Last Week in the Legislature
May 17, 2019 | Issue #18
By John Sharbaugh, CAE
Managing Director of Government Affairs
Sunset Bill Goes to the Governor
The Sunset bill (HB 1520) on the Texas State Board of Public Accountancy (TSBPA), was sent to Governor Greg Abbott on Tuesday, May 14. This came after the House had concurred on a minor change the Senate made to the bill when it was in that chamber. Once the House concurred on that change, the bill was finalized, enrolled and sent to the governor, who now has 10 days to sign or veto it. We do not expect a veto, so in the next week, the bill will become law with or without the governor’s signature.
Successful passage of the bill concludes nearly a year of work on this top advocacy priority for TXCPA and the CPA profession. Passage of the bill assures that TSBPA will continue for at least another 12 years, until its next Sunset Review cycle in 2031. Sincere thanks to the many people who made this success possible. It was definitely a team effort that included the members and staff of TSBPA, the leadership and staff ofTXCPA, and the many TXCPA Key Persons and other government relations volunteers who helped along the way by communicating with their legislators at critical points in the legislative process. A big “thank you” to all who helped in this effort.
Nonprofit Bill Approved in House Committee – Deadline for Passage Next Tuesday
I reported last week on SB 1463, a bill that would modify record-sharing requirements for nonprofits in Texas. The Senate passed the bill last week on May 9. The bill was then sent to the House; the House Committee on Business and Industry considered the bill this week and voted it out on Tuesday. The bill needs to be scheduled for a vote in the House and to assure its passage, the House must vote on it by the end of the day next Tuesday. Under the rules of the House, next Tuesday is the last day for the House to consider Senate bills and Senate joint resolutions on the House calendar. Hopefully, SB 1463 will meet that deadline. We will have to wait and see.
SB 1463 provides clarity as to exactly what kinds of books and records nonprofits must share with the public on request under the law as defined in Texas Code Section 22.353.SB 1463 also puts parameters on how many requests an individual can make under the statute before it becomes unreasonable. The hope is that this type of clarity will reduce the number of harassing and abusive requests that some nonprofits have been encountering under the current law. TXCPA is supporting passage of SB 1463.
Comptroller Revises Revenue Estimate Upward
Good news for the legislature (and all Texans) came this week when on Tuesday, Comptroller Glenn Hegar announced that lawmakers will have an additional $518 million to spend on public programs thanks to more robust tax collections. In a letter to Governor Greg Abbott, Lt. Governor Dan Patrick and Speaker Dennis Bonnen, Hegar noted that “Some of the increased revenue projected for fiscal 2019 is attributable to upwardly revised estimates of oil and natural gas production taxes.” As a result, the state’s Rainy Day Fund is expected to grow by nearly $300 million in additional revenue.
The revised revenue numbers come on top of a relatively positive estimate Hegar made back in January about the state’s tax collections over the next two years. At that time, the comptroller thought state coffers would end the fiscal year on August 31 with about $4.2 billion in the bank. Tuesday’s revision brings that figure to $4.7 billion. Hegar also noted that lawmakers are likely to grow the state’s treasury by another $550 million if they pass legislation to streamline online sales tax collections on out-of-state sellers.
You can read the comptroller’s letter here.
Bill to Capture Remote Sellers Who Use ‘Marketplaces’
I reported last week on the Wayfair legislation (HB 2153) that was passed by the legislature and was sent to the governor. This legislation was recommended by the comptroller and is in response to last year’s Supreme Court ruling allowing states to tax out-of-state sellers even if they do not have a physical presence in Texas, but sell their products here. It allows the Texas comptroller to identify a single tax rate to apply to remote sellers. Because local taxing jurisdictions in Texas have varying sales tax rates, ranging from 6.25 to 8.25 percent, the bill is intended to simplify online vendors’ sales tax calculations.
But there is another part to this Wayfair puzzle and the comptroller referenced it in his letter to the state’s top leaders this week. Another bill, HB 1525, would require marketplaces such as Etsy, Ebay and Amazon to collect sales tax on third-party, out-of-state sellers and is expected to yield more than half a billion dollars for the state. If a Texan purchases an item online from a seller in another state using a “marketplace,” a definition that includes websites and software applications, the marketplace would be responsible for collecting and paying sales tax on those transactions. The Legislative Budget Board estimates that the bill would yield an additional $550 million in 2020 and 2021 above what lawmakers included in their budget assumptions.
House Bill 1525 was passed this week and sent to the governor on Tuesday. Both HB 2153 and HB 1525 are expected to become law. Read an analysis of HB 1525.
Major Issues Still in Conference Committees
The major issues that the legislature is dealing with, things like the budget, school funding and property tax reform, are all in the process of being debated and discussed in conference committees now. Both the House and Senate have passed their own versions of legislation on these major issues, so the hard work now is negotiating their differences and developing a common bill that both chambers can support. Typically, once the conference committee finishes its work, the House and Senate line up and support the work the conference committee submits to them. We will soon see if that holds true this year, as time is running out with the session ending on May 27.
Many Bills Dying Due to Deadlines
This week, many House bills met their demise as Tuesday was the deadline for House bills to get out of committee and have any chance for a vote in the House. Senate bills that were referred to the House are still alive, but next Tuesday is the deadline for them to be voted out of a House committee and make it to the House floor for a vote. So next week, we will see many more bills fall by the wayside due to the rules of the game. This is all part of the natural cycle of legislation in each session. Many bills are introduced each session (over 7,000 this year), but only around 20 percent are typically passed and become law.
At this point, only around 380 House and Senate bills have been passed. When all is said and done, that number will likely be closer to 1300-1400. But it is still only a small percentage of the total number of bills this session, bearing similarity to the Biblical quote from Matthew that “many are called, but few are chosen.”
Anti-licensing Efforts Have Limited Success – But Not Going Away
I reported earlier in the session about the efforts of several groups to eliminate or reduce the amount of occupational and professional licensing that exists in Texas and around the country. There is resistance to the expansion of occupational licensing across the political spectrum. In the 1950s, only 5 percent of workers in the United States were in jobs that required licensure, but by 2015 that number had grown to 30 percent. The increase leads to a lot of questions about whether licenses are truly protecting the public or whether they are stifling competition. While most state legislatures are not looking directly at learned professions like CPAs, doctors or engineers, all occupations and professions have the potential of getting swept into legislation that is introduced on this issue.
Last year, during the interim session of the legislature, I attended a hearing in the Senate where this issue was debated. Several groups made presentations arguing against licensing and encouraging legislators to eliminate many licensing provisions. When the TSBPA Sunset hearing was held, a representative of one of these groups testified against the renewal of TSBPA and against licensing in general. At several hearings I attended this session, these anti-licensing proponents showed up to make their case, as well.
Fortunately, no significant legislation has been passed this session that would have a serious effect on licensing, especially anything that would affect CPA licensing. But it is also clear that these folks are not going to go away and they are in it for the long haul. They have the funding and the backing of both conservative and liberal groups, and they believe in the gospel they are preaching. So, while it looks like we are going to win the battle in this legislative session, the war will go on. Often, it takes years for viewpoints to change on an issue and as long as these anti-licensing proponents are willing to engage and lobby on this matter, the CPA profession and other licensed professionals need to be on guard and ready to do battle. My guess is we will see this issue back in the next session of the legislature.