Governor Perry vetos three affordable housing bills

Texas Governor Rick Perry has vetoed three affordable housing bills passed by the Texas Legislature.

HB 3983 by Rep. Rodriguez (D-Austin) and Sen. Watson (D-Austin) – Relating to the imposition of property taxes on the residential homesteads of low-income and moderate-income persons.

The bill makes technical changes to the Homestead Preservation District law, passed by Representative Rodriguez two session ago. The changes were requested by the City of Austin.

The Austin City Council has committed to establishing a Homestead Preservation District in East Austin. It is not clear whether the veto of this bill will jeopardize the adoption of that Homestead Preservation District.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14, of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 3983 of the 81st Texas Legislature, Regular Session, due to the following objections:

I am vetoing House Bill No. 3983 because I have serious concerns about language in the bill that requires the comptroller to conduct a study of “circuit breaker” property tax programs used in other states.

“Circuit breaker” programs are designed to provide property tax relief to certain individuals based upon their income. The cost of this type of program is usually borne by the state, while the local governments still receive their full share of the property tax. In some states, renters are also eligible for rebates despite the fact that they do not directly pay the property tax.

These programs have several negative effects. One negative effect is that it breaks the link between what taxpayers pay and what they receive in local services. Under a “circuit breaker,” some taxpayers will effectively pay no tax but receive the same services and amenities as other taxpayers who do not benefit from the program.

Such a program would also have a significant cost to the state, since the purpose of the program is to allow local governments to enjoy the political benefits of a tax break without having to carry the cost. This allows them to avoid tough decisions about the level of taxation that the community can bear and what services the voters want them to provide.

Finally, if such a program were to be adopted in Texas, it would make the distribution of the property tax burden less equitable by shifting it to middle-class property owners. This would make the property tax function more like a progressive income tax, in that the tax burden would slowly be pushed upwards until only the owners of the most valuable property paid any actual tax.

Texas property owners could use additional tax relief, and I have worked hard to ensure that they receive relief; however, any solution must be one that makes all property owners better off. This study would undermine all the efforts made to ensure that the property tax has a low rate, is broad-based and is equitable for all Texans.

HB 2888 by Rep. Martinez (D-Austin) and Sen. West (D-Dallas) – Relating to financial assistance administered by the Texas Department of Housing and Community Affairs.

HB 2888 would have done two things.

First. require that the Texas Department of Housing and Community Affairs adopt policies to ensure that each housing development that receives financial assistance administered by the department, including financial assistance from the proceeds of bonds issued by the department:

(A) reserves a certain number of units in the development for individuals and families of very low income, to the extent that the reservation does not conflict with any requirements for the development under 26 U.S.C. Section 42; and

(B) except as otherwise permitted by law, accepts as tenants individuals and families receiving rental assistance under Section 8, United States Housing Act of 1937 (42 U.S.C. Section 1437f), or some other form of rental assistance from a political subdivision of this state or from the state or federal government.

Second, directs TDHCA to establish volunteer income tax assistance programs operated through a collaboration of the Internal Revenue Service and another entity under which taxpayers eligible for the Free File program receive free assistance in preparing federal income tax returns.

The second provision is an initiative designed to help lower-income taxpayers get free assistance to file their taxes from volunteers who are trained to help them get the full tax refund benefits they are entitled to under state law.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14 of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 2888 of the 81st Texas Legislature, Regular Session, due to the following objections:

House Bill No. 2888 would take funds away from the Temporary Assistance for Needy Families (TANF) program to fund a Volunteer Income Tax Assistance grant program to be administered through the Texas Department of Housing and Community Affairs. Taking TANF dollars away from their intended purpose of serving clients to fund this program is unnecessary. These funds should be used to benefit people, not create more government bureaucracy.

Furthermore, tax assistance and Earned Income Tax Credit education programs are already provided by the Texas Workforce Commission, Texas’ 28 local workforce development boards, and numerous nonprofit organizations and community centers.

I asked a supporter of the bill, Walter Moreau, executive director of Foundation Communities, a major nonprofit housing provider for his reaction to the veto.  Here is what he says…

This is the most fiscally conservative stupid thing I can imagine.

Working Texas families annually miss out on over a billion dollars in tax credits and deductions. Volunteer tax filing programs around the state help these families get the refund they are due. With the stimulus bill another $7 billion in education, homebuying, child care and other credits are coming to Texas, but only if folks fill out the forms correctly. A tiny investment of money from the State would reap millions in the pockets of hard working Texans.

This year we had 500 volunteers doing 17,000 tax returns in Austin.

…..What does Perry have against church volunteers, Junior Leaguers, business school students and retirees giving their time to help working poor families file their tax returns correctly? Does he want working families to just forgo the $7 billion in tax benefits in the stimulus bill?

A veto on this bill is just plain stupid. Volunteer income tax programs help common, working Texas families to file their income tax return correctly.

HB 2692 by Rep. Rodriguez (D-Austin) and Sen. Watson (D-Austin) – Relating to certain municipal requirements regarding sales of residential properties in certain areas.

H.B. 2692 would have given the city of Austin a tool to ensure that low to moderate income households have the opportunity to live near commuter rail stations by promoting affordable housing within one mile of a commuter rail station.  It does this, specifically, by creating a waiver from the existing state code preventing cities from setting price ceilings on property.  This exemption applies only to multifamily development intended for sale, located less than one mile from a commuter rail stop.

In essence it would have repealed the state prohibition against inclusionary zoning, enacted by the Legislature two sessions ago, in this narrow circumstance.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14 of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 2692 of the 81st Texas Legislature, Regular Session, due to the following objections:

House Bill No. 2692 would allow the City of Austin to set a price plan on multifamily developments located less than one mile from a commuter rail station.

However, current law states, with very few exceptions, that a municipality may not adopt a requirement that establishes a maximum sales price for a privately owned housing unit or residential building lot. House Bill No. 2692 would also interfere with the Austin real estate market by artificially capping housing prices. The market should be allowed to thrive without unnecessary government interference.

I will blog the statements of the supporters of the other vetoed bills next week.