May 19, 2017

This week's Capitol Roundup :

  • Key AGC-TBB bills moving in Senate
  • Franchise tax and property tax bills left pending as budget bill still being finalized
  • Straus and Patrick look to "must pass" bills as special session remains an option

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Quote of the Week
"While I respect and defer to Gov. Abbott's right to call a special session on any topic, I believe that such a session will not be necessary if we work together to pass two critical bills."
-House Speaker Joe Straus

In a letter sent Monday to Lt. Gov. Dan Patrick, Speaker Straus made clear his intention to avoid a special session by passing two key bills. One of those bills - the budget - is the only bill the Legislature is actually required to pass. The other bill would ensure that state agencies up for review can extend their existence into next session since the House failed to approve their renewal.
State breach of contract bill passes Senate committee, other AGC-TBB bills pending

Two key AGC-TBB bills received hearings in Senate committees this week, and one of them was voted out and now awaits a vote on the Senate floor. 

The two bills - dealing with state breach of contract and background checks - have already passed the House, making the Senate the final hurdle before reaching the governor's desk. 

AGC-TBB bills staying alive in Senate

Rep. John Cyrier's (R-Lockhart) House Bill 2121 passed its first test in the Senate on Friday after unanimously passing the House last week. 

The measure - which adds to a bill passed last session allowing the state to be sued when it breaks a deal - was voted of the Senate State Affairs Committee and now awaits a vote from the full Senate. 

Rep. John Cyrier
The bill,  HB 2121 , allows for attorney's fees to be collected for state breach of contract claims (engineering, architectural or construction services) under $250,000, which are currently handled by the State Office of Administrative Hearings (SOAH).

The legislation is being carried by Sen. Bryan Hughes (R-Mineola) in the Senate along with Cyrier's other state breach bill, HB 2128, which is still waiting for a hearing in the Senate State Affairs Committee.

Rep. Dwayne Bohac
Rep. Dwayne Bohac's (R-Houston) House Bill 3270 received a hearing in the Senate Education Committee on Thursday, but has not received a vote.

The legislation,  HB 3270, decides when the state's mandatory background check applies to school construction projects.
The bill is being carried in the Senate by Sen. Larry Taylor (R-Friendswood), who chairs the Senate Education Committee. If approved in committee, the bill will need a full Senate vote before heading to the governor. 

Other AGC-TBB bills looking for Senate vehicles

Meanwhile, several other AGC-TBB bills were killed last Thursday night by the self-proclaimed "Freedom Caucus," which cut short votes on 356 total bills. 

Those bills could breathe new life if successfully attached to other bills that have survived a vote in the House or Senate. 

The AGC-TBB staff is trying to find new vehicles for the following bills that died last week in the House:

House Bill 2343 by Rep. Workman - Right-to-repair bill  allowing contractors subject to potential defect claims to have 150 days to fix the defect and allows for inspection by a third-party engineer attended by all parties subject to the claim.  

House Bill 3065 by Rep. Deshotel - Lien law bill  would simplify and streamline the state's lien process with an online system that eliminates hidden claims and fixes notice issues.

House Bill 3357 by Rep. Romero Jr. - Prevailing wage rate bill  addresses "employee misclassification" issues by amending the state prevailing wage statute.

House Bill 3434 by Rep. Koop - Uniform general conditions bill  would create a uniform set of standards for construction contracts by state agencies, which school construction contracts would be required to operate under
With budget pending, key tax bills hang on

Three big tax bills have been left hanging in the balance as a committee of lawmakers from the House and Senate continue to seek a budget compromise.

The budget is the only bill the Legislature is constitutionally required to pass every two years  during the 140-day session. Nearly every session, the budget's final details are ironed out by a 10-member "conference committee."

However, this session's conference committee is operating slightly differently than in years' past. While the committee members usually seek a compromise on the funding amount, this year's debate centers around the funding source. While the House budget writers prefer using the state's Rainy Day Fund to fill a $2.5 million budget hole, the Senate budget would divert funding from a voter-approved stream of money to the state highway fund. 

Though the conference committee is usually able to reach an agreement before the session deadline - which falls on May 29 this year - the governor could call lawmakers back to Austin for a "special session" if lawmakers fail to strike a deal. In that case, any number of issues could be up for renewed debate if the governor allows it. 

Hanging in the balance are a few big tax reform bills - dealing with property taxes and the franchise tax - which have been stalled in lieu of a budget deal. 

Phasing out the franchise tax

Two bills to phase out the franchise tax - House Bill 28 by Rep. Dennis Bonnen and Senate Bill 17 
by Sen. Jane Nelson - are both currently stalled in committees. However, Bonnen's HB 28 received a hearing in the Senate Finance Committee on Friday. 

Both bills would phase out the state franchise tax, also known as the margins tax. While Bonnen's bill does not specify an exact timeline for the phase out, Nelson's bill mandates the tax be completely eliminate in 10 years. The tax currently yields about $3.9 billion per year. 

Bonnen's bill would allocate up to $3.5 billion of the ending balances in state general-revenue funds each two-year budget cycle in order to pay down the tax. Franchise tax rates would be lowered each cycle to account for the ending balances until the rates will reach zero. Meanwhile,  Nelson's bill  would dedicate half of any state revenue growth above five percent to reducing franchise tax rates, which would eventually reach zero.

Local property tax elections

Another major tax bill - Senate Bill 2 - is one of Lt. Gov. Dan Patrick's 
pet projects that would
require local governments to hold elections when they raise property taxes by more than a set amount.

The bill is currently stalled in the House Ways and Means Committee after passing the Senate in March on a 18-12 vote. House members have made some changes to the bill that will have to be approved in the Senate if the bill has a chance at becoming law.

After receiving heavy opposition from cities and counties, the House version of the bill eliminated all amendments relating to rollback property tax rates, including mandatory and petition elections. Here is the current form of the bill as substituted in the House.

The bill primarily requires that tax rate calculations be made on Comptroller-prescribed forms and certified as accurate before tax rates are approve. It also establishes special appraisal review boards in the state's five largest counties to hear protests of commercial, industrial, utility, and multi-family property valued at $50 million or more, but only if property owners request it.
Special session looms as Patrick and Straus identify "must-pass" bills

This week, House Speaker Joe Straus  declared in a letter leaked to the press that only two bills needed to pass to avoid a special session. Since then, Lt. Gov. Dan Patrick has added his own must-pass priorities to that list. 

While the Legislature is only required by the state Constitution to pass one bill - the budget - the governor can call legislators back to the Capitol for a "special session" to tackle any number of issues that the governor sees as priorities. The final day of session is May 29.

In his letter sent to Patrick on Monday, Straus made clear that he intended to focus the House on passing two bills: the budget and a "sunset safety net" bill. 

"We certainly understand that some bills that are passed in one chamber will not have the support to move forward in the other," Straus wrote. "Still, as the House continues to pass priority Senate bills, I respectfully ask that the Senate also consider acting soon on issues that are priorities of the House, including public education, school accountability and testing reform, child protection, mental health, cybersecurity and preserving health insurance for retired teachers."

On the other hand, Patrick has lined up two other bills he says must pass in order to avoid a special session: a property tax bill and the so-called "bathroom bill" that Patrick has been pushing all session. 

"If we must go to a special session, I will respectfully ask the governor to add both of these bills - plus other legislation he has voiced support for - in that special session call," Patrick said. "If the bills don't pass in the special and they're blocked again, I will ask the governor to call us back again and again and again."

While Gov. Greg Abbott has indicated the need to pass both the budget and the sunset safety bill, he has also supported the property tax reform and bathroom bill legislation proposed by Patrick in the Senate. Abbott has said he has faith that all of the bills can be passed before the May 29 deadline. 

"I have identified my priorities and...we are on a pathway where those priorities can be addressed during the regular session," Abbott said. "It's just a matter of getting everybody on the same page."

The budget is being worked out in conference committee, however, the "sunset safety net" bill is one of over 350 bills that was killed in the House last week. Now, it is up to the Senate to pass the bill in order to keep certain state agencies alive until next session. The state agencies, which are reviewed periodically and have to be reauthorized to remain in existence, were placed in the "safety net" bill to keep them alive until next session since legislators could not agree on their reviews this year. 

Patrick's bathroom bill - Senate Bill 6 - has passed the Senate but has yet to get a hearing in a House committee. 

The bill would regulate bathroom use in government buildings, public schools and universities based on "biological sex," and prohibit local governments from adopting or enforcing local bathroom regulations. The legislation has been derided by many in the Texas business community, but has also received support among social conservative branches. 

Patrick's other must-pass bill - Senate Bill 2 - passed the Senate in March, however, it is currently stalled in the House Ways and Means Committee. The legislation would require local governments to hold elections when they raise property taxes by more than a set amount. 

29 - Last Day of 85th Legislature

8 -  AGC TBB Safety Committee Meeting - Austin
18-21 -  AGC TBB Annual Convention - Coueur d'Alene Resort, Idaho

29-30 - AGC-TBB Strategic Planning Meeting

3 -  AGC TBB Safety Committee Meeting - TEXO
17 - AGC TBB Board Meeting - Austin AGC Office