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Legislative Updates

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Legislative update: May 24, 2019 »

With three days remaining in the 86th Legislative Session, only about 13.5 percent of bills have reached Gov. Abbott’s desk. In 2017, 19 percent of bills reached the governor. In 2015, 21.7 percent of bills advanced to the final stamp. Normally, about a quarter of filed house and senate bills advance to the final step in the legislative process. After today, only bills in conference committee will have the chance to survive.

Stay tuned for our Legislative Wrap-Up. We’ll tell you what you need to know about action on key priorities this session.

Legislators release final school finance plan

On Thursday, the state’s top three leaders – Gov. Greg Abbott, Lt. Gov. Dan Patrick and Speaker Dennis Bonnen – announced that lawmakers have reached a deal on the budget, public school finance and property tax reform. Both House and Senate members will need to sign off on the bills before Sine Die on Monday.

A flyer passed out at the press conference reported several key wins for public schools, including:

  • A “significant” increase in the basic per-student allotment, without a specific dollar amount;
  • Full-day pre-kindergarten funding for low income students;
  • $2 billion for “dynamic” compensation for teachers, librarians, counselors and nurses, including $104 million for a merit-based incentive raise program for educators;
  • $3.2 billion toward teacher raises;
  • Bonus funding for College, Career and Military Readiness outcomes, dual-language programs, and extended year summer programs for economically disadvantaged students;
  • Creation of the first dyslexia identification program in Texas, as well as establishment of high-quality K-3 reading standards;
  • Creation of a “Do Not Hire” registry for classroom teachers to protect students;
  • Quadrupled funding for constructing and equipping new facilities; and,
  • Changes in the school funding formula that would result in a reduction of recapture or “Robin Hood” payments from wealthier districts to less wealthy districts by $3.6 billion (47 percent), without elimination of those payments.

The handout also listed specific property tax measures designed to slow the growth of local school property taxes, including $5 billion to lower school property taxes by an average of 8 cents in 2020 and 13 cents in 2021. The final version of SB 2 will also include 2.5 percent tax compression started in 2021 and require school districts to conduct efficiency audits before proposing a tax increase.

Overall, the combination of increased school funding and property tax reform is estimated to increase the state’s share of education funding form 38 percent to 45 percent.

The chief state lawmakers left many questions unanswered, including the new per-student basic allotment and minimum teacher pay schedule. Conferees for the school finance plan, House Bill 3, must submit their final bill by midnight on Saturday. The Senate has until Sunday to release the final tax bill, Senate Bill 2, and until Monday to agree on the appropriations bill, House Bill 1.

House members reject ban on lobbying by local communities

Senate Bill 29, which would have banned governing bodies from using public money for lobbying, failed to pass to third reading in the House on Monday.

Legislators must read bills three times before legislation can advance to the next step. This process is designed to slow down the legislative process and foster debate among members. Bills are first read when they are referred to a committee by the lieutenant governor or speaker of the House. After committee revision and approval, the bill is read a second time on the floor for discussion and a vote. During the second reading, legislation can still be revised and is passed by a simple majority. Any amendments must also pass by a simple majority. On third and final reading, any revisions must be adopted as amendments by a two-thirds majority. The bill then goes to the next chamber for another round or, after approval by both chambers, to the governor.

SB 29 would have prevented local governments from using public money to directly or indirectly influence, or attempt to influence, the outcome of legislation relating to taxation, bond elections, tax-supported debt, and ethics and transparency of public servants. Preventing local communities from hiring lobbyists to represent them was appealing to many lawmakers, but deemed as clearly unconstitutional by others. Opponents argued the bill would have prevent city representatives, who can live hundreds of miles away from the Capitol, from contesting unfunded mandates and other harmful legislation.

Other updates

House Bill 3143, which would improve transparency and extend Chapter 312 agreements until 2029, was passed by the Senate as amended on Monday. Chapter 312 agreements allow governing bodies like cities and counties to offer tax abatements to attract new or expanding job-generating companies. Senators voted down a handful of proposed amendments to the bill, including one that would have prohibited tax incentives for any project involving a solar or wind energy device.

Legislative update: May 17, 2019 »

Only 10 days remain until Sine Die on May 27, the end of the 86th Legislature. Most bills will die a swift death in the next few days, the usual fate in any legislative session.

A bill dies when it fails to meet a deadline and therefore cannot advance to a vote. Tomorrow, any pending senate bills and joint resolutions in House committees will die in committee. Next Wednesday, any senate bills or joint resolutions that have not come to a vote by the full House will die. Bills in conference committee, including the budget bill and the public education finance bill, have the latest deadlines.

Priorities that succumb to a deadline can still be attached as amendments or “riders” to other bills. This strategy risks jeopardizing those larger bills by deterring votes from lawmakers who disagree with the rider. The budget, as the only bill that legislators must pass, is somewhat protected: no budget rider may alter state law.

Schools districts raise concerns about changes to funding formula

Lawmakers are currently working on House Bill 3, the school finance reform bill, in conference committee. Both the House and Senate versions of the bill would make sweeping changes to the school funding formula, which determines state funding provided to each public school in Texas.

School districts, business leaders and chambers of commerce across the state have sounded an alarm on one change in particular – using current-year property values in school formulas.

Currently, school formulas use property values from the prior year, which are largely set and most accurately represent the local tax revenue actually available to districts. Using these values allows districts to write budgets with a clearer understanding of how much funding they will receive from the state or lose through recapture (a.k.a., Robin Hood) payments. Going to current-year values will cause districts to lose the revenue they gained from prior-year property values. Losing this revenue would be equivalent to another form of recapture by the state.

Even with prior-year values, school districts face significant uncertainty in their budgeting processing due to estimates about student attendance, growth and changing expenses. Forcing districts to develop budgets based on current-year property values will add volatility to an already imprecise process. Districts will need to be more conservative in their estimates to avoid accidental deficits. The state will also need to rely more on the Comptroller’s estimates for property values, which tend to be more conservative to avoid overspending state funds.

According to David Pate, CFO of Richardson ISD, RISD would lose a little more than $18 million in state funding the first year after the changes took effect. This would equate to a loss of 275 teachers in the school district. In a press release today, Plano ISD estimated a greater loss of $35 million and possibly 500-600 teachers. These losses would not be recovered going forward.

The state, altogether, would save approximately $1.8 billion in state education funding. These costs would then be passed on to local taxpayers and significantly reduce any benefit to school districts from school finance reform this session. You can email state legislators to voice your opinion here. Lawmakers in conference committee have until May 25 to make changes and report on HB 3.

High-speed rail dodges bullet from lawmakers

Texas Central, a privately-funded rail company, has been planning a high-speed rail between North Dallas and Greater Houston. The rail would make the journey in less than 90 minutes, require no public funding, and has proven extraordinarily safe in Japan. Rural legislators between Dallas and Houston have opposed the project as detrimental to their towns and landowners, who could be subject to eminent domain for the project.

Several bills designed to impede the rail died last week. However, lawmakers made another attempt to delay the project this week by adding a rider to the budget.

The budget rider would have required a court to definitively and unappealably affirm Texas Central’s ability to use eminent domain for the project before the company could coordinate with the Texas Department of Transportation to cross state highways. Obtaining a court ruling likely would have taken several years.

One member of the budget committee, Rep. Armando Walle (D-Houston), said the rider was removed over concerns it could change general law, which is prohibited in the budget bill. For fear of endangering the entire appropriations bill, they opted to remove the rider.

Once the appropriations bill leaves conference committee, both chambers will vote on the amended bill. If the budget is approved, HB 1 will go to the governor.

Comptroller Hegar announces additional $518 million in the budget

In a surprise announcement on Tuesday, Texas Comptroller Glenn Hegar declared another $518 million would be available to lawmakers for the 2020-21 budget. $300 million of these funds will go to the state’s Rainy Day Fund as revenue from oil and natural gas production taxes. There has been no word yet on how the additional funds will be used.

The comptroller has a difficult job. Unlike most states, which meet and plan their budgets annually, the Texas comptroller must estimate our state’s revenue for the next two years. Comptroller Hegar is known for his conservative estimates of future state funds.

2019 Texas Public Ed Almanac shows progress toward 60x30TX goals

The Texas Higher Education Coordinating Board (THECB) released the 2019 Texas Public Education Almanac this week. The report includes a few indicators on progress toward 60x30TX goals:

  • 5 percent: the percentage of Texans aged 25-34 who hold a certificate or degree, an increase from 40.3 percent three years ago;
  • 6 percent: the increase in certificates and associate’s, bachelor’s and master’s degrees awarded by all Texas higher ed institutions, a total of 341,307 degrees;
  • 8 percent: the increase in 6-year graduation rates toward postsecondary degrees at public four-year universities over the last ten years, for a total of 61.6 percent.

Of every 100 students enrolled in the eighth grade in Texas in academic year 2007-08, 78 graduated from high school, 54 enrolled in higher education in Texas, and 23 received a higher education degree or certificate in Texas by August 2017. Within this group, only 14 percent of the economically disadvantaged students received a degree or certificate, compared to 33 percent of those not economically disadvantaged.

Overall, the Almanac reported significant progress toward 60x30TX, but at a slower rate than will be necessary to achieve 60 percent of Texans aged 25 to 34 holding a certificate or degree by 2030. 60x30TX was launched in 2015 to prepare a skilled workforce to meet industry demands. It has been estimated that 60 percent of Texans will need a certificate or degree by 2030 for the state to stay competitive in the global market.

Senate passes “Save Chick-fil-A” religious liberty bill

Senators passed Senate Bill 1978 this week, which would prohibit state and local governments from taking adverse action against individuals, organizations or businesses based on their belief about marriage. LGBTQ groups have targeted the bill as another discriminatory bathroom bill, a reference to legislation pushed by Lt. Gov. Dan Patrick last session. The original bathroom bill would have banned individuals from bathrooms that do not match their biological sex in publicly-owned facilities, including schools. Such legislation, including religious liberty bills like SB 1978, is widely viewed as discriminatory and discourages large employers and special events from expanding to Texas.

A similar bill, House Bill 3172, was struck down by point of order from a member of the LGBTQ caucus last week. HB 3172 would have prohibited adverse action against any person based on their membership in, affiliation with, or contribution to a religious organization. The bill was nicknamed the “Save Chick-fil-A” bill because it would have allowed the attorney general to sue the San Antonio City Council after council members voted against Chick-fil-A opening a restaurant in their airport. Council member Robert Trevino stated earlier this year that he could not support a company with “a legacy of anti-LGBTQ behavior.”

SB 1978 has been referred to the House State Affairs Committee, which has until tomorrow to report on the bill.

Other updates

House Bill 3143, which would extend the Chapter 312 economic development incentives, was passed by the Senate National Resources & Economic Development Committee this week. The bill would also add transparency measures, including public hearings before the adoption, amendment, repeal or reauthorization of an agreement under Chapter 312. Chapter 312 agreements allow cities to leverage local property taxes to attract new or expanding businesses. HB 3143 will now go on to the full Senate.

Legislative update: May 3, 2019 »

For our alert this week, check out our podcast episode. Find all our episodes here or on Apple Podcasts.

Tech Titans CEO Bill Sproull talks about the 2019 Texas legislative session and which bills are in committee and the process to making them laws.

The bills include topics of education reform (teacher raises & funding), a bill to address rising property taxes, plus a regular and supplemental budget bill.

Legislative update: May 3, 2019 »

Budget comparisons

Two budget conference committees, groups of appointees from both chambers for a specific bill, have been negotiating budget proposals for the 2020-21 biennium (HB 1) and the current biennium (SB 500). In January, Texas Comptroller Glenn Hegar announced the budget would increase by nearly $9 billion and the Economic Stabilization Fund, or rainy day fund, would swell to $15 billion. Now, lawmakers must decide how that surplus is spent to pass an appropriations bill, the only legislation they are constitutionally required to pass.

Major differences remain between the House and Senate proposals:

  • Both proposals for the 2020-21 budget dedicate about $116 billion from the state’s general revenue (GR) account.
  • The House version would withdrawal an additional $2.3 billion from the Economic Stabilization Fund (ESF), while the Senate would not use any rainy day funds.
  • Both versions of HB 1 would increase appropriations to the Foundation School Program (FSP), state public schools’ funding account, by $9 billion. $6.3 billion would go directly to increasing the per-student allotment, teacher raises and other programs, and $2.7 billion would replaces school funding lost to property tax cuts.
  • The Senate has proposed $4 billion for $5,000 raises to teachers and librarians. The House would require schools to dedicate 25 percent of increases in the per-student allotment to raises for school district employees.

Both chambers would dedicate $15.6 billion to state colleges and universities over the next biennium.

Both versions of the supplemental bill, SB 500, would withdrawal about $4 billion from the rainy day fund. The House version of SB 500 would provide $169.8 million to pay off the backlog of matching funds mandated by the Texas Research Incentive Program (TRIP) for research at qualifying state colleges and universities. The Senate would not dedicate any funding to TRIP.

House passes property tax reform bill

Senate Bill 2, the major property tax reform bill, was passed by the full House after six hours of debate on Tuesday. The House version of SB 2 would trigger an automatic election if local revenue from property taxes grew by more than 3.5 percent, whereas the current rollback rate is 8 percent. SB 2 passed despite significant concerns from Texas cities about cuts to public safety funding, which makes up the majority of city budgets.

The House version of SB 2 would override any standing revenue caps in cities and counties. The bill would also allow cities and counties to include losses from homestead exemptions and providing indigent healthcare in revenue calculations. Taxing units could increase their property tax revenue by $500,000 per year without triggering an automatic election. Their revenue growth could also exceed the rollback rate some years if the average revenue growth over the last five years was 3.5 percent or less. Hospitals and community colleges would remain exempt from the changes, and therefore retain their 8-percent election trigger. An attempt by Rep. Eric Johnson (D-Dallas) to exempt public safety funding from the revenue calculation was tabled.

Finally, House members made SB 2 contingent on the passage of major school finance reform, HB 3. The new provision would require passage of HB 3 for SB 2 to go into effect.

School finance reform advances to Senate floor

The Senate Education Committee reluctantly approved their substitute for House Bill 3 on Wednesday. With only three weeks remaining in the 86th session, senators rushed to approved HB 3 so that the full Senate could vote on the bill soon. Once the upper chamber has passed the bill, a conference committee can be appointed to work out the details. House Bill 3 is scheduled for debate Monday on the Senate floor.

The committee substitute would provide $5,000 across-the-board raises for state teachers and librarians, in line with Senate Bill 3 passed by the upper chamber in March. The pay increases would cost $4 billion over the next biennium. The bill would also allow for merit pay raises, fund pre-K funding for low-income students, increase the homestead exemption from $25,000 to $35,000, and provide outcomes-based funding bonuses to high-achieving school districts.

The Senate version of HB 3 replaced the original 4-cent property tax cut per $100 valuation with an 8-cent cut the first year, and 15-cent cut in subsequent years. Together with teacher pay raises, the steep tax cuts would require a new source of revenue not specified in the bill.

Recently, lawmakers have discussed increasing the sales and use tax by one cent to pay for the large property tax cuts proposed in the Senate version of HB 3. The House Ways & Means Committee passed substituted versions House Joint Resolution 3 and House Bill 4621 this week, which would dedicate 100 percent of the new sales tax revenue to property tax relief. The initial HJR 3 proposal would have dedicated 80 percent of the new revenue to property tax relief and 20 percent to school funding. The one-cent increase is estimated to raise $5 billion toward lowering property tax rates.

Joint resolutions require two-thirds approval by both chambers since they go to the voters as constitutional amendments. If every House Republican voted for HJR 3, the bill would still need 18 House Democrats to pass. Many Democrats are opposing any sales tax increases as a regressive tax that shift costs from higher-income homeowners to low-income consumers.

In the Senate Education Committee on Wednesday, Chairman Larry Taylor (R-Friendswood) expressed regret at bringing HB 3 to a vote without a clear source of funding or an official analysis of how the bill would impact their districts. Three members – Sen. Paul Bettencourt (R-Houston), Sen. Angela Paxton (R-McKinney) and Sen. Bob Hall (R-Edgewood) – voted Present Not Voting due to significant concerns about funding the bill. Sen. Taylor reassured committee members that once HB 3 was passed, its details would be negotiated in conference committee.

Other updates

House Bill 3143, which would extend the expiration date of Chapter 312 tax abatements from cities to new or expanding businesses, was passed by the House and referred to the Senate Natural Resources & Economic Development Committee.

Legislative update: April 26, 2019 »

Senate finally reveals state education plan

Senator Larry Taylor (R-Friendswood), chair of the Senate Education Committee, filed the upper chamber’s school finance proposal on the filing deadline in March with numerous blank underscores in place of actual dollar amounts. On Thursday, he laid out before the Senate Education Committee  a heavily-revised substitute of House Bill 3. The Senate version would:

  • Increase the student allotment by a lower amount, $740, from $5,150 to $5,880 (instead of $6,030 as in the House’s proposal);
  • Include a $5,000 one-time pay raise for full-time teachers and librarians, as the Senate unanimously approved in Senate Bill 3;
  • Include performance-based funding for school districts tied to reading at grade level by third-graders;
  • Add unpredictability to school budgets by changing current law, which allows school districts to use property tax values from the previous year in funding formulas, to use valuations from the current year;
  • Limit the growth of school districts’ revenue from property taxes starting in 2023; and,
  • Lower school district property taxes by 8 cents in the first year and 15 cents per $100 of assessed value starting the second year, compared to the House’s proposed 4-cent reduction.

Many other allotments that the House had increased would be reduced as well, including funding for the P-TECH grant program. For example, although the Career and Technical Education allotment would be expanded in HB 3 to include eighth graders, this would reduce funding by forcing school districts to fund P-TECH grant programs through their existing CTE funding.

The Senate Education Committee did not bring HB 3 to a vote. Opponents voiced several concerns about the proposal, including the financial burden of sustaining  the one-time $5,000 raise and tying school budgets to current-year property values. The proposal also depends on additional funding for schools from other tax sources. Senator Paul Bettencourt (R-Houston) proposed a few alternatives to swapping property tax reduction for an increase in the  sales tax, including diverting severance taxes from oil production and collecting online sales tax.

College-readiness bills advance

Lawmakers advanced legislation on other school issues this week, including individual graduation committees, technology skills curricula and performance indicators.

Senate Bill 213 and House Bill 851 would repeal the expiration date for individual graduation committees, which consider high school students who failed one or two end-of-course (EOC) exams for graduation. The committee includes the principal, teachers of the failed courses, and a parent, designated advocate or even the student if the student is older than 18. Texas has seen a reduction in the college readiness of high school graduates. These committees award high school diplomas to students who may not be ready for college or the workforce. Allowing students who have not passed their EOC’s to graduate also devalues the diplomas of students who studied hard and passed their exams. The program is currently set to expire this September. House members passed the Senate companion to HB 851, SB 213, on Thursday.

House Bill 2984 would add computer programming, coding, computational thinking and cybersecurity to the essential knowledge and skills of the technology curriculum for students in grades K-8. The State Board of Education would revise the curriculum every five years to align with current or emerging professions. HB 2984 was passed by the full House and sent to the Senate this week.

House Bill 843 would add satisfactory performance on Algebra II and English III assessments to public school performance indicators. Success in these courses has proven to be a reliable predictor of college success. Passing Algebra II alone doubles the odds that a student who enters college will complete a bachelor’s degree. HB 843 was passed by the full House and received by the Senate this week.

Texas Municipal League names top ten anti-city bills this session

The Texas Municipal League (TML) identified its top ten bills that threaten the autonomy or funding of local governments in Texas. House Bill 2 and Senate Bill 2, revenue-capping rollback tax bills, topped the list, which spanned from local tree regulations to telecom provider fees. A few of the bills are included below. See the full list at Community Impact.

Senate Bill 29 and House Bill 281, also known as the “silencing cities” bills, would prohibit counties, cities and transit authorities from spending public money for lobbying activities. Like private entities, current law allows cities to hire lobbyists to support or oppose legislation that impacts their communities. TML argued these bills could be a violation of free speech for cities by restricting their ability to speak out on legislation. SB 29 was passed by the full Senate and sent to the House last week. HB 281 was passed by the House State Affairs Committee early this month and has stalled in the Calendars Committee.

Senate Bill 1152 and House Bill 3535 would lower municipal right-of-way fees for telecommunications providers to run cables over an existing line. Telecom providers argue they should not have to pay twice to run telephone calls, cable television or video signal over the same line. Cities have become sensitive to any reduction in their budget with severe property tax rollbacks in the spotlight. Both bills were passed by the House State Affairs Committee last week and sent to Calendars.

Other Updates

The House Ways & Means Committee members adopted a substantially revised substitute of Senate Bill 2 by an 8-3 vote on Thursday. The substitute now closely resembles the lower chamber’s proposal, House Bill 2, including provisions that would:

  • Trigger automatic tax elections for hospital districts and community colleges at 8 percent;
  • Trigger elections if revenue for cities, counties and emergency service districts increases by more than 3.5 percent, and allow property tax levies to increase by $500,000 per year without triggering an election; and,
  • Allow local municipalities to factor homestead exemptions into their revenue growth calculation to avoid penalizing cities for offering tax cuts to residents.

The House committee also made passage of SB 2 contingent or dependent on the approval of HB 3, the lower chamber’s major school finance reform bill. House members also cut certain provisions that required the participation of taxing units with less than $15 million in combined sales and tax revenue and allowed cities to factor indigent defense costs into their revenue calculations. The House is set to debate the revised SB 2 next week, and it will certainly attract a lot of amendments.  Any changes will likely be rejected by the Senate, and a conference committee will be created to negotiate a revised bill.

The House & Senate conferees on HB 1, the next biennial budget, formally met on Monday, and heard a presentation from the Legislative Budget Board on the differences between the House and Senate versions of the budget.  The conference committee on the supplemental funding bill for the current fiscal period, SB 500, has yet to meet.  SB 500 includes some very important budget additions to address shortfalls in state Medicaid funding, the backlog in the Texas Research Incentive Program, etc.  Many observers believe that the budget conferees will wait on some resolution on school funding and property tax relief before finalizing an agreement on the supplemental FY 18-19 budget and the upcoming FY 20-21 budget.

Legislative update: April 19, 2019 »

The “dirty dozen” bills heard by High Speed Rail subcommittee

The project at issue, privately funded by Texas Central Partners, would connect Dallas to Houston with a high-speed rail. According to Texas Central, nearly 50,000 “super-commuters” travel between Dallas and Houston more than once a week. The new high-speed bullet train, identical to the one used successfully in Japan, would make the journey in less 90 minutes. Without additional delays, implementation would start in 2025.

The House Subcommittee on High Speed Rail heard twelve bills this week that are designed to impede construction of high-speed rails in Texas. Representatives of rural districts between Dallas and Houston authored “the dirt dozen” to create setbacks. For example, HB 2716 would prohibit any private or third-party entity funding the rail from surveying land until all necessary funding had been obtained beforehand. Other bills would address option contracts to acquire property for the project, permits from state agencies, and bonds with the Texas Department of Transportation. One bill was withdrawn from committee. The rest were left pending without a vote.

Another strategy to derail to project would encumber eminent domain, or the right to expropriate private land for public use with compensation. Senate Bill 421 would establish precise (and, therefore, litigious) requirements for initial offers and easement term provisions. The bill would also create strict time constraints on landowner meetings that could result in irreconcilable operational challenges and unnecessary delays. Opponents also contend that delays and fear of future litigation could impede or prevent other essential public works projects, such as fuel, water or electricity infrastructure. SB 421 was passed by the Senate last week and has been scheduled for a hearing, along with its corresponding House bill HB 991, next week by the House Land & Resource Management Committee.

Senators pass amended version of major property tax bill

Senators approved their major property tax proposal, Senate Bill 2, on Monday with a few changes. The rollback rate was raised from 2.5 percent to 3.5 percent for taxing districts other than schools, which would still be capped at 2.5 percent growth. Small taxing units with less than $15 million in revenue would not be subject to the cap but could opt-in through an election.

SB 2 has been stalled since Valentine’s Day due to insufficient support in the upper chamber. The rules require a two-thirds majority (19 senators) to bring legislation to the floor for discussion and a vote. Lt. Gov. Patrick gained his nineteenth vote from Sen. Kel Seliger (R-Amarillo), a former mayor, after threatening the “nuclear option” of suspending the two-thirds rule and requiring only a simple majority to hear the bill. SB 2 was referred to the House Ways & Means Committee. The corresponding bill in the lower chamber, House Bill 2, was postponed.

On Wednesday, the House Ways & Means Committee heard two bills that would raise the state sales tax by 1 percent to pay down property taxes and also provide additional funding to schools. House Joint Resolution 3 and House Bill 4621 would raise the statewide sales tax to 7.25 percent. 80% of the new sales tax would be used to buy down school property tax rates, and the other 20% would go to increase the basic allotment that schools get for each student.

The new rate would equal California’s state sales tax, which is the highest in the nation. Local governments may also add on 2 percent, making the combined state and local sales tax 9.25 percent or the fourth highest combined sales tax rate in the U.S.

The proposal ran into immediate opposition from the right and the left. Left leaning lawmakers are concerned that lowering property taxes with dedicated sales tax revenue would result in a regressive tax that harms poorer Texas. According to a Texas Tribune analysis, only Texans earning more than about $150,000 per year would pay a reduced percentage of their income to taxes if the bill passed. Lower earners – eighty percent of Texans – would pay more of their income to taxes as a result of the tax swap. Opponents on the right call it a tax increase, especially since it increases government funding of schools and the proposal doesn’t use 100% of the sales tax generated to buy down property taxes.  HJR 3 may have a difficult time of getting the necessary two-third’s approval threshold in the House to approve a constitutional amendment, which would require support from at least 17 Democrats. Both HJR 3 and HB 4621 were left pending in committee.

Remaining budget conferees appointed

Both chambers have announced conferees for the budget bills, House Bill 1 for the next biennium and Senate Bill 500 to supplement the current budget cycle. The speaker and lieutenant governor appoint lawmakers to serve on conference committees when each chamber has disagreements about the same bill. The committee then reconciles the bills so that both chambers can approve and send a single bill to the governor.

The House appointments for HB 1 were announced last week. Lt. Gov. Dan Patrick announced the upper chamber’s conferees on Wednesday:

  • Jane Nelson (R-Flower Mound), chair of the Senate Finance Committee;
  • Joan Huffman (R-Houston), chair of State Affairs and vice chair of Criminal Justice;
  • Lois Kolkhorst (R-Brenham), chair of Health & Human Services;
  • Robert Nichols (R-Jacksonville), chair of Transportation and vice chair of Business & Commerce; and,
  • Larry Taylor (R-Friendswood), chair of Education.

Texas Tribune noted that Lt. Gov. Dan Patrick appointed only Republicans to the budget bill conference committee, a first since the Republican party gained control of the Senate in 1997.

Both chambers announced their conferees for the supplemental appropriations bill, SB 500, this week:

  • Jane Nelson (R-Flower Mound), chair of the Senate Finance Committee;
  • Juan "Chuy" Hinojosa (D-McAllen), vice chair of Finance;
  • Joan Huffman (R-Houston), chair of State Affairs and vice chair of Criminal Justice;
  • Lois Kolkhorst (R-Brenham), chair of Health & Human Services;
  • Larry Taylor (R-Friendswood), chair of Education;
  • John Zerwas (R-Richmond), chair of the House Appropriations Committee;
  • Giovanni Capriglione (R-Southlake), chair of the Infrastructure, Resiliency & Invest subcommittee;
  • Mary E. González (D-Clint), member of the subcommittee on education funding;
  • D.F. "Rick" Miller (R-Sugar Land), vice chair of the subcommittee on general government, judiciary and public safety spending; and,
  • Toni Rose (D-Dallas), chair of the subcommittee on natural resources, business and economic development, and regulatory spending.

The process

House Bill 2000, which would authorize tuition revenue bonds for state universities, was passed by the House on Thursday. Tuition revenue bonds support large construction and infrastructure projects at higher ed institutions.

Lawmakers have just over five weeks until the session ends on Memorial Day, May 27. All major deadlines, including when the last bills can be heard and revised, also fall in May.

Sources: Texas Legislature Online (TLO)

Legislative update: April 12, 2019 »

Property tax bills stall in both chambers

Property tax relief – either by decreasing property tax rates or slowing their growth – has been named a top priority by both chambers. Several strategies have been put forward in both chambers to address rising property taxes.

Lowering the rollback tax rate to 2.5% – HB 2 and SB 2

This week, property tax reform bills in both chambers stalled. House Bill 2 was to have been been debated on the House floor on Thursday, however, it has been rescheduled for a debate Monday, and Senate Bill 2 doesn’t have enough votes to bring it to the floor of the Senate for debate even though it’s been voted out of committee.

Both bills would reduce the rollback tax rate from 8 percent to 2.5 percent. The rollback tax rate is the rate that would raise tax revenue by a certain percentage compared to the prior year.  Current law allows voters to petition for a rollback election to change (and often decrease) the local tax rate.  HB 2 and SB 2 would remove the requirement for a petition by triggering an automatic rollback election if the city’s revenue from these taxes increased by more than 2.5 percent.  The bills would also require the rollback elections to be held in November, increasing voter participation. The amended version of HB 2 would not apply to school districts, community colleges, hospitals or emergency services districts. The Senate version would apply to all local jurisdictions. The bills would also make changes to oversight of appraisal districts, appraisal review boards and property tax arbitration. They do not address annual appraisal creep, or the steady rise in appraised values for homeowners.

Decreasing school district taxes – HB 3

House Bill 3, the session’s major school finance bill, would lower school districts’ tax rates statewide by 4 cents. HB 3 was passed by the House last week.

Raising the homeowners exemption – SB 5 and HB 4352

Senate Bill 5 would increase the homeowners exemption from $25,000 to $35,000, and House Bill 4352 would double the exemption. Neither bill has been voted on by either chamber’s committee to which they were referred, and both would require voter approval.

Raising the sales tax – HB 4621 and HJR 3

Lawmakers have also been discussing House Joint Resolution 3, which would increase the state sales tax rate. This week, the state’s top three leaders – Governor Greg Abbott, Lieutenant Governor Dan Patrick, and Speaker Dennis Bonnen – announced their support for increasing the sales tax to reduce property taxes. House Public Education Committee Chair Dan Huberty (R-Houston), has proposed a penny increase from 6.25 percent to 7.25 percent. The extra revenue received from all Texas consumers would go to public schools and property owners. HJR 3 would require passage of enabling legislation, House Bill 4621, as well as voter approval in November to amend the state constitution.

As currently written, HJR 3 would require revenue from the extra penny to go toward (1) increasing the state’s share of primary and secondary school funding and (2) reductions in school district property (ad valorem) taxes. Based on the Texas Comptroller’s numbers from 2018, the extra revenue could potentially increase the state’s share of public education spending from 36 percent to 46 percent by infusing $5.1 billion into school finance. Local taxes would still provide more than half of public school funding. The increased revenue to school districts might also make the proposed 2.5 percent rollback rate more palatable by providing an extra source of income to schools.

Homeowners would see their bills lowered by an increased sales tax on all Texans. Opponents have criticized the proposal as a regressive tax, or a tax applied uniformly that takes a larger percentage of income from low-income earners than high-income earners. Sales tax is also a volatile source of income, varying according to the health of the economy, meaning it’s an unsure source of consistent income for schools or to reduce property tax.

A joint resolution requires approval by more than two-thirds of each chamber to pass, or 100 (of 150) House members. With 83 Republican representatives, the bill would require bipartisan support to pass the lower chamber. Currently, HJR 3 and HB 4621 remain in the House Ways & Means Committee, where they were heard on Tuesday but did not come to a vote.

The process

Budget

The Senate passed its substitute for the appropriations bill, House Bill 1, unanimously on Tuesday. The House announced its appointments for conference committee on Thursday:

  • John Zerwas (R-Richmond), chairman of the House Appropriations Committee;
  • Greg Bonnen (R-Friendswood), chairman of the House Appropriations Subcommittee on Article III of the budget (education spending);
  • Sarah Davis (R-West University Place), chair of the Appropriations Subcommittee on Article II (health and human services spending);
  • Oscar Longoria (D-Mission), vice chair of the House Appropriations Committee and chair of the Appropriations Subcommittee on Article I, IV & V (general government, judiciary and public safety/criminal justice spending); and,
  • Armando Walle (D-Houston), Vice Chair of the Appropriations Subcommittee on Article III (education spending).

Once the Senate has chosen their conferees, budget negotiations will begin.

The appropriations or budget bill is the only legislation that lawmakers must pass. If the final budget goes to Governor Greg Abbott before May 17, he will have 10 days to veto any parts of the bill. If he receives the bill with less than 10 days left in the session, he will have 20 days to issue line-item vetoes on the budget.

Chapter 312/313 extension for economic development tools

House Bill 360 and House Bill 2129 would extend Chapter 312 and 313, respectively, by 10 years. These chapters in the tax code allow cities and school districts to offer tax incentives for major new economic development projects. Both bills were passed by the full House this week and will now to go the Senate for committee assignment.

Legislative update: April 5, 2019 »

The 86th legislature is ramping up as critical legislation makes its way across the aisle. Education funding was the focus this week. The House’s school finance proposal went to the other chamber, legislators approved increases in higher ed funding, and economic incentives inched forward.

House members approve school finance bill as amended

On Wednesday the House assembly passed House Bill 3, their school finance reform bill, by a vote of 148-1. The sole nay vote was Rep. Jonathan Stickland (R-Bedford). Members also approved about 50 amendments to the bill, including:

  • Raises of at least $1,850 for full-time, non-administrative school district employees, funded in part by any mandated increase in basic allotments;
  • A grant program for summer career and technology programs which partner with an appropriate private entity; and,
  • Additional funding for Pathways in Technology Early College High School (P-TECH) schools.

Rep. Dan Huberty (R-Houston), Chairman of the House Public Education Committee, filed an amendment to dedicate at least 25 percent of the difference between a district’s allotments for the current and preceding year when its basic allotment increases. Three-fourths of that dedicated funding must be distributed as equal raises for all eligible employees, with the remaining quarter spent at the district’s discretion.

The passage of HB 3 was marked as a victory for the new Speaker of the House, Rep. Dennis Bonnen (R-Angleton), who pledged to increase funding for Texas public schools this session. The House’s proposal cannot be compared to the Senate’s school finance bill which, in the style of ad libs, contains underscores in place of numbers throughout. The lower chamber’s proposal would be initially less than the Senate’s $5,000 across-the-board raises for teachers and librarians, but would be a more permanent increase in teacher pay.

HB 3 will now go to the Senate. Legislation regarding school finance will most likely be resolved in a conference committee. A conference committee is appointed when the originating chamber does not concur with some or all of the opposite chamber’s amendments for a particular bill. Committee members then negotiate to resolve the differences.

Senate budget panel approves matching increase in public school funding

Also on Wednesday, the Senate Finance Committee unanimously passed their biennial budget proposal. The revised budget would match the House’s $9 billion increase in state revenue to public schools. There are a few key differences between the way each chamber would appropriate or distribute the funds.

The Senate proposal would provide $4 billion to fund a $5,000 raise for every public school teacher and librarian for the next biennium only, with the remaining $2.3 billion going to school districts. The House proposal would dedicate a total of $6.3 billion to increase basic allotments and salaries at Texas schools, as well as fund other programs. Both budgets would dedicate the remaining increase of $2.7 billion to abate property tax increases.

The revised budget plan appropriates $4.8 billion more than the Senate’s original plan in January. The proposal will now go to the Senate, where it is expected to pass.

Lawmakers consider boosting Texas higher ed funding

State funding for colleges and universities stagnated or declined for each school during the last session, despite enrollment growth and inflation. Lawmakers have pledged to focus on increasing in higher ed funding during the current session.

Budget proposals from both chambers would increase overall general revenue for state universities. These would include increases to UT Dallas’ funding, by $14.6 million in the House and by $16.2 million in the Senate. The full House passed its budget last week. Senators will debate their version next week.

The House version of the supplemental appropriations bill, which would pay down obligations remaining from the current biennium (2018-19), would provide nearly $170 million toward the $193 million in backlog funding for the Texas Research Incentive Program (TRIP). TRIP matches private donations for university research with state funding. The Senate’s supplemental bill, Senate Bill 500, provides no funding for TRIP. Budget proposals from both chambers for the next biennium (2020-21) would dedicate $70 million to TRIP. Both supplemental budgets have been passed by their respective chambers and are awaiting the appointment of a conference committee.

Tuition revenue bonds (TRBs) are approved by the legislature for projects at Texas colleges and universities, including equipment, buildings or other related infrastructure for campuses. TRBs are serviced by the revenue from those projects as well as student tuition. House Bill 2000 would provide nearly $568 million through 2021 for various projects at state universities, including $120 million for a joint UT Dallas-UT Southwestern Translational Biomedical Engineering and Science Building on the UTSW campus. The bill was approved by the House Higher Education Committee this week and will now go to the full House.

The process

House Bill 2, the lower chamber’s property tax bill identical to Senate Bill 2, was substituted and approved by the House Ways & Means Committee with the 2.5 percent rollback tax rate intact. Both HB 2 and SB 2 would trigger an automatic election if a city’s revenue grew by more than 2.5 percent. The committee revised HB 2 to include Certificates of Obligation (CO) in the revenue calculation for the rollback rate. Committee members also lowered the threshold for eligible cities from $15 million in revenue to $3 million, essentially including all cities. HB 2 will now go to the full House for consideration.

House Bills 360 and 2129, which would extend Chapter 312 and 313 incentives, were also approved by the House Ways & Means Committee. The Property Tax Abatement Act (Chapter 312 of the Texas Tax Code), set to expire this year, allows cities, counties and special districts to attract companies by exempting their increases in taxable property value. The Texas Economic Development Act (Chapter 313), set to expire in 2022, allows school districts to offer incentives to new companies by limiting their appraised property value.

House Bill 700 was approved by the House International Relations & Economic Development Committee. HB 700 would expand the Skills Development Fund to include workforce development boards, public libraries and school districts as qualifying partners. The fund supports partnerships between private Texas businesses and local colleges that offer customized, rapid job training programs for employees of expanding or relocating businesses.

Sources: Texas Legislature Online (TLO), Legislative Budget Board (LBB), UT Dallas Office of Public Affairs

Legislative update: March 22, 2019 »

House and Senate budget proposals advance

Each session lawmakers are constitutionally required to pass only one bill, the budget for the next biennium (House Bill 1). Legislators also pass supplemental bills to cover unpaid costs from the current biennium (House Bill 4 and Senate Bill 500). After each chamber has passed their budget proposal, lawmakers will create a conference committee to debate changes, make compromises and ultimately consolidate the proposals into one bill for the governor’s certification or veto. Governor Greg Abbott will probably not receive the bill until the end of the session, because budget items depend on passing other legislation to dedicate those funds to certain programs.

The House Appropriations Committee approved HB 1 this week, clearing the way for hearing and debate by the full House. The House budget would dedicate a total of $250 billion from local, state and federal funds, including an increase of $6 billion for public K-12 education and $3 billion for property tax relief.

The House supplemental bill would also include $183 million to fully fund the Texas Research Initiative Program (TRIP) backlog. TRIP uses state funds to match up to 100 percent of private donations to eligible universities for research. A large backlog of unmatched funds has accumulated since the creation of the program because of insufficient state funding. UT Dallas comprises $40 million of this amount.

The House proposal would spend about $6.6 billion from the Economic Stabilization Fund (ESF), or rainy day fund, leaving the ESF with $8.4 billion at the end of 2021. Most of that funding would go to Hurricane Harvey relief and future disaster preparedness, as well as retired teachers with state pensions.

Currently, the ESF contains $11 billion and is projected to increase by more than $3 billion through the next two years. The House budget would withdraw the largest amount since the creation of the ESF in 1990. The next largest withdrawal was in 2011, when lawmakers spent $3.2 billion and cut funding to public schools during an economic recession.

On the other side, the Senate plan would withdraw $4.4 billion from the ESF in 2019 primarily for Harvey relief and school safety measures, estimating that the ESF would return to $11 billion by 2021. The Senate’s supplemental budget was unanimously passed last week.

Substitute for school finance reform bill approved by committee

The House Public Education Committee approved a substituted version of House Bill 3 this week, the lower chamber’s major school finance reform bill. Additional funding for merit-based salary programs for teachers was removed after opposing testimony by state educators. The initial version provided funding for schools that opted in to merit-based salary raises for teachers. The language in the bill required approval by the state education commissioner for any proposed program. Otherwise, teacher raises would be based solely on years of experience.

Supporters argued that allowing for merit-based criteria would infuse more accountability in the public school system. Opponents argued the initial version of HB 3 gave the commissioner of education, who is unelected, too much power. They also expressed concern that such criteria would be applied too broadly to teachers of different subjects and grades. Criteria would also likely highlight standardized test scores such as STAAR, which were not designed for teacher evaluation.

Rep. Dan Huberty (R-Houston), chairman of the House Public Education Committee, said the initial language of the bill “could have been construed as tied to [the state’s standardized test, STAAR] and created a little bit too much authority as we went forward.”

The merit pay language was replaced with additional funding for districts to hire teachers in high-needs campuses, rural districts, or in priority subject areas experiencing a teacher shortage. Districts who opt in would be subject to state evaluations.

HB 3 will now go to the House Calendars Committee to be scheduled for a hearing by all representatives.

The process

Thousands of bills are filed each session. After legislation is filed and referred to a committee, the bill is scheduled for a public hearing, where it may be revised by committee members. The committee can then vote on the revised version, or substitute. If approved, the substitute goes to the calendars committee to be scheduled for the floor of that chamber.

Most of the nearly 9,000 bills this session will not progress through all these steps. If the committee chairman never brings the bill to a vote, the bill can be left pending in committee indefinitely. If the bill is approved by a specific committee such as Education, the calendars committee may never place the bill on the floor calendar. The bill may never be referred to a committee before the end of the session. Even if legislation survives this process in one chamber, it may stall in the other one.

The legislative process in Texas is designed to filter out most bills and encourage debate. Only one bill – the budget – must overcome each of these stages during the regular session. If a priority bill does not pass, the governor can also call a special session later in the year to debate emergency issues.

Sources: Texas Legislature Online (TLO), House Research Organization (HRO)

Legislative update: March 15, 2019 »

Legislators filed more than 8,700 bills before the deadline last Friday. Major bills that address priorities of the Lieutenant Governor and Speaker of the House, Senate Bills 1-20 and House Bills 1-30, have been filed. Legislation will start moving forward now that filing is over and any bill can be heard on the floor in both chambers.

Senate releases school finance outline

Chairman Larry Taylor (R-Friendswood), leader of the Senate Education Committee, filed Senate Bill 4 as the Senate’s major public finance proposal late last Friday. The cost of the bill could not be determined due to placeholder language in the bill, which left out several important multipliers for formula funding. The initial version of SB 4 contains nonspecific language regarding:

  • An increased per-student allotment;
  • Limits for a district’s wealth per student, which would affect Robin Hood recapture payments;
  • New funding for dual language programs and dyslexic students;
  • Allotments for educationally disadvantaged students who (i) perform well on third grade reading assessments or (ii) graduate with college, career or military readiness;
  • Fast-growing districts in the top 25th percentile of enrollment growth; and,
  • Small rural districts and mid-sized districts.

SB 4 focuses heavily on the 60x30TX Plan, which aims to reach 60 percent of Texans aged 25-34 who hold a college or professional degree by 2030. The bill sets the attainment of (i) 60 percent of graduates and (ii) 60 percent of satisfactory third grade reading assessments as performance indicators. Districts would be encouraged to establish detailed plans to achieve 60x30 goals, and high school students would be required to complete and submit a free application for federal student aid (FAFSA) for college funding. SB 4 also contains language for pre-K and “blended learning” programs, which combine classroom and online instruction.

Regarding teacher salaries, SB 4 would also allow districts to submit proposals for “educator effectiveness programs,” merit-based teacher salary raises, at the discretion of the education commissioner. The percentage of Texas teachers who could receive raises under such programs would be limited to 10 percent in 2019-2020, eventually extending to all teachers over the next decade. Senate Bill 3, which would provide $5,000 to all state classroom teachers and librarians, was passed by the Senate and sent to the House for committee referral.

SB 4 has been referred to the Senate Education Committee, where committee members will need to hammer out the bill’s details. The Senate’s budget proposal would increase public education spending by $4.3 billion, about $3 billion less than the House’s proposed increase.

The process

Lawmakers have 10 weeks remaining until the end of the session. Starting next week, the House Appropriations Committee will begin public hearings on House Bill 1, the session’s major budget bill.

Sources: Texas Legislature Online (TLO)

Legislative update: March 8, 2019 »

House unveils school finance proposal

Chairman Dan Huberty (R-Houston), the chair of the House Public Education Committee, announced the lower chamber’s school finance proposal this week. House Bill 3 would increase the basic allotment, raise educator salaries and provide incentives for several new programs including merit-based pay. More than two-thirds of the lower chamber members have signed on as authors or co-authors of HB 3 as a show of support. The proposal would increase public education funding by $9 billion above enrollment growth and current law entitlement during the next biennium, with $6.3 billion going to school finance reform and $2.7 billion to property tax cuts.

Dubbed The Texas Plan, HB 3 would:

  • Increase the per-student basic allotment by $890, from $5,140 to $6,030;
  • Quadruple the annual allocation for new facilities to $100 million;
  • Increase minimum base salaries for educators as determined by years of teaching experience, and allow school districts to adopt alternative merit-based minimum pay guidelines;
  • Provide $140 million for a program to recruit and retain teachers;
  • Reduce school property tax rates by 4 cents per $100 of taxable property value statewide (e.g., taxes on a $250k home would decrease by about $100 annually);
  • Reduce Robin Hood recapture payments by 38 percent, or $3 billion, in 2020-21 (as estimated by the above tax cuts);
  • Allow the Texas Education Agency commissioner to adjust funding formulas if they result in “unanticipated loss or gain” for a district (subject to the governor’s office and Legislative Budget Board);
  • Fund full-day pre-K for low-income students;
  • Provide incentives to districts that offer an extra 30 days of half-day instruction to elementary students during the summer;
  • Establish grant programs to (1) train teachers to effectively combine classroom instruction with e-learning and (2) help parents use additional services for children with learning disabilities; and,
  • Dedicate more funding to research-based programs proven to advance student achievement, including dual-language immersion, dyslexia identification and career and technology education programs.

See this flier on HB 3 for additional information.

House legislators fought hard to raise the per-student base allotment last session with no success. Base funding formulas for Texas school districts have not been revised since 2015 and are not adjusted for inflation.

Chairman Huberty also said one of the bill’s goals was to provide school districts with more flexibility in spending the additional funds. Merit-based pay systems for educators could provide some of that flexibility for districts who choose to participate. The idea is based in part on the Dallas ISD model, which uses classroom appraisals, assessment scores and student surveys to compare teachers and reward the highest-performing educators.

Merit-based guidelines would still need to meet or exceed minimums for new teachers and those with 20 or more years of experience. In school districts that do not adopt alternative schedules, teacher raises would range from nearly $600 to more than $1,600. The new schedule would also incentivize retention of new teachers, who would receive a $400 monthly raise during their second year.

Both chambers have declared raising teacher salaries to be a major priority. The National Education Association found that Texas ranked 28th nationally in teacher pay in 2017, with an average pay more than $7,000 below the national average. Senators unanimously passed Senate Bill 3 this week as well, which would mandate a one-time raise of $5,000 for all Texas teachers and librarians above their 2018-19 school year salary, or $500 above their monthly salary. All senators have signed onto SB 3 as co-authors to show their support.

The upper chamber’s corresponding school finance reform bill has not been filed as of the writing of this update. Librarians were added because, as Senate Finance Chair Jane Nelson (R-Flower Mound) noted, Texas requires all librarians to have spent two years as classroom teachers. Major differences between the House and Senate approaches to teacher pay are detailed in the table below.

House Bill 3 been scheduled for a hearing by the House Public Education Committee Tuesday, March 12. Senate Bill 3 will go to the House to be heard and possibly revised in committee.

The process

Today is the deadline to file bills other than local bills, emergency appropriations or bills related the governor’s emergency items. Lawmakers will be working hard to address their priorities before the end of the session on May 27.

Sources: Texas Legislature Online (TLO)

Legislative update: March 1, 2019 »

Bills would repeal in-state tuition for undocumented high school graduates

House Bill 413 by Rep. Kyle Biedermann (R-Fredericksburg) and Senate Bill 576 by Sen. Pat Fallon (R-Prosper) would repeal in-state tuition for undocumented students who graduate from Texas high schools. Currently, these students can attend higher ed institutions for in-state tuition rates if they (i) graduated from a public or private high school in Texas and (ii) have lived in Texas for at least three years prior to graduation or receiving their GED. Texas became the first state to establish in-state tuition policies in 2001 under former-governor Rick Perry. Texas colleges and universities only need a statement of residency and an affidavit that the student will apply to become a permanent U.S. citizen. HB 413 would remove these specifications entirely, and SB 576 would allow institutions to determine which documentation is needed to establish residency. HB 413 was referred to the House Higher Education Committee.

New American Economy (NAE), a bipartisan research organization that advocates for economically friendly immigration policies, released a study this week that found Texas could lose $400 million in Texas economic activity, or additional consumer spending from increased income, in the first year if lawmakers pass HB 413 or SB 576. The loss stems from $213.6 million in wage earnings and $184.2 million from lost additional spending annually. Affidavit students contribute $397.8 million to the Texas economy annually through increased earnings as well as additional tax revenue. The study used data to estimate that 25,000 students were covered by in-state tuition annually, about half of students graduate within six years, and controlled for various factors such as English proficiency, gender and race in calculating additional earnings.

Tech Titans has signed the Texas Compact on Immigration developed by Texas for Economic Growth, a coalition launched by New American Economy, and Texas Business Immigration Coalition. The Texas Compact commits to promoting common-sense immigration reforms that strengthen our economy and attract talent and business to Texas. The compact highlights three principles to guide bipartisan immigration solutions:

  1. A federal immigration system and policies that create jobs and attract global talent and investment, including pathways to legal citizenship and border protection.
  2. In-state tuition in Texas, which empowers immigrants better contribute to the local and state economies.
  3. Local policies that support and attract new talent to keep communities competitive.

See the full language here.

Lawmakers work property tax rollback bills

House Bill 2, which would trigger local elections if property tax revenue increased by 2.5 percent or more annually, was discussed for nearly 12 hours in the House Ways & Means Committee on Wednesday. Chairman Dustin Burrows (R-Lubbock) reportedly seemed open to rollback rates other than 2.5 percent during the hearing, including rates based on a price or wage index. HB 2 and SB 2 would not decrease property taxes, but are designed to slow the rate of property tax increases by tying elections to increases in local tax revenue. Rep. Burrows noted that under the current rollback rate of 8 percent, property taxes would “double in nine years,” while at 2.5 percent taxes would double in 28 years. HB 2 remains pending in committee without amendments.

Two weeks ago, the Senate Property Tax Committee approved an amended Senate Bill 2, the corresponding property tax bill in the upper chamber. SB 2 is now waiting behind a blocker bill before consideration by the upper chamber. A blocker bill is a legislative tool used most sessions that results from the senate rules, which require senators to consider bills in the order they are received from committees. This order can be circumvented by a three-fifths majority, or 19 of 31 senators. Once under consideration, the bill could be amended and passed by a simple majority (16 votes). Currently there are not 19 senators who are willing to suspend the rules to take up SB2 So, an attempt to vote out the blocker bill by a simple majority is under consideration so sponsors can bring SB 2 to the floor of the Senate for consideration. This year’s blocker bill is Senate Bill 409, “relating to the creation, purpose, implementation, and funding of the County Park Beautification and Improvement Program.”

The process

Next Friday, March 8 is the deadline for lawmakers to file bills and joint resolutions unrelated to the governor’s emergency items. More than 5,000 bills and resolutions have been filed so far by both chambers.

Senate Bill 3, which would provide $5,000 raises to all teachers in Texas public schools, was unanimously passed by the Senate Finance Committee this week. Testimony from teachers supported the direct pay increase, while schools asked for more flexibility in how to use the addition $3.9 billion. The bill was approved with amendments that extended the raises to charter school teachers, and prevented schools from decreasing salaries and increased pensions costs to cover the pay raises. Sen. Nelson clarified that SB 3 would not prevent lawmakers from establishing merit-based policies. SB 3 was left pending in committee.

The upper chamber amended its rules to add two seats to the Senate Higher Education Committee. The new members will be Sen. José Menéndez (D-San Antonio) and Sen. Pete Flores (R-Pleasanton).

Correction: In our last alert, we incorrectly stated the 2018-19 budget did not fund special items for state universities. All special items remained, however many were decreased. The current budget proposals include funding for higher ed special items.

Sources: Texas Legislature Online (TLO)

Legislative update: February 22, 2019 »

Higher ed institutions saw maintained or decreased funding during the last session. This year, universities are hoping for funding that meets enrollment growth, as well as more money for innovative programs and research.

Higher education funding will be a priority in 2020-21 budget

In 2017, legislators set aside less money for Texas colleges and universities even with substantial enrollment growth. UT Dallas lost more than $300k in general revenue compared to the previous biennium, despite adding 3,700 students and proportionally increasing semester credit hours the following year. The 2018-19 budget also removed most special items, which are requests by higher ed institutions for facilities, research programs or other projects that require more than formula funding.

Increasing higher ed funding is essential to address multiple state goals, including the 60x30 plan to achieve 60 percent of adults aged 25-34 obtaining a degree or certification by 2030, as well as expanding research to drive innovation and economic growth. The current budget proposals, HB 1 and SB 1, do not include special items. However, they would increase formula funding for universities without fully recognizing enrollment growth. For UT Dallas, this would mean an increase of more than $6 million.

Budget writers also neglected funding for research programs at state universities. In an interview with Texas Tribune’s Evan Smith last week, Rep. John Zerwas admitted that legislators “robbed the research funds” at higher ed institutions during the last session, and said increasing higher ed funding will be a priority for the upcoming budget. He used TRIP as a specific example of an underfunded program that may benefit from the increased dollars available this session.

The Texas Research Incentive Program (TRIP) uses state funds to match up to 100 percent of private donations to eligible universities for research. TRIP was established in 2010 to incentivize the private sector and philanthropists to help build more Tier One universities in Texas, or universities that are recognized nationally for their competitive research output. Emerging research universities (ERUs), including UT Dallas, are eligible for these matching funds. TRIP has been successful in leveraging contributions but has incurred a significant backlog because of insufficient funding by legislators. Currently, the backlog of matching state funds has reached $182 million.

Earlier in February, the state’s ERUs met in Austin to develop a research agenda focused on TRIP and Core Research Support funding. Their joint request asked the legislature to make a one-time appropriation to pay the $182 million backlog and to grant an additional $50 million for new matching funds. They also requested restoring the Core Research Support Fund, which was cut by 10 percent last session, to its 2016-17 level. The current House and Senate budget proposals would maintain Core Research Support, but would provide only $35 million to TRIP, the same as the previous session. If additional funds are not provided, Texas would owe $153 million in unfunded matching contributions to its emerging state universities.

The process

More committees held organizational meetings this week. A few heard bills addressing the governor’s emergency items. Below are updates about bills discussed in our previous alerts:

  • SB 570 relating to franchise tax credits for companies that employ paid interns was referred to the Senate Finance Committee.
  • HB 580, which would allow school districts to cut taxes for employers that hire their students as interns, was referred to the House Public Education Committee.
  • HB 360, which would extend the expiration of the Property Redevelopment and Tax Abatement Act for Chapter 312 projects, was referred to the House Ways & Means Committee.
  • HB 700, which would expand the Skills Development Fund, was referred to the House International Relations & Economic Development Committee.

Source: Texas Legislature Online (TLO)

Legislative update: February 15, 2019 »

Senate Property Tax Committee approves tax cap bill
On Monday the Senate Property Tax Committee approved a revised version of Senate Bill 2 in a 4-0 vote. SB 2 would trigger an automatic local election if a municipality’s revenue from property taxes increased by more than the “rollback rate” of 2.5 percent. The sole democrat on the committee, Sen. Juan "Chuy" Hinojosa (D-McAllen), abstained from voting. The committee adopted 15 mostly technical amendments to the original bill, however maintained the 2.5 percent threshold. Opposition testimony at the hearing noted that Texas ranks 46th among states in overall tax burden according to the Tax Foundation, and were concerned about salaries for city personnel and emergency responders. Many representatives in the House have indicated they will wait to see any school finance legislation before they decide on property tax relief.

The Senate Finance Committee also met on Monday to discuss the upper chamber’s proposal for school funding, which would provide $2.4 billion in additional revenue to cover enrollment growth. Their budget would also appropriate another $6 billion to cover teacher salary raises and to offset the costs of property tax relief. The committee’s revised version of SB 2 will now go to the Senate Floor for discussion and a vote. If approved, the bill will go to the House for committee referral.

Bills expand and maintain economic development incentives
The Skills Development Fund supports partnerships between private Texas businesses and local community or technical colleges. Businesses that expand or relocate to Texas can apply for funding to develop customized, rapid job-training programs for employees. House Bill 700 by Rep. Ryan Guillen (D-Rio Grande City) and Senate Bill 352 by Sen. Beverly Powell (D-Burleson) are identical bills that would expand the Skills Development Fund to include workforce development boards, public libraries and school districts as qualifying partners. SB 352 has been referred to the Senate Natural Resources and Economic Development Committee.

The Property Tax Abatement Act, found in Chapter 312 of the state Tax Code, allows cities, counties and special districts to exempt the increase in a company’s property value from taxation. Local governments can use these tax abatements to attract new industries or to retain and develop existing businesses. Once new employers are established, they continue to tap into the surrounding workforce, contribute to future tax revenue and strengthen the local economy. Chapter 312 also allows cities to apply for funds to improve reinvestment zones, or areas that are in serious disrepair, present public hazards or create an economic liability.

The Property Tax Abatement Act is set to expire this year. House Bill 499 by Rep. Angie Chen Button (R-Richardson), House Bill 360 by Rep. Jim Murphy (R-Houston) and Senate Bill 118 by Sen. Royce West (D-Dallas) are identical bills that would extend its expiration date for another 10 years, until 2029. Senate Bill 350 by Sen. Beverly Powell (D-Burleson) would remove the expiration date, making the act permanent. SB 118 and SB 350 have been referred to the Senate Natural Resources and Economic Development Committee.

Legislators support apprenticeship and internship programs
Expanding apprenticeships and internships has been proposed to combat the state’s skills gap, or shortage of skilled workers. Apprenticeships train high school or postsecondary students in skills specific to that industry, producing skilled applicants who are ready to enter the workforce upon graduation. Legislators can promote the creation of these opportunities by offering tax credits to employers who hire paid interns, or by establishing a grant program to reimburse companies for costs associated with new interns.

House Bill 580 by Rep. Shawn Thierry (D-Houston) would allow local school districts to reimburse private employers from the Foundation School Program for paid internships with their district’s students for career and technical education programs. Senate Bill 508 by Sen. Borris Miles (D-Houston) would establish a separate grant program to reimburse private employers for paid internships with public school students. SB 508 was referred to the Senate Education Committee on Thursday.

House Bill 966 by Rep. Harold Dutton, Jr. (D-Houston) would give businesses with interns employed for less than 48 months a sales-and-use tax refund or franchise tax credit of either $2,500 or half of the intern’s wages. The franchise tax credit could cover their total tax due if five or more interns are employed, and if half of their combined wages is equal to or less than the total tax. Senate Bill 570 by Sen. Brandon Creighton (R-Conroe) would also provide a franchise tax credit of $1,000 for each public school student who completes an eligible internship program.

The process
Throughout the session, we will update you about the progress of important bills in the legislative process. Every bill must pass through a series of reviews, revisions and votes before the governor will have a chance to approve or veto the final version. The Legislative Budget Board, under the House of Representatives, publishes a helpful primer on the life of a bill. The House Research Organization (HRO) also released a guide on how the Texas state budget is written.

Sources: Texas Legislature Online (TLO), Texas Office of the Comptroller

Legislative update: February 8, 2019 »

Governor Greg Abbott names emergency items
On Tuesday, before a gathering of the Texas Senate & House, Governor Greg Abbott delivered his State of the State address. At the start of each legislative session, the governor uses the State of the State address to list his priorities as well as any emergency items. Normally legislators cannot vote on legislation until the filing deadline, March 8; however, bills that are designated emergency items by the Governor are fast-tracked for committee floor debate and approval.

Governor Abbott's six emergency items for the 86th Legislature are:

  1. School finance reform;
  2. Property tax relief;
  3. Teacher pay raises;
  4. School safety;
  5. Mental health programs; and,
  6. Hurricane Harvey disaster response.

Some of these priorities have legislation already filed, such as property tax reform (SB 2 & HB 2) and teacher pay raises (SB 3). The other items will likely be addressed in the top bills of both chambers, House Bills 1-20 and Senate Bills 1-30.

Property tax bill heard in committee
Senators quickly addressed one of the governor’s emergency items, property tax relief. The Senate Property Tax Committee met on Wednesday to discuss Senate Bill 2, or the newly named Texas Property Tax Reform and Relief Act of 2019. An identical bill, House Bill 2, has also been filed by Rep. Dustin Burrows (R-Lubbock).

SB 2 would make significant changes to property tax law, including:

  • Decrease the rollback rate from 8 percent to 2.5 percent. If a city or county’s local tax revenue increases by more than 2.5 percent, an automatic “rollback” election would be triggered for citizens to vote to approve the additional revenue.
  • Exclude cities and counties that collect less than $15 million in combined property and sales and use tax. This caveat will exclude more than half of Texas cities and counties from SB 2, but will include more than 60 percent of the state population.
  • Create a new, online “real-time tax rate notice” to inform residents of local tax rate proposals. Property owners would be able to see their local tax rates, how much they will owe in taxes, and how much they would owe based on a proposed tax rate, a tax rate that would produce no new revenue for cities or counties, and the rollback tax rate. There would also be a required email address for local governments so that citizens could voice their opposition or support toward tax proposals.
  • Reform the appraisal review process. In counties with one million or more residents, Appraisal Review Boards (ARB) would hear protects for commercial properties that exceed $50 million in value. The bill would also create a Property Tax Administration Advisory Board in the Texas Comptroller’s office to oversee the entire property tax process.

The new rollback rate would apply to many North Texas cities, including Richardson and Plano. The fiscal note for SB 2 notes that tax revenues for school districts would decrease and costs to the state through school funding formulas would increase. However, the exact cost to school districts and the state cannot be estimated, as well as the savings per household.

The process
The legislature is warming up for the 86th session. The Senate has begun referring bills to committee. More than 800 Senate bills and more than 1,900 House bills have been filed so far.

Sources: Texas Legislature Online (TLO)

Legislative update: February 1, 2019 »

Comptroller recommends that state contribute 40 percent of public education finance

Texas Comptroller Glenn Hegar, who manages the state’s finances, released a Fiscal Notes report this week that broke down public school funding formulas with new numbers. His message overall was that school funding formulas must change fundamentally to generate impactful school finance reform. He suggested that the historical average of state contributions to public school funding, 40 percent state to 60 funding local funding, is “reasonably attainable” and would significantly mitigate the pressure on local districts.

Public school funding in Texas depends largely on three variables: the number of students in a district, local property values and property tax rates. Increasing the basic allotment, or amount of money per student based on the average daily attendance (ADA), has been an effective strategy for increasing state spending based on enrollment. The calculation based on property taxes, however, has been more problematic.

The report highlighted the cycle of decreasing state contributions and rising property taxes. Currently, state spending decreases as a percentage of overall public school funding as local tax revenues increase. The Foundation School Program (FSP), which the state uses to fund public schools, counts local revenues first. The state then supplements the remainder, so that any increase in local tax revenue decreases the overall share of state spending. While property tax rates have increased in small amounts, property values in Texas have risen sharply. As a result, local tax revenues have increased with a corresponding decrease in the share of state spending each year. This often compels districts to raise local tax rates, perpetuating the general dissatisfaction with rising property taxes.

This pattern, which is written into the current public school finance formulas, has placed increasing burdens on local communities to pay for their schools. In 2018 the state contributed 36 percent of public school funding, down from 46 percent in 2008. During the same decade, after accounting for inflation, per-student public school funding from local sources rose by 29 percent, while funding from state sources fell by 8 percent. Hegar noted that one of the chief issues with the current formulas is their failure to account for inflation, which could alleviate much of the pressure on school districts to cover rising costs of materials like books and office supplies.

School funding from property values is also subject to wealth equalization and recapture. Revenue from “property-wealthy” districts is “recaptured” and redistributed to less wealthy districts. Disparities between districts can be extreme. For example, the highest property wealth per ADA is $16.9 million in Westhoff ISD, between San Antonio and Victoria. The lowest is $65,476 in Tornillo ISD, outside of El Paso (TEA). Large cities such as Austin have complained about the recapture calculation because of losing large portions of their budget. Plano ISD returned $105 million in recapture revenue in 2017, the second highest recapture in the state. Removing this equalization, however, would result in gross discrepancies in funding per student among districts, and potentially open the Texas public school system to litigation.

The report also highlighted the problematic ways that state and local funding shares are calculated by the Legislative Budget Board (LBB) and the Texas Education Agency (TEA). The LBB is controlled by the Texas Legislature, while the TEA is led by the governor’s appointees. Both organizations include recaptured payments as state contributions, even though they are derived from another district’s property tax revenue. The recapture of local taxes made up 3.9 percent of public school funding in 2018. Hegar used his own numbers in his report, which count dollars from local taxes as local funding.

Hegar further warned that the rising number of economically disadvantaged or higher-needs students is outpacing general enrollment. Economically disadvantaged students already make up 59 percent of the state’s 5.4 million public school students and are often more costly to educate per student. He also advised legislators to consider the volatility of funding sources. Some tax revenue, such as severance taxes on oil and gas, can vary up to 50 percent annually. Sales and use tax revenue is also much more susceptible to economic downturns than property taxes.

Both chambers file bills to reduce rollback tax rate

Rep. Dustin Burrows (R-Lubbock), chairman of the House Ways and Means Committee, and Sen. Paul Bettencourt (R-Houston), chairman of the Senate Property Tax Committee, filed identical bills to curb the growth in local property tax revenue. House Bill 2 and Senate Bill 2 would require voter approval for any property tax revenue growth above 2.5 percent. Lawmakers failed to pass a similar measure last session with a threshold of 4 percent. However, Governor Greg Abbott, Speaker Dennis Bonnen and Lieutenant Governor Dan Patrick expressed optimism that their unity will allow this attempt to succeed. Currently, local property tax revenue in municipalities can increase by 8 percent year over year before triggering voter approval. This rollback rate of 8 percent is independent of the actual property tax rate. For example, a vote could be required if appraised property values increase tax revenues by 8 percent even if the rate stays the same or decreases. School districts, cities and counties pushed back, saying that local revenue sources make up for reduced state spending on education. Cities also expressed concern about funding public safety measures if a lower revenue cap is passed.

The process

Bills have not been assigned to committees yet. The House Appropriations and Senate Finance committees have begun meeting daily for the extensive budget-writing process. The House Public Education Committee met on Wednesday, and Chairman Rep. Dan Huberty (R-Houston) announced a schedule for the next few meetings. The Texas Commission on Public School Finance will present their report on Feb. 6, and the committee will begin hearing bills on Feb. 19.

Sources: Texas Legislature Online (TLO). Fiscal Notes is a review of the Texas economy from the office of Glenn Hegar, Texas Comptroller of Public Accounts.

Legislative update: January 25, 2019 »

The House and Senate released their committee assignments this past week. The makeup of a committee is crucial to the fate of a bill. Once a bill is assigned to a committee by the Speaker of the House or the Lieutenant Governor, the chair decides which legislation the group will discuss and often revise. If a majority of committee members vote in favor of the final bill, it can be scheduled for a hearing by the full chamber. Modified legislation can diverge drastically from the original bill, and legislation can easily halt at this stage if the committee chair or members do not favor the legislation.

Committee Assignments

Senate

Lt. Gov. Dan Patrick released the Senate committee assignments late Friday afternoon. Freshman Senator Angela Paxton (R-McKinney), who won the open seat for Senate District 8 last November, was assigned Vice Chair of the Senate Property Tax Committee, as well as a seat on the Business & Commerce, Education and Natural Resources and Economic Development committees. Senator Nathan Johnson (D-Dallas), who won against incumbent Don Huffines, was assigned to Administration, Health and Human Services, Veteran Affairs and Border Security, and Water and Rural Affairs.

Other highlights for North Texas senators included:

  • Senator Bob Hall (R-Edgewood) – Vice Chair, Veteran Affairs & Border Security; seats on Education and State Affairs
  • Senator Kelly Hancock (R-North Richland Hills) – Chair, Business & Commerce; Vice Chair, Transportation; seats on Finance, Natural Resources & Economic Development, and Property Tax
  • Senator Royce West (D-Dallas) – Vice Chair, Higher Education; seats on Education, Finance and Transportation
  • Senator Jane Nelson (R-Flower Mound) – Chair, Finance; seat on State Affairs
  • Senator Brian Birdwell (R-Granbury) – Chair, Natural Resources & Economic Development; Chair, Sunset Advisory; seats on Finance and State Affairs
  • Senator Pat Fallon (R-Prosper) – Vice Chair, Administration; seats on Education, Intergovernmental Relations, Natural Resources & Economic Development, and State Affairs

Several committees with North Texas representation will see bills that impact our legislative priorities. Nearly half of the Senate Education Committee will be from North Texas, including Senators Paxton, Pat Fallon (R-Prosper), Bob Hall (R-Edgewood), and Royce West (D-Dallas). Sen. Jane Nelson (R-Flower Mound) will chair the Senate Finance Committee. Senators Angela Paxton and Senator Kelly Hancock (R-North Richland Hills) will sit on the Senate Property Tax and Business & Commerce committees, with Sen. Paxton as vice chair of the former and Sen. Hancock chairing the latter.

House

Speaker Dennis Bonnen revealed his chamber’s committee assignments this week. The Speaker of the House assigns the members to House committees. See highlights from the North Texas delegation below:

  • Rep. Rafael Anchia (D-Dallas) – Chair, International Relations & Economic Development
  • Rep. Angie Chen Button (R-Richardson) – Chair, Urban Affairs; seat on Higher Education
  • Rep. Eric Johnson (D-Dallas) – seats on Higher Education and Urban Affairs
  • Rep. Julie Johnson (D-Carrollton) – seats on Insurance and Judiciary & Civil Jurisprudence
  • Rep. Jeff Leach (R-Plano) – Chair, Judiciary & Civil Jurisprudence; seats on Pensions, Redistricting, and Investments & Financial Services
  • Rep. Morgan Meyer (R-Dallas) – Chair, General Investigating; seats on Public Education and Judiciary & Civil Jurisprudence
  • Rep. Thresa "Terry" Meza (D-Irving) – seats on Agriculture & Livestock, Human Services and Resolutions Calendars
  • Rep. Victoria Neave (D-Dallas) – seats on Corrections and Judiciary & Civil Jurisprudence
  • Rep. Candy Noble (R-Allen) – seat on Ways & Means
  • Rep. Ana-Maria Ramos (D-Richardson) – seats on Natural Resources and Defense & Veterans' Affairs
  • Rep. Scott Sanford (R-McKinney) – seats on Public Education and Ways & Means
  • Rep. Matt Shaheen (R-Plano) – Vice Chair, Urban Affairs; seat on Ways & Means
  • Rep. John Turner (D-Dallas)– seats on Appropriations and Environmental Regulation

The House Committee on Higher Education has a few North Texas representatives, including Rep. Angie Chen Button (R-Richardson) and Rep. Eric Johnson (D-Dallas). The House Committee on Urban Affairs will be chaired by North Texas officials Rep. Button and Rep. Matt Shaheen (R-Plano). The larger House Appropriations Committee has only one rep from the Dallas area, Rep. John Turner (D-Dallas), in its roster. The Public Education committee includes Rep. Morgan Meyer (R-Dallas) and Rep. Scott Sanford (R-McKinney). Rep. Sanford, Rep. Shaheen and Rep. Candy Noble (R-Allen) will represent North Texas on the Ways & Means Committee.

The process

The House filed their appropriations or budget bill, House Bill 1, on Wednesday. House and Senate bills will be referred to a committee by the Speaker or Lieutenant Governor, respectively, now that the committees have been assigned. The deadline to file most bills and joint resolutions is Friday, March 8. The House Appropriations Committee will begin meeting next week. The Senate Finance Committee, which will address the budget, has begun meeting daily.

Sources: Texas Legislature Online (TLO)

Legislative update: January 18, 2019 »

House and Senate reveal new budget proposals

On Wednesday, Sen. Jane Nelson (R-Flower Mound) filed Senate Bill 1, the upper chamber’s budget for the 2020-21 biennium. The Senate proposed a base budget of $243 billion, an increase of 12 percent from the 2018-19 budget. The bill would also increase the Foundation School Program (FSP), the state’s source of public school funding, by $4.7 billion.

The lower chamber’s proposed budget, which will be House Bill 1, has not been filed. The Legislative Budget Board (LBB) published a report on Monday that proposed $247 billion over the next biennium, with $7 billion more allocated toward the FSP. The increase is about $3 billion more than the Senate’s public education allocation. The lower chamber’s budget would increase funding for primary and secondary schools by about 17 percent, for a total of $70.6 billion. The LBB estimate included funding from federal and state funding as well as local property taxes, which are projected to decrease as the state’s contribution increases. The House only proposed a 1.6 percent increase in higher education funding. The new budget would draw about $633 million from the Economic Stabilization Fund, better known as the Rainy Day Fund or Texas’ savings account.

Public school finance has been a primary concern for many years as the state’s share of education funding has declined. For a thriving economy, Texas needs a reservoir of qualified, educated workers. Improving our workforce starts with a strong education that meets the needs of its students and businesses in the community. The leaders of the Texas legislature have declared public school finance reform as one of their top priorities during the 86th session.

Teacher pay raises

SB 1 also included a $3.7 billion allocation for mandated teacher pay raises. Sen. Nelson filed Senate Bill 3, which contains the first across-the-board pay increase for Texas teachers in nearly 20 years. The bill would provide full-time teachers with a $10,000 pay raise by Fall 2021, with a $5,000 salary increase in Fall 2020 and an additional $5,000 the next year. Lt. Gov. Dan Patrick endorsed the proposal during his inaugural address. Gov. Greg Abbott also emphasized the importance of improving public education funding in his inaugural speech, stating, “Our students deserve better…It is time for Texas to deliver real education reform.”

The process

No House or Senate committees have been assigned. Lt. Gov. Dan Patrick said Senate committees would be assigned next week. House committee preferences were due on Tuesday, with assignments planned by the end of January. Bill assignments will begin after the committees are announced. No bills can be passed the first 60 days of the session unless the governor declares emergency items.

Sources: Texas Legislature Online (TLO), Legislative Budget Board (LBB)

Legislative update: January 11, 2019 »

The 86th Legislature convened on Tuesday and is off to an exciting start. More than 1,000 bills have been filed since November of last year. Governor Greg Abbott, Lieutenant Governor Dan Patrick and the newly-elected Speaker Dennis Bonnen committed to collaborate on key issues during the upcoming session. Texas Comptroller Glenn Hegar announced an additional 8.1 percent will be available to lawmakers for the next budget.

Rep. Dennis Bonnen of Angleton will be the next Speaker of the House

One of the most pressing questions for the next session has been who will replace former Speaker of the House Joe Straus. The leader of the state House of Representatives, like the lieutenant governor, has enormous power to steer the legislature. Among other duties, the speaker appoints committees and their leadership, refers all proposed legislation to those committees, and decides which bills come to a vote on the floor. This authority allows the speaker to negotiate bipartisan agreements, ensure that committee chairs and vice chairs share his or her priorities and interests, and even halt opposed legislation.

In November of last year, a majority of representatives pledged to elect Rep. Dennis Bonnen (R-Angleton) to be the next Speaker of the House. Governor Abbott, Lieutenant Governor Patrick and Speaker Bonnen held a joint news conference on Wednesday to reassure Texans with the “very strong, profound and unequivocal message” that they are united on key issues. Each of them highlighted school finance and property tax reform during their campaigns. When asked if he would push Bathroom Bill legislation that plagued lawmakers in 2017, Lieutenant Governor Patrick stated he did not plan on reintroducing a battle that has “been settled…been won.”

Rep. Bonnen was 24 years old when he won the open 1996 Republican primary runoff by ten votes. He was the youngest member at that time. In 2013, Rep. Bonnen became speaker pro tem under Joe Straus, the Speaker’s second-in-command. The following session, he was appointed to chair the powerful Ways & Means Committee. He became known as the “House’s top advocate” and a “bulldog” during this time for his work on the House’s tax cut proposal. In 2017, Rep. Bonnen became a key mediator of the growing tension between Lt. Gov. Patrick and former Speaker Straus. Last year, Rep. Bonnen was not even a candidate for Speaker when more than 100 out of the total 150 House members pledged to support him. His experience in House leadership, rightward-leaning views and reputation as a skilled arbitrator contributed to his victory.

Rep. Bonnen studied political science at St. Edward’s University in Austin. After college, he interned for former Rep. Greg Laughlin, a conservative Democrat who would switch to GOP the following year. During his tenure in public office, he worked in various industries until he settled as president, CEO and chairman of Heritage Bank in 2008. See the Texas Tribune’s profile on the new Speaker for additional background.

Comptroller announces Texas will have nearly $9 billion more to spend in the next budget

The budget is the only bill that state lawmakers must pass each session. Policy priorities are born or buried in the state budget each year. Key issues such as reforms to public school funding formulas, research at state universities, tax relief and job training programs must be written into the budget to be enacted. Bills that require state funding are contingent on inclusion in, and passage of, the appropriations bill each biennium.

Texas Comptroller Hegar has the job of estimating the state’s economic condition for the next two years to determine the state budget. On Tuesday he released his biennial budget report for 2020 and 2021. His evaluation of the Texas economy was “cautiously optimistic,” with 8.1 percent more funding for lawmakers to distribute. A total of $119.1 billion will be available for the budget, an increase from $110.2 billion for 2018 and 2019. The state’s Economic Stabilization Fund, more commonly known as the Rainy Day Fund, is also at a record high of $15 billion.

The Texas Comptroller has an especially difficult task because he is asked to predict the state’s available funds over a longer period than most states, who normally meet each year. After delivering the positive outlook above, he warned that “we’re unlikely to see continued revenue growth at the unusually strong rates we’ve seen in recent months.” However, lawmakers will still have significantly more funding available than the previous session to spend on top priorities such as public school financing and property taxes.

The process

More than 800 House bills and 300 Senate bills have been filed since last November. Lawmakers will continue to introduce new legislation until the deadline on March 8. The top spots, House Bills 1 through 20 and Senate Bills 1 through 30, are reserved for the top priorities of the Speaker and the Lieutenant Governor respectively and have not been filed. The upper and lower chambers alternately file the appropriations bill each session, and this year will be the House’s turn with House Bill 1. The Speaker and the Lieutenant Governor will assign committees likely later this month or early February. Once the committee appointments are announced, lawmakers will start meeting to work on legislation.

Tech Titans will track bills relevant to our Legislative Agenda, where you can find our positions on policies that are vital to the North Texas technology community. Each week we will continue to highlight bills and developments that matter to you and the high tech industry. Stay tuned!

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