A Texas-Sized Legislative Review and Preview

In January, I predicted a ‘meat and potatoes’ 86th Texas Legislative Session and that’s what we got.

If you’re skeptical, see it here.. https://www.linkedin.com/pulse/86th-texas-legislature-have-meat-potatoes-we-hope-like-casselberry/

Or here in my “Texas Business and Policy Report” on KXAN/ NBC Austin: https://vimeo.com/313005137/c5769f43b1

The Republican “Big Three” leadership – the Governor, Lt. Governor and a newly minted House Speaker – remained politically unified, focusing their legislative energies on core policy issues like property tax relief and school finance reform, and largely avoided the more divisive social issues.

Why the newfound synergy?  Look no further than the November 2018 elections; Republicans lost 12 State House seats, 2 incumbent Senators along with 2 Congressmen, and several statewide elected officials (including Lt. Governor Patrick himself) survived closer-than-expected elections.

(For perspective, however, the Democrat candidate receiving the most votes, U.S. Senate candidate Francis “Beto” O’Rourke was still only the 9th highest vote getter in the state).

It was apparently enough to scare Republicans straight.  What resulted was a  moderated Big 3 and Legislature that focused more on difficult issues like taxes and education reform – generally only addressed under court order – and less on social issues such as the so-called ‘bathroom bill.’

While one could argue it was pragmatic politics, let’s also give credit where credit is due.

Most new legislation went it effect on September 1.  The following summary of “Major Legislation of the 2019 Session” comes courtesy of my friend and colleague, Royce Poinsett of Poinsett PLLC.  See also my FORECAST of what’s ahead, below.

Texas legislators filed more than 7,300 bills in 2019, and enacted over 1,400 into law. Some of the most significant legislative action is summarized here.

State Budget. HB 1 enacts a two-year balanced state budget with $250.7 billion in overall spending.  This is an increase of more than 16 percent over the prior biennium, made possible by a healthy Texas economy and energy sector. Much of the new spending went to the top legislative priorities: $6.5 billion for public schools and $5.1 billion to “buy down” Texans’ property tax bills (see below).

The legislature also authorized a record-breaking $6.1 billion withdrawal from the Economic Stabilization Fund (or “rainy day fund”) for large-scale infrastructure projects and Hurricane Harvey recovery. However, the state continued its stinginess on health and human services programs, budgeting just 1 percent more than in the prior budget and cutting Medicaid spending by $900 million.

Property Tax Reform. SB 2 bars cities, counties and special districts from increasing property tax collections more than 3.5 percent in any year without a vote of the public; school districts are capped at 2.5 percent. (This is a major restriction from the current cap of 8 percent.)  Democrats and local officials warn that the new tighter revenue limits could seriously disrupt local budgets and services.

School finance reform. The legislature accomplished something many insiders thought impossible: enacting wholesale school finance reform without a court mandate. HB 3 provides a total of $11.6 billion in new state funding for public education: (i) $4.5 billion for a 20 percent general increase in per student baseline funding, and targeted funding increases for pre-kindergarten programs, 3rd grade reading proficiency and dyslexia; (ii) $2 billion for an average salary increase of $4,000 for teachers, librarians, nurses and counselors; and (iii) over $5 billion for “buying down” school districts’ maintenance and operation tax rates to provide taxpayer relief (an average of 8 cents per $100 property valuation in 2020 and an additional 5 cents per $100 property valuation in 2021).

HB 3 will also provide future school tax relief by limiting local school property tax growth to 2.5 percent per year (absent voter approval). And because the state government is increasing its share of public education funding from 38 percent to 45 percent, it is decreasing the “Robin Hood” recapture payments required from wealthy districts by $3.6 billion per biennium, or 47 percent, overall.

Even with the passage SB 2 and HB 3, Texans are unlikely to see their property tax bills fall in absolute terms, as increasing home values will continue to drive those bills upward.  But the reform package should prevent the dramatic increases Texans have been seeing in high growth areas.

Many observers caution that the state may need to seek new revenue sources in future sessions if it is to sustain these billions in new school spending commitments in future budgets.

Abortion. The legislature declined to consider Alabama-style challenges to Roe v. Wade, but did enact less ambitious restrictions.  SB 22 prevents state and local governments from partnering with abortion providers like Planned Parenthood, even on non-abortion health programs.

Guns. The legislature failed to enact the “constitutional carry” handgun rights (i.e., carry without licensing) promoted by some gun rights activists.  But it did enact HB 302 permitting tenants to possess lawfully owned firearms in leased dwellings regardless of landlord objections, and SB 535 allowing licensed handgun owners to carry their arms in places of worship (unless expressly prohibited by the institution).

State vs. Local Control.  The revenue limitations in SB 2 and HB 3 are obviously fairly extreme examples of state preemption over local control. On the other hand, cities were successful in defeating legislation that would have removed their ability to enact local ordinances requiring employers to provide paid sick leave, or regulating short-term rental companies like Airbnb.

Tobacco.  SB 21 into law prohibits the sale of cigarettes, e-cigarettes and other tobacco products to Texans younger than 21.

Cannabis.  The legislature failed to pass legislation decriminalizing “marihuana” (or even a bill updating its anachronistic statutory spelling).  But HB 3703 does expand the medical conditions for which low-THC medical cannabis, or CBD oil, can be legally prescribed to include MLS, ALS, Parkinson’s disease, terminal cancer, autism and many kinds of seizure disorders.

Red light cameras. HB 1631 bans red light cameras across the state, although it does permit current contracts for the devices to continue until their expiration dates.

Breastfeeding and pumping.  HB 541 clarifies state law to make clear that women in Texas are allowed to pump breast milk, not just breastfeed, anywhere in public.

News Laws that Affect the Real World

Attorneys should always be prepared to answer the eternal cocktail party question: “Did this year’s legislature change any laws that affect my daily life?”

But Don’t Drink Alone. SB 1232 and SB 1450 allow for expanded legal home delivery of alcoholic products and beverages, and HB 1545 permits Texans to buy “beer to go” directly from craft brewery taprooms.

Competition for the Grackles. SB 476 prohibits cities from enacting restrictions on restaurants that want to let diners bring pets onto their outdoor patios.

Win for Big Lemon. HB 234 allows young Texans to legally run lemonade (and other nonalcoholic beverage) stands on private property and public parks, overriding any local government or neighborhood association objections.

Swipe Left. HB 2789 criminalizes the sending of nude or sexually explicit photos to unwilling recipients through text message, social media and online dating applications.

Back in Brass. Building on the legislature’s legalization of switchblades in 2013, HB 446 ends the state’s ban on “brass knuckles.”

FORECASTING

The 2020 elections will determine who controls the re-drawing of legislative district lines (aka redistricting) when the 87th Texas Legislature convenes in January 2021 so every competitive race will be as hotly contested as 2018.

Texas Democrats need to flip 9 seats to control the Texas House for the first time since 2000.  (At 19-12, the Texas Senate is out of reach for Democrats)

I have maintained that 2018 was likely an aberration driven by “Beto” enthusiasm, the whopping $80,000,000M spent by Democrats in the state, and straight-ticket voting (no longer an option for voters).

We shall see.

Republicans will not have the widely popular Governor Greg Abbott at the top of the ticket and it’s unclear if President Trump will boost or drag down ballot candidates.  Based on recent GOP congressional retirements, they may be sensing the latter.

If the economy continues to flourish and the property tax ‘buy down’ holds up for the next twelve months then expect Republicans to survive in 2020.  But, the state’s demographics are changing rapidly with an ever-growing Hispanic population that voted roughly 65/35 for Democrats in ’18 and in-migration from more liberal states that could also change our politics faster than I would otherwise anticipate.

Historically, the every-10-year redistricting session is contentious and 2021 will be no exception.  Even if the GOP maintains control, it’s likely the margin will continue to narrow.  I’ll have more on policy matters in a later edition.

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