Wrapping up the rest of the regular session

So as we now know, a special session on redistricting has been called, though we don’t yet know what if anything else may be added later. I covered that last night, so let’s cover what else got done at the end of the regular session, beyond what I noted below. First of all, the budget passed, though not without some late drama.


The Texas House approved the 2014-15 budget bill and sent it to Gov. Rick Perry on a vote of 118-29, a lopsided vote that belied the teeth-gnashing and nail-biting over the past few weeks as budget-writers crafted the final deal.

One of Perry’s top priorities — “significant tax relief” — faced the threat of a filibuster by state Sen. Rodney Ellis, D-Houston, Sunday night because his language mandating a periodic review of the $43 billion in tax credits had been stripped from House Bill 500.

When the bill came up around 10:30, Ellis could have killed it by talking until midnight. He did not, but voted against it and predicted that lawmakers were carving a hole in the budget that would have to be filled in future sessions.

Toppling HB 500 would not have undercut the entire budget, but could have prompted Perry to put tax relief on the agenda if he calls lawmakers back after the regular legislative session ends Monday. A special session is considered a near-certainty to deal with redistricting and perhaps other issues.

Senate Bill 1, the two-year budget bill, spends $94.6 billion in state general revenue — up $7 billion — over the next two years on public schools, prisons, parks and health care for low-income children and the disabled. Including federal dollars, the budget bill totals $197 billion, a 3.7 percent increase over the current budget.


Many Texans also would be getting a break on their electric utility bills after both chambers agreed to eliminate an $800 million fund that was created to help low-income Texans and senior citizens pay their bills in the summer months. House Bill 7 repeals the fee that fed that fund, which brings ratepayers about $150 million a year in relief. The remainder of the fund will be paid out over the next three years to provide a discount to people who are eligible.

“I believe this will be the only bill going through this legislative session where customers, mom and dad, individuals who are working, will receive a direct tax rebate that they can feel, they can see and that will be meaningful and tangible for them,” state Rep. Sylvester Turner, D-Houston, said.

Texans served by municipal or cooperative electric providers, including many in Austin and other Central Texas communities, were never subject to the fee.

Businesses could be in line to get about $1 billion in tax breaks.

HB 500 would cut the tax rate for the franchise tax, commonly called the margins tax, by 2.5 percent in 2014 and 5 percent in 2015. The second year tax cut is dependent on state funds being available.

The bill also makes permanent a $1 million exemption for small businesses that have less than $1 million in gross receipts.

Its biggest change, championed by state Rep. Harvey Hilderbran, R-Kerrville, allows businesses to deduct up to $1 million in expenses once they pass $1 million in gross receipts.

See here and here for more on the gyrations regarding the System Benefit Fund, which had been the biggest source of budget shenanigans in the past, as it collected millions that were never appropriated so its revenue could count towards “balancing” the budget. One way to look at all this is that it was an attempt to meet Perry’s demand for $1.8 billion in tax “relief”. Whether he accepts this or not will help determine the agenda of a special session, if one is called. The Observer has more on the budget details, and a statement from Sen. Ellis about HB500 is beneath the fold.

One item that largely went below the radar but that could have required attention in overtime was the fate of the Railroad Commission. Not the failed renaming and attempt to impose more stringent ethics requirements on it but the sunset bill reauthorizing its existence, which nearly ran aground in the session’s twilight.

If lawmakers do not act soon, the agency that regulates oil and gas in Texas could disappear.

A legislative review of that agency, the Texas Railroad Commission, failed this session, and a measure that might be used to keep the agency alive until 2015 or later doesn’t include any reference to the RRC.

“It means the Railroad Commission will go away,” said state Rep. Dennis Bonnen, R-Angleton.

Bonnen chairs the Sunset Advisory Commission, which is charged with periodically assessing and renewing the charters of state agencies. The RRC’s “sunset” legislation failed in 2011, and lawmakers extended the life of the agency until this year. It didn’t work; the legislation that would have renewed the agency’s charter and made additional changes has already failed again.

What’s more, House Bill 1675, this year’s version of the “safety net” that rescued the RRC and other agencies last year, doesn’t include the Railroad Commission this time. Unless lawmakers add it in the final days of the session, the agency will go out of business.

Despite Bonnen’s pessimism, others say that there is a way forward for the agency. Lawmakers who meet in conference committee to reconcile House and Senate versions of HB 1675 could take special measures to extend the life of the RRC for two more years.

“I’m confident that we will get it solved,” said state Sen. Troy Fraser, R-Horseshoe Bay, who noted the importance of the agency. “There are a couple of vehicles to resolve it.” One is the conference committee on House Bill 1675, he said.

“Obviously [we’d] like to get it resolved in the regular session,” Fraser said.

In the end, the RRC was added back into HB1675 via the committee report. I sometimes think cats are envious of how many lives some pieces of legislation get every other year.

The things that did not get done in regulation time are redistricting, about which we know what happened; transportation funding, which just sort of quietly slipped off the radar once Perry stuck a shiv into a bill that would have raised vehicle registration fees; and all of the wingnut wish list items like abortion and gun rights and what have you. This as I’ve said before is simply a matter of what Rick Perry wants to do. There’s plenty of speculation about what Perry may do and what may or may not be good politics for him to do. All I know is we’ll know when he tells us. Rick Perry does what he thinks is best for Rick Perry, and that’s all there is to it.

Senator Rodney Ellis (D-Houston) today blasted the latest plan to add hundreds of millions of dollars in tax breaks while continuing to blatantly obstruct all efforts to catalog and review over $44 billion in state tax giveaways.

At issue is the Conference Committee Report to HB 500, which adds over $700 million in franchise tax cuts for Texas businesses. Last week, Ellis added an amendment – by a unanimous vote — which would identify and review Texas’ tax preferences, ensure that they are carrying out their intended purposes, and advance more efficient and effective economic policy was passed by the Texas Senate.

“The Texas tax code is riddled with tax subsidies, giveaways and loopholes that were put in place years ago by special interests and have never even been reviewed,” said Ellis. “No one in state government even knows how many are in the code, how much they cost, or if they are even working!

“Just last week, this body unanimously said it was time to shine the light on those giveaways,” said Ellis. “Now, in the dead of night, we have again chosen to protect these special interest tax subsidies in a cloak of darkness and secrecy while adding hundreds of millions more breaks to the code. That is outrageous.”

The Ellis amendment would have:

Identify Tax Preferences in Code — Require the Texas Comptroller of Public of Accounts to identify all state and local tax preferences in the Tax Code.
Set Schedule for Review — The Comptroller would set a schedule for all to be reviewed in next twelve years.
Review and Study — The Legislative Budget Board would perform reviews of those state and local tax preferences over a twelve-year period.

According to state reports, Texas spends $44 billion annually on these incentives, but with almost no accountability or oversight. To keep that in perspective, Texas is eligible for $100 billion over 10 years to expand Medicaid.

To many Texans, these so-called incentives are simply another way to game the system. For instance, Texas gave retailers a tax break of over $200 million in 2010 simply to file their sales tax on time. Texas also gave away over $7.4 Billion in revenue from 2004-09 to Natural gas producers, due to an antiquated definition of “high cost” gas that reduces the tax rate actually paid from the 7.5% in statute to under 2% (1.1 to 1.9).There’s even a loophole that allows private country clubs to skip out on millions of dollars of property taxes. Using the loophole, the state’s largest beneficiary, River Oaks Country Club, has a market value of $79 million but is assessed at only $4 million. The 2014-15 budget even includes nearly $40 million to subsidize Hollywood movies.

The truth is, as a result of the sunset process, the legislature knows virtually everything there is to know about every penny spent by agencies such as Texas Board of Architectural Examiners, The Texas Commission on the Arts and the Windham School District with the Texas Department of Criminal Justice than we do about the Texas tax code. Furthermore, this session there are nearly 100 bills on the cusp of becoming law which mandate thorough studies of such issues as the prohibition of dairy farming in certain areas of the state, or requiring research papers to be available to the public.

“We brag about transparency, we review every agency and every dollar spent on our school children, or for grandma at the nursing home, but we let nearly $50 billion every session drain out of here with not so much as a glace,” said Ellis. “We need better accountability measures on corporate welfare and tax giveaways just like every other government program, but just when it looked like we were going to have it, the special interests and lobbyists won.

“And the people lost.”

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