Last Week in the Legislature
May 3, 2019 | Issue #16
By John Sharbaugh, CAE
Managing Director of Government Affairs
Sunset Bill Still in a Holding Pattern
Nothing new this week to report on the TSBPA Sunset bill, HB 1520. The bill is still waiting on a vote in the full Senate since it was passed out of the Senate Committee on Business and Commerce on Tuesday, April 23, 2019. The bill has been placed on the Senate Intent Calendar so it will be taken up at some point. Bills on the Intent Calendar are not taken up in any particular order, and the Senate routinely considers only a portion of those measures listed on the Intent Calendar for a given day.As of press time today, the bill had not been taken up in the Senate. The issue is the volume of legislation that must be processed through the Senate. We just have to wait our turn. We anticipate it should happen in the near future.
Nonprofit Bill Takes a New Approach
I reported last week on the proposed legislation (HB 2147) to modify the requirements for nonprofit organizations to provide copies of their books and records on demand from the public and how the bill had encountered problems due to opposition from the attorney general. The attorney general was opposed to the approach in HB 2147 which would give nonprofits an option of having an independent audit and sharing that information with the public as a means of being exempt from the books and record requirements of Sec. 22.353.
When HB 2147 was introduced, there was an identical Senate bill, SB 1463, introduced as well. That bill had a hearing on Tuesday of this week in the Senate Committee on Business and Commerce. A committee substitute was proposed for SB 1463 to respond to the AG’s concerns. Instead of giving nonprofits the option of undergoing an independent financial audit as a means of being exempted from the books and records requirements of the current law, SB 1463 provides clarity as to exactly what kinds of books and records must be shared on request under the law. It also puts parameters on how many requests an individual can make before it becomes unreasonable. The hope is that this type of clarity will reduce the number of harassing and abusive requests that some nonprofits are encountering under the current law. You can read the committee substitute on SB 1463.
At the hearing, I testified on behalf of TXCPA in favor of the committee substitute, and there were two other witnesses that also testified in support. There were no opposition witnesses and the committee left the bill pending, which is standard procedure. The committee then took the committee substitute up again on Thursday and voted out the bill and placed it on the Local and Uncontested Calendar. The Local and Uncontested Calendar is used for the consideration of local and uncontested bills at times designated by the Senate. So again, this bill will eventually be voted on in the Senate once it works its way up the list.
Property Tax Bill Finally Debated and Passed in the House
After several weeks of on-again, off-again calls for debating and voting on the property tax bill in the House, that chamber finally got to it this week. On Tuesday, SB 2 was approved on a 107-40 margin after several hours of debate. More than 20 Democratic House members broke party ranks to support the measure, which has garnered adamant opposition from city and county officials since its introduction. Local officials claim the revenue cap in the bill is too low and will limit their ability to provide public safety and other necessary services to their residents.
Meanwhile, the bill’s author and chair of the tax-writing Ways and Means Committee, Rep. Dustin Burrows (R-Lubbock), made it clear that SB 2 was not going to lower anyone’s property taxes. He stated that while the bill makes the tax process more transparent, “it does not lower anyone's property taxes. It was never designed to do that, and I've never promised anyone that it did.”
What SB 2 does do is offer wholesale reforms to the property tax system and limit the ability of cities, counties and other taxing units to raise property tax revenue. As passed, it forces cities, counties and emergency service districts to hold an election to approve raising 3.5 percent more property tax revenue than the previous year. Hospitals and community colleges have an 8 percent election trigger in the version passed by the House.
Other than this different treatment for hospital and community colleges, there are few other differences between the House’s version of the property tax package and the bill passed by the Senate back in mid-April. Another difference relates to small taxing jurisdictions. In the Senate version, those taxing units that bring in less than $15 million combined sales and property tax revenue would have to opt-in to some of the bill’s provisions. The House’s revision eliminated that definition and inserted a new allowance to let all taxing units increase their property tax levy by $500,000 without triggering an election.
The Senate version would also permit the costs of providing indigent defense services to be factored into the revenue growth calculation. The House removed that language but included a similar clause that protects cities and counties from being penalized if they offer homestead exemptions to their residents.
Finally, the House version includes a provision that lets taxing units bank unused revenue growth for five years, allowing them to surpass the 3.5 percent trigger in some of them. Currently, cities, counties and other taxing units can raise 8 percent more property tax revenue before their voters can petition for an election to roll back the increase. SB 2 would make those elections automatic and put in place a battery of reforms designed to increase transparency and utility for taxpayers.
The state’s top leaders – governor, lieutenant governor and House speaker - have all pushed for property tax and school finance reform since the beginning of the session, although the Senate has emphasized the former and the House has emphasized the latter, if ever so slightly. Movement on both pieces of legislation slowed this month as both chambers waited for the other to move on its priorities.
House leaders have signaled that they believe property tax reform legislation should run on a parallel track with the school finance bill since the issues are so closely intertwined and the real property tax reduction must come through the education bill. The House made its version of SB 2 contingent on school finance reform passing. Ahead of Tuesday’s debate on SB 2, the Speaker signaled that the House won’t act any further on property tax reform negotiations until the Senate passes a school finance bill.
SB 2 now heads to a conference committee where the differences will need to be hammered out before a final version can be adopted.
School Finance Bill Accelerates in the Senate
With the House making it clear that it would not move property tax reform legislation without a simultaneous bill to implement changes in school finance, the Senate Education Committee ramped up its timetable for getting a bill passed. On Tuesday, the Senate Education Committee Chair, Larry Taylor (R-Friendswood), stated that the committee would likely not approve the school finance bill (HB 3) until Thursday or next week. But by the end of the day on Tuesday that timeline had rapidly accelerated, and the committee voted on the bill Wednesday morning. It was expected that the full Senate would take the bill up on Friday but, late Thursday afternoon, Taylor announced that the bill would be deferred until Monday so Senators can file amendments.
Many details of the bill still need to be ironed out, however, and committee members voted Wednesday without an official analysis of how their districts would fare financially. Still, the vote seemed to address concerns that the Senate was moving too slowly on school finance. The vote brings the upper chamber one step closer to catching up with the House, which has already passed three top legislative priorities: the budget, school finance, and property tax reform bills.
The Senate Education Committee voted out a version of the school finance legislation that differs in many ways from the version the House voted out in early April. It includes a $5,000 across-the-board raise for full-time classroom teachers and librarians, funding for districts that want to pay higher-rated teachers more, money for districts with better student academic outcomes, and a few different long-term property tax relief proposals.
The House's version of the bill requires districts to use a portion of their additional base funding per student on raises for all school employees and designates extra money for raises to be given at the districts' discretion. It lowers school tax rates by 4 cents per $100 valuation and lowers rates further for districts taxing higher. But it doesn't include a proposal for long-term, ongoing tax relief.
Chairman Taylor has indicated the Senate’s long-term school property tax relief proposals will only be viable if lawmakers also find a sufficient revenue source to make up for lost local tax revenue. Currently, there's a blank space where the revenue source should be in the bill.
The state’s top leaders have backed a proposal to increase the sales tax one percentage point and use that revenue for tax relief. This legislation, House Joint Resolution 3 (HJR 3), was introduced in the House Ways and Means Committee in early April but saw no action. Well, HJR 3 was finally voted out of the Ways and Means Committee on Wednesday by a 6-2 vote. It would give Texans the chance to approve the sales tax swap in a vote this November. Time is running out for the House to move that Resolution forward. House bills and joint resolutions must get on the House calendar by the end of next Tuesday and must be voted out by the end of next Thursday.
Budget Negotiations Underway – What Are the Numbers?
Both the House and Senate have passed their budgets and have appointed members to a conference committee to negotiate on their differences. Their overall budget numbers are fairly close - $251 billion for the House and $248 billion for the Senate. But there are differences on how that money should be spent and the House is proposing to use $2.3 billion from the Rainy Day Fund while the Senate does not propose tapping that account at all.
The two sides have until May 27, when the legislative session ends, to come to an agreement and pass a final overall budget for the state. The budget bill is the only piece of legislation that the legislature is required to pass as dictated by the state constitution. So, the odds are high they will complete their mission – at least at some point. I am still betting it will happen during the regular session and we won’t see a special session of the legislature. But I thought the Rangers were going to win the World Series a few years ago, so what do I know?
The Texas Tribune has a good summary of the differences between the Senate and House budgets.
House Reduces Penalties for Pot; Senate Not High on the Issue
This week the House passed a bill to reduce the penalties for possession of small amounts of marijuana (it is the 50th anniversary of Woodstock after all!). HB 63 was given initial passage on Monday and then received final approval by the House on Wednesday by a vote of 103-42. HB 63 is sponsored by Rep. Joe Moody, (D-El Paso), and initially it was a bill to decriminalize marijuana possession. There was resistance to going that far so he changed the bill on the House floor from a decriminalization measure to one that reduces the penalties for possession. The bill lowers possession of 1 ounce or less from a Class B to a Class C misdemeanor, which is the same classification as a traffic ticket.
There has been a nationwide “marijuana movement” over the past several years with efforts to move toward legalization, decriminalization or reduced penalties for possession. A few states have gone to legalization and commercialization and are collecting significant tax revenue from the sale of marijuana. So, proponents were happy to see the legislation pass in the House this week. However, their joy may be short lived as the prospects for the bill in the Senate do not look good.
Senator John Whitmire, (D-Houston), who chairs the Senate Criminal Justice Committee, never gave Moody’s companion bill in the Senate a public hearing and previously said he didn’t see an appetite for marijuana reform in the Senate. In a tweet Tuesday, Lt. Governor Dan Patrick confirmed that to be the case, stating that Chair Whitmire was right “that HB 63 is dead in the Texas Senate. I join with House Republicans who oppose this step toward legalization of marijuana.” Patrick has spoken against bills to relax the state’s marijuana laws in the past, so it is not a new position for him. Based on Patrick’s opposition, I believe HB 63 will “go up in smoke” in the Senate.
Regulating Motorized Scooters in Texas
The use of electric scooters has exploded over the past few years and not everyone is in love with these new modes of transportation. You better stay alert for them if you are walking around downtown Austin. This week, the Senate passed a bill to try and reign in and regulate the use of these motorized methods of mayhem. SB 549, sponsored by Senator Royce West (D-Dallas), was passed in the Senate on Wednesday. It would ban people from riding electric scooters along sidewalks in the cities where these transportation devices have become extremely popular. The bill would also require scooter users to be at least 16 years old, would prohibit more than two people from riding a scooter at the same time, and add new guidelines for parking so a rider can’t obstruct a road or sidewalk when they finish their ride.
Citing safety concerns, some local governments have already imposed restrictions on electric scooters like creating restricted areas where they can't be used. But the Senators wanted to impose minimum statewide guidelines and that is what SB 549 does. The bill would allow counties and cities to add further scooter restrictions like increasing the age limit, requiring helmets or adding a higher criminal or civil penalty for not complying with the rules.
Most of the bill, like the age limit and the prohibition from riding on sidewalks, would only apply to rented scooters, not personal scooters. The bill passed in a 20-11 vote, and it now moves to the House for their consideration. There is an identical bill in the House (HB 4499), but it has been sitting in a committee since March and has not had a hearing. You can read SB 549 here.