Last Week in the Legislature
Full Speed Ahead
Major Issues and TXCPA Priority Legislation Progresses
By Kenneth Besserman
Director of Government Affairs and Special Counsel
March 24, 2023 | Issue 7
AUSTIN - This week, the Texas Legislature took significant steps on a number of large issues – some high priority and some controversial. In addition, TXCPA priority legislation that will help address the CPA pipeline also had an exceptionally good week in the legislature.
Property Tax Reform
The Texas Senate passed much of Lt. Governor Dan Patrick’s priority legislation relating to property tax reform, business tax reform and school finance. Senate Bill 3, increasing the Homestead Exemption to $70,000, Senate Bill 4, adding additional property tax relief, and Senate Bill 5, increasing the business personal property tax exemption, all unanimously passed the Senate this week.
Taken as a whole, the legislation provides over $16.5 billion in property tax relief to homeowners, saving the average homeowner $756 in property tax relief in the first year and the average over-65 homeowner $1,056 in the first year. SB 4 will compress and lower the property taxes that school districts can collect and supplant those tax collections with state funds available because of the very large state budget surplus available. SB 5 would increase the business personal property tax exemption from $2,500 to $25,000.
In the House, the House Appropriations Committee has started hearing on their property tax proposals, which focus on limiting appraisal growth increases – limiting the increase to 5% per year. The proposal, as it stands today, significantly helps homeowners, but without any additional state funds going to schools in place of property tax collection, some in the business community fear that limiting property tax appraisal increases will just move more of the property tax burden to business owners.
In the coming weeks, there will be some tough negotiations between the chambers to come to a compromise. This is by far the biggest issue of the session, so all other legislative items other that the state budget may get caught up in the gamesmanship played by both chambers.
Other Big Items
Other major items taking major steps include Senate hearings on power grid reform – increasing generating capacity; discussions about renewable energy sources; weatherization of power generating facilities; and legislation related to limiting the Public Utility Commission's (PUC) ability to create a secondary energy market to address power outages and shortfalls. Both chambers have started hearings on a few hot button items, including gender-affirming/transition medical procedures, public and school library limitations on access to controversial materials, and education savings accounts.
The education savings accounts legislation – giving parents $8,000 per student to use to attend any school of their choice – is the latest version of the school choice/school voucher proposal that has been debated for a number of sessions. The debate about education savings accounts is particularly interesting because the support and opposition to those proposals does not break down on traditional party lines, but brings together urban and rural coalitions, rich and poor school districts, and other coalitions that are not traditionally aligned on issues. This means that the path to passing the legislation is more difficult than other partisan issues. It will be an interesting last two months of this issue because Governor Greg Abbott has put some political capital into education savings accounts.
It Was Unanimous
TXCPA’s legislative priority of the session – SB 159 allowing CPA candidates to begin taking the CPA Exam after completing 120 semester hours – made significant progress this week. On Tuesday, March 22, the legislation passed the Senate unanimously. (The Senate vote can be found at page 519.) The legislation has now moved on to the House. The House version of the bill, HB 797, passed the House Licensing & Administrative Procedures Committee last week and is slowly making its way to the House Calendars Committee and the House floor. The bill(s) are moving fast and TXCPA has received a number of positive comments about the legislation from legislators, students, educators and many others.
The other legislative priority, SB 951 and HB 2504 – increasing accessibility to the Fifth-Year Accounting Scholarship by more accounting students – have been referred to their respective committees. TXCPA is continuing to work with the bills’ authors and committees to get the bills set for hearing. We do not envision any substantive problems with the legislation, but we are hoping for committee hearings soon before the legislative calendar begins to bog down. There will be more information about the progress of this legislation in the coming days.
We are hopeful that both of these issues – 120 hours to test and the accounting scholarship – can help attract more students to the CPA profession and help to address the CPA pipeline. TXCPA is working hard to get these bills across the finish line.
Stay tuned for some busy weeks ahead. In the coming weeks, we will look a little closer at other legislation that may impact CPAs or the accounting profession.
See you next week.