Goodness, gracious! The 2020 election has come and gone, and most of us who follow races and elections are exhausted. Nationally, the election was non-stop news, and that election coverage goes on as I write this. But let’s take a few minutes to talk about TREPAC, the election results in the great state of Texas, and what we can expect as we get into the next legislative session…
Overall, the general election was a huge success for REALTOR®-supported candidates in Texas: Nearly 96 percent of candidates supported by TREPAC and RPAC in state and federal races, respectively, won their Nov. 3 races.
The 87th Texas Legislature convenes Jan. 12, 2021. What happens after then is anyone’s guess. Whatever happens, Texas REALTORS® will be there, advocating for real estate consumers and professionals.
In fact, the association just released its Legislative Priorities for the 87th Texas Legislature, which outlines 19 priority issues the association will monitor during the 2021 session and is available at www.texasrealestate.com/issues.
Following are four priority issues on the association’s radar:
Homeowners Associations (HOAs)
Issue: Homeowners associations exist to enhance neighborhoods and increase property values. Increasingly, though, HOAs are taking on functions local governments traditionally provide. The Texas Legislature has addressed HOA issues a number of times over the last 20 years, yet property owners and property buyers still voice concerns over actions taken by HOAs.
Most of the problems with HOAs generally fall into three categories:
- Money or collection issues
- Deed-restriction enforcement
- Lack of responsiveness from the HOA
Texas REALTORS® Position: Texas REALTORS® supports efforts to reform laws governing Homeowners Associations to ensure HOA operations are transparent and resident friendly. We understand that HOA legislation should seek to provide an appropriate balance between private-property rights and agreed-upon community standards, but any reforms must uphold property owners’ First and 14th Amendment rights.
- We support legislation requiring HOAs and related nonprofit corporations to have regulatory oversight (whether from their county or an agency of the State of Texas), and to be registered entities and make available relevant and current contact information.
- Texas REALTORS® supports firm timelines for producing HOA documents related to property sales as well as reasonable and necessary fee limits.
- Our association also supports legislation to eliminate the exemption for fees paid to 501(c)3 and 501(c)4 corporations from the transfer fee ban in the Texas Property Code.
Issue: In 2019, REALTOR® supported property tax reform legislation (Senate Bill 2) brought monumental changes to the state’s property tax system.
Local property taxes in Texas have increased dramatically over just the past few decades.
From 1998 to 2017, the total property tax levy statewide increased more than 211 percent, or $40.35 billion, according to the latest data from the Texas Comptroller available as of Dec. 1, 2020.
Part of the increase in local property tax revenue can be attributed to new property added to the appraisal roll and higher property values. However, an increase in property value should not be an automatic increase in property tax revenue.
If a local taxing entity needs more revenue, a more honest and transparent conversation needs to occur at the local level, so taxpayers completely understand why.
Texas REALTORS® Position: Texas REALTORS® supports continued monitoring of the implementation of law changes that resulted from passage of the Texas Property Tax Transparency and Reform Act of 2019, and a case-by-case evaluation of minor modifications to those statutes that may be deemed appropriate and necessary during the 2021 rollout phase.
Sales Tax on Professional Services
Issue: The State of Texas imposes a sales tax on retail sales, leases and rentals of most goods and some taxable services. All local governmental entities have the option of imposing an additional local sales tax for a maximum combined state and local tax of 8.25 percent.
During past legislative sessions, some discussion has concentrated on expanding the state sales tax base to include professional services. All professional services, including real estate services, would be taxed.
Texas REALTORS® Position: Our association steadfastly opposes efforts to expand the sales-tax base to include professional services. Furthermore, the association believes any taxing structure should not place an undue burden on the real estate industry or hamper the economic recovery in Texas.
Issue: Despite statewide Proposition 1 passing in 2014, highway and road construction in Texas remains underfunded. The shortfall is due mostly to an underperforming gasoline tax and an unwillingness to adjust the tax or increase other transportation-related fees.
The problem is magnified by a population boom, mostly in and around urban population centers. In fact, Texas has four of the 11 most-populous cities in the United States (Houston, Dallas/ Fort Worth, San Antonio and Austin), each of which is growing rapidly.
Due to an insufficient revenue stream, the Texas Department of Transportation (TxDOT) has been forced to over-rely on bond debt to fund roadway maintenance and new transportation projects. However, TxDOT’s main bond programs (State Highway Fund bonds, Texas Mobility Fund bonds, and general-obligation highway bonds) are effectively exhausted. Additionally, the agency currently pays approximately $1 billion per year (about 10 percent of its annual budget) in interest payments on the outstanding bond debt — which exacerbates the funding shortfall.
With the uncertainty of future federal dollars, diminishing revenue, and depleted bond capacity, TxDOT has also resorted to a large number of public/private partnerships (i.e., toll roads).
Clearly, bonds and toll roads are important pieces of the transportation-funding solution, but they will not meet the growing demands on transportation infrastructure by themselves. The agency needs to re-evaluate the current transportation model for the state to identify new methods to efficiently handle the population increases and the state’s transportation needs.
Texas REALTORS® Position: The state of Texas must ensure its citizens the right to a safe and efficient transportation system. In doing so, the state must address numerous issues: congestion, capacity, construction and maintenance costs, safety, age and condition of roadways and the impact transportation delays have on air quality, cost of goods and quality of life. Failing to pay for infrastructure needs will ultimately cost state taxpayers an extraordinary amount of money in the future.
Our association supports the following:
- The Texas Transportation Commission and Texas Department of Transportation should ensure accountability, transparency and public involvement in the transportation-planning process.
- A statewide, multimodal transportation system that facilitates safe and efficient movement of people and goods, including sufficient transportation choices such as roads, freight and passenger rail, waterways, sea and inland ports and air.
- Local option transportation funding sources, in addition to state funding, which may include toll roads.
- A study on transportation funding sources needed to create infrastructure at or above the state’s current levels of service.
- TxDOT’s efforts to secure BUILD grant funding for rural roadways near energy sectors.
- The concept of high-speed rail as a mode of transportation in Texas.
WOWZA! That’s a lot of information to try to digest, and that is just four of the 19 Legislative Priorities your association will be watching this legislative session.
This is just one of many reasons that your TREPAC investments work for you every day, to make sure our elected officials know the issues that affect all property owners and REALTORS®.