Amending the Texas Constitution to Expand Tax Relief - Just A Little Bit

Brusniak Turner Fine LLP

In Texas, everything is bigger – including the constitution. Texas has the second longest state constitution in the United States. With over 500 amendments (and counting), you may think there is an inspired legal framework holding together the Lone Star State; however, the reason the constitution is so long is because it was built that way.

The legislature’s power is limited by the constitution and, unlike Texas’s sister states to the east and west, Texas requires a constitutional amendment to change laws that could otherwise be adopted through an initiative or referendum process or by legislative action. As a result, even small changes – like expanding an existing tax break – sometimes require a constitutional amendment.

To illustrate, there are three property tax issues that Texans will have the opportunity to vote on in the November 2, 2021 ballot and one in the May 7, 2022 ballot. Each issue requires a constitutional amendment and are described below:

  • Texas Proposition 2, Authorize Counties to Issue Infrastructure Bonds in Blighted Areas
    • Proposition 2 would amend the Texas Constitution to give counties a new power: the power to raise money by issuing bonds to fix “blighted” (undeveloped, unproductive areas). The power to issue bonds for purposes of remediating blighted areas is nothing new; however, until now that power has been reserved for cities. This new measure could impact property taxes across Texas because it allows counties to raise money by issuing bonds for those purposes. In other words, this constitutional amendment grants counties the same power cities have to fix blighted areas. Note, voters rejected a similar proposition in 2011. However, if voters approve this time around, then property taxes may rise in order to fund the development.
  • Texas Proposition 7, Homestead Tax Limit for Surviving Spouses of Disabled Individuals
    • Proposition 7 would amend the Texas Constitution to extend tax relief to the surviving spouses of disabled individuals. Currently, the law grants a homestead tax limit for disabled persons. Proposition 7 would transfer that same tax limit to the surviving spouse of a disabled person who passes away. To retain the tax limit on the homestead, the surviving spouse must meet certain eligibility requirements, i.e. over the age of 55 and receive disability benefits under the Federal Old-Age, Survivors, and Disability Insurance Program administered by the Social Security Administration.
  • Proposition 8, Homestead Tax Exemption for Surviving Spouses of Military Fatally Injured in the Line of Duty
    • Proposition 8 would amend the Texas Constitution to expand the surviving spouse tax exemption for members in the armed services. Currently, the constitution grants an exemption to the surviving spouse of a member of the armed services "who is killed in action," which has been interpreted to mean individuals killed during combat. In other words, if a spouse is killed in combat, the surviving spouse receives a tax exemption – but if a spouse was killed during training, the surviving spouse gets nothing. Proposition 8 would amend the constitution to extend that tax exemption to the surviving spouses of armed service members killed during training or non-combat exercises.
  • SJR 2 – Increasing the Amount of the School District Residence Homestead Exemption
    • This amendment, if passed, will grant taxpayers some measure of relief from the ubiquitous rise in property taxes. The legislation would raise the state's homestead exemption from $25,000 to $40,000 for school district property taxes, which would amount to approximately $176 in annual savings for homeowners. The proposed amendment will go on the May 7, 2022 ballot.

As you can see, the tax issues on the November and May ballots are relatively minor. Nevertheless, they each require a constitutional amendment. So, the next time you read about a constitutional amendment involving Texas property taxes, remember that the power of the legislature in terms of property taxation is limited in many circumstances.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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