Texas Constitutional Amendment Election, 2007 - Proposition 3

Proposition 3

Proposition 3 (H.J.R. No. 40) is the constitutional amendment authorizing the legislature to provide that the maximum appraised value of a residence homestead for ad valorem taxation is limited to the lesser of the most recent market value of the residence homestead as determined by the appraisal entity or 110 percent, or a greater percentage, of the appraised value of the residence homestead for the preceding tax year.

The measure passed 71.49 percent in favor to 28.51 percent against.

• Comments by supporters: When the legislature proposed the limitation on increases in appraised value of residence homesteads in 1997 and the voters approved it, the legislature and the voters understood the limitation to prohibit the appraised value of a homestead from being increased by more than 10 percent from year to year. The intent was to provide a circuit breaker that would protect homeowners from the hardship of having their ad valorem taxes increased substantially from one year to the next as a result of appraisal increases. Instead, the limitation has been construed by many appraisal districts that do not appraise property annually to authorize increases of up to 30 percent in the year in which a residence homestead is reappraised for tax purposes. The proposed amendment conforms the language of the Texas Constitution to the legislature’s intent when it enacted the original appraisal limitation and the voters’ understanding of the limitation when they approved it.

• Comments by those in opposition: The proposed amendment is unnecessary because appraisal districts in most counties that are experiencing rapid increases in property values already appraise property annually, and the proposed amendment has no effect on appraisal increases in those appraisal districts. While the amendment is intended to protect homeowners from increases in property values from one year to the next of 20 or 30 percent as allowed under current law in appraisal districts that appraise property only every two or three years, in reality those increases are uncommon because property values tend to increase more slowly in those appraisal districts. To the extent that the proposed amendment reduces the ad valorem tax burden of the owner of a residence homestead the value of which is rising rapidly and that is located in an appraisal district that does not appraise property annually, the amendment has the effect of shifting the tax burden to other taxpayers, including owners of commercial property and of homesteads the values of which are rising less rapidly.