Article
This week I will continue to discuss the constitutional amendments that will appear on the November 6th ballot. These amendments were joint resolutions that were passed during the recent legislative session; however, because they change the Texas Constitution, voters have the opportunity to approve or disapprove of the amendments in a state-wide election. Over the next several weeks I will continue to write about each of the 16 propositions, and include supporting and opposing arguments.
Proposition 5: Allowing temporary property tax freeze for smaller city redevelopment
The constitutional amendment would allow cities with fewer than 10,000 people to hold an election permitting the city to enter into an agreement with an owner of real property in or adjacent to an area in the city that has been approved for funding under the Downtown Revitalization Program or the Main Street Improvements Program under which the parties agree that the taxes imposed by any political subdivision on the owner’s property may not be increased for the first five tax years after the tax year in which the agreement is entered into.
Supporters argue that Prop. 5 would provide eligible small cities a tool to create incentives for private property owners to renovate downtown buildings and improve downtown properties in conjunction with other downtown revitalization efforts undertaken by those cities. The temporary tax freeze would be tailored to apply only to smaller municipalities that are unable to use economic development tax incentives that are available to larger cities. With only a small number of properties eligible for the limitation on property tax increases, there is expected to be very little fiscal impact; however, after the freeze has expired, cities can expect to see increased tax revenue from the improved properties.
Opponents say that Prop. 5 would grant these property owners a double benefit--infrastructure improvements funded by state tax dollars through the revitalization programs and a five-year tax freeze. Any tax break shifts the tax burden to other taxpayers, and this shift can be more pronounced in smaller communities. Also, any agreement reached between the owner and the city would also have to apply to the school district, the county, and other local taxing authorities that would have no say about losing this tax revenue.
Proposition 6: Property tax exemption for a personal vehicle used for business activities
Proposition 6 would allow an individual to exempt from ad valorem taxation one motor vehicle that was used in the individual's occupation and also used for personal activities. Supporters say this proposition would eliminate the requirement that an individual pay property taxes on a personal vehicle used for business purposes. Many independent entrepreneurs such as realtors, farmers, and salespersons use a personal vehicle in their professional duties. Because these people are not able to receive an exemption for personal use, they are taxed on the vehicle's entire value. By limiting this exemption to one motor vehicle per individual owner, an individual could not benefit from the exemption of an entire fleet of vehicles.
Opponents say that the proposed constitutional amendment would exempt from taxation many motor vehicles used in the production of income by their owners. Exempting such commercial property from taxation runs counter to the long-standing public policy in Texas that all personal property used for the production of income, including motor vehicles, be taxed. A vehicle used predominantly for business should not be exempt merely because it is used for occasional personal purposes.
You can view a complete list of the proposed constitutional amendments with analyses online at www.tlc.state.tx.us. For more information regarding these propositions, please contact my office by writing to P.O. Box 2910, Austin, TX 78768-2910 or by emailing me at larry.phillips@house.state.tx.us. My district office phone number is (903) 891-7297.
Gallery