abolition of the office of county treasurer in Galveston County.”
Proposition 13 – HJR 107 “The constitutional amendment to increase the mandatory age of retirement for state justices and judges.”
Proposition 14 – SJR 74 “The constitutional amendment providing for the creation of the centennial parks conservation fund to be used for the creation and improvement of state parks.” ($1B)
* Proposed Amendment Information Source: Texas Secretary of State
Election Day is Tuesday, November 7, 2023. An educated electorate is a power deterrent to excess government spending. Now what you are voting for, or against when you go to the polls this November.
Learn more here:
1) Legiscan.com – an impartial and non-partisan legislative tracking and reporting service.
2) Texaspolicy.com – Texas Public Policy Foundation, a conservative reporting service.
3) Texasscorecard.com – a pro-liberty conservative reporting service.
Be sure you have a residential or commercial realtor who understands where we are and where we are going in the current market so that you can make the best decisions for your family and your business in the days ahead.
If you’ve read this far, thank you! And one last thing – if you are a real estate agent who is looking for a commercial brokerage to help with your clients’ commercial or land needs in Texas, agents that value competency, integrity, honesty, and courtesy, please give us a call and let us know how our agents can help you via a referral partnership or mentorship agreement as you learn about commercial transactions while working with a pro.
