DALLAS - Texas voters will decide in November on a state constitutional amendment that would reauthorize $2 billion in tax-exempt general obligation bonds for the state's land and housing loan programs for military veterans.
Voters have authorized a total of $4 billion of GO bonds for the Texas Veterans Land Board's efforts since the end of World War II, of which approximately $2 billion has been retired.
Proposition 6 would allow the veterans board to issue additional bonds without further voter or legislative approval up to the existing authorization of $4 billion.
Passage of the amendment would also remove the restriction limiting the program's total amount of outstanding debt to $500 million. Federal law limits the sales of the state bonds for veterans programs to $250 million a year.
The Veteran's Land Board GO bonds are rated AA-plus by Standard & Poor's, following an upgrade from AA in early August. The board is under the administration of the Texas General Land Office.
The bonds are supported through interest payments on loans originated through the board's programs that provide low-interest loans to Texas veterans for housing, home improvements, and land acquisition.
More than 120,000 veterans have participated in the programs since the veterans land board began lending money in the late 1940s.
Proposition 6 on the Nov. 3 statewide ballot would authorize the board "to issue general obligation bonds in amounts equal to or less than amounts previously authorized."
Rusty Martin, the land board's deputy commissioner of financial management, said the proposed amendment would streamline the entire process.
"Periodically we have gone to the Legislature for get new additional authorization based on the anticipated amount of activity," Martin said. "Whenever the Legislature approves additional capacity, it automatically goes onto the ballot for the next general election as a constitutional amendment."
Martin said the reauthorization would provide sufficient funds to finance the board's three programs for another eight to 10 years. The program currently has a balance of some $80 million in bond proceeds, which will be depleted by the end of fiscal 2010 in August.
Bond issues for the veterans' program will increase due to additional demand for loans as a result of more-liberal eligibility requirements, Martin said.
The program had been limited to veterans who began their service before 1976, he said, and they had to apply for a loan within 30 years of their discharge date. Now all veterans are eligible, regardless of when they entered the military, but the eligibility period was shortened to 25 years.
"We typically issue about $100 million of new-money GO bonds in a year, but we're expecting that to go to probably $150 million to $200 million a year under the new requirements," Martin said.
Interest in the programs has slightly declined as the Texas economy faltered over the past 12 months, he added.
"We typically do about $600 million in loans a year, but this year it will be about $480 million," Martin said.
The Veterans' Land Board was established by Texas voters in 1946, and given authority to issue $25 million in bonds. In 1951 voters approved extension of the program to post-war veterans, and increased the bonding capacity to $100 million.