Monday, November 2, 2015

Texas Property Tax Exemption for Surviving Spouses of Disabled Veterans Amendment, Proposition 2

This is the last post of the series where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment authorizing the legislature to provide for an exemption from ad valorem taxation of all or part of the market value of the residence homestead of the surviving spouse of a 100 percent or totally disabled veteran who died before the law authorizing a residence homestead exemption for such a veteran took effect.

Helpful Links

What does this do?


For a while, we've had a law where a "totally disabled" veteran that owned their home could be 100% exempt from property taxes. Then, in 2011, we passed an amendment making it such that, when these veterans died, their property tax exemption remained for their spouse, as long as the spouse stayed in the same home and did not remarry. Due to legalese wording reasons, that law has unintentionally only been able to apply when the veteran died after 2011, when it came into law. This amendment makes it apply retroactively to cover veterans who died before 2011.

Also, there are already extra homestead exemptions if you are elderly or disabled (regardless of veteran status), which already apply to a surviving spouse (still in the same home and not remarried).

The same oddities of homestead exemptions I explained for prop 1 apply here. This is the state government mandating a cut in taxes that are only collected by local governments. It's unclear how this will affect local government revenue, especially around military bases where there may be a high number of people eligible for this exemption. Some state this as a reason to oppose the law, but others point to the bill HB 7 which they say should make state taxes cover the difference. I don't know to what extent that will actually happen.

This would apply to an estimated 3,800 people.

I've seen support for this purely based on the fact that it's a "tax cut". But making selective exceptions to tax law is, in effect, no different from writing a check to those people for that amount. Whether we call this welfare or a tax cut is really just semantics. It should be evaluated on whether it's a good use of public money.

Why would this be good?


It will give money to people who likely would highly benefit from it, and for the most part we wouldn't have to worry about a disincentive to work.

Why would this be bad?


A large part of the harm this addressed in 2011 is a sudden increase in property taxes after a spouse dies, which the surviving spouse didn't anticipate and can't handle. Because this year's amendment applies retroactively for deaths that occurred many years ago, this is helping people who already faced that sudden increase in property taxes and have remained in the same home, unmarried, all that time anyway. By selecting who gets financial assistance this way, we are likely specifically helping only those who need it least (out of the category of surviving spouses of fully disabled veterans). Because presumably, the surviving spouses who are hurting for cash the most had to sell their home or did not own a home in the first place.

As I already hinted at right above this, and explained in more detail in my previous post on prop 1, I really dislike homestead exemptions in general. It'd be much better to give surviving spouses, or any person in need, some sort of tax rebate that is not dependent on their owning a house.

I wonder if there are other unintended side effects of the weird selection process for who receives this money. For instance, if an old veteran dies, leaving his old wife behind, it may be best for the children to help her sell her house and move nearby. Could the fact that she could lose a full exemption on property tax lead people to not make such a move? Would someone not remarry, despite wanting to, because they would suddenly see their cost of living shoot up?

Verdict


Undecided!

I believe public policy should financially help those who really need help. And this would surely help some people who do really need that help. However, this seems like a really bad way to do it. Whether someone deserves help is not dependent on whether their spouse was in the military, or if they have chosen to not remarry after that spouse died, or if they owned a home and have not moved. This amendment strikes me as a really bad way to financially help those in need. I want my vote to acknowledge that there are many problems with this proposal, but I also don't want to make the perfect the enemy of the good. So I don't know what I'm going to do. Maybe I'll just not vote on this one.

What would it take to change my mind?


Don't know.

Texas Homestead Exemption for School District Property Taxes Amendment, Proposition 1

This is part of the series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment increasing the amount of the residence homestead exemption from ad valorem taxation for public school purposes from $15,000 to $25,000, providing for a reduction of the limitation on the total amount of ad valorem taxes that may be imposed for those purposes on the homestead of an elderly or disabled person to reflect the increased exemption amount, authorizing the legislature to prohibit a political subdivision that has adopted an optional residence homestead exemption from ad valorem taxation from reducing the amount of or repealing the exemption, and prohibiting the enactment of a law that imposes a transfer tax on a transaction that conveys fee simple title to real property.

Helpful Links

What does this do?


There's basically 3 parts: 1. increase in homestead exemption, 2. increase in extra exemption for the elderly/disabled, and 3. banning of sales tax on home sales. You can ignore 2 because it basically just keeps things the same with regard to an extra amount of homestead exemption for elderly/disabled. Same with 3; we already don't collect sales tax on home sales, and doing so would require its own constitutional amendment. So mostly, to decide whether to support this change, we just need to understand part 1.

This change applies to the property taxes collected by your local school district. Basically, every year you pay a percent of your property's value to the school after the amount of the homestead exemption, which is currently $15,000. As a simple example, pretend you own a $35,000 home, and your school district has a property tax of 5%. You'd have to pay 0.05 * (35,000 - 15,000) = $1,000. With this amendment, the exemption would change such that you'd have to pay 0.05 * (35,000 - 25,000) = $500. Since homes are generally much more expensive than this, the actual tax cut will be much smaller than these simple examples.

One weird thing is that this is a cut in local taxes being mandated by the state government. What will the school districts do about the lost revenue? The state government will cover the cost with its own taxes. Now you might start to see why, even though this is described as a tax cut, the Libertarian Party opposes this amendment. The House originally wanted to cut the state sales tax, but the Senate wanted to make this change instead, and we ended up with the Senate's proposal. So from state and local taxes combined, this isn't necessarily cutting taxes, since the cut in the local level is made up by increased spending at the state level which was originally supposed to be a cut at the state level. Also, as property values go up, property tax rates can always be "cut" without losing revenue, and it's quite possible that many local governments will choose to delay inevitable property tax cuts to offset the forced exemption increase from the state government. And there's some entertaining irony for state politicians who strongly oppose the federal government meddling in state affairs to be meddling in local government affairs.

Another weird thing about this is that state gas taxes will be used to cover part of the new increased state spending on local school districts. Why is that weird? Because prop 7 is about looking for more ways to fund our highways since the gas tax isn't raising enough money for our roads. So why are they, in this amendment, wanting to divert more of the gas tax revenue to other things? I don't get it.

Why would this be good?


It cuts property taxes a little, even though it's arguably at the expense of a state-wide sales tax cut. Also, I suspect that it's good for the state to take a larger share of school funding at the margin, because it can help smooth out funding across schools rather than rich areas having a lot of school funding while poor areas have a little. However, I don't know that this is what the state will actually do; this is a potential improvement.

Why would this be bad?


I think homestead exemptions distort the market and should be eliminated rather than increased. I'd prefer a sales tax cut. And I'd prefer any property tax cuts to come in the form of rate decreases, not exemption increases. First, you pay the property tax regardless of whether you own or rent. Property taxes must be paid on apartments, for instance, and all of an apartment's money comes from rents, so it is therefore reflected in the price of rents. But homestead exemptions only reduce property taxes for home owners, which effectively is a state subsidy of home ownership versus renting. Not only that, it is on top of additional federal subsidies to home ownership (like the mortgage interest deduction). I don't want to further distort the free market's pricing of buying-versus-renting property, especially since this disproportionately benefits the wealthy (who are more likely to own than rent). Also, you may have recent memories of serious economic problems that were arguably caused by a distorted market that over-encouraged home-buying...

Verdict


I plan on voting no. Because I'm more confident in the cons of expanded homestead exemptions (as opposed to the originally proposed across-the-board tax cuts) than I am confident in pros of the changes in education funding.

What would it take to change my mind?


I'm not sure. But this was a pretty confusing amendment to learn about, so there is much more likely to be some "unknown unknowns" that I could still discover that would change my mind in ways I can't anticipate.

Texas Sales and Use Tax Revenue for Transportation Amendment, Proposition 7

This is part of the series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment dedicating certain sales and use tax revenue and motor vehicle sales, use, and rental tax revenue to the state highway fund to provide funding for nontolled roads and the reduction of certain transportation-related debt.

Helpful Links

What does this do?


Overly-simple summary: it requires a portion of general tax revenue to go toward roads for the next 10 years.

Currently, roads are primarily funded through gas taxes rather than other taxes. This has the benefit of, to some extent, targeting the tax toward people who use the roads more, as well as encouraging less traffic and gas consumption. But since fuel efficiency for many cars has gone way up, current levels of the gas tax are no longer sufficient to fund state highways. So if we were to keep using our gas taxes in this way, the rates would need to be raised, and most state politicians do not want to sign any kind of tax rate increase into law. To avoid that, Texas has been building up some debt for highway work. This amendment seeks to divert existing general tax revenue toward highways so that we can pay for what we need without having to raise the gas tax.

The first question that came to my mind was: why this strange constitutional amendment forcing them to dedicate a portion to highways in this way for a while, when they can just choose to divert those funds in this way year-by-year? But from what I can tell, there's actually a fairly good reason for that. Most highway work requires years of funding to be dedicated to a project, so it's good to have something that forces the revenue to be consistent.

Why would this be good or bad?


To know the practical effect of the law, we'd need to compare it to what would happen if this law did not get approved. Basically, there would be a portion of general tax revenue that would be free to do something else, which leads to a few different possibilities:

  • They may simply fund highways in this way anyway in year-to-year budget. This would be less desirable due to the uncertainty of a steady revenue stream, as I explained a bit earlier. But it probably wouldn't be too bad, and I'm guessing this is the most likely alternative.
  • They may have to raise gas taxes (and maybe raise other transportation fees) to pay instead. IMO this would be better. Because not only do we need more and better highways for our growing population, but paying for them with gas taxes gives extra incentive to drive less, which solves our problem at both ends: we'd need to pay for less road work if people drive less. Taxes on gas are also a classic example of Pigovian taxation, and I'd like to shift more of our tax burden onto pollutants for that reason.
  • Or, they may simply not increase funding for highways. My basic understanding is that this would definitely be bad: we are building up debt in that area that needs to be paid off, and we really do have increasing needs here as our population rapidly grows without the gas tax paying for as much as it used to.
  • For the last two possibilities, it would leave open the question of what is done with the general tax revenue that would otherwise go to highways? That also needs to be considered:
    • They may cut general taxes. This seems likely given the ideology of our state, and especially if they are left having to raise gas taxes or fees in some way, a cut in other taxes would be the only way the politicians may be able to save face.
    • They could fund something else. The two other major areas of state government spending are health care (medicaid) and education:
      • Texas spends the absolute minimum on medicaid, and at the margin extra spending would receive additional federal funding, so arguably there's a lot of bang-for-buck here. But I think there's no chance our state government will increase medicaid funding.
      • More likely (but I would guess less likely than tax cuts), the money could be used on education. But I would argue we shouldn't expect much benefit per extra dollar here, because despite conventional wisdom, once you adjust for demographics, Texas ranks very highly in education. And that should make us skeptical that we have a lot room for improvement.


Verdict


I am undecided-leaning-no.

Basically, I do think we need increase state road funding. I want to vote yes to the extent that it would make sure that happens. But I'd prefer to vote no to the extent that it encourages them to fund it differently (I very much think gas taxes should pay for it).

What would it take to change my mind?


It really comes down to how much likelihood we should assign to the alternatives, and honestly I don't have a good idea of how to do that accurately. So solid data toward that end could easily cause me to choose one way or the other.

Sunday, November 1, 2015

Texas State Capital Residency Repeal Amendment, Proposition 3

This is part of the series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment repealing the requirement that state officers elected by voters statewide reside in the state capital.

Helpful Links

What does this do?


Currently, all state-wide elected officials must live in Austin. Not even a suburb of Austin is OK. This repeals that requirement for some positions: the Agriculture Commissioner, Land Commissioner, Comptroller, Attorney General, and Railroad Commissioner.

Why would this be good?


Because current requirements were passed when people had to come to work by horse, whereas today you can drive in each day from the suburbs and easily communicate with people remotely. Unnecessary requirements for a job reduce the number of people who want to have that job, which can prevent you from getting someone who you would want. It's also just nice to not force a person to do something that may be a great cost to them, unless you have a particularly good reason. It's also worth noting the most states don't require their officials in these positions to live in the capital.

Why would this be bad?


A lot of the reasons to oppose this seemed pretty meaningless (people like to be old-fashioned), but here are the potential problems that give me pause:

  • It's good for everyone to be working in the same place, so staff and voters have easier access. However, maybe everyone will still work in the place - plenty of people physically work in a city different from the one they live in. One alternative suggestion was to allow living within a 50-mile radius of Austin rather than just saying "you don't have to live in Austin." Maybe that'd be better, but it's not the choice we're voting on. I also just don't know, for the positions affected, how important it even is to be in the same place as everyone else most work days.
  • It could help politicians get away with corruption. If they get tried for some crime, they'll be prosecuted in their home county, which may be friendlier than in Austin. A progressive group stated this as a reason to vote no, citing that Travis County is more more Democratic than most of Texas, and Republican politicians would prefer to get tried in more Republican counties. However, you can see how this argument goes both ways. If a Republican county may go too easy on a Republican politician, so may a Democratic county rule too harshly on a Republican politician. And it's worth noting that this amendment had bipartisan support.
  • This could cost more money if politicians live further from the capital, because of state-reimbursed travel. However, I did not see any data cited to give an idea of what kind of costs would be possible here.


Verdict


I plan on voting yes.

Basically, I should let people do what they want unless I have good reason not to. And I don't have a very good reason to force those few politicians to live in Austin. And if their new "freedom" here is taken too far, hopefully there will be another amendment to refine it, such as having a certain distance from Austin where the politicians must live. Either way, clearly the status quo on this, where they can't even live in an Austin suburb, is outdated.

What would it take to change my mind?


More data that suggests the potential downsides are more likely to be a bad problem.

Texas Right to Hunt, Fish and Harvest Amendment, Proposition 6

This is part of the series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment recognizing the right of the people to hunt, fish, and harvest wildlife subject to laws that promote wildlife conservation.

Helpful Links

What does this do?


Wins the award for being the most Texas of all the proposals. Yee-haw! Beyond that, it does nothing as far as I can tell. We already have a right to hunt/fish/harvest, just as I already have the right to discuss politics on this blog without the Texas Constitution directly stating it. Also, unlike the U.S. Constitution, changing our state's Constitution is fairly simple - it's pretty much how all state laws are passed. And most of the proposals we're voting on this Tuesday go into effect by removing and replacing existing pieces of our Constitution. If somehow Texas becomes anti-hunting and tries to outlaw it, it'd have to do so with a constitutional amendment regardless of whether this amendment passes. And if the federal government outlawed hunting, it really wouldn't matter whether we allow it in our state Constitution.

Why would this be good?


I suppose you could think of this as reducing the odds of losing the right to hunt/fish/harvest by something like 0.0001%. It at least won't hurt in that regard.

Why would this be bad?


Our constitution would be slightly longer, and therefore take slightly longer to read.

Verdict


I plan on voting no.

It doesn't seem to matter either way. I just find pure political theater annoying.

What would it take to change my mind?


Maybe $5. But I'm guessing it's illegal to sell your vote, so let's go ahead and say I'm just joking.

Texas Sports Team Charitable Foundation Raffles Amendment, Proposition 4

This is part of the series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment authorizing the legislature to permit professional sports team charitable foundations to conduct charitable raffles.

Helpful Links

What does this do?


In Texas, laws about raffles at professional sports games (or really anywhere) are very prohibitive. You can only have 2 per year, and all proceeds must go to charity. Why? Because that is considered a form of gambling, which is largely illegal here (wouldn't want any competition for the state-run lottery?).

This amendment makes our charitable raffle laws slightly less restrictive. Exactly - and only - 10 professional sports teams will be allowed to hold "50/50 raffles", where 50% of the proceeds go to charity, and the other 50% goes to the winner of the raffle. This can get a lot more people to join a charitable raffle, because they have more fun if there's the possibility of winning something. The teams will still not be allowed to profit from these raffles. There are various other restrictions, such as not allowing the winner to be announced "through interactive and instantaneous technology" because that would be electronic gambling!

Why would this be good?


Because there are many winners and probably no losers. More money can be raised for charities. Sports teams are allowed to do something they want to do. Sports fans can participate in something they want to participate in.

Why would this be bad?


Gambling addiction.

...

If you are like me, you are going to have a hard time imagining many lives getting ruined because someone repeatedly blew all their wealth on a crippling addiction to charitable raffles at baseball games. And anti-gambling groups who are lobbying against this law, like the "Christian Life Commission of the Baptist General Convention of Texas", aren't even trying to say that will happen. Their argument is that allowing even this small increase in "gambling" will be a slippery slope to even worse laws allowing even more kinds of gambling in the future.

Verdict


I plan on voting yes.

It seems to me that everyone is a winner here, and I don't put much weigh on slippery slope arguments in general. You can use that type of logic to oppose anything if you want to.

What would it take to change my mind?


I really don't know.

Amendment No. 5 (S.J.R. 17)

This is the first of a series of posts where I struggle to understand and think through the 7 proposed amendments to the Texas Constitution that we can vote on 11/3.

Ballot Title


The constitutional amendment to authorize counties with a population of 7,500 or less to perform private road construction and maintenance.

Helpful Links


What does this do?


Counties do publicly funded/run road construction and maintenance (duh). This requires some amount of equipment and employees (duh). For most of Texas history, it was against the law for you as a private citizen to pay, with your own money, for the county's equipment/employees to do your own private road construction/maintenance (such as a driveway). In large enough counties, that's not much of a problem. The county always has its own work it can do, and you will have access to businesses that you can pay to do this work. But in small rural counties, there may be no private road construction/businesses nearby, and there's not year-round work for the county to do, so the laws to keep the county's road work separate from private road work meant that their equipment (and employees?) had to often just go unused, which is a waste.

So... to solve this problem, in 1980 a law was passed to allow a county to perform work on private roads for "a reasonable charge" if their population was under 5,000. Also, any revenue from such work must be used "only for the construction, including right-of-way acquisition, or maintenance of public roads". The proposed change this year is to raise that cap to counties with a population under 7,500.

Why would this be good?


I think it's pretty clear, from the above description, that it's a win/win scenario to allow this. The person who wants to pay for the county to do private road work benefits because they get what they want. The county government benefits because they get revenue. The people benefit because they don't have to pay as much taxes to fund their county's road work. People who want an efficient world benefit because resources don't have to sit idle when they could be put to a productive use.

Why would this be bad?


The only opposing case I found to this amendment is that, instead of lifting the cap from 5,000 to 7,500, we should just allow all counties to do this. That sounds fine to me, but I don't want to make the perfect be the enemy of the good, so this doesn't really sound like a reason to vote against this amendment.

But in reading about the 1980 law that originally made this exception for some counties, I saw a couple of things that could be counted as cons here. For one, this could be used by county governments in corrupt ways, such as doing cheap work for someone as a favor. Further, performing work under a market price could be damaging to the private market for such work. The law does state that the work must be done for "a reasonable charge" to avoid these problems, but of course that's no guarantee.

Verdict


I plan on voting yes.

The pros seem very clear, and the cons seem mere possibilities that, even if true, don't outweigh the pros. And even if the pros and cons seemed like a toss-up, I think in those cases you should side with letting people make their own decisions anyway. And this law simply allows more counties to make their own decisions instead of our state government forcing things to be inefficient.

What would it take to change my mind?


The most likely thing would be evidence suggesting that this is overwhelmingly just used for political favors.