Analysis of Texas Proposition 3: Tax Breaks Quicker Way To Rebuild After Disaster

This is part of a series on the 10 propositions appearing on the November 2019 Texas Constitutional Amendment Election.

Disaster area property tax breaks
Proposition 3 (HJR 34)
“The constitutional amendment authorizing the legislature to provide for a temporary exemption from ad valorem taxation of a portion of the appraised value of certain property damaged by a disaster.”

Recommendation: For.

The money saved by taxpayers under this amendment can be used to repair or rehabilitate property — quite possibly increasing the value of the property and generating more revenue for local governments.

This amendment could also give tax office or appraisal district officials more time to evaluate the diminished value of a property affected by a disaster (rather than in the immediate throes of widespread destruction).

This is a win-win despite any temporary losses for local government. One worry we have is that it will continue to incentivize development in disaster-prone areas, but that is a much wider issue to address.

Another worry is that in the event of a widespread or historic disaster, a small taxing entity could suffer a huge loss in available tax revenue for as long as the tax break is in effect. But there would remain three safeguards against inadvertently bankrupting a local government: 1) the Legislature would be able to evaluate whether or not the tax break would create a second disaster, 2) the legislature could act on this for only a few months every two years (Texas has a biennial legislature), and 3) the amendment would only pertain to a portion of the damaged property (not the whole thing).

The benefits far outweigh the concerns we have. Plus, considering the billions spent on disaster recovery per year this could only help in saving recovery dollars and maybe even reducing the state and federal budget.

Below is the analysis from the Texas Legislative Council containing pros and cons.

Comments by Supporters

• Providing a temporary tax exemption for property damaged by a disaster is a cheaper,
simpler, and more easily administrable method of providing property tax relief to those
suffering the aftereffects of a disaster than the current method of reappraisal.

• A tax exemption will provide property tax relief in a more expeditious manner than
reappraisal of the property.

• The current method of reappraisal is optional. The proposed tax exemption will provide
tax relief that homeowners and businesses can count on and will afford those suffering
after a disaster much-needed peace of mind.

Comments by Opponents

• Introducing yet another property tax exemption into state law could end up depriving
local governments of adequate levels of funding.

• Amending the constitution to provide for a tax exemption for damaged property is
unnecessary, as the existing method of reappraisal of damaged property following a
disaster provides a sufficient mechanism to address the need of disaster victims for
temporary property tax relief.

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