Last Week in the Legislature
By Kenneth Besserman
Director of Government Affairs and Special Counsel
June 11, 2021 | Issue No. 19
87th Legislative Session Review - TXCPA Success in 2021
On May 31, the Texas Legislature adjourned, concluding the tumultuous 87th regular session. The session began in a subdued fashion as legislators came to Austin after the winter holidays and the COVID-19 positive test cases were skyrocketing. There was a general unease about how the session would operate, uncertainty about vaccine availability and a concern that the session might have to end early or be postponed because of the raging pandemic.
After a few months in Austin, the legislature began to operate closer to normal, but with much less public input and transparency than in past sessions. Before we get to the final few days of session (which were exciting, dramatic and controversial – more on that later) and what is to come in a special session, let’s review TXCPA successes and other major issues that were addressed.
Two of the three major priorities of TXCPA have been signed by the governor!
- House Bill 1195 (Rep. Charlie Geren), which excludes loans forgiven under the Paycheck Protection Program from the Texas franchise tax, has been signed by the governor and became law immediately. This bill was important to
our profession both as business owners and as CPAs so that we can properly advise our clients of the tax implications of federal forgiven loans.
- Another important TXCPA legislative priority is Senate Bill 297 that will extend the CPA fingerprinting deadline by one year to August 31, 2022. The bill was signed by the governor on June 7. The pandemic year made it difficult
for CPA licensees to submit their fingerprints timely, so this extension is necessary for the State Board and for our members.
- Senate Bill 6 – the Pandemic Liability Act – is legislation that has been a priority of the governor, business community, health care entities, and trade/professional associations. All worked very closely since fall 2020 to ensure that businesses that act in good faith, followed government guidance, and did not maliciously or purposefully put customers and employees in harm’s way would not be subject to pandemic-related litigation. TXCPA was involved in those working groups to craft commonsense language to protect all during the pandemic. SB 6 is also expected to be signed by the governor in the coming days.
The 87th session had a number of big and controversial issues (some of which passed, some did not, and some may be addressed in a special session) that took up much of the legislature’s time and energy.
The state budget, the only bill that is required to pass each session, started out in uncertain territory when, in summer 2020, the Comptroller had indicated that the state was facing over a $3-4 billion budget deficit because of lower tax collections during the pandemic.
The federal government sent Texas $20-30 billion in federal stimulus funds in the CARES Act and the American Rescue Plan Act to assist the state in pandemic-related costs in the public education and higher education systems. The big unanswered question in the budget – which is likely to be addressed in a special session – is how will the $10-12 billion in unappropriated funds be spent and who has the authority to spend or direct those funds. Both the governor and the legislature want authority to appropriate and direct those federal funds.
Redistricting is always an important and partisan issue every regular session after the U.S. Census. This session was starkly different in that the federal government had not yet released the detailed Census numbers to the states. That data is expected to be sent to the states in the late summer or early fall, thereby triggering a special session to draw political maps.
Texas is set to get two new Congressional seats, down from the three-four seats that many redistricting experts had predicted. Be prepared for a lot of partisan bickering about where the new Congressional seats will be located, where the new state representative and Senate lines will be, and for a long legal battle. It is likely that the 2022 primary election season will be extended well into the fall and summer as the courts get involved.
Another issue that was front and center this session was the power grid reform. After the devastating February winter storm, the legislature held a number of hearings with ERCOT, Public Utility Commission officials and energy experts to try and understand what happened and what reforms were necessary so a power grid failure of that magnitude could not happen again.
The legislature passed Senate Bill 2 and Senate Bill 3 that address some power grid reforms, but many suggest that the legislature did not go far enough. Senate Bill 3 only requires natural gas facilities that are deemed “critical” by regulators to be weatherized to withstand a weather emergency. No widespread or required weatherization passed the legislature. There will be fines imposed on those facilities that do not weatherize if they are required to do so. Senate Bill 2 will restructure ERCOT to shrink the board from 16 to 11 members and eight of the 11 appointees would be selected by a committee of three appointed by the governor, lieutenant governor and speaker.
In the coming weeks, look for additional information about how the session ended up, what the big issues were, and what to expect in a special session (or two or three).
See you soon.