Last Week in the Legislature

April 12, 2019 | Issue #13

By John Sharbaugh, CAE
Managing Director of Government Affairs

Sunset Bill Referred to Texas Senate Committee

With the passage of the Sunset bill (HB 1520 updated) in the Texas House on April 3, attention has now turned to the Senate. This week, the House bill was read in the Senate (which is a requirement for any bill that comes from the House) and it has been referred to the Senate Committee on Business and Commerce. The next step in the process will be a hearing on the bill in that Senate committee.

Since there is a Senate Sunset bill (SB 613) that was identical to the original House bill, the differences between the Senate and House bills will have to be reconciled. One way of doing that is for the Senate to accept the House version and move it. That is certainly our hope, since the House version includes provisions on CPA firm mobility that TXCPA supports, while the Senate version does not. By approving the House bill, the Senate can also expedite the process as the legislation would not have to go back to the House again for another vote, since it was already approved there.

Our goal now is to encourage the Senate to accept the House bill and move it to passage. It may be a while until a hearing in the Senate Business and Commerce Committee takes place. There are over 420 other bills that have also been referred to this committee and everyone wants a hearing on their bill. So, our biggest hurdle at this time is probably the “tyranny of the clock.”

We are entering the final weeks of the legislative session, which ends on May 27. For the time being, we will play the waiting game and hope that the bill gets scheduled in committee in the near future.

Increasing the Sales Tax to Lower Property Taxes

Probably the biggest news in Austin this week was the announcement by the state’s top leaders – Governor Greg Abbott, Lt. Governor Dan Patrick and Speaker Dennis Bonnen – that they support a 1 percent increase in the state’s sales tax rate to generate revenue that would be used to lower property taxes, if legislators agree to limit future local property tax increases. Under their plan, the proposed sales tax increase would be presented to the voters this fall as a constitutional amendment.

At a press conference on Wednesday, the three leaders issued a statement saying, “Today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term.”

HB 2 and SB 2 are both bills that would lower the threshold for raising property taxes to 2.5 percent and would require a vote of the electorate to exceed that threshold. At this point, SB 2 has been sitting in the Senate for over a month, since it was passed out of committee early in the legislative session. Thus far, it has not garnered enough support to get it to the floor for a vote.

Senate Democrats seem united in their opposition to it and one Republican Senator, Kel Seliger (R-Amarillo), has publicly voiced his opposition. Unless the dynamics change, its passage looks questionable. Meanwhile, the House has been waiting to see what happens in the Senate and it appears the waiting will continue, at least until next week.

The proposal outlined by the state’s top three leaders this week would raise the state's sales tax rate from 6.25 percent to 7.25 percent, with the additional tax dollars generated annually going to property tax relief, if voters approve the idea in a constitutional amendment. But the concept may be a hard sell to Democrats, since the sales tax is considered regressive. And the support of some Democrats is necessary to meet the threshold of approval for any proposed constitutional amendment.

A proposed constitutional amendment must be approved by a supermajority of the House and Senate before it can be presented to the voters. If all 83 Republicans in the House vote yes on the proposal, then 17 House Democrats would also need to support it to meet the necessary threshold. In the Senate, the task is not quite as daunting. There, they will need 21 votes. If all 19 Republican senators support the proposal, they will need to pick up two Democrats in that chamber.

Rep. Dan Huberty (R-Houston), who authored House Joint Resolution 3 and House Bill 4621 on this same issue, is considering changing his proposed legislation to use a fraction of the additional money generated by the sales tax for public schools – to get more Democrats on board in the House.

Stay tuned to see how this plays out. You may be getting a chance to weigh in later in the year. If the legislature approves the resolution, the constitutional amendment would go to voters to approve in November and if voters approve it, the tax rate change would apply in January 2020.

Vendor Monitoring Software Bill Has a Hearing

I reported a few weeks ago on a bill that is similar to proposed legislation being pushed in a number of states around the country and one that caused concern for TXCPA, as well as many other service providers who perform work for governmental entities. HB 1352, sponsored by Rep. Giovanni Capriglione (R-Southlake), would require any vendor who contracts (for a contract value of $100,000 or more) with a governmental entity to provide professional or technical information technology services performed using a computer to load software on their computers that verifies the work performed during the hours billed. The software would have to capture screen shots every three minutes and the vendor would have to maintain all of this data for seven years.

On Monday, the bill was heard in the House State Affairs Committee and I testified in opposition on behalf of TXCPA. Two other witnesses from technology-related trade groups also testified against the bill. The lone witness to testify in favor of the bill was a representative from the company that sells this type of software and has been lobbying for similar legislation around the country. You can read my testimony here.

At the hearing, Capriglione introduced a committee substitute for his bill. He stated that the substitute does several things to the original version of HB 1352. First, it eliminates “professional services” from the bill’s requirements. Second, it changes the bill from being “mandatory” to allowing governmental entities to require this type of tracking software as part of their contract requirements for vendors. And lastly, the committee substitute would require a vendor to sign an “attestation” that what they have billed for is accurate and supported by work actually performed. Capriglione stated that these changes should alleviate the concerns that have been raised about the bill, but the opposition groups, including TXCPA, don’t agree with the assessment. We will continue to work against this legislation.

A copy of the committee substitute bill was not available at press time, but you can see a copy of the original HB 1352.

The committee took no vote on the bill and it was left pending. Our hope is that it will die in this committee. There is no companion bill in the Senate.

Senate Passes a Budget

This week, the Senate passed a budget/appropriations bill. The House passed its budget earlier in the session, which the Senate used in its deliberations. The Senate-passed bill went back to the House, where the changes made by the Senate were rejected. So, the stage is now set for the House and Senate to begin negotiations to reach a consensus on a budget supported by both chambers. A conference committee of House and Senate members will be appointed to hammer out the differences. The House conferees named to the conference committee are Representatives John Zerwas (R-Houston), Greg Bonnen (R-Friendswood), Sarah Davis (R-West University Place), Oscar Longoria (D-Mission) and Armando Walle (D-Houston). At press time, the Senate conferees had not been named.

On Tuesday, by a unanimous vote, the Senate approved a two-year, $248 billion spending plan that includes $2.7 billion for property tax “relief,” but the budget bill did not detail how those funds would be used to lower property taxes. Those details will get hammered out in other legislation both chambers are working on. The Senate budget also includes a $6.3 billion boost for public schools, about $4 billion of which would increase teachers’ and librarians’ annual salaries by $5,000, with $2.3 billion set aside for unspecified aid to school districts.

Both the House and Senate approved budgets that have similar total price tags and both have agreed to pump an additional $9 billion in state funds into the public education portion of the budget. But crucial differences remain between the two proposals on other matters.

Other priorities funded in the Senate budget include $230 million to maintain health benefits for retired teachers, $157 million to maintain graduate medical education opportunities for medical school graduates, and more than $1 billion across state agencies for cybersecurity and technological improvements. The Senate’s budget plan also contains a provision directing the Texas Health and Human Services Commission to cut costs by $900 million. If included in the final version approved by the legislature, it would mark the sixth consecutive two-year budget to order the health commission to cut significant costs from its operations.

Bill to Deal with Anti-Trust Issues for Texas Boards Approved in the Senate

I reported a few weeks ago on proposed legislation that is intended to provide relief from potential anti-trust claims against Texas licensing boards, including the Texas State Board of Public Accountancy (TSBPA). SB 1995, sponsored by Senator Brian Birdwell (R-Granbury), was passed by the Senate on Thursday.

SB 1995 will create a process and a division within the Office of the Governor to review all proposed rules by licensing agencies that could affect market competition before the rule can be adopted or implemented. The proposed legislation would provide the “active state supervision” that the U.S. Supreme Court discussed as a safeguard against possible antitrust claims that could be lodged against a licensing board. You can read the version of SB 1995 that passed this week.

Birdwell is also the chairman of the Texas Sunset Commission, where this issue surfaced during the Sunset Review process. In laying out his bill before the Senate State Affairs Committee last week, Birdwell explained that this issue was one that the state of Texas needed to deal with in order to protect its “state exemption” under the federal anti-trust laws and that a solution that applies to all licensing boards makes the most sense. There is a companion bill in the House (HB 4112), sponsored by Rep. Chris Paddie (R-Marshall), who is the vice chairman of the Sunset Commission. So, look for this legislation to make its way through the process to adoption over the upcoming weeks.

Red-Light Camera Legislation Slows to a Halt

This week, there were signs that the proposed legislation to do away with red-light cameras around the state was in jeopardy. Early in the session, Rep. Jonathan Stickland (R-Bedford) filed HB 1631 to outlaw red-light cameras and he had more than 100 House members sign on in support. In the Senate, Senator Bob Hall (R-Edgewood) filed SB 653, an identical bill.

Red-light cameras have been legal in Texas since 2007, but they have raised the ire of many people who claim they violate people’s rights to due process and are primarily used as revenue raisers by local authorities. Proponents of red-light cameras claim they help reduce accidents and save lives.

With the level of support for HB 1631 in the House, one would think that it would easily fly through that chamber, but now it looks like that may not be the case. That’s because House Transportation Committee Chairman Terry Canales (D-Edinburg) told the media this week that he’s not moving the bill out of his committee because of concerns that crashes could rise if red-light cameras are removed from intersections across the state. Unless Canales changes his mind, the bill is likely dead this session. Supporters of the bill are working to rally last-minute support, but most political insiders privately say the measure may well fall short this session.