Last Week in the Legislature

By Kenneth Besserman
Director of Government Affairs and Special Counsel

March 26, 2021 | Issue No. 10

Halfway Home (Not Counting Special Sessions)

The Texas Legislature has finally reached the halfway point of the 87th regular session. Traditionally, the halfway point of a session is the time when committees begin holding longer and longer hearings, committees start moving bills out of committee to the Senate and House floors, and also the time when controversial (and not controversial) bills start dying.

This session is no different, but the committee bottleneck is more pronounced this session. The slower committee referral process in both chambers and with each committee holding fewer hearings because of the pandemic and health and safety protocols, the chances of legislation passing are diminishing rapidly. With many big issues still remaining to be addressed by the legislature (more on that shortly), and with members and committees not wanting to spend a lot of time in hearings, the time and ability to negotiate compromise language is also running short.

There is some concern by Capitol insiders that some very controversial legislation may be moved along the legislative process without the usual scrutiny, debate and compromises that usually attend legislation. With fewer opportunities to negotiate and influence legislation, we may see a lot of controversial legislation passed that may not have passed in a non-pandemic session. Your TXCPA Government Relations team, our lobby team, and our members are staying ever vigilant and ready to move expeditiously if controversial legislation moves.

TXCPA and our 2021 legislative priorities had a significant week at the midpoint of the session. SB 297 (Sen. Perry), which extends the fingerprinting deadline by one year for CPA license renewals, passed out unanimously from the Senate Natural Resources & Economic Development Committee. The bill was certified for the Senate Local and Uncontested Calendar and will soon pass out of the Senate and be taken up by the House.

HB 1195 (Rep. Geren) – excludes PPP forgiven loans from Texas franchise tax revenue calculations – passed unanimously out of the House Ways & Means Committee and also passed out of the Calendars Committee. The bill will be set for the House floor debate in the coming days. TXCPA has not encountered any difficulty or any controversies surrounding this legislation as we have been talking to legislators. This legislation will put Texas on level with 30+ other states and the federal income tax in the tax treatment of PPP forgiven loans.

Another bill that TXCPA is watching closely and has been part of a working group on the language is the civil liability reform for pandemic-related lawsuits. SB 6 (Sen. Hancock) was heard in the Senate Business & Commerce Committee on Tuesday, March 23. The business community, health care providers, trial lawyers and many others have been negotiating language on SB 6 for many months. All of the forementioned groups testified about the importance of the legislation, the need for legal certainty relating to pandemic-related lawsuits, and also the need to allow individuals access to the courts if there are bad actors purposefully disregarding governmental health and safety regulations or willfully placing individuals in harm’s way during the pandemic.

The legislation seeks to balance the interests of economic certainty, the interests of health care providers and businesses, and the interests of individuals’ access to the courts for legitimate legal claims. The bill was left pending in Committee, but with this legislation being a priority of state leadership, all indications are that it will make its way to the governor’s desk.

With Easter just around the corner and the final stretch of the session coming, there are a few big issues that the legislature will face in the final 60 days of session. First, the only bill that has to pass is a balanced budget. The Senate Finance and House Appropriations Committees have been meeting all session to draft a state budget. Hearings continue and the budget should hit the Senate and House floors sometime in April.

The projected revenue available to legislators has fluctuated vastly in the past several months. Last summer, it was thought that Texas was going to face a $4-5 billion budget deficit entering the 2021 session. At the start of the session, Comptroller Glenn Hegar issued his Biennial Revenue Estimate indicating that there was only going to be a $1 billion deficit – much of the early projected revenue shortfall had been filled with increased sales tax revenues associated with online shopping in the second half of 2021. Now, with passage of the new federal American Rescue Plan Act, there are significant funds being sent to states and Texas is facing a possible financial windfall, the amount of which is not fully known.

Texas budget writers and state leadership are still learning about what federal strings are attached to the spending of those funds and what the funds can be used for. Bottom line is that the state budget is not in bad shape and it seems very likely that the House and Senate will agree on budget before the end of the session.

The other two big issues that the legislature will face in the coming months are ERCOT/power grid reform and election integrity. It appears that the House and Senate are taking vastly different approaches to power grid reform. The Senate moved quickly to pass legislation to require the PUC to retroactively address the price surges during the winter storm. The House is taking a slower approach to learn more about the price surges and what reforms can be passed to address future issues. Both houses are seeking to reform the ERCOT structure and address weatherization of the power grid. As yet there is not agreement on what legislation will pass.

Lastly, one of the more controversial issues this session is a slate of election integrity (election reform) bills that seek to limit early voting times, restrain local abilities to ensure voting access, limit mail in voting, and other reforms. Both House and Senate committees have begun hearing these bills. This issue will be highly charged and highly partisan when, and if, those bills make it to the House and Senate floors. Expect a lot of fireworks on those bills. Should make for good viewing.

Only 65 days to go.