Explanations, pros and cons of amendments
By the League of Women Voters of Texas
Official ballot language: “The constitutional amendment authorizing the Legislature to provide for an exemption from ad valorem taxation of part of the market value of the residence homestead of a partially disabled veteran or the surviving spouse of a partially disabled veteran if the residence homestead was donated to the disabled veteran by a charitable organization for less than the market value of the residence homestead and harmonizing certain related provisions of the Texas Constitution.”
Explanation: Proposition 1 would amend the constitution to allow the legislature to entitle a partially disabled veteran or the surviving spouse to a partial homestead exemption even if the homestead was donated at some cost to the veteran. The enabling legislation, HB 150, allows partially disabled veterans to claim a property tax exemption if they paid 50 percent or less of the market value for the house donated to them by a charity.
• Currently a partially disabled veteran who paid part of the cost of a donated home receives no property tax exemption. Proposition 1 would give the same property tax exemption to a partially disabled veteran who paid something toward the value of a donated home that is currently received by partially disabled veterans whose homes were donated in full.
• Proposition 1 would continue a pattern of giving exemptions to specific groups of people. Reducing the taxes on specific groups usually means other groups must absorb more of the tax burden.
• The legislature should focus its efforts on reducing the tax burden on everyone.
Official ballot language: “The constitutional amendment to establish a lower amount for expenses that can be charged to a borrower and removing certain financing expense limitations for a home equity loan, establishing certain authorized lenders to make a home equity loan, changing certain options for the refinancing for home equity loans, changing the threshold for an advance of a home equity line of credit, and allowing home equity loans on agricultural homesteads.”
Explanation: Proposition 2 would amend Article 16, Section 50(a)(6) of the Texas Constitution that governs home equity loans−money borrowed against the value of a homestead by its owner using the property as a guarantee to repay the loan. This amendment proposes changes to the following terms:
Fee cap. Lower the maximum limit on fees that can be charged to borrowers from 3% to 2% of the loan principal and exclude the cost of appraisals, property surveys, title insurance premiums, title insurance, and title examination reports from calculation of the maximum limit on fees.
Refinancing. Allow a home equity loan to be refinanced as a non-home equity loan secured with a lien against the property if certain conditions are met. This is currently prohibited.
Home equity lines of credit. Repeal a provision that prevents additional advances on a home equity line of credit if the unpaid principal exceeds 50% of the fair market value of the homestead.
Agricultural homesteads. Allow a home equity loan for a homestead designated for agricultural use. This is currently prohibited.
Approved lenders. Expand the list of approved home equity lenders by adding subsidiaries of banks, savings and loan associations, savings banks, and credit unions; and replace mortgage brokers with mortgage bankers and mortgage companies.
• The proposed amendment will make home equity loans more accessible, lower costs for borrowers, and provide consumers more choice.
• Fee cap. Lenders will be able to make loans under $100,000 more easily; the fee cap will not include fees by third parties, and consumers will still be protected against extreme fees from lenders.
•Refinancing. Allowing a home equity loan to be refinanced into a nonhome equity loan within reasonable restrictions would increase consumer choice. The borrower could combine a home equity loan with another loan to have one payment or to get a lower interest rate.
• Home equity lines of credit. The change would allow the borrower to initially take out a smaller loan and pay less interest before borrowing more against the line of credit.
• Agricultural homesteads. Owners of large and small agricultural homesteads should have the same choice as other Texans to borrow against their property under the consumer protections of a home equity loan.
• The proposed amendment will raise costs for borrowers and remove several important consumer protections that have worked for borrowers and lenders.
• Fee cap. Adding the costs for appraisals, surveys, and title insurance and reports on top of a maximum fee limit of 2% of the loan principal would likely be higher than the current 3% cap on all fees.
•Refinancing. Home equity loans have important protections related to judicial foreclosure and protection against loss of non-home assets. A new home equity loan with the consumer protections is a better option than a non-home equity loan without those protections.
• Home equity lines of credit. Current limits require the borrower to budget carefully for projected expenses and their repayment.
• Agricultural homesteads. Home equity loans and lines of credit for agricultural properties are costlier than farm operating loans and lines of credit due to the added large costs for appraisals, surveys, and title insurance and reports.
Official ballot language: “The constitutional amendment limiting the service of certain officeholders appointed by the governor and confirmed by the Senate after the expiration of the person’s term of office.”
Explanation: Proposition 3 would modify the holdover provisions for all unsalaried officers appointed by the governor such as appointees to volunteer boards and commissions. Current law, known as the “holdover” provision, allows all unsalaried appointees to continue to perform the duties of their office until a successor is duly qualified. “Holdovers” ensure continuation of functions but have been used to serve as extensions of terms of office. This proposition makes it clear that if a term expires when the legislature is not in regular session, the officer will continue to serve only until the last day of the next regular session of the legislature. These unsalaried officials would not continue to serve in office past the expiration even if no successor has been appointed. If a new official is not appointed by the end of the session, then the office would become vacant.
• This amendment would limit the amount of time a governor’s appointee can serve and would address concerns about some gubernatorial appointees being held over in their positions long after their terms have expired. Placing the limit at the end of a regular legislative session allows Senate confirmation hearings of appointees.
• Placing a limit on how long an appointee could continue serving in office would ensure that these unsalaried volunteer positions are rotated among qualified Texans.
• The Governor has many appointed positions to fill; the existing law allows flexibility for appointees to continue serving until qualified replacements are found.
• This amendment could result in many important appointed positions remaining vacant if a qualified replacement is not found within a certain time frame.
Official ballot language: “The constitutional amendment authorizing the Legislature to require a court to provide notice to the attorney general of a challenge to the constitutionality of a state statute and authorizing the Legislature to prescribe a waiting period before the court may enter a judgment holding the statute unconstitutional.”
Explanation: Proposition 4 would require a court to notify the stateattorney general when a party to litigation files a petition, motion, or other pleading challenging the constitutionality of a state statute. Courts must wait 45 days, after providing the notice, before entering a judgment holding the statute unconstitutional. In 2011, the state legislature passed a statute with a similar notice and waiting period, but in 2013, the Texas Court of Criminal Appeals ruled that the law
was unconstitutional. Proposition 4 is designed to provide a constitutional basis for the notice and waiting period to restore the 2013 law.
• Proposition 4 ensures the state has an opportunity to defend the constitutionality of its laws.
• The proposed amendment would not alter the state’s separation of powers doctrine nor restrict the ability of courts to strike down laws as unconstitutional.
• This amendment would only provide the attorney general with notice so the attorney general could offer assistance to defend a state law. It would not change the authority of the attorney general’s office over criminal matters.
• The constitution should not be amended in a way that could undermine the state’s separation of powers doctrine. Each branch of the government should be able to exercise its powers without interference from another branch.
• The legislature should not establish procedures that delay a Texan’s right to pursue and receive relief from unconstitutional laws.
• Under current law, in criminal cases the state prosecuting attorney, not the attorney general, represents the state. This law could create confusion regarding the attorney general’s role in criminal cases.
Official ballot language: “The constitutional amendment on professional sports teams' charitable foundations conducting charitable raffles.”
Explanation: Proposition 5 would amend Article 3, Section 47(d-1) of the Texas Constitution, enabling certain professional sports team charitable foundations to conduct charitable raffles. Voters approved a constitutional amendment in 2016 to allow certain professional sports team charitable foundations that existed on January 1, 2016, to conduct charitable raffles at home games. It authorized the 10 Texas major league sports franchises that had charitable foundations on that date to conduct charitable raffles. Proposition 5 and its enabling legislation, HB 3125, would expand the number of professional sports team charitable foundations that are eligible to hold charitable raffles at home sports games. This amendment proposes to:
• Remove the restriction that only charitable foundations existing on January 1, 2016 may conduct charitable raffles
• Define “professional sports teams” eligible to conduct charitable raffles to allow professional hockey, basketball, football, baseball, soccer, motorsports, and golf teams, including minor leagues as well as major leagues.
• Proposition 5, in expanding the number of eligible sports teams, allows more teams to capitalize on the large and supportive crowds at sporting events, which increases the amount of charitable funds to support their charitable programs.
• It would add minor league sports teams representing more rural and suburban communities, bringing charitable revenue to new and different parts of the state and uniting sports teams and their communities to assist disadvantaged Texans.
• The proposed amendment only expands the number of sports teams that could participate in charitable raffles; it would make no other change and would not remove safeguards that were established to protect against improperly conducted raffles.
• Current law, which applies only to the 10 Texas major league sports franchises, protects against the creation of entities solely to take advantage of charitable raffles.
• Proposition 5 could open the door to further expansion of charitable raffles conducted by the foundations of less well-established teams.
• The proposed amendment expands gambling in Texas by increasing the number of raffles that sports team foundations can conduct, which could lead to other groups requesting authority to offer such raffles.
Official ballot language: “The constitutional amendment authorizing the Legislature to provide for an exemption from ad valorem taxation of all or part of the residence homestead of the surviving spouse of a first responder who is killed or fatally injured in the line of duty.”
Explanation: Proposition 6 would give property tax exemptions to surviving spouses of first responders killed in the line of duty if the spouse has not remarried. If the surviving spouse moves to a new homestead, the spouse is entitled to an equivalent homestead exemption for real property taxation.
• Families of fallen first responders, with their incomes reduced, should not have to bear the burden of losing their homes because of the price of property taxes.
• Surviving spouses of first responders killed in the line of duty should be treated the same as surviving spouses of veterans killed in the line of duty.
• The fiscal impact on a single taxing district would be minimal.
• Regardless of how deserving the recipients, creating additional property tax exemptions may require local governments to place an additional tax burden on other taxpayers.
• School districts would receive less revenue from property taxes so the state may decide to cover this reduction by taking it from the General Revenue Fund, creating a cost to the state.
Official ballot language: “The constitutional amendment relating to legislative authority to permit credit unions and other financial institutions to award prizes by lot to promote savings.”
Explanation: The Texas Constitution, Art. 3, Sec. 47, prohibits lotteries and raffles with a few exceptions, such as bingo games and charitable raffles conducted by nonprofit or religious organizations. Proposition 7 would amend the constitution to allow the legislature to authorize credit unions or other financial institutions to conduct promotional activities that can award a prize to one or more of the institution’s depositors selected by lot to encourage savings. The enabling legislation for Proposition 7, HB 471, defines raffles legalized under this amendment as savings promotion raffles; the criteria for entering is a deposit of a specific amount into a savings account or savings program. Other terms of the savings account or program – fees, withdrawal limits, interest or dividends – must be commensurate with those of savings accounts or programs that are not subject to a savings promotion raffle.
• Saving incentives are needed as more than one-third of Texas households lack a savings account and about half do not have a three-month emergency fund. States that have removed legal barriers to such raffles have seen a significant increase in consumer savings.
• Savings promotion raffles are not gambling as they require no form of payment, only a deposit into a savings account, and benefit the consumer even if the consumer does not win a prize. Depositors can withdraw their money at any time and therefore do not lose money as in other raffles.
• Proposition 7 would permit one industry to do a raffle and would be the only non-charitable raffle allowed in the state. It is not equitable to allow only one industry to conduct raffles.
• This proposition could lead to other industries requesting permission to hold raffles and to more serious forms of gambling.