Last Week in the Legislature
The Busy Season Officially Begins
By Kenneth Besserman
Director of Government Affairs and Special Counsel
March 10, 2023 | Issue 6
AUSTIN - The second week of March every legislative session officially kicks off the busy time of the session. The 60th day of this session, March 10, 2023, is both the bill filing deadline and the first day that the House and Senate can debate bills on the House and Senate floors other than emergency items and resolutions. By this time next week, there will be hundreds and thousands more bills that will have been filed. Legislative offices, lobbyists and the general public will be scouring the recently filed bills discovering items of interest and controversial measures and trying to figure out how to get their bill moving during the last three months of session.
The past two weeks have been a very busy time for TXCPA’s legislative agenda. On March 7, the Senate Business & Commerce Committee heard SB 159 (watch the archived hearing here) – the legislation to permit CPA candidates to begin taking the CPA Exam after completion of 120 semester hours. Senator Charles Perry laid out SB 159 – one of TXCPA’s priority bills of the session – and TXCPA Chair Sheila Enriquez testified in favor of the bill. The legislation has support of TXCPA, The Accounting Coalition, a number of mid-size Texas and regional accounting firms, and a broad spectrum of CPAs, accounting students and the profession in general.
We are thankful for Senator Perry’s support of this important pipeline initiative and all the support we have received from our members and the profession. SB 159 will likely be voted out of committee during the week of March 13 and be eligible for Senate floor debate before the end of March. (Editor's note: The companion bill, HB 797, will be presented at a hearing of the Texas House Committee on Licensing and Administrative Procedures on March 15. Learn more here.)
In addition to SB 159, TXCPA has had SB 951 and HB 2504 introduced. Both bills address the 5th Year Scholarship program that is administered by the Texas State Board of Public Accountancy. The bills will make the 5th year scholarship available to more students – those who have completed at least 15 hours of upper-level accounting coursework. In essence, the scholarship will be available to those in their 3rd, 4th and 5th years of education, rather than just the 5th year. The bill is important to the CPA pipeline issue – the cost of education can be a barrier to students wanting to continue on the CPA track and obtain the necessary 150 semester hours for licensure. We are set to move this bill in the Senate and House committees very soon.
In addition to TXCPA’s two priority bills, we have been reviewing hundreds of bills of importance to our members and the profession. We are looking closely at all of the property tax legislation filed, a number of bills relating to economic. social and governance (ESG) issues, reviewing bills relating to tax administration, and looking at bills that affect the professional licensing in general – relating to criminal background checks and how it might affect licensure. To date, there have not been any committee hearings on any of the bills that we are filing, but we will continue to monitor the process of these bills and keep you informed of their status.
On a broader scale, both the House Appropriations and Senate Finance Committees are making progress on the state budget and how best to address the state budget surplus. Both the House and the Senate budgets have carved out some significant funds to address property tax reform. There is some considerable debate and differences of opinion between Speaker Dade Phelan and Lt. Governor Dan Patrick’s position on how to provide property tax relief. On the House side, the House seems to be focusing on appraisal cap reform (lowering the threshold to a 5% yearly increase on appraisals opposed to the current 10%) and to providing appraisal cap relief more broadly to both homeowners and businesses. On the Senate side, the property tax reform proposals are focused on raising the homestead exemption from $40,000 to $70,000. While there is broad support for this proposal in the Senate, there is concern from businesses, business groups and non-homeowners that the homestead exemption does not give them any property tax relief.
While it is still early in the session, these two wildly divergent approaches to property tax reform mean that there are going to be some heated discussions (in public and private) had and some compromises needed in order to pass significant property tax reform. To add a bit more flavor and controversy to the mix, there is now a Senate proposal to cut the state sales tax from 6¼% to 5¾% to give all Texas residents and businesses some added tax relief. This proposal is significant in that it is the first sales tax reduction bill in serious consideration for at least two decades. While the price tag for this sales tax reduction is about $9 billion, that is significantly less than the state budget surplus that exceeds $40 billion. You will be hearing a lot more about these proposals in the coming weeks.
We have previously talked about the top 30 priorities of the Lt. Governor. In the past two weeks, Speaker Phelan has started to roll out the House priorities for the session. Those priorities include:
• Appraisal cap reform;
• Water development projects;
• Streamlining property development and building reviews;
• Broadband infrastructure development and funding;
• A mental health and brain research institute;
• Diversion of youth away from state confinement;
• Addressing sexually explicit materials in libraries;
• Economic development tools – the Texas Jobs & Security Act;
• A new funding model for community colleges that rewards associate degrees and non-credit workforce education programs; and
• A new business court system in Texas to specialize in complex business cases.
These high priority House bills are in stark contrast to the Senate priorities, so these issues, much like the property tax reform debate, are going to be very interesting in the coming months.
It is going to be a busy rest of March and April. Thank you to all who have engaged with TXCPA and our legislative priorities. Your voice is what makes our advocacy efforts work on your behalf. Please reach out if you want to get further involved with our advocacy efforts.