Public Policy

Support our legislative efforts

The Richardson Chamber develops its legislative agenda for each legislative session during Public Policy Briefings, monthly luncheon meetings with subject matter experts that help our members stay informed. Past speakers include state legislators, U.S. Congressmen, Richardson ISD officials, City of Richardson City Manager, candidate forums, etc.

Luncheon meetings are usually held on the second Monday of each month in the Chamber’s Board Room.

The Richardson Chamber also plans special events throughout the year to better inform members about important legislative issues.

For more information on meeting sponsorship or special event sponsorship, contact Molly Ulmer at 972-792-2811 or molly@richardsonchamber.com for more information.

Sign up for legislative alerts, released every Friday during the ongoing 86th Texas Legislature.

Legislative Alerts

Legislative Alert: March 22, 2019

House and Senate budget proposals advance

Each session lawmakers are constitutionally required to pass only one bill, the budget for the next biennium (House Bill 1). Legislators also pass supplemental bills to cover unpaid costs from the current biennium (House Bill 4 and Senate Bill 500). After each chamber has passed their budget proposal, lawmakers will create a conference committee to debate changes, make compromises and ultimately consolidate the proposals into one bill for the governor’s certification or veto. Governor Greg Abbott will probably not receive the bill until the end of the session, because budget items depend on passing other legislation to dedicate those funds to certain programs.

The House Appropriations Committee approved HB 1 this week, clearing the way for hearing and debate by the full House. The House budget would dedicate a total of $250 billion from local, state and federal funds, including an increase of $6 billion for public K-12 education and $3 billion for property tax relief.

The House supplemental bill would also include $183 million to fully fund the Texas Research Initiative Program (TRIP) backlog. TRIP uses state funds to match up to 100 percent of private donations to eligible universities for research. A large backlog of unmatched funds has accumulated since the creation of the program because of insufficient state funding. UT Dallas comprises $40 million of this amount.

The House proposal would spend about $6.6 billion from the Economic Stabilization Fund (ESF), or rainy day fund, leaving the ESF with $8.4 billion at the end of 2021. Most of that funding would go to Hurricane Harvey relief and future disaster preparedness, as well as retired teachers with state pensions.

Currently, the ESF contains $11 billion and is projected to increase by more than $3 billion through the next two years. The House budget would withdraw the largest amount since the creation of the ESF in 1990. The next largest withdrawal was in 2011, when lawmakers spent $3.2 billion and cut funding to public schools during an economic recession.

On the other side, the Senate plan would withdraw $4.4 billion from the ESF in 2019 primarily for Harvey relief and school safety measures, estimating that the ESF would return to $11 billion by 2021. The Senate’s supplemental budget was unanimously passed last week.

Substitute for school finance reform bill approved by committee

The House Public Education Committee approved a substituted version of House Bill 3 this week, the lower chamber’s major school finance reform bill. Additional funding for merit-based salary programs for teachers was removed after opposing testimony by state educators. The initial version provided funding for schools that opted in to merit-based salary raises for teachers. The language in the bill required approval by the state education commissioner for any proposed program. Otherwise, teacher raises would be based solely on years of experience.

Supporters argued that allowing for merit-based criteria would infuse more accountability in the public school system. Opponents argued the initial version of HB 3 gave the commissioner of education, who is unelected, too much power. They also expressed concern that such criteria would be applied too broadly to teachers of different subjects and grades. Criteria would also likely highlight standardized test scores such as STAAR, which were not designed for teacher evaluation.

Rep. Dan Huberty (R-Houston), chairman of the House Public Education Committee, said the initial language of the bill “could have been construed as tied to [the state’s standardized test, STAAR] and created a little bit too much authority as we went forward.”

The merit pay language was replaced with additional funding for districts to hire teachers in high-needs campuses, rural districts, or in priority subject areas experiencing a teacher shortage. Districts who opt in would be subject to state evaluations.

HB 3 will now go to the House Calendars Committee to be scheduled for a hearing by all representatives.

The process

Thousands of bills are filed each session. After legislation is filed and referred to a committee, the bill is scheduled for a public hearing, where it may be revised by committee members. The committee can then vote on the revised version, or substitute. If approved, the substitute goes to the calendars committee to be scheduled for the floor of that chamber.

Most of the nearly 9,000 bills this session will not progress through all these steps. If the committee chairman never brings the bill to a vote, the bill can be left pending in committee indefinitely. If the bill is approved by a specific committee such as Education, the calendars committee may never place the bill on the floor calendar. The bill may never be referred to a committee before the end of the session. Even if legislation survives this process in one chamber, it may stall in the other one.

The legislative process in Texas is designed to filter out most bills and encourage debate. Only one bill – the budget – must overcome each of these stages during the regular session. If a priority bill does not pass, the governor can also call a special session later in the year to debate emergency issues.

Sources: Texas Legislature Online (TLO), House Research Organization (HRO)

Legislative Alert: March 15, 2019

Legislators filed more than 8,700 bills before the deadline last Friday. Major bills that address priorities of the Lieutenant Governor and Speaker of the House, Senate Bills 1-20 and House Bills 1-30, have been filed. Legislation will start moving forward now that filing is over and any bill can be heard on the floor in both chambers.

Senate releases school finance outline

Chairman Larry Taylor (R-Friendswood), leader of the Senate Education Committee, filed Senate Bill 4 as the Senate’s major public finance proposal late last Friday. The cost of the bill could not be determined due to placeholder language in the bill, which left out several important multipliers for formula funding. The initial version of SB 4 contains nonspecific language regarding:

  • An increased per-student allotment;
  • Limits for a district’s wealth per student, which would affect Robin Hood recapture payments;
  • New funding for dual language programs and dyslexic students;
  • Allotments for educationally disadvantaged students who (i) perform well on third grade reading assessments or (ii) graduate with college, career or military readiness;
  • Fast-growing districts in the top 25th percentile of enrollment growth; and,
  • Small rural districts and mid-sized districts.

SB 4 focuses heavily on the 60x30TX Plan, which aims to reach 60 percent of Texans aged 25-34 who hold a college or professional degree by 2030. The bill sets the attainment of (i) 60 percent of graduates and (ii) 60 percent of satisfactory third grade reading assessments as performance indicators. Districts would be encouraged to establish detailed plans to achieve 60x30 goals, and high school students would be required to complete and submit a free application for federal student aid (FAFSA) for college funding. SB 4 also contains language for pre-K and “blended learning” programs, which combine classroom and online instruction.

Regarding teacher salaries, SB 4 would also allow districts to submit proposals for “educator effectiveness programs,” merit-based teacher salary raises, at the discretion of the education commissioner. The percentage of Texas teachers who could receive raises under such programs would be limited to 10 percent in 2019-2020, eventually extending to all teachers over the next decade. Senate Bill 3, which would provide $5,000 to all state classroom teachers and librarians, was passed by the Senate and sent to the House for committee referral.

SB 4 has been referred to the Senate Education Committee, where committee members will need to hammer out the bill’s details. The Senate’s budget proposal would increase public education spending by $4.3 billion, about $3 billion less than the House’s proposed increase.

The process

Lawmakers have 10 weeks remaining until the end of the session. Starting next week, the House Appropriations Committee will begin public hearings on House Bill 1, the session’s major budget bill.

Sources: Texas Legislature Online (TLO)

Legislative Alert: March 8, 2019

House unveils school finance proposal

Chairman Dan Huberty (R-Houston), the chair of the House Public Education Committee, announced the lower chamber’s school finance proposal this week. House Bill 3 would increase the basic allotment, raise educator salaries and provide incentives for several new programs including merit-based pay. More than two-thirds of the lower chamber members have signed on as authors or co-authors of HB 3 as a show of support. The proposal would increase public education funding by $9 billion above enrollment growth and current law entitlement during the next biennium, with $6.3 billion going to school finance reform and $2.7 billion to property tax cuts.

Dubbed The Texas Plan, HB 3 would:

  • Increase the per-student basic allotment by $890, from $5,140 to $6,030;
  • Quadruple the annual allocation for new facilities to $100 million;
  • Increase minimum base salaries for educators as determined by years of teaching experience, and allow school districts to adopt alternative merit-based minimum pay guidelines;
  • Provide $140 million for a program to recruit and retain teachers;
  • Reduce school property tax rates by 4 cents per $100 of taxable property value statewide (e.g., taxes on a $250k home would decrease by about $100 annually);
  • Reduce Robin Hood recapture payments by 38 percent, or $3 billion, in 2020-21 (as estimated by the above tax cuts);
  • Allow the Texas Education Agency commissioner to adjust funding formulas if they result in “unanticipated loss or gain” for a district (subject to the governor’s office and Legislative Budget Board);
  • Fund full-day pre-K for low-income students;
  • Provide incentives to districts that offer an extra 30 days of half-day instruction to elementary students during the summer;
  • Establish grant programs to (1) train teachers to effectively combine classroom instruction with e-learning and (2) help parents use additional services for children with learning disabilities; and,
  • Dedicate more funding to research-based programs proven to advance student achievement, including dual-language immersion, dyslexia identification and career and technology education programs.

See this flier on HB 3 for additional information.

House legislators fought hard to raise the per-student base allotment last session with no success. Base funding formulas for Texas school districts have not been revised since 2015 and are not adjusted for inflation.

Chairman Huberty also said one of the bill’s goals was to provide school districts with more flexibility in spending the additional funds. Merit-based pay systems for educators could provide some of that flexibility for districts who choose to participate. The idea is based in part on the Dallas ISD model, which uses classroom appraisals, assessment scores and student surveys to compare teachers and reward the highest-performing educators.

Merit-based guidelines would still need to meet or exceed minimums for new teachers and those with 20 or more years of experience. In school districts that do not adopt alternative schedules, teacher raises would range from nearly $600 to more than $1,600. The new schedule would also incentivize retention of new teachers, who would receive a $400 monthly raise during their second year.

Both chambers have declared raising teacher salaries to be a major priority. The National Education Association found that Texas ranked 28th nationally in teacher pay in 2017, with an average pay more than $7,000 below the national average. Senators unanimously passed Senate Bill 3 this week as well, which would mandate a one-time raise of $5,000 for all Texas teachers and librarians above their 2018-19 school year salary, or $500 above their monthly salary. All senators have signed onto SB 3 as co-authors to show their support.

The upper chamber’s corresponding school finance reform bill has not been filed as of the writing of this update. Librarians were added because, as Senate Finance Chair Jane Nelson (R-Flower Mound) noted, Texas requires all librarians to have spent two years as classroom teachers. Major differences between the House and Senate approaches to teacher pay are detailed in the table below.

House Bill 3 been scheduled for a hearing by the House Public Education Committee Tuesday, March 12. Senate Bill 3 will go to the House to be heard and possibly revised in committee.

The process

Today is the deadline to file bills other than local bills, emergency appropriations or bills related the governor’s emergency items. Lawmakers will be working hard to address their priorities before the end of the session on May 27.

Sources: Texas Legislature Online (TLO)

Legislative Alert: March 1, 2019

Bills would repeal in-state tuition for undocumented high school graduates

House Bill 413 by Rep. Kyle Biedermann (R-Fredericksburg) and Senate Bill 576 by Sen. Pat Fallon (R-Prosper) would repeal in-state tuition for undocumented students who graduate from Texas high schools. Currently, these students can attend higher ed institutions for in-state tuition rates if they (i) graduated from a public or private high school in Texas and (ii) have lived in Texas for at least three years prior to graduation or receiving their GED. Texas became the first state to establish in-state tuition policies in 2001 under former-governor Rick Perry. Texas colleges and universities only need a statement of residency and an affidavit that the student will apply to become a permanent U.S. citizen. HB 413 would remove these specifications entirely, and SB 576 would allow institutions to determine which documentation is needed to establish residency. HB 413 was referred to the House Higher Education Committee.

New American Economy (NAE), a bipartisan research organization that advocates for economically friendly immigration policies, released a study this week that found Texas could lose $400 million in Texas economic activity, or additional consumer spending from increased income, in the first year if lawmakers pass HB 413 or SB 576. The loss stems from $213.6 million in wage earnings and $184.2 million from lost additional spending annually. Affidavit students contribute $397.8 million to the Texas economy annually through increased earnings as well as additional tax revenue. The study used data to estimate that 25,000 students were covered by in-state tuition annually, about half of students graduate within six years, and controlled for various factors such as English proficiency, gender and race in calculating additional earnings.

Tech Titans, one of our partner organizations, has signed the Texas Compact on Immigration developed by Texas for Economic Growth, a coalition launched by New American Economy, and Texas Business Immigration Coalition. The Texas Compact commits to promoting common-sense immigration reforms that strengthen our economy and attract talent and business to Texas. The compact highlights three principles to guide bipartisan immigration solutions:

  1. A federal immigration system and policies that create jobs and attract global talent and investment, including pathways to legal citizenship and border protection.
  2. In-state tuition in Texas, which empowers immigrants better contribute to the local and state economies.
  3. Local policies that support and attract new talent to keep communities competitive.

See the full language here.

House Bill 2, which would trigger local elections if property tax revenue increased by 2.5 percent or more annually, was discussed for nearly 12 hours in the House Ways & Means Committee on Wednesday. Chairman Dustin Burrows (R-Lubbock) reportedly seemed open to rollback rates other than 2.5 percent during the hearing, including rates based on a price or wage index. HB 2 and SB 2 would not decrease property taxes, but are designed to slow the rate of property tax increases by tying elections to increases in local tax revenue. Rep. Burrows noted that under the current rollback rate of 8 percent, property taxes would “double in nine years,” while at 2.5 percent taxes would double in 28 years. HB 2 remains pending in committee without amendments.

Two weeks ago, the Senate Property Tax Committee approved an amended Senate Bill 2, the corresponding property tax bill in the upper chamber. SB 2 is now waiting behind a blocker bill before consideration by the upper chamber. A blocker bill is a legislative tool used most sessions that results from the senate rules, which require senators to consider bills in the order they are received from committees. This order can be circumvented by a three-fifths majority, or 19 of 31 senators. Once under consideration, the bill could be amended and passed by a simple majority (16 votes). Currently there are not 19 senators who are willing to suspend the rules to take up SB2 So, an attempt to vote out the blocker bill by a simple majority is under consideration so sponsors can bring SB 2 to the floor of the Senate for consideration. This year’s blocker bill is Senate Bill 409, “relating to the creation, purpose, implementation, and funding of the County Park Beautification and Improvement Program.”

The process

Next Friday, March 8 is the deadline for lawmakers to file bills and joint resolutions unrelated to the governor’s emergency items. More than 5,000 bills and resolutions have been filed so far by both chambers.

Senate Bill 3, which would provide $5,000 raises to all teachers in Texas public schools, was unanimously passed by the Senate Finance Committee this week. Testimony from teachers supported the direct pay increase, while schools asked for more flexibility in how to use the addition $3.9 billion. The bill was approved with amendments that extended the raises to charter school teachers, and prevented schools from decreasing salaries and increased pensions costs to cover the pay raises. Sen. Nelson clarified that SB 3 would not prevent lawmakers from establishing merit-based policies. SB 3 was left pending in committee.

The upper chamber amended its rules to add two seats to the Senate Higher Education Committee. The new members will be Sen. José Menéndez (D-San Antonio) and Sen. Pete Flores (R-Pleasanton).

Correction: In our last alert, we incorrectly stated the 2018-19 budget did not fund special items for state universities. All special items remained, however many were decreased. The current budget proposals include funding for higher ed special items.

Sources: Texas Legislature Online (TLO)

Legislative Alert: February 22, 2019

Higher ed institutions saw maintained or decreased funding during the last session. This year, universities are hoping for funding that meets enrollment growth, as well as more money for innovative programs and research.

Higher education funding will be a priority in 2020-21 budget

In 2017, legislators set aside less money for Texas colleges and universities even with substantial enrollment growth. UT Dallas lost more than $300k in general revenue compared to the previous biennium, despite adding 3,700 students and proportionally increasing semester credit hours the following year. The 2018-19 budget also removed most special items, which are requests by higher ed institutions for facilities, research programs or other projects that require more than formula funding.

Increasing higher ed funding is essential to address multiple state goals, including the 60x30 plan to achieve 60 percent of adults aged 25-34 obtaining a degree or certification by 2030, as well as expanding research to drive innovation and economic growth. The current budget proposals, HB 1 and SB 1, do not include special items. However, they would increase formula funding for universities without fully recognizing enrollment growth. For UT Dallas, this would mean an increase of more than $6 million.

Budget writers also neglected funding for research programs at state universities. In an interview with Texas Tribune’s Evan Smith last week, Rep. John Zerwas admitted that legislators “robbed the research funds” at higher ed institutions during the last session, and said increasing higher ed funding will be a priority for the upcoming budget. He used TRIP as a specific example of an underfunded program that may benefit from the increased dollars available this session.

The Texas Research Incentive Program (TRIP) uses state funds to match up to 100 percent of private donations to eligible universities for research. TRIP was established in 2010 to incentivize the private sector and philanthropists to help build more Tier One universities in Texas, or universities that are recognized nationally for their competitive research output. Emerging research universities (ERUs), including UT Dallas, are eligible for these matching funds. TRIP has been successful in leveraging contributions but has incurred a significant backlog because of insufficient funding by legislators. Currently, the backlog of matching state funds has reached $182 million.

Earlier in February, the state’s ERUs met in Austin to develop a research agenda focused on TRIP and Core Research Support funding. Their joint request asked the legislature to make a one-time appropriation to pay the $182 million backlog and to grant an additional $50 million for new matching funds. They also requested restoring the Core Research Support Fund, which was cut by 10 percent last session, to its 2016-17 level. The current House and Senate budget proposals would maintain Core Research Support, but would provide only $35 million to TRIP, the same as the previous session. If additional funds are not provided, Texas would owe $153 million in unfunded matching contributions to its emerging state universities.

The process

More committees held organizational meetings this week. A few heard bills addressing the governor’s emergency items. Below are updates about bills discussed in our previous alerts:

  • SB 570 relating to franchise tax credits for companies that employ paid interns was referred to the Senate Finance Committee.
  • HB 580, which would allow school districts to cut taxes for employers that hire their students as interns, was referred to the House Public Education Committee.
  • HB 360, which would extend the expiration of the Property Redevelopment and Tax Abatement Act for Chapter 312 projects, was referred to the House Ways & Means Committee.
  • HB 700, which would expand the Skills Development Fund, was referred to the House International Relations & Economic Development Committee.

Sources: Texas Legislature Online (TLO)


Legislative Alert: February 15, 2019

Senate Property Tax Committee approves tax cap bill
On Monday the Senate Property Tax Committee, including Vice Chair Angela Paxton (R-McKinney), approved a revised version of Senate Bill 2 in a 4-0 vote. SB 2 would trigger an automatic local election if a municipality’s revenue from property taxes increased by more than the “rollback rate” of 2.5 percent. The sole democrat on the committee, Sen. Juan "Chuy" Hinojosa (D-McAllen), abstained from voting. The committee adopted 15 mostly technical amendments to the original bill, however maintained the 2.5 percent threshold. Opposition testimony at the hearing noted that Texas ranks 46th among states in overall tax burden according to the Tax Foundation, and were concerned about salaries for city personnel and emergency responders. Many representatives in the House have indicated they will wait to see any school finance legislation before they decide on property tax relief.

The Senate Finance Committee also met on Monday to discuss the upper chamber’s proposal for school funding, which would provide $2.4 billion in additional revenue to cover enrollment growth. Their budget would also appropriate another $6 billion to cover teacher salary raises and to offset the costs of property tax relief. The committee’s revised version of SB 2 will now go to the Senate Floor for discussion and a vote. If approved, the bill will go to the House for committee referral.

Bills expand and maintain economic development incentives
The Skills Development Fund supports partnerships between private Texas businesses and local community or technical colleges. Businesses that expand or relocate to Texas can apply for funding to develop customized, rapid job-training programs for employees. House Bill 700 by Rep. Ryan Guillen (D-Rio Grande City) and Senate Bill 352 by Sen. Beverly Powell (D-Burleson) are identical bills that would expand the Skills Development Fund to include workforce development boards, public libraries and school districts as qualifying partners. SB 352 has been referred to the Senate Natural Resources and Economic Development Committee.

The Property Tax Abatement Act, found in Chapter 312 of the state Tax Code, allows cities, counties and special districts to exempt the increase in a company’s property value from taxation. Local governments can use these tax abatements to attract new industries or to retain and develop existing businesses. Once new employers are established, they continue to tap into the surrounding workforce, contribute to future tax revenue and strengthen the local economy. Chapter 312 also allows cities to apply for funds to improve reinvestment zones, or areas that are in serious disrepair, present public hazards or create an economic liability. The City of Richardson has three reinvestment zones in Centennial Park and areas that would support rail construction that connects Plano/Richardson to DFW airport.

The Property Tax Abatement Act is set to expire this year. House Bill 499 by Rep. Angie Chen Button (R-Richardson), House Bill 360 by Rep. Jim Murphy (R-Houston) and Senate Bill 118 by Sen. Royce West (D-Dallas) are identical bills that would extend its expiration date for another 10 years, until 2029. Senate Bill 350 by Sen. Beverly Powell (D-Burleson) would remove the expiration date, making the act permanent. SB 118 and SB 350 have been referred to the Senate Natural Resources and Economic Development Committee.

Legislators support apprenticeship and internship programs
Expanding apprenticeships and internships has been proposed to combat the state’s skills gap, or shortage of skilled workers. Apprenticeships train high school or postsecondary students in skills specific to that industry, producing skilled applicants who are ready to enter the workforce upon graduation. Legislators can promote the creation of these opportunities by offering tax credits to employers who hire paid interns, or by establishing a grant program to reimburse companies for costs associated with new interns.

House Bill 580 by Rep. Shawn Thierry (D-Houston) would allow local school districts to reimburse private employers from the Foundation School Program for paid internships with their district’s students for career and technical education programs. Senate Bill 508 by Sen. Borris Miles (D-Houston) would establish a separate grant program to reimburse private employers for paid internships with public school students. SB 508 was referred to the Senate Education Committee on Thursday.

House Bill 966 by Rep. Harold Dutton, Jr. (D-Houston) would give businesses with interns employed for less than 48 months a sales-and-use tax refund or franchise tax credit of either $2,500 or half of the intern’s wages. The franchise tax credit could cover their total tax due if five or more interns are employed, and if half of their combined wages is equal to or less than the total tax. Senate Bill 570 by Sen. Brandon Creighton (R-Conroe) would also provide a franchise tax credit of $1,000 for each public school student who completes an eligible internship program.

The process

Throughout the session, we will update you about the progress of important bills in the legislative process. Every bill must pass through a series of reviews, revisions and votes before the governor will have a chance to approve or veto the final version. The Legislative Budget Board, under the House of Representatives, publishes a helpful primer on the life of a bill. The House Research Organization (HRO) also released a guide on how the Texas state budget is written.

Sources: Texas Legislature Online (TLO), Texas Office of the Comptroller


Legislative Alert: February 8, 2019

Governor Greg Abbott names emergency items
On Tuesday, before a gathering of the Texas Senate & House, Governor Greg Abbott delivered his State of the State address. At the start of each legislative session, the governor uses the State of the State address to list his priorities as well as any emergency items. Normally legislators cannot vote on legislation until the filing deadline, March 8; however, bills that are designated emergency items by the Governor are fast-tracked for committee floor debate and approval.

Governor Abbott's six emergency items for the 86th Legislature are:

  1. School finance reform;
  2. Property tax relief;
  3. Teacher pay raises;
  4. School safety;
  5. Mental health programs; and,
  6. Hurricane Harvey disaster response.

Some of these priorities have legislation already filed, such as property tax reform (SB 2 & HB 2) and teacher pay raises (SB 3). The other items will likely be addressed in the top bills of both chambers, House Bills 1-20 and Senate Bills 1-30.

Property tax bill heard in committee
Senators quickly addressed one of the governor’s emergency items, property tax relief. The Senate Property Tax Committee met on Wednesday to discuss Senate Bill 2, or the newly named Texas Property Tax Reform and Relief Act of 2019. An identical bill, House Bill 2, has also been filed by Rep. Dustin Burrows (R-Lubbock).

SB 2 would make significant changes to property tax law, including:

  • Decrease the rollback rate from 8 percent to 2.5 percent. If a city or county’s local tax revenue increases by more than 2.5 percent, an automatic “rollback” election would be triggered for citizens to vote to approve the additional revenue.
  • Exclude cities and counties that collect less than $15 million in combined property and sales and use tax. This caveat will exclude more than half of Texas cities and counties from SB 2, but will include more than 60 percent of the state population.
  • Create a new, online “real-time tax rate notice” to inform residents of local tax rate proposals. Property owners would be able to see their local tax rates, how much they will owe in taxes, and how much they would owe based on a proposed tax rate, a tax rate that would produce no new revenue for cities or counties, and the rollback tax rate. There would also be a required email address for local governments so that citizens could voice their opposition or support toward tax proposals.
  • Reform the appraisal review process. In counties with one million or more residents, Appraisal Review Boards (ARB) would hear protects for commercial properties that exceed $50 million in value. The bill would also create a Property Tax Administration Advisory Board in the Texas Comptroller’s office to oversee the entire property tax process.

The new rollback rate would apply to many North Texas cities, including Richardson and Plano. The fiscal note for SB 2 notes that tax revenues for school districts would decrease and costs to the state through school funding formulas would increase. However, the exact cost to school districts and the state cannot be estimated, as well as the savings per household.

The process
The legislature is warming up for the 86th session. The Senate has begun referring bills to committee. More than 800 Senate bills and more than 1,900 House bills have been filed so far.

Sources: Texas Legislature Online (TLO)


Legislative Alert: February 1, 2019

Comptroller recommends that state contribute 40 percent of public education finance

Texas Comptroller Glenn Hegar, who manages the state’s finances, released a Fiscal Notes report this week that broke down public school funding formulas with new numbers. His message overall was that school funding formulas must change fundamentally to generate impactful school finance reform. He suggested that the historical average of state contributions to public school funding, 40 percent state to 60 funding local funding, is “reasonably attainable” and would significantly mitigate the pressure on local districts.

Public school funding in Texas depends largely on three variables: the number of students in a district, local property values and property tax rates. Increasing the basic allotment, or amount of money per student based on the average daily attendance (ADA), has been an effective strategy for increasing state spending based on enrollment. The calculation based on property taxes, however, has been more problematic.

The report highlighted the cycle of decreasing state contributions and rising property taxes. Currently, state spending decreases as local tax revenues increase. The Foundation School Program (FSP), which the state uses to fund public schools, counts local revenues first. The state then supplements the remainder, so that any increase in local tax revenue decreases state spending. While property tax rates have increased in small amounts, property values in Texas have risen sharply. As a result, local tax revenues have increased with a corresponding decrease in state spending each year. These spending cuts compel districts to raise local tax rates, perpetuating the general dissatisfaction with rising property taxes.

This pattern, which is written into the current public school finance formulas, has placed increasing burdens on local communities to pay for their schools. In 2018 the state contributed 36 percent of public school funding, down from 46 percent in 2008. During the same decade, after accounting for inflation, per-student public school funding from local sources rose by 29 percent, while funding from state sources fell by 8 percent. Hegar noted that one of the chief issues with the current formulas is their failure to account for inflation, which could alleviate much of the pressure on school districts to cover rising costs of materials like books and office supplies.

School funding from property values is also subject to wealth equalization and recapture. Revenue from “property-wealthy” districts is “recaptured” and redistributed to less wealthy districts. Disparities between districts can be extreme. For example, the highest property wealth per ADA is $16.9 million in Westhoff ISD, between San Antonio and Victoria. The lowest is $65,476 in Tornillo ISD, outside of El Paso (TEA). Large cities such as Austin have complained about the recapture calculation due to losing large portions of their budget. Plano ISD returned $105 million in recapture revenue in 2017, the second highest recapture in the state. Removing this equalization, however, would result in gross discrepancies in funding per student among districts, and potentially open the Texas public school system to litigation.

The report also highlighted the problematic ways that state and local funding shares are calculated by the Legislative Budget Board (LBB) and the Texas Education Agency (TEA). The LBB is controlled by the Texas Legislature, while the TEA is led by the governor’s appointees. Both organizations include recaptured payments as state contributions, even though they are derived from another district’s property tax revenue. The recapture of local taxes made up 3.9 percent of public school funding in 2018. Hegar used his own numbers in his report, which count dollars from local taxes as local funding.

Hegar further warned that the rising number of economically disadvantaged or higher-needs students is outpacing general enrollment. Economically disadvantaged students already make up 59 percent of the state’s 5.4 million public school students and are often more costly per student. He also advised legislators to consider the volatility of funding sources. Some tax revenue, such as severance taxes on oil and gas, can vary up to 50 percent annually. Sales and use tax revenue is also much more susceptible to economic downturns than property taxes.

Both legislative chambers file bills to reduce rollback tax rate

Rep. Dustin Burrows (R-Lubbock), chairman of the House Ways and Means Committee, and Sen. Paul Bettencourt (R-Houston), chairman of the Senate Property Tax Committee, filed identical bills to curb property tax revenue. House Bill 2 and Senate Bill 2 would require voter approval for any revenue growth above 2.5 percent. Lawmakers failed to pass a similar measure last session with a threshold of 4 percent. However, Governor Greg Abbott, Speaker Dennis Bonnen and Lieutenant Governor Dan Patrick expressed optimism that their unity will allow this attempt to succeed. Currently, local property tax revenue in municipalities can increase by 8 percent before triggering voter approval. This rollback rate of 8 percent is independent of the actual property tax rate. For example, a vote could be required if appraised property values increase tax revenues by 8 percent even if the rate stays the same or decreases. School districts, cities and counties pushed back, saying that local revenue sources make up for reduced state spending on education. Cities also expressed concern about funding public safety measures if an arbitrary revenue cap is passed.

State of the City

The City of Richardson held its annual State of the City on Wednesday. Mayor Paul Voelker and members of the City Council highlighted achievements in 2018, including the DART Board approving the Cotton Belt Commuter Rail Line; the leasing in Richardson of more than 1.5 million square feet of office space, and progress in planning for the East Arapaho-Collins Innovation District. They noted that Richardson has the highest concentration of foreign-owned businesses in the Metroplex and maintains its status as the official International Business Capital of North Texas by the Texas Legislature. The City continues to work with its institutional and philanthropic partners to improve the community. To find out more about the state of Richardson, see the summary and recording of the State of the City.

The process

Bills have not been assigned to committees yet. The House Appropriations and Senate Finance committees have begun meeting daily for the extensive budget-writing process. The House Public Education Committee met on Wednesday, and chairman Rep. Dan Huberty (R-Houston) announced a schedule for the next few meetings. The Texas Commission on Public School Finance will present their report on Feb. 6, and the committee will begin hearing bills on Feb.

Sources: Texas Legislature Online (TLO). Fiscal Notes is a review of the Texas economy from the office of Glenn Hegar, Texas Comptroller of Public Accounts.


Legislative Alert: January 25, 2019

The House and Senate released their committee assignments this past week. The makeup of a committee is crucial to the fate of a bill. Once a bill is assigned to a committee by the Speaker of the House or the Lieutenant Governor, the chair decides which legislation the group will discuss and often revise. If a majority of committee members vote in favor of the final bill, it can be scheduled for a hearing by the full chamber. Modified legislation can diverge drastically from the original bill, and legislation can easily halt at this stage if the committee chair or members do not favor the legislation.

Committee Assignments

Senate

Lt. Gov. Dan Patrick released the Senate committee assignments late Friday afternoon. The freshman Senator Angela Paxton (R-McKinney), who won the open seat for Senate District 8 last November, was assigned Vice Chair of the Senate Property Tax Committee, as well as a seat on the Business & Commerce, Education and Natural Resources and Economic Development committees. Senator Nathan Johnson (D-Dallas), who won against incumbent Don Huffines, was assigned to Administration, Health and Human Services, Veteran Affairs and Border Security, and Water and Rural Affairs.

Several committees with North Texas representation will see bills that impact our legislative priorities. Nearly half of the Senate Education Committee will be from North Texas, including Senators Paxton, Pat Fallon (R-Prosper), Bob Hall (R-Edgewood), and Royce West (D-Dallas). Sen. Jane Nelson (R-Flower Mound) will chair the Senate Finance Committee. Senators Angela Paxton and Senator Kelly Hancock (R-North Richland Hills) will sit on the Senate Property Tax and Business & Commerce committees, with Sen. Paxton as vice chair of the former and Sen. Hancock chairing the latter.

House

Speaker Dennis Bonnen revealed his chamber’s committee assignments this week. The Speaker of the House assigns the members to House committees. The Economic & Small Business Committee that Rep. Angie Chen Button (R-Richardson) chaired during the previous two sessions was removed. She will be chairing the Urban Affairs Committee during the 86th session. Rep. Jeff Leach (R-Plano) will chair the Judiciary and Civil Jurisprudence Committee. Rep. Ana-Maria Ramos (D-Richardson), a freshman representative, will not lead a committee but will have seats on two committees instead. See the full line-up below:

  • Rep. Angie Chen Button (R-Richardson) – Chair, Urban Affairs; seat on Higher Education
  • Rep. Jeff Leach (R-Plano) – Chair, Judiciary & Civil Jurisprudence; seats on Pensions, Redistricting, and Investments & Financial Services
  • Rep. Ana-Maria Ramos (D-Richardson) – seats on Natural Resources and Defense & Veterans' Affairs

The House Committee on Higher Education has a few North Texas representatives, including Rep. Angie Chen Button (R-Richardson) and Rep. Eric Johnson (D-Dallas). The House Committee on Urban Affairs will be chaired by North Texas officials Rep. Button and Rep. Matt Shaheen (R-Plano). The larger House Appropriations Committee has only one rep from the Dallas area, Rep. John Turner (D-Dallas), in its roster. The Public Education committee includes Rep. Morgan Meyer (R-Dallas) and Rep. Scott Sanford (R-McKinney). Rep. Sanford, Rep. Shaheen and Rep. Candy Noble (R-Allen) will represent North Texas on the Ways & Means Committee.

The process

The House filed their appropriations or budget bill, House Bill 1, on Wednesday. House and Senate bills will be referred to a committee by the Speaker or Lieutenant Governor, respectively, now that the committees have been assigned. The deadline to file most bills and joint resolutions is Friday, March 8. The House Appropriations Committee will begin meeting next week. The Senate Finance Committee, which will address the budget, has begun meeting daily.

Sources: Texas Legislature Online (TLO)


Legislative Alert: January 18, 2019

House and Senate reveal new budget proposals

On Wednesday, Sen. Jane Nelson (R-Flower Mound) filed Senate Bill 1, the upper chamber’s budget for the 2020-21 biennium. The Senate proposed a base budget of $243 billion, an increase of 12 percent from the 2018-19 budget. The bill would also increase the Foundation School Program (FSP), the state’s source of public school funding, by $4.7 billion.

The lower chamber’s proposed budget, which will be House Bill 1, has not been filed. The Legislative Budget Board (LBB) published a report on Monday that proposed $247 billion over the next biennium, with $7 billion more allocated toward the FSP. The increase is about $3 billion more than the Senate’s public education allocation. The lower chamber’s budget would increase funding for primary and secondary schools by about 17 percent, for a total of $70.6 billion. The LBB estimate included funding from federal and state funding as well as local property taxes, which are projected to decrease as the state’s contribution increases. The House only proposed a 1.6 percent increase in higher education funding. The new budget would draw about $633 million from the Economic Stabilization Fund, better known as the Rainy Day Fund or Texas’ savings account.

Public school finance has been a primary concern for many years as the state’s share of education funding has declined. For a thriving economy, Texas needs a reservoir of qualified, educated workers. Improving our workforce starts with a strong education that meets the needs of its students and businesses in the community. The leaders of the Texas legislature have declared public school finance reform as one of their top priorities during the 86th session.

Teacher pay raises

SB 1 also included a $3.7 billion allocation for mandated teacher pay raises. Sen. Nelson filed Senate Bill 3, which contains the first across-the-board pay increase for Texas teachers in nearly 20 years. The bill would provide full-time teachers with a $10,000 pay raise by Fall 2021, with a $5,000 salary increase in Fall 2020 and an additional $5,000 the next year. Lt. Gov. Dan Patrick endorsed the proposal during his inaugural address. Gov. Greg Abbott also emphasized the importance of improving public education funding in his inaugural speech, stating, “Our students deserve better…It is time for Texas to deliver real education reform.”

House and Senate reveal new budget proposals

No House or Senate committees have been assigned. Lt. Gov. Dan Patrick said Senate committees would be assigned next week. House committee preferences were due on Tuesday, with assignments planned by the end of January. Bill assignments will begin after the committees are announced. No bills can be passed the first 60 days of the session unless the governor declares emergency items.

Sources: Texas Legislature Online (TLO), Legislative Budget Board (LBB)


Legislative Alert: January 11, 2019

The 86th Legislature convened on Tuesday and is off to an exciting start. More than 1,000 bills have been filed since November of last year. Governor Greg Abbott, Lieutenant Governor Dan Patrick and the newly-elected Speaker Dennis Bonnen committed to collaborate on key issues during the upcoming session. Texas Comptroller Glenn Hegar announced an additional 8.1 percent will be available to lawmakers for the next budget.

Rep. Dennis Bonnen of Angleton will be the next Speaker of the House

One of the most pressing questions for the next session has been who will replace former Speaker of the House Joe Straus. The leader of the state House of Representatives, like the lieutenant governor, has enormous power to steer the legislature. Among other duties, the speaker appoints committees and their leadership, refers all proposed legislation to those committees, and decides which bills come to a vote on the floor. This authority allows the speaker to negotiate bipartisan agreements, ensure that committee chairs and vice chairs share his or her priorities and interests, and even halt opposed legislation.

In November of last year, a majority of representatives pledged to elect Rep. Dennis Bonnen (R-Angleton) to be the next Speaker of the House. Governor Abbott, Lieutenant Governor Patrick and Speaker Bonnen held a joint news conference on Wednesday to reassure Texans with the “very strong, profound and unequivocal message” that they are united on key issues. Each of them highlighted school finance and property tax reform during their campaigns. When asked if he would push Bathroom Bill legislation that plagued lawmakers in 2017, Lieutenant Governor Patrick stated he did not plan on reintroducing a battle that has “been settled…been won.”

Rep. Bonnen was 24 years old when he won the open 1996 Republican primary runoff by ten votes. He was the youngest member at that time. In 2013, Rep. Bonnen became speaker pro tem under Joe Straus, the Speaker’s second-in-command. The following session, he was appointed to chair the powerful Ways & Means Committee. He became known as the “House’s top advocate” and a “bulldog” during this time for his work on the House’s tax cut proposal. In 2017, Rep. Bonnen became a key mediator of the growing tension between Lt. Gov. Patrick and former Speaker Straus. Last year, Rep. Bonnen was not even a candidate for Speaker when more than 100 out of the total 150 House members pledged to support him. His experience in House leadership, rightward-leaning views and reputation as a skilled arbitrator contributed to his victory.

Rep. Bonnen studied political science at St. Edward’s University in Austin. After college, he interned for former Rep. Greg Laughlin, a conservative Democrat who would switch to GOP the following year. During his tenure in public office, he worked in various industries until he settled as president, CEO and chairman of Heritage Bank in 2008. See the Texas Tribune’s profile on the new Speaker for additional background.

Comptroller announces Texas will have nearly $9 billion more to spend in the next budget

The budget is the only bill that state lawmakers must pass each session. Policy priorities are born or buried in the state budget each year. Key issues such as reforms to public school funding formulas, research at state universities, tax relief and job training programs must be written into the budget to be enacted. Bills that require state funding are contingent on inclusion in, and passage of, the appropriations bill each biennium.

Texas Comptroller Hegar has the job of estimating the state’s economic condition for the next two years to determine the state budget. On Tuesday he released his biennial budget report for 2020 and 2021. His evaluation of the Texas economy was “cautiously optimistic,” with 8.1 percent more funding for lawmakers to distribute. A total of $119.1 billion will be available for the budget, an increase from $110.2 billion for 2018 and 2019. The state’s Economic Stabilization Fund, more commonly known as the Rainy Day Fund, is also at a record high of $15 billion.

The Texas Comptroller has an especially difficult task because he is asked to predict the state’s available funds over a longer period than most states, who normally meet each year. After delivering the positive outlook above, he warned that “we’re unlikely to see continued revenue growth at the unusually strong rates we’ve seen in recent months.” However, lawmakers will still have significantly more funding available than the previous session to spend on top priorities such as public school financing and property taxes.

The process

More than 800 House bills and 300 Senate bills have been filed since last November. Lawmakers will continue to introduce new legislation until the deadline on March 8. The top spots, House Bills 1 through 20 and Senate Bills 1 through 30, are reserved for the top priorities of the Speaker and the Lieutenant Governor respectively. The upper and lower chambers alternately file the appropriations bill each session, and this year will be the House’s turn with House Bill 1. The Speaker and the Lieutenant Governor will assign committees likely later this month or early February. Once the committee appointments are announced, lawmakers will start meeting to work on legislation.

The Chamber will track bills relevant to our Legislative Agenda, where you can find our positions on policies that are vital to the Richardson business community. Each week we will continue to highlight bills and developments that matter to you and to the Richardson business community. Stay tuned!

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