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The Senate Committee on Local Government met on April 20 to hear invited and public testimony on interim charges related to bond elections and ballot language. The hearing notice can be found here.

This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Comments

  • Chair Paul Bettencourt – Are taking some public testimony later in the day, first have the ballot language interim charge

 

Ballot Language: Study the development of the language used for constitutional amendment and local ballot propositions. Recommend changes to make ballot propositions more easily understood by voters.

 

Invited Testimony

  • Chair Bettencourt – Have two constitutional amendments coming up on the ballot Prop 1 and Prop 2; HB 3 and SB 2 aim to drive tax rates down as well
  • Chair Bettencourt – Propositions make clear the legislature believes tax relief is important
  • Chair Bettencourt – Is the first-time automatic approval language has been approved for tax bills to actually come down
  • Chair Bettencourt – Have saved taxpayers $6 billion in 2021 alone

 

Jeff Archer, Executive Director Texas Legislative Council

  • The SOS supplements the constitutional amendment by providing an explanatory summary
  • Are hundreds of ballot propositions in the statutes; include local government and other special districts
  • Typically voters expect to vote on the constitutional amendment based on the language provided in the voting booth
  • Drafting that language along with notices, warning, guarantees, etc. is complicated
    • Are times where ballot language is not ideal
  • Constitutional amendments tend to be money, investment into the PUF, Rainy Day Fund, among others
  • Courts in Texas have taken a hands-off approach on constitutional amendment language
    • Courts have pointed to the explanatory summaries by the SOS as supplemental information
    • City of Austin changed the ballot proposition for the homeless ban; court unanimously agreed the city manipulated language so it was misleading
  • Chair Bettencourt – When you read these two amendments it does not say that not all 65 and above and disabled will get this benefit
  • Chair Bettencourt – Reads language from Prop 1; he notes there has been discussion that language is difficult to understand
  • Chair Bettencourt – Should we have a plain language box that we will in above the technical language of the constitutional amendment
  • Archer and Chair Bettencourt discuss how Props 1 and 2 have never been done before
  • Chair Bettencourt – Should be discussing putting a plain language explanation of the propositions on them
  • Constitutional amendments are supposed to be written neutrally and with plain language
  • Notes a Freeport constitutional amendment concerning interstate commerce was redrafted with “jazzed up” language
  • Often use language from previous drafted constitutional amendment language, but try to make it their own
  • Menéndez – Courts become involved when they feel language is conflicting or not providing the truth?
    • Could have been local cases on bonds, the Austin case went to the Supreme Court
    • Courts will find some theory to determine if the ballot language is misleading
    • In Arkansas the courts have challenged every ballot proposition
    • In Texas, not many have been challenged
  • Menéndez and Archer discuss that ballot language does not currently require the entire details of what the proposition will do
  • Menéndez – If we were to force school districts to disclose property tax increases as required by HB 3, even if it may not be the reality, would be misleading to the voter?
    • Agrees it might be misleading
  • Menéndez – In November 2021 more than half of school districts lost their bonds due to that language, so that’s why I am asking about it
  • Zaffirini – Who should be responsible for reviewing ballot language at the state and local level?
    • Laws vary locally, but most prescribe how to write the ballot language
    • City charters determine how charter initiatives or amendments are put on the ballot
    • State can discuss whether they want to provide additional oversight on this language
  • Zaffirini – Do you have anyone who can provide standards on misleading language?
    • Every circumstance is unique; could be discussion at committees, with authors, whether each house wanted to set up a practice on scrubbing ballot language before bills get out
  • Zaffirini – Looking into readability formulas? Would be concerned if they were because they do not measure familiarly, vocabulary or clarity
    • We look at sentence length and other items, but we do not end there
    • For the new school proposition requirements, notes they could have changed “raising school taxes” to “raising M&O taxes”
  • Hall – Need to be honest when we call it a loan when it’s a bond; we should not ever use the statement that this will not raise peoples’ taxes
    • Do not disagree with you, this terminology is used interchangeably
    • Are going back to basics here
  • Eckhardt – Not necessarily true bond elections will raise taxes; often times it is financially prudent to take out a bond
  • Hall – Have a difference of opinion with Eckhardt
  • Chair Bettencourt – You have noted you could have changed language to freeze value in Prop 1 and Prop 2
  • Paxton – By convention or requirement that ballot language is one sentence?
    • Is convention; could probably find examples longer than that
    • Shorthand title and then a description may be something the committee could consider
  • Chair Bettencourt – Adding a shorthand title either done by rule or legislation would be something we need to look at

 

Keith Ingram, SOS Office

  • Office drafts a brief explanatory statement on the proposed proposition
  • Chair Bettencourt – Would a shorthand statement be helpful, especially considering the complex language of Prop 1?
    • Some constitutional amendments are so complicated that it is difficult to provide a simple summary
    • Attorney General’s office reviews the explanatory statement and that is the final product
  • Chair Bettencourt – Are there any potential recommendations on how to make this more digestible?
    • Law requires a proposition be in the form of one sentence; could change the election code to use more than one sentence
    • Could put in a limitation there to prevent the ballot for being so long
    • Voter should not be figuring out the proposition in the voting booth because it would make voting times take longer
  • Zaffirini – Although there is a one sentence explanation;
  • Chair Bettencourt – Could expand the one sentence limitation to two, but could be some ballot length issues
  • Could put the explanatory statement on the ballot as well, but may not necessarily be more clear
  • Zaffirini – Is this a recommendation, or an alternative?
    • An alternative
  • Chair Bettencourt – Is not a character length requirement? No e-slate limitations?
    • No; and there are none anymore

 

James Quintero, TPPF

  • Are problems when presenting local ballot proposition language to the public
  • In 2016 City of Austin’s ballot proposition considering ride share regulations had muddy language; believes this was intentional
  • City of Houston Drainage Fee charter amendment omitted the fact there was a charge to be imposed if the proposition passed; Supreme Court noted the city did not provide adequate information
  • Notes a 2018 Prop K asking if Austin voters wanted to move forward with a third-party audit language was manipulated by the city
  • Recommends codifying the Texas Supreme Court language in the Houston drainage case
  • Need to bring additional transparency to the voting booth; like including the true cost
  • Recommends the establishment of a third-party review of the ballot language, like the SOS
  • Could expand on HB 477 in 2019 which established a voter information document to include a plain language add on
    • Is a requirement that an entity should post the document 21 days prior; would like to see that timeline increased
  • Chair Bettencourt – Agrees with that last point

 

Bond Elections: Review and report on voter participation and bond election result differences between November and May elections. Make recommendations for improved voter turnout, increased election efficiencies, and better of local debt.

 

Invited Testimony

 

Rob Latsha, Executive Director Texas Bond Review Board

  • Information we will present to the board has been provided by a third-party
  • Data may be effected by the propositions delayed or cancelled due to COVID-19
  • While there was a large amount of ISD bonds that were defeated, there was also the largest amount that was passed
  • Chair Bettencourt – That is an important dichotomy; was a substantial deduction, 60% of the dollars passed; core large-scale bond expansions passed
    • This is the first time we have done data collection for this data; will be doing additional analysis on this
  • Chair Bettencourt – What other macro trends do you see?
    • Is difficult to discern, as time goes on it will be better to see those
  • Concerned about some of this data where there was a very low number of votes; Coupland ISD was one vote for and three votes against
  • This is the first time we have done data collection for this data; will be doing additional analysis on this
  • Chair Bettencourt – Seems like defeated issues were line items in HB 3
  • Menéndez – Do you study bonds in terms of the debt approval process?
    • Yes at the state level
    • Net present value savings will give you the value of the total dollars you would be refunding today
  • Menéndez – Has been a disagreement whether bonds always result in an increase in taxes; is this similar to what you are describing?
    • Refunding is a way to save money; infrastructure is required for growth and while it may increase taxes it would increase your tax base
    • There are intergenerational equity questions because the tax may be shared over time to those who did not have the ability to vote on those bonds
  • Chair Bettencourt – HB 3 breaks up the categories of bonds, prepared to have an analysis on the swing of bond election results over the last couple years?
    • Looking forwards to May

 

Justin Groll, Texas Bond Review Board

 

James Quintero, TPPF

  • Local governments have developed an over-reliance on public debt; has increased to $389.7 billion dollars in total
  • Because of this, citizens of Texas all owe about $13,000
  • Texas now ranks as having the 3rd highest total of public debt behind California
  • FY 2021 151 local governments held 311 bond elections where 86.9% of bond amounts were approved; borrowing $18.5 billion in additional debt
  • Most bond elections are successful and add to the existing burden
  • TPPF does not oppose the issuance of all debt, but need reforms to protect taxpayers
  • Need to require ballot box transparency; average voter does not know enough about the borrowing to make an informed choice
  • Legislature has started this transparency process in HB 3 for school districts; they have to put if it would result in a property tax increase
    • Requirement should be extended to local governments
  • Need to reform certificates of obligation; are overused and often subvert the will of the voters
    • Provides an example of CO overuse and uses the example of a Travis County courthouse project
  • Menéndez – Concerned about school districts having to put there would be a property tax increase even if that is not necessarily the case
    • Provision was added to also counter those promoting the bond with possible misleading information
    • Menéndez – Should have a third party analyze to how this will affect the taxpayers
  • Chair Bettencourt – Added certificates of obligation in the truth in taxation calculations; is that not enough of a reform?
    • Is a provision in HB 1860 that allowed for the status quo to continue if a city created a TIRZ; hearing cities are just moving forward with a creation of more TIRZ
    • Chair Bettencourt – Is another topic for another interim charge
  • Hall – Are times when it makes sense to borrow, but is often too much spending/borrowing; provides an example of Van Zandt County running up a debt in 2012 resulting in a change up of leadership
  • Hall – Should consider requirement on the ballot how much current debt is and how much new bond will increase new debt
  • Nichols – In your handout you recommended to establish minimum voter requirements; have a poor turnout already, how would you pick a number?
    • Would choose pushing bond elections to November over establishing minimum voter requirements
    • Looked at previous proposed legislation in developing a threshold; SB 702 85(R) establishes a 15% threshold and SB 1613 86(R) set the threshold at 35%
  • Nichols and Bettencourt discuss voter turnout already being low
  • Nichols – If a school district wants a proposition to pass they usually put it on the May ballot
  • Eckhardt – Want to address the bond election you brought up for which I was the county judge
  • Eckhardt – Many of the fastest growing cities are in Texas; are ranked the 6th lowest for state and local tax burden ranking
    • Sounds like there is room to improve
  • Eckhardt – Aware of exemptions on tax based on income or ability to pay? Have not found any
    • We do not have an income tax, so generally speaking we have a system predicated on other factors
  • Eckhardt – Recommendation with regard to the COs troubles me
  • Eckhardt and Quintero discuss whether the Travis County courthouse bond proposal was subverting the will of the taxpayers
  • Eckhardt – If this was a major breach of trust with the taxpayers, would have been voted out
    • If you asked the average person with a CO is, then I would doubt they would know what that is

 

Public Comment

Greg Smith, Fast Growth School Coalition

  • Lost in this conversation is the amount of work the school districts need to do in order to prepare for the bond elections
  • Districts are dealing with inflation; is a “monstrous” variable compared to previous estimates
  • Part of the reason facilities for classrooms were more successful
  • Language requirements for these bonds have been helpful for the voter
  • Want to ensure districts have the option to hold their bond elections either in November or May
  • Need to do everything we can to increase voter turnout but not address in haste FGSC is happy to work with the committee with whatever moves forward into the next legislative session
  • Chair Bettencourt – Mentioned inflation; statistics on enrollment which is primary method of payment?
    • 60k for Texas, 70 districts in state and growing up to 1,500-2k kids and in an elementary school in some cases
  • Chair Bettencourt – Curious about COVID impacts
    • 62 districts had bond elections, 117 on table for May
    • Chair Bettencourt – How many using substantially split ballot propositions?
    • Many, think a lot of lessons were learned
  • Chair Bettencourt – SB 30 was about recognizing the obvious, people have different reaction and it is up to the will of the voters
  • Zaffirini – If timing of bond projects were condensed, how would affect districts?
    • Would get delays, overcrowded conditions, and potentially higher costs
  • Zaffirini – High value bonds are more likely to pass with elections with a lower voter count?
    • Did not analyze recent elections, but previously no
  • Chair Bettencourt – Recent data we have would answer that question; Smith said he would like a copy of the data

 

Closing Remarks

  • Chair Bettencourt – Have dropped to 7th in lowest tax rates in the country courtesy of recent legislation passed