Senator Robert "Bob" Deuell, M.D.
The Texas State Senate
District 2

For Immediate Release
August 25, 2003

***CAPITOL UPDATE***

Constitutional Amendment Election Information

AUSTIN - This week, I will continue with the analysis of proposed constitutional amendments. The election will be held on September 13, and Texans will vote on 22 proposed amendments to the Texas Constitution. This article focuses on amendments 14-18. The analyses contained in these articles comes from the Texas Legislative Council's "Condensed Analysis of Proposed Constitutional Amendments." To view the entire document, please visit their website at www.tlc.state.tx.us, or feel free to contact my office for a hard copy.

AMENDMENT NO. 14

The constitutional amendment providing for authorization of the issuing of notes or the borrowing of money on a short-term basis by a state transportation agency for transportation-related projects, and the issuance of bonds and other public securities secured by the state highway fund.

SUMMARY: The proposed amendment would provide for the Texas Department of Transportation to issue notes or obtain loans with terms of two years or less to carry out any of the department's functions. The amendment would also provide for the Texas Transportation Commission to issue longer term bonds or other public securities to fund highway improvement projects. The bonds or other public securities would be payable from the money in the state highway fund.

ARGUMENTS FOR: The state's population and the amount of traffic on state roads have grown enormously, and new roads are needed. Allowing the state to borrow money for those purposes, rather than waiting for the money to accumulate, will allow those problems to be addressed earlier. The state already borrows money for many purposes, and the building of roads using short-term borrowing is an important tool to allow the state to more efficiently administer its function of providing for transportation.

ARGUMENTS AGAINST: Borrowing does not create new money for road construction, it only delays the time when payment is due. The state could actually increase the amount of road construction accomplished by finding additional sources of revenue for this purpose, such as increased vehicle registration fees or motor fuel taxes. By borrowing money the state will incur extra expenses, such as interest and the expenses related to issuing bonds or notes. These expenses may be paid from money in the state highway fund, resulting in less money actually available to spend directly on transportation projects.

AMENDMENT NO. 15

The constitutional amendment providing that certain benefits under certain local public retirement systems may not be reduced or impaired.

SUMMARY: The proposed amendment amends Article XVI, Texas Constitution, by adding Section 66 to provide that any change made to certain benefits provided by certain retirement systems cannot reduce benefits that a person was entitled to receive before the date of the change. The amendment places the responsibility for ensuring that those benefits are not reduced on both the retirement system and the governmental entities that finance the system. The amendment applies to public retirement systems of political subdivisions, such as cities and counties, that provide benefits for their employees. Under the amendment, any reduction in the retirement or death benefits that the retirement systems provide cannot be applied retroactively to benefits that a person has accrued or is entitled to receive before the date the reduction takes effect. The application of the amendment is limited in several ways. It specifically exempts the retirement system that provides benefits for San Antonio firefighters and police officers, and it does not apply to any statewide retirement system. An opt-out provision is also included under which voters may choose to exempt a political subdivision from the application of the amendment at local elections to be held next year. The amendment applies only to service or disability retirement benefits and death benefits. Health and life insurance benefits are not within the scope of the amendment. Further, it does not apply to disability benefits that a person has previously received, but may no longer receive because the person no longer qualifies as disabled under the terms of the retirement system.

ARGUMENTS FOR: In exchange for their years of work in public service, often at a lower salary than their counterparts in the private sector, local government employees should receive retirement benefits that are protected. This protection will enable these employees to better plan for retirement, knowing that the benefits they have earned are guaranteed. The proposed amendment would permit local public retirement systems to make changes in the provision of certain benefits as long as the changes apply prospectively. The amendment would also give those retirement systems the flexibility the systems need to adjust retirement benefits if necessary to respond to changing economic times, while still protecting the benefits that local government employees have earned. The amendment would give voters the flexibility to exempt a political subdivision from the application of the amendment at local elections to be held next year.

ARGUMENTS AGAINST: Providing a constitutional guarantee of certain benefit levels and placing the burden of that guarantee on both local public retirement systems and local government employers could force local governments to raise taxes, cut necessary services, or both, to maintain benefit levels. Although the amendment would protect the retirement benefits earned by employees of local governments, the amendment does not extend that protection to other public employees such as teachers and state employees. It is unfair to provide a constitutional protection of retirement benefits for some public employees but not for others. Although the amendment would give voters the option of exempting a political subdivision from the application of the amendment, this opt-out provision is available to voters on only one date: a local election to be held in May 2004. In subsequent years, if a retirement system and a local government become unable to sustain retirement benefits at protected levels, voters would no longer be able to exempt their city or county from the amendment's application.

AMENDMENT NO. 16

The constitutional amendment authorizing a home equity line of credit, providing for administrative interpretation of home equity lending law, and otherwise relating to the making, refinancing, repayment, and enforcement of home equity loans.

SUMMARY: The proposed amendment amends Section 50, Article XVI, Texas Constitution, by providing that a home equity loan may be in the form of a line of credit, allowing a lender of a home equity loan who fails to comply with the lender's obligations under the loan to cure the failure and avoid forfeiting the principal of and interest on the loan, providing for interpretation by a state agency of the constitutional provisions relating to loans secured by a homestead, adding mortgage brokers to the list of persons eligible to make home equity loans, allowing payments on a home equity loan to be more often than monthly, requiring lenders to provide to a borrower before closing of a home equity loan an itemized estimate of amounts that the borrower will be required to pay at the closing, and allowing a home equity loan to be refinanced by a reverse mortgage. This same change is also being proposed by Proposition 6, which is being submitted to the voters at this election.

ARGUMENTS FOR: Home equity loans in the form of a line of credit are popular in other states, and borrowers in Texas also would like to have this flexible option. Allowing borrowers to access their homestead equity periodically in the amount needed rather than in a lump sum will save the borrowers the money that would otherwise be paid as interest on money borrowed before it is needed or on higher interest rate loans not secured by the homestead. Several years have passed since home equity loans were authorized in Texas, yet many lenders are still reluctant to offer the loans. This is because of the steep penalty for making an error in the loan process--loss of the entire principal of and interest on the loan--and because of the uncertainty of interpretation of some of the existing constitutional provisions. The proposed amendment would ease those fears by allowing the lenders to correct errors to bring the loans into compliance with the law, and by providing for administrative interpretations to give the meaning of the law more certainty. Reverse mortgages are a popular means for seniors to supplement their income by tapping the equity in their homes. Beginning in 1998, there were several years when home equity loans were available but reverse mortgages were not being offered. During this period many persons who would have preferred reverse mortgages obtained home equity loans instead. The amendment would allow these borrowers to convert their existing home equity loans into reverse mortgages.

ARGUMENTS AGAINST: Any loan secured by a person's home has the risk that the person will lose the home if unable to make the payments. Lines of credit make it easier to borrow money through loans secured by homes and consequently will cause more persons to lose their homes. The steep penalties for lenders who err exist because of the steep penalty for borrowers who err--loss of the borrower's home. The safeguards provided by the law are important to protect borrowers, and lenders should not be allowed to take them lightly, knowing that they can simply cure any problems if they are caught. Similarly, the constitutional provisions governing homestead mortgage lending have been submitted to and approved by the voters. An administrative agency should not be given the potential opportunity to void or alter what the voters have approved. Elderly persons, who may be more susceptible to unscrupulous or uncaring lending practices, may be victimized by lenders who would convince elderly borrowers under home equity loans to convert those loans to reverse mortgages under terms unfairly favorable to the lender.

AMENDMENT NO. 17

The constitutional amendment to prohibit an increase in the total amount of school district ad valorem taxes that may be imposed on the residence homestead of a disabled person.

SUMMARY: The proposed amendment amends Subsection (d), Section 1-b, Article VIII, Texas Constitution, which prohibits increases in the amount of school district ad valorem taxes that may be imposed on the residence homestead of a person who is 65 years of age or older. The proposed amendment would grant disabled persons much the same beneficial tax treatment that elderly persons are currently granted.

ARGUMENTS FOR: Due to inflation, rising property values, or increases in tax rates, school district taxes have consistently increased over time. Tax increases are particularly hard on persons on fixed incomes, such as many elderly or disabled persons. Elderly persons are already protected from school tax increases on their homes. The proposed amendment would similarly protect homeowners who are disabled for social security purposes from increases in school district property taxes, allowing them to remain in their homes. The amendment prevents only increases in the amount of school district taxes on the residence homesteads of the disabled and does not relieve disabled homeowners from all of the taxes they must pay to their school district. The amount of tax revenue that will be lost to any particular school district in future years will be minimal and can be made up from other sources of revenue without significantly increasing the tax burdens of other taxpayers.

ARGUMENTS AGAINST: Limiting the amount of school district taxes on the residence homesteads of the disabled does not affect the total tax burden of the school district but will only shift the tax burden among taxpayers. By limiting increases in the taxes owed by a disabled person, the amendment unfairly shifts a portion of the tax burden to other homeowners and to owners of other types of property, primarily business property, who are not entitled to any limitation on their school district taxes. Regardless of the amount of tax revenue that will be lost by one school district if the amendment is adopted, the total amount lost by all school districts will be significant. In addition, not every school district will be able to increase its tax collections to make up for the lost property tax revenue in future years and will likely look to the state government to make up for their lost property tax revenue at a time when the economy is weak and state funds that are available for education need to be conserved.

AMENDMENT NO. 18

The constitutional amendment authorizing the legislature to permit a person to assume an office of a political subdivision without an election if the person is the only candidate to qualify in an election for that office.

SUMMARY: The proposed amendment adds Section 13A, Article XVI, Texas Constitution, to authorize the legislature to provide by general law that a person may assume an office of a political subdivision without an election if that person is the only candidate to qualify in an election for that office.

ARGUMENTS FOR: By authorizing the legislature to allow political subdivisions to avoid the expense of time and money to list unopposed candidates on the ballot and count votes for unopposed candidates, the proposed amendment promotes efficiency in election administration and would help reduce the cost of elections. The amendment would permit the legislature to give election officials greater flexibility in ballot preparation. Simpler, shorter ballots will allow the voter to focus on contested races, without having to sort through the unopposed candidates and will generally reduce voter confusion. The amendment would not interfere with anyone's right to vote. If a candidate is unopposed, and no other candidate, including a write-in candidate, is eligible for election to that office, the race is decided.

ARGUMENTS AGAINST: Omitting a candidate from the ballot deprives voters of their right to vote for the candidate of their choice. Those who take the time to vote are exercising their right to endorse the candidate they wish to represent them and validate the candidate's election to public office. The right to vote for a candidate should exist regardless of the number of candidates. The amendment would authorize the legislature to deprive candidates of the opportunity to gain visibility by campaigning and make it more difficult for the voters to know who their elected leaders are or what offices are being filled. The amendment is unnecessary because Amendment No. 8, to be submitted to the voters at the same time as this amendment, would more broadly authorize the legislature to provide by general law that a person may assume any office, including an office of a political subdivision, without an election if that person is the only candidate to qualify in an election for that office. If Amendment No. 8 is approved by the voters, this amendment is unnecessary and duplicative, and will add confusion to the Texas Constitution.

If you would like to receive the Capitol Update via e-mail, please contact me at bob.deuell@senate.state.tx.us.

To contact Sen. Deuell about the legislative process, contact the Capitol Office at (512) 463-0556 or mail to Sen. Bob Deuell, Texas Senate, P.O. Box 12068, Austin, TX 78711. The website for the Texas Senate is www.Senate.state.tx.us. The e-mail address for Sen. Deuell is: bob.deuell@senate.state.tx.us.

Top