February 18, 2019
“One man with courage makes a majority.” Andrew Jackson
Last week during the 86th Legislative Session, the following took place:
Senate Finance Committee:
This past Monday, the Senate Finance Committee took testimony on the following Article III Education Agencies:
Texas Education Agency
Teacher Retirement System
Optional Retirement Program
Higher Education Group Insurance
Windham School District
School for the Blind and Visually Impaired
School for the Deaf
This past Tuesday, the Senate Finance Committee took testimony on the following Article III Education Agencies:
Texas A&M University System and Component Institutions
Texas A&M University System Health Science Center and Agencies
Texas State University System and Component Institutions
University of North Texas System and Component Institutions
University of North Texas Health Science Center
This past Wednesday, the Senate Finance Committee took testimony on the following Article III Education Agencies:
Texas Tech University System and Component Institutions
Texas Tech University Health Sciences Centers
Baylor College of Medicine
University of Texas System and Component Institutions
University of Texas Health Science Components
University of Houston and Component Institutions
Public Community/Junior Colleges
Texas State Technical College System and Component Institutions
Note: The Senate Finance Committee had posted a meeting for Thursday in case they did not finish hearing from the previously-posted educational institutions, but it was cancelled.
House Appropriations Committee:
Subcommittee on Articles I, IV & V (General Government, Judiciary, and Public Safety & Criminal Justice) met this past Monday, Wednesday, Thursday, and Friday. On
Monday, they heard from representatives of the Legislative Budget Board, Secretary of State, Office of the Governor, Commission on the Arts, Commission on State Emergency Communications, Texas Facilities Commission, Texas Public Finance Authority, Texas Historical Commission, Employee Retirement System, Pension Review Board, Texas Emergency Services Retirement System and Bond Review Board. On
Wednesday, they heard from representatives of the Comptroller’s office, Attorney General’s office, Cancer Prevention and Research Institute of Texas, Texas Ethics Commission, Department of Information Resources, Texas State Library and Archives Commission, Preservation Board, State Office of Rick Management, and Texas Veterans Commission.
This past Thursday, they heard from representatives of the Texas Military Department, Juvenile Justice Department, Department of Criminal Justice, Board of Pardons and Paroles, Texas Commission on Fire Protection, Texas Commission on Jail Standards, Texas Commission on Law Enforcement, Texas Alcoholic Beverage Commission, Texas Department of Public Safety, and Texas Division of Emergency Management.
This past Friday, they heard from representatives of the Supreme Court, Court of Criminal Appeals, the 14 Courts of Appeals, Office of Court Administration, Texas Indigent Defense Commission, the Judiciary Section of the Comptroller’s office, the Special Prosecution Unit, Judicial Compensation Commission, Office of the State Prosecuting Attorney, Office of Capital and Forensic Writs, State Law Library, and State Commission on Judicial Conduct.
Subcommittee on Article II (Health & Human Services) met Monday, Tuesday and Wednesday. This past Monday, the committee heard from representatives of Texas Health and Human Services Commission and the Texas Civil Commitment Office. This past Tuesday, they heard from representatives of the Office of Inspector General and Department of State Health Services. This past Wednesday, they heard from representatives of Texas Department of Family and Protective Services.
Subcommittee on Article III (Education) met this past Wednesday and Thursday. On Wednesday, the committee heard from representatives of Lamar State Colleges, Texas State Technical Colleges, and Texas A&M University System and its component institutions. This past Thursday, they heard from representatives of the Texas School for the Blind and Visually Impaired, Texas School for the Dear, the University of Texas System and its component institutions, and the Texas State University System and its component institutions.
Subcommittee on Articles VI, VII & VIII (Natural Resources, Business & Economic Development, and Regulatory) met this past Monday, Tuesday, Wednesday and Thursday. Last Monday, the committee heard from representatives of Texas Department of Transportation, Texas Department of Motor Vehicles, Texas Workforce Commission, Texas Department of Housing and Community Affairs, and Texas Lottery Commission.
This past Tuesday, they heard from representatives of the General Land Office, Veterans’ Land Board, Railroad Commission, Texas Department of Agriculture, Texas Commission on Environmental Quality, Texas Parks and Wildlife Department, Texas Animal Health Commission, Texas Water Development Board, Texas State Soil and Water Conservation Board, and Low-Level Radioactive Waste Disposal Compact Commission.
Last Wednesday, they heard from representatives of Texas Department of Insurance, Texas Medical Board, Texas Optometry Board, State Board of Pharmacy, Board of Chiropractic Examiners, State Board of Dental Examiners, Physical and Occupational Therapy Examiners, State Board of Podiatric Medical Examiners, Board of Examiners of Psychologists, Health Professions Council, Texas Board of Veterinary Medical Examiners, Texas Board of Professional Land Surveying, and Texas Board of Nursing.
This past Thursday, they heard from representatives of the Public Utility Commission, Office of Public Utility Counsel, Texas Department of Licensing and Regulation, State Office of Administrative Hearings, Texas Funeral Service Commission, Board of Professional Geoscientists, Office of Injured Employee Counsel, Office of Public Insurance Counsel, Board of Plumbing Examiners, Texas Racing Commission, and Texas State Securities Board.
Aerospace & Defense Manufacturing – Last Monday, the Texas Association of Manufacturers (TAM) released an economic impact study that shows the State of Texas would realize more than $76 million in additional state revenue from the aerospace and defense (A&D) industry – and help recover 4,000 lost jobs – if Texas aligned state franchise tax policy with the Federal Acquisition Regulation (FAR). The FAR provides “uniform policy and procedures for acquisition” for companies doing business with the federal government.
Tony Bennett, CEO of TAM said, “Defense-related aerospace activity is a cornerstone of the Texas economy, with 17 of the top 20 firms in the nation having a substantial presence here. More than 44,000 employees – many of them military veterans – earn more than $100,000 in these high-quality jobs. We owe it to the men and women who are contributing to the security of our nation and our economy to embrace tax policy that attracts and retains these good jobs in Texas.” According to the study, Texas has lost market share and 4,000 net jobs in the A&D sector partially as a result of discrepancies between the current Texas franchise tax and the cost definitions contained in the FAR, which more accurately reflect manufacturing, compensation, training and technical services costs incurred by A&D contractors.
The study shows the direct benefits that would result from conforming the current franchise tax to the FAR:
- Annual Additional Economic Activity: $4.1 billion
- Annual Additional Value-Added: $2.3 billion
- Annual Additional Earnings:$1.4 billion
- Total Permanent Jobs: 19,493
- Annual State Tax Revenue: $76.1 million
Jon Hockenyos, president of TXP, Inc. and lead author of the economic study added, “The prospect for aligning the franchise tax with the FAR could pay outsized dividends.”
Texas Oil & Gas Association – Last Tuesday, the Texas Oil & Gas Association (TxOGA) released data indicating that the Texas oil and natural gas industry paid more than $14 billion in state and local taxes and state royalties in fiscal year 2018, up 27 percent from fiscal year 2017 and the second-highest total in Texas history. TxOGA President Todd Staples said, “Last year alone, the Texas oil and natural gas industry paid the equivalent of $38 million a day to fund our schools, roads, universities and first responders. More tax and royalty revenue from the oil and natural gas industry means our lawmakers have more to work with to meet the needs of our growing state. In fiscal year 2018, Texas school districts received $1.24 billion in property taxes from mineral properties producing oil and natural gas, pipelines, and gas utilities.
Counties received $366.5 million in oil and natural gas mineral property taxes. In addition to taxes and royalties, Texas oil and natural gas companies are investing billions in advanced technologies that are protecting and improving our environment – proof that we can grow our economy, protect the environment and enhance our energy security at the same time. U.S. CO2 emissions are near 20-year lows and methane emissions from oil and natural gas systems are down 14 percent since 1990 – all while production has skyrocketed.”
Specific statistics provided in the report:
- State royalties paid by the oil and natural gas industry in fiscal year 2018 increased 18 percent to a total of $2 billion. That money is used to capitalize the Permanent School Fund (PSF), which benefits the public schools of Texas, and the Permanent University Fund (PUF), which benefits public higher education in Texas.
- Oil and natural gas royalties constitute the only substantive new money deposited annually to the PSF and PUF.
- The Texas Permanent School Fund is the largest educational endowment in the country, with a balance of $44 billion at the end of fiscal year 2018 (bigger than Harvard University’s endowment worth $39.2 billion).
TxOGA also released its policy priorities for the 86th Legislature, which include:
- Support for adequate funding for the Railroad Commission of Texas and the Texas Commission on Environmental Quality to be properly staffed and equipped;
- Funding for the Texas Department of Public Safety to enhance public safety on congested roadways in energy-producing areas;
- Reauthorization of the Texas Emissions Reduction Plan (TERP);
- Renewal of Chapter 312 of the Tax Code, which allows counties and cities to provide temporary property tax reductions for new projects; and
- Additional funding to assist counties in energy sectors that are experiencing increased traffic and road deterioration.
Texas Association of Manufacturers – On Tuesday, the Texas Association of Manufacturers (TAM) and its members gathered at the State Capitol to celebrate Texas Manufacturers’ Day, with the message that “manufacturing matters” to the state’s economy and the roughly 870,000 Texans who work in the industry. Industry leaders urged elected officials to embrace legislation that would attract investment, grow jobs and strengthen the Texas workforce.
TAM CEO Tony Bennett said, “The Legislature must maintain policies that keep Texas in the game to attract major investments and jobs here. We need smart economic development tools, policies that strengthen our competitive position and a ready workforce for today’s manufacturing job opportunities.” At the top of TAM’s priority list is renewal of Chapter 312 of the Texas Tax Code, which allows counties and cities to offer temporary tax exemptions to attract new capital investment projects and the quality jobs that accompany them. Bennett continued, “Texas has the fourth highest industrial property taxes of any state – 65 percent higher than the national average.
Every other state in the nation will cheer if Texas abandons economic development by allowing Chapter 312 to expire.” He also noted that most states and countries offer similar economic development incentives. He concluded, “Global competition for major manufacturing investment is fierce. We cannot afford to take our competitive edge for granted. Texans will lose if Chapter 312 expires.”
Texas Small Business Protection Act – Also on Tuesday, Senator Donna Campbell filed SB 762, which she said will “protect small businesses from overreaching ordinances that insert big government into the employment practices of private businesses.” She named the bill the “Texas Small Business Protection Act.” Senator Campbell said, “SB 762 will prohibit Austin, San Antonio, and other cities from enforcing involuntary paid sick leave policies on small businesses, burdening them with unnecessary costs and threatening their ability to stay open.
Texas has the tenth largest economy in the world because we promote free enterprise and protect economic freedom. Unfunded mandates on small businesses are a regulatory nightmare that negatively impacts the economy and costs jobs. City officials need to get their nose out of the private sector and focus on the public service function of local government like delivering drivable roads and providing clean drinking water. The filing of SB 762 comes almost one year to the date since the Austin City Council passed a mandate last February requiring all businesses to pay and keep track of sick leave for their employees.
That policy is expected to cost local businesses $150 million a year in overhead costs according to a study conducted by the Austin Chamber of Commerce. Currently, six in ten Texans receive paid sick leave benefits without any type of government mandate. However, that number increases to eight out of ten workers when you take smaller firms and family-owned businesses out of the equation. In other words, these ordinances present the greatest cost to those small businesses least likely to afford it. While Austin’s ordinance was ruled unconstitutional by the Third Court of Appeals, the City of San Antonio has since passed a similar ordinance.”
Senate Health & Human Services Committee – Also last Tuesday, the Senate Health & Human Services Committee took up:
SB 10 by Jane Nelson (R-Flower Mound), which would establish the Texas Mental Health Care Consortium and leverage the expertise of Texas’ medical schools to bolster mental health resources for children and adolescents. Governor Abbott declared the bill an emergency item in his State of the State address. All 31 senators are signed on as co-authors of SB 10. Senator Nelson said, “Texas has been making strong progress on mental health with innovative programs that expand access to care.
This bill will help better identify children and adolescents with mental health challenges and connect them with the treatment they need before they become a danger to themselves and others. Under this legislation we can also better address our workforce needs and support mental health research.” Specifically, SB 10 would:
- Create a consortium to help coordinate state mental health initiatives across Texas’ health-related institutions of higher education;
- Establish mental health “hubs” at the health-related institutions consisting of psychiatrists, social workers, referral specialists and other mental health professionals;
- Establish the Child Psychiatry Access Network (CPAN), which will allow pediatricians and primary care providers to consult with mental health experts on treatment options for their patients;
- Establish a program allowing youth to be screened for mental health conditions through telemedicine;
- Increase residency opportunities for psychiatry students in community settings;
- Expand and coordinate mental health research at health-related institutions; and
- Require judges to be educated about mental health resources in their community.
The Senate budget allocates $100 million in new funding for SB 10. It was voted out favorably as substituted.
Surprise Medical Billing – Also on Monday, a group of eight Texas health insurance, business, and consumer groups released a consensus statement calling for an end to the practice of sending “surprise” medical bills to patients. The statement, which was signed by the Texas Association of Health Plans (TAHP), AARP Texas, the Texas Association of Business (TAB) and others, highlights the prevalence of surprise medical billing for out-of-network emergency care in Texas, as well as consumers’ inability to ensure they receive in-network care for an emergency.
The organizations plan to support legislation ending the practice of surprise billing. They pointed out that Texas is leading the nation with some of the highest rates of out-of-network emergency care providers and surprise medical billing. Three hundred of Texas’ 407 hospitals have no in-network emergency room (ER) doctors available for the major three health plans, and almost 50 percent of all Texas ER doctor claims are out-of-network, which is substantially higher than for all other types of health care providers.
As a result, one in three ER admissions in Texas results in a surprise bill – nearly twice the national average of one in five. Freestanding ER’s also contribute to the problem, submitting 83 percent of all out-of-network ER facility claims in Texas. TAHP CEO Jamie Dudensing said, “We still see it over and over again in the news – Texans constantly receive outrageously-high surprise medical bills for health care they receive in an emergency. We are committed to working with the legislature this session to put an end to surprise billing and make sure patients are no longer held hostage during these billing disputes.”
The consensus statement lists the following principles to ensure Texas patients receive high-quality, affordable care:
- Everyone in Texas deserves affordable, high-quality coverage and care, and control over their health care choices.
- Patients should be protected from surprise medical bills.
- Health care providers should be fairly compensated.
- State policy should restrain costs and ensure quality networks.
- Patients should be informed when care is out-of-network.
The letter’s other signers include the Center for Public Policy Priorities (CPPP), the National Multiple Sclerosis Society, the Texas Association of Life & Health Insurers (TALHI), Texas Association of Health Underwriters (TAHU) and the National Federation of Independent Business (NFIB).
Medical Cannabis – On Tuesday, Representative Ron Reynolds (D-Missouri City) announced the filing of HB 209 and HJR 21 to legalize medical cannabis. Representative Reynolds said, “I am proud to announce the filing of HB 209 and HJR 21, which seeks to make access to medical cannabis available for more patients with debilitating medical conditions, instead of it being reserved only for children with epilepsy. HB 209 would authorize parents to administer medical cannabis to children with debilitating medical conditions if the treatment is recommended by their physician.
This bill also authorizes establishing licensed cannabis testing facilities to analyze the safety and potency of medical cannabis. In 2017, the Legislative Budget Board projected this bill to have a $9,288,521 positive impact on our State’s economy within two years of implementation. It’s time for Texas to join the other 33 states, the District of Columbia, Guam, and Puerto Rico, all of whom have comprehensive public marijuana/cannabis programs. We should not be afraid or reluctant to explore new ways to provide compassionate care, cure diseases, and ease the pain and suffering of Texans, especially our veterans.”
Industrial Production of Hemp Products – Also on Tuesday, Roland Gutierrez (D-San Antonio) filed HB 1657, which would legalize the production and regulation of hemp products. Representative Gutierrez said, “Industrial hemp operating on a commercial scale is a big win for Texas farmers because it is a drought tolerant crop that requires less water and resources to grow.
Hemp is an ecologically sound plant that produces strong fabric and has thousands of uses. The federal 2018 Farm Bill, which passed in December, officially classifies hemp as an agricultural commodity and allows state legislatures to determine its legality. HB1657 certifies that the State of Texas has the resources and personnel to carry out the production and distribution of hemp products.
Forty other states have already passed similar legislation, and hemp is being solidified as a legitimate agricultural commodity. Most importantly, this bill is about farm owners all over Texas that have the ability to grow hemp year-round, as it is a rotational crop. Agriculture is an important sector in the Texas economy, and the production of hemp in our state would give it a significant boost.
Legalizing hemp in Texas is about giving our farmers the opportunity to grow and distribute a durable, natural fiber that can be incorporated into thousands of products. We want to move Texas in the right direction in terms of agricultural commerce, and legalizing hemp is the first step.”
Senate Property Tax Committee – Last Monday, the Senate Property Tax Committee took up:
SB 2 by Paul Bettencourt (R-Houston), which would be the Property Tax Reform & Relief Act of 2019. The committee discussed the bill and adopted 12 amendments before voting the SB 2 out of committee. The amendments will be rolled into a committee substitute.
The following summary of the amendment was provided by Texas Taxpayers and Research Association. The amendments would:
- allow “small taxing units” as defined in the bill to call local elections to reduce their rollback tax threshold from 8 percent to 2.5 percent;
- provide that tax rates must be approved by the governing bodies of taxing units other than school districts, 71 days before the November uniform election date, if the governing body adopts a tax rate that exceeds the rollback tax rate;
- change the term “rollback tax rate” to “voter-approved tax rate”;
- permit chief appraisers to submit certified estimates of value to taxing units if appraisal review boards do not complete hearing protests by July 20;
- require one public hearing on proposed tax rates, rather than two, and clarify publication requirements;
- prohibit governing bodies of taxing units from reducing first responder compensation based on reductions in the rollback tax rate;
- delete proposed date changes to the property tax calendar so that the current schedule for providing notices of appraised value, protesting values, and completing appraisal rolls is retained;
- prohibit value increases as a result of binding arbitration and litigation, as well as appraisal review board protests;
- specify the appraisal manuals that appraisal districts must use to comply with generally accepted appraisal methods and techniques;
- provide that protests may not be heard by appraisal review board special panels unless requested or consented to by the property owner or agent;
- provide that appraisal review board orders determining protest must list land and improvements separately; and
- limit discovery that appraisal districts may request in litigation concerning value.
Senator Juan “Chuy” Hinojosa (D-McAllen), the only Democrat on the committee, voted “present-not-voting” on the motion to report SB 2 out of the committee favorably. Senator Hinojosa explained his vote saying, “While I support 97.5 percent of this bill, I cannot support the other 2.5 percent. Specifically, I cannot support the 2.5 percent ‘voter-approved rate’ currently in SB 2. While the existing 8 percent rate is too high, the 2.5 percent rate is too low and would jeopardize the ability of local governments to provide crucial services to their communities.
There is no doubt that property tax appraisals are increasing faster than our paychecks. Property taxpayers need relief. However, we should find a balanced approach that does not tie the hands of our local elected officials and hinder their ability to provide basic services and public safety. The largest budget expenditure by local governments is public safety. On average, 60 percent of their budget supports our police officers and firefighters. With a 2.5 percent cap, SB 2 could hinder our local governments’ ability to keep our communities safe and to fund other necessary services and infrastructure. Instead of applying a one-size-fits-all approach to our vast state, to provide true property tax relief we should focus more on school finance reform.
School taxes are the largest portion of our property tax bill. We should also eliminate unfunded mandates by the state. I look forward to continuing to work with my colleagues to find consensus on a fair and equitable solution that improves the property tax and appraisal process without hindering our local communities’ ability to fund public safety, education, indigent health care, and the infrastructure needed to continue Texas’ prosperity.”
Appraisal District Reform – Last Friday, Representative Matt Krause (R-Fort Worth) filed HB 1333, which would institute appraisal district reforms. Specifically, it would:
- Improve notification of property value increases, changes to exemptions, and eligibility of exemptions. Representative Krause said, “It improves notification of valuation increases, changes to exemptions, and eligibility of exemptions by providing homeowners the option to receive notifications electronically via email. This would create a modern and more direct line of communication between appraisal districts and homeowners.”
- Create an honest appraisal process. Representative Krause added, “The bill creates a fairer appraisal process by prohibiting an officer or employee of a taxing unit that participates in the appraisal district from being employed by an appraisal district. Persons with a vested interest in increasing property valuations should not be employed by an appraisal district. Additionally, the bill requires that the cosmetic nature of the property to be included in the appraisal.”
- Provide resources and assistance to homeowners by requiring appraisal districts to maintain a list of licensed real estate agents, licensed appraisers, and licensed tax agents willing to provide free help to homeowners. The list of voluntary professionals would be made readily available to the public upon request.
Representative Krause concluded, “The Appraisal District Reform Act provides much needed improvement to the appraisal process. By granting Texans more resources and opening up a more transparent system, homeowners are given a more fair and convenient opportunity to challenge their appraisals.”