Legislative Alert: May 29, 2015 »
Wednesday was the last day for the House to decide on all Senate bills and for the Senate to vote on all bills. The official end to this legislative session on Monday, June 1, is the last day for both chambers to approve, reject or correct revised bills that leave conference committees. Many bills died this week before the Tuesday and Wednesday midnight deadlines, but the progress of legislation important to the Texas high tech industry from this week can be found below.
HB 26, the economic development reform bill authored by Rep. Angie Chen Button (R-Richardson), was passed by the Senate on Tuesday and assigned a conference committee by the House on Thursday. Both chamber have until Monday to approve HB 26 and send it to the Governor.
HB 2712, which creates a 20-year sales tax exemption for certain large data center projects, was passed by the Senate on Monday and approved by the House on Thursday. Tax incentives for data centers would encourage these often multibillion-dollar projects to settle in our state, creating high-tech jobs and attracting more capital investment. HB 2712 will now go to the Governor's desk.
HB 32, which provides a 25 percent franchise tax cut to all businesses in Texas, was approved by both Chambers on Thursday and will now head to Gov. Abbott's desk. The bill is estimated to cost $2.6 billion over the next biennium and satisfies Gov. Abbott, who said he would veto any appropriations bill that did not include a margins tax cut.
SB 632, which abolishes the Texas Emerging Technology Fund and redistributes its account to other state programs, was passed by the House on Monday. The Senate refused to concur with House amendments to the bill on Thursday and assigned a conference committee to negotiate a new version.
SB 1457, which curbs the behavior of patent trolls in harmful patent infringement claims, was passed by the House on Friday and sent to the Governor on Tuesday. Patent trolls target small businesses and individuals by submitting baseless or tenuous claims that require years of complex and costly litigation to resolve. SB 1457 introduces basic requirements for these claims, such as the number of the patent in question and the identity of the plaintiff, and a civil penalty for their abuse.
SB 9, which limits the growth rate of the budget, was passed by the House on Tuesday and assigned a conference committee by the Senate on Thursday. The Texas Constitution limits state spending to the growth of the state economy for certain categories in the budget. The revised version of SB 9 would expand these restrictions to the entire budget and require only a simple majority vote to override the state spending cap. The cap on each category, such as education or transportation, would be based on inflation and population rates relevant to that area and determined by the Legislative Budget Board for each session.
HB 2, the supplemental budget bill that fills gaps in the 2014-2015 state budget, was passed unanimously by the Senate on Tuesday with amendments, which the House approved on Thursday. HB 2 will also go to Gov. Abbott's desk.
HB 100, which would allocate millions of dollars for much-needed construction and maintenance funds for Texas colleges and universities, was sent to conference committee by the Senate on Monday. Both chambers must approve the revised version of the bill, distributed on Thursday, by midnight next Monday.
HB 1000, which creates three new university research funds over the next biennium, was passed by the Senate on Wednesday. The new funds are intended to support quality faculty and research capacity at higher ed institutions (HRO report). Another bill that promotes higher ed research, SB 44, was sent to the Governor on Tuesday. SB 44 specifies that private gifts made to colleges and universities to support undergraduate research are eligible for matching state grants under the Texas Research incentive Program (TRIP).
Legislative Alert: May 22, 2015 »
Representatives plan to meet over the weekend in anticipation of the Wednesday, May 27 deadline for passing House bills in the Senate and Senate bills in both chambers. Last Friday was the final day for representatives in the lower chamber to pass House bills. Make sure you check out our Updates section below to see the status of legislation that could impact the tech industry.
Negotiations over appropriations bill finally come to end
On Thursday night House and Senate negotiators reached an agreement regarding the controversial appropriations bill, the budget legislators must pass before the end of the session. House and Senate members must approve the $210 billion budget before it goes to the governor's desk. Below are some highlights of the final version:
House and Senate approve bills that support telecommunications providers
On Wednesday the Senate passed Senate Bill 1009, which would increase the cap on sales tax refunds for telecom network equipment from $50 million to $75 million. The analysis for HB 2199, its identical companion, says the bill would spur economic activity, create new jobs, improve broadband services and restore Texas' competitive edge over other states in the telecom arena. SB 1009 was sent to the House Ways and Means Committee on Thursday.
House representatives approved Senate Bill 755 on Thursday, another bill authored by Sen. Van Taylor and sponsored by Rep. Angie Button (R-Richardson) intended to help the tech industry. SB 755 would remove a glitch in Texas law that allows the same computer program to be taxed twice.
Prudent investment of excess Rainy Day funds approved, sent to governor
The Senate passed House Bill 903 on Thursday, which authorizes the investment of excess funds in the state Rainy Day Fund. HB 903 will now head to Gov. Abbott to be signed into law or vetoed. A sufficient balance for the Rainy Day Fund, also known as the economic stabilization fund (ESF), is considered to be $7 billion; however, the balance is expected to reach $11.1 billion by the end of 2017. HB 903 proposes that the Comptroller invest a percentage of the excess funds ($4.1 billion), which are currently "highly liquid, low yield assets," according to the well-established prudent investor standard. Over time, these small, relatively safe investments would build the Texas emergency fund and provide more support for programs when general revenue falls short. See the Finance committee's bill analysis and the HRO report for a more detailed account of the bill's fiscal strategy.
SB 1457, which would curb the widespread practice of abusive patent litigation, passed out of the House Judiciary and Civil Jurisprudence Committee on Wednesday and was sent to Calendars on Thursday.
HB 32, which would reduce the franchise tax over the next biennium as proposed by the budget, was passed by the Senate Finance Committee on Wednesday.
HB 100, which distributes tuition revenue bonds (TRBs) to Texas colleges and universities for facility maintenance and construction, was passed by the Senate on Tuesday. On Thursday, however, the House did not concur with the Senate's amendments and appointed a conference committee.
SB 632, which eliminates the Texas Emerging Technology Fund and establishes governor's university research initiative to recruit distinguished researchers, was passed unanimously by the House Economic and Small Business Development Committee on Thursday.
SB 44, another bill aimed at improving Texas' position as an innovator in research, is scheduled for a House vote today. SB 44 would clarify that private gifts made to colleges and universities are eligible for matching funds under the Texas Research Incentive Program.
Legislative Alert: May 8, 2015 »
Legislators hurried this week to push several bills because of deadlines approaching next week, despite the stalemate between House and Senate members over sales and property tax cuts in the budget. Monday, May 11 is the last day for House bills to leave committee and Friday, May 15 is the last day for representatives to vote on House bills. The last day for the Senate to consider all legislation is Wednesday, May 27.
Addressing the growth of patent trolls
The Senate passed SB 1457, written by Sen. Robert Nichols (R-Jacksonville) and co-authored by Don Huffines (R-Dallas). The bill addresses the negative impact of "patent trolls," patent assertion entities (PAEs) that use abusive patent litigation to target businesses and innovators for financial gain. In lieu of federal action, states have begun establishing their own laws that prohibit PAEs from making bad faith claims of patent infringement, or claims that are false, baseless or misleading. SB 1457 allows the Texas Attorney General to investigate bad faith claims and bring suit against patent trolls, and protects patent holders by notifying them of possible infringements and pursuing compensation. The bill was passed by the House Judiciary & Civil Jurisprudence Committee on Tuesday.
Ways & Means approves bill promoting telecom investment and development
House Bill 2199, filed by Rep. Tan Parker (R-Flower Mound) and identical to Senate Bill 1009, would increase the annual cap on the sales tax refund for communications network equipment from $50 million to $150 million. Texas imposes the eighth highest sales tax rate on telecommunications equipment, making our state less competitive than other states when attracting telecommunications companies and providers. A sales tax rebate could promote investment in communications networks and have an impact across the economy, including the generation of more jobs and local tax revenue. HB 2199 passed out of the House Ways & Means Committee last Friday. The Senate Finance Committee hear testimony on its sister bill, Senate Bill 1009, on Wednesday.
Prekindergarten, higher ed funding bills head to governor's desk
House Bill 4, an early education bill and one of Gov. Abbott's top priorities, was passed by the Senate on Thursday. HB 4 dedicates $130 million to encourage existing pre-K programs to implement certain high quality curricula and teaching measures, such as smaller class sizes and training. Early education grant programs are currently available for qualifying children, such as low-income, military and foster children. If the House approves changes and the 11 amendments adopted by the Senate, the bill will head to the governor's desk for his signature.
On Monday the House approved Senate Bill 1191, which would increase funding for state colleges and universities by $130 million annually to accommodate growth. SB 1191 will now head to Gov. Abbott for his approval.
House passes several economic development measures
The House passed House Bill 26, and is expected to pass House Bill 27 and House Bill 28 next week, the state economic development reform package authored by Rep. Angie Button (R-Richardson). HB 26, which was referred to the Senate Natural Resources &Economic Development Committee on Tuesday, abolishes the Texas Emerging Technology Fund (TETF), creates a university research initiative to match funds for the recruitment of renowned faculty at state colleges and universities, shortens the state's approval period for grants, and authorizes the Texas Enterprise Fund (TEF) to fund higher ed research commercialization requests. HB 27 also eliminates TETF and supports higher ed research commercialization grants, but redistributes remaining TETF funds to only the Texas Research Incentive Program or the Texas Research University Fund. HB 28, in an effort to increase transparency in state economic development programs, establishes regular audits of Texas economic incentive programs.
The House also unanimously approved the first sales tax cut in Texas history. House Bill 31 decreases the state sales and use tax from 6.25% to 5.95%, a reduction of nearly 5 percent. The House also passed House Bill 32, which decreases the franchise tax for all business owners by 25 percent, without an amendment that mirrored the Senate's plan by increasing the franchise tax exemption from $1 million to $4 million. HB 32 would provide an estimated $4.9 billion in tax relief to Texas business owners. Both bills were amended so that the Comptroller could further reduce tax rates if more state revenue comes in than expected.
Several other economic development measures were passed in an effort to increase Texas' competitive advantage when recruiting new businesses. HB 1701, passed on Wednesday, shortens the approval period for TEF proposals from 91 days to 31 days. HB 590, approved by House legislators on Tuesday, attracts start-ups and promotes growth by creating a tax exemption for property used for the commercialization of technologies developed by universities and eligible medical centers.SB 632, approved by the Senate, also redirects funds from TETF toward the creation of Gov. Abbott's proposed university initiative for the recruitment of Nobel Laureates and National Academy members to Texas colleges and universities.
Reliable funding for road construction, maintenance and long-term projects
Senate Joint Resolution 5, the companion bill to SB 5, was unanimously passed out of the House Transportation committee last Tuesday. SJR 5 would dedicate the first $2.5 billion in vehicle sales tax revenue to the general revenue fund, and the second $2.5 billion to the State Highway Fund (SHF). Any remaining funds would be split evenly between the General Revenue Fund and SHF each fiscal year. Constitutionally dedicated funds could provide a predictable revenue stream for the Texas Department of Transportation, which needs to know how much funding it will receive years in advance for negotiating on long-term projects. Revenue from the state's 6.25% tax on vehicle sales currently goes into the state's general revenue fund. If voters approved the measure in November 2016, the bill would go into effect in 2018.
The House also gave preliminary approval to <astyle="color: blue; text-decoration: underline;" track="on" shape="rect"href="http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=84R&Bill=HB13"linktype="1" target="_blank">House Bill 13 by Transportation Chairman Rep. Joe Pickett (D-El Paso), which establishes certain requirements for TxDOT projects and authorizes the Texas Transportation Commission to determine how to use funding collected from HJR 13. HB 13 is contingent on the passage of House Joint Resolution 13 by voters this November, which would dedicate $3 billion in net sales tax revenue, along with an additional 2 percent of remaining revenue, each fiscal year to SHF. SJR 13 would result in an estimated loss of $11.7 billion to state general revenue funds by 2020. HB 13 and HJR 13 dedicate significantly more funding to TxDOT than SB 5, sent to the House Transportation committee two weeks ago, which would transfer the first $2.5 billion in annual vehicle sales and use tax revenue to SHF.
Legislative Alert: April 17, 2015 »
This week's headliners were the House and Senate budgets, the approval of expanded economic incentives for data centers and debate over school financing reform. Several bills relevant to the North Texas technology industry were also approved by committees and sent to Calendars, where they will be scheduled for discussion and a vote.
House committee approves economic incentives for large data center projects
On Tuesday, the House Ways & Means committee approved several bills aimed at improving economic incentives for large data center projects. Legislators hope that passage of the bills below will make Texas a leader in this segment of the tech industry by extending current exemptions. Each of the bills below has a counterpart in the Senate and will be scheduled for a discussion and vote by the House.
House Bill 2096 by Rep. Angie Chen Button (R-Richardson) would extend the incentives to data centers of any size and reduce the required capital investment from $200 million to $100 million, among other changes. House Bill 2712 by Rep. Charlie Geren (R-Fort Worth) would also broaden the definition of data centers and exempt tangible personal property required for its operation. House Bill 2709, also by Rep. Geren, would allow more data centers to apply for benefits on property used for their facilities under the Texas Economic Development Act.
Side-by-side budget comparison: Senate vs. House
Now that both legislatures have approved budgets for 2016-17, five representatives and five senators will be appointed to a conference committee to unite the proposals. Below is a summary of some of the differences between each version.
The $1.6 billion difference in the House and Senate versions represents less than 1% of the total amount allocated for the next biennium. Part of the included tax relief that depends on legislation has seen some promising developments. House Bill 31, which reduces the sales tax from 6.25 to 6.24 percent, and House Bill 32, which deceases the margins tax by 5 percent, were passed out of the Ways & Means committee and are headed for the House floor.
Reforming how Texas supports its schools
House Bill 1759, the controversial public education funding bill filed by Rep. Jimmy Van Aycock, was discussed in committee on Tuesday. A district court ruled in favor Texas public schools last August, stating that tax cuts from previous sessions imposed a statewide property tax in violation of the Texas Constitution. Legislators have until July 1st to remedy the school financing system, unless the Texas Supreme Court answers the state's appeal. Rep. Aycock said in committee that legislators shouldn't wait to hear back before restoring formula funding allotments. HB 1759 would provide $3 billion to public schools over the next biennium and include eighth grade students in career & technology funds, but would also make larger increases in funding for wealthier schools than urban districts.
HB 26, HB 27 and HB 28 by Rep. Button have passed out of the Economic & Small Business Development committee and are headed to the House floor. The bills include a number of key economic development reforms that could produce an estimated $19 million in net state revenue.
SB 1601, which disqualifies high-speed rails from eminent domain, passed out of the Transportation committee with a 5-4 vote. The bill could jeopardize plans to construct a privately-funded high-speed rail between Dallas and Houston.
HB 1603 by Rep. Villalba, which would create a chancery court for complex business litigation, was approved by the Business & Industry committee and sent to Calendars.
SB 1457, relating to bad faith patent infringement claims, was approved by the State Affairs committee and scheduled to be heard by the Senate.
Legislative Alert: April 3, 2015 »
House budget proposals were debated at length and overwhelmingly passed on Wednesday. Education reform also had the spotlight this week as the House Higher Education Committee approved a bill to provide critical funds to state universities and the Senate passed a new A though F rating system for school performance evaluations.
Budget proposals approved after marathon debate
The House deliberated on Tuesday for 18 hours before passing the budget, House Bill 1, at 5:39 am. Their proposal accounts for $209.8 billion in spending - $7.7 billion more than the current budget, but $2 billion less than the state spending cap. HB 1 contains 257 adopted amendments, including an appropriation of $1.6 billion to fund statewide pre-K programs submitted by Rep. Yvonne Davis (D-Dallas). Texas law prevents legislators from making law in the budget, but adjustments in funding and amendments for certain programs can effectively determine state policy on certain issues. The budget proposal will now be heard and discussed in the Senate so that both legislatures can agree on one budget for the next biennium. The House also unanimously passed the supplemental budget, House Bill 2, which would provide an additional $503 million for fiscal year 2015. Visit our legislative alerts page for a summary of how the appropriations bills impact issues that affect the technology industry.
Bills for expansion/maintenance of tuition revenue bond funds leave committee
House Bill 100 by Rep. John Zerwas (R-Richmond), Chair of the House Higher Education Committee, was passed unanimously out of committee on Monday. HB 100 allocates more than $2.6 billion to Texas universities during the next biennium, including $70 million for a new engineering building at UT Dallas and $80 million for a vivarium and lab facilities at UT Southwestern Medical Center. Tuition revenue bonds (TRBs) are important for expansion, facility maintenance and renovation projects at higher ed institutions. HB 100 is now headed to the House floor, where it will be discussed and held to a vote.
Senate passes new letter grade system for schools performance ratings
The Senate passed Senate Bill 6 this week, which would establish a letter grading system for school performance evaluation. Grades of A through F would replace the current classifications of "exemplary," "recognized," "acceptable" and "unacceptable." Those four designations, author Sen. Larry Taylor (R-Friendswood) said, "lack the clarity of an A through F rating system." Supporters say clear ratings will increase transparency in school rating systems and allow parents to make more informed decisions about where their children attend school, but opponents argue a simplified system would stigmatize struggling schools. SB 6 is considered part of Lt. Gov. Dan Patrick's education reform agenda.
House and Senate budgets leave committees
House Bill 1 and Senate Bill 2, the general appropriations bills for each house, were passed out of committee this week. Both of these conservative proposals will be highly amended as legislators work together to pass only one state budget. Below is a review of each budget's recommendations for state programs that impact businesses and communities.
Texas Research Incentive Program (TRIP)
The Texas Research Incentive Program matches and leverages private donations for research at colleges and universities. HB 1 provides nearly $179 million for the next biennium that includes $67.5 million from the Emerging Technology Fund, a large increase from the previous year. SB 2 provides only $30 million from general revenue and additional funds from the Emerging Technology Fund. Part of the House's allocation would reduce the current backlog of TRIP funding requests.
Tuition revenue bonds (TRBs)
Tuition revenue bonds are authorized during the legislative session and provide higher education institutions with funding for construction and expansion of facilities, equipment and other infrastructure needs. In their interim report, the House Higher Education Committee criticized this method of providing supplemental financing to schools because most approved TRB requests favor construction over maintenance, rely on incomplete data from universities, and are uncertain. During the 83rd Legislature, $3.8 billion in TRBs were requested but none passed before the end of the session. The committee recommended funding schools from general revenue instead; however, HB 1 and SB 2 only provide for 24% and 64% of estimated total available funds, respectively, and SB 2 recommends the passage of $250 million in TRBs. Ensuring campuses receive the funding they need to maintain quality will likely be a top priority this session.
Both budget proposals provide $24 billion to Texas Department of Transportation, an estimated 97% of total available funds that includes $2.5 billion provided by Proposition 1 passed last November. The amount allocated by SB 2 is contingent on the passage of a legislation that authorizes a one-time transfer from motor vehicle sales tax revenues to the State Highway Fund, and the discontinuance of transfers from the SHF to other agencies.
Texas Enterprise Fund (TEF) and Emerging Technology Fund (ETF)
HB 1 provides $57 million to the Texas Enterprise Fund, which uses financial incentives to attract businesses to Texas, and splits the remaining Emerging Technology Fund balance of $101 million between TRIP and research programs, including Gov. Abbott's University Research Initiative. The Senate's budget does not provide any new funding to TEF or TETF for the next biennium. Instead, SB 2 proposes that legislators transfer half of the TETF balance to the Texas Enterprise Fund, and use the remaining funds for the University Research Initiative and TRIP.
Skills Development Fund
The Skills Development Fund, a workforce development initiative that provides grants to public colleges to develop career and technical education program development, would receive about $50 million over the next biennium under either budget, based on an estimated cost of $1,800 per trainee.
Tax Relief Package
This week, the Senate passed the following bills targeted at tax relief for homeowners and small businesses:
Sources: Texas Legislature Online
Legislative Alert: March 20, 2015 »
Several key bills with the potential to reshape Texas' business climate have been filed and passed on to committees in the legislature. Keep up with a legislation that impacts the North Texas technology community with Tech Titan's biweekly legislative alerts.
Bill Sproull's legislative alert
Click on the photo above to hear Bill Sproull, President of Tech Titans, speak briefly about exciting news and recent developments in the Texas legislature.
Reform package for state economic development programs
Rep. Angie Chen Button (R-Richardson) filed three bills last week proposing major changes to state economic development programs. House Bill 26 creates an Economic Incentive Oversight Board and amends the Texas Enterprise Fund guidelines to prioritize small businesses and support projects at higher ed institutions. HB 27 and HB 28 eliminates the Texas Emerging Technology Fund, redistribute remaining ETF funds, establish recurring independent audits of economic development programs, and remove underutilized programs. In a released statement, she said the legislation "lays the groundwork for Economic Development reform in Texas." The bills follow recent criticisms of Texas incentives programs, including unfair distribution of funds and lack of transparency. All bills have been referred to the Economic & Small Business Committee, where Rep. Button is committee Chair.
High-speed electric railway between Dallas and Houston
Rebecca Cowle from Texas Central Railway (TCR) spoke to the Chamber's Public Policy Committee last Friday about the plans for construction of a high-speed electric railway between Dallas and Houston. The privately-funded project is modeled on the successful, exceptionally safe Shinkansen railway in Japan. The proposed route maximizes existing right-of-ways and has an estimate transit time as low as 77 minutes one-way. If approved, TCR expects to be operational by 2020. Two bills, if passed, threaten its construction. House Bill 1889 by Rep. Will Metcalf (R-Conroe), an outspoken critic of the plan, would require TCR to acquire approval from every individual city and county that hosts the route. Senate Bill 1601 by Sen. Lois Kolkhorst (R-Brenham) would disqualify companies that operate high-speed rails from exercising the power of eminent domain. For more information and updates, check out the Commission for High-Speed Rail in DFW's newsletters, the TxDOT Rail Division and the Federal Railroad Administration.
Specialized chancery court for complex business suits
Rep. Jason Villalba (R-Dallas) spoke to the Advocacy Team last Wednesday about House Bill 1603, which would create a new specialized court for complex, lengthy corporate litigation. The chancery court and court of chancery appeals would remove cumbersome business disputes, such as mergers and acquisitions, security law and shareholder derivative actions. These cases crowd court dockets and prevent legitimate suits from being heard in a timely fashion. Because complex corporate litigation often requires specialized knowledge, HB 1603 proposes appointing individuals with the appropriate expertise and background for judgeships. Villalba modeled the bill after the Delaware Court of Chancery. Creating a chancery court may also attract more businesses who wish to incorporate in Texas. "By creating this business-focused, specialized chancery court," Villalba said, "we are telling the world that Texas is open for business and that there is no greater state in the United States to incorporate and begin operations." HB 1603 has been referred to the Business & Industry committee.
Source: Texas Legislature Online
Legislative Alert: March 13, 2015 »
In anticipation of today's deadline for filing bills, legislators have flooded the Capitol with new proposals totaling more than 3,000 in the House of Representatives and 1,200 in the Senate. Committees have already begun to hear testimony and a few key bills have passed the House and Senate. Keep up with a legislation that impacts the North Texas technology community with Tech Titans's biweekly legislative alerts.
State of the State
Governor Abbott outlined his top priorities for this session in his State of the State last week. His agenda includes five emergency items for this Legislature to address immediately: strengthening border security, transportation funding, expansion of early education, higher education research initiatives and ethics reform. Abbott proposed $2 billion in tax reductions for employers by reducing or eliminating the franchise tax, $2.2 billion in property tax relief, increasing funding for road construction and maintenance by $4 billion and allocating $500 million for higher education research programs and faculty incentives. He further stated his support for adopting open carry laws and extensive ethics reform, led by Sen. Van Taylor (R-Plano) and Rep. Charlie Geren (R-Fort Worth).
Senate and House committees assigned
Lt. Gov. Dan Patrick announced his committee assignments on Jan. 23rd. Below are the committees for key North Texas legislators:
Rep. Angie Chen Button: Economic & Small Business Development (Chair), Rules & Resolutions, Ways & Means
Rep. Jeff Leach: Criminal Jurisprudence, Government Transparency & Operation
Rep. Linda Koop: Appropriations, Emerging Issues in Texas Law Enforcement (Select), International Trade & Intergovernmental Affairs
Sen. Van Taylor: Nominations (Vice Chair), Education, Health & Human Services, Transportation
Sen. Don Huffines: Transportation (Vice Chair), Administration, Business & Commerce, Education
Among the many bills filed this session that address the current shortfall in the State Highway Fund, Senate Bill 5 has received some of the greatest support so far with 20 co-authors and Lt. Gov. Dan Patrick’s vocal support. Sen. Robert Nichols (R-Jacksonville) and Sen. Jane Nelson (R-Flower Mound) authored the bill, which proposes to dedicate the first $2.5 billion in revenue from the existing sales taxes on new and used vehicles to the general revenue fund, and the following $2.5 billion to the State Highway Fund to pay for construction, maintenance and transportation debt. Any remaining tax would be split evenly between the two funds. The Transportation committee’s analysis estimated that $2.8 billion would be added to the State Highway Fund during its first year in 2018, and more than $3 billion by 2020. The bill was passed by the Senate and will now be scheduled for a vote in the House.
Repealing the Franchise Tax
Testimony on several bills related to repealing the franchise tax was heard by the Finance committee this week. The margin tax was intended to provide stable, long-term funding for public schools after a Texas Supreme Court case deemed the state’s method of financing public schools violated the Constitutional provision against a statewide property tax (similar to the recent August 2014 ruling in favor of Texas public schools). The franchise or margin tax has been criticized for being overly complex, failing to meet revenue expectations by several billion dollars, charging businesses whether or not they earn profit, and disproportionately harming small businesses. In the bill analysis for Senate Bill 105 filed by Sen. Craig Estes, R-Wichita Falls, the Finance Committee accuses the franchise tax of "inflat[ing] consumer prices while deflating employee wages" and being "one of the most destructive taxes on corporate and small businesses in the country." Despite this strong opposition, replacing the estimated $2.7 billion loss in revenue from its repeal has been a growing concern and threatens the tax cuts to citizens promised by Texas lawmakers. An identical bill, HB 850, and other similar bills have been referred to the House Ways & Means committee for review.
Repealing the Texas Emerging Technology Fund
Rep. Jason Villalba, R-Dallas, filed House Bill 1389 to phase out and repeal Section D of the Texas Emerging Technology Fund (ETF), which deals with commercialization grants to private high-tech companies. Villalba has also filed House Bill 1506, which transfers a portion of TETF funds to the Texas Enterprise Fund. ETF was established in 2005 to match research grants at Texas universities and to seed and retain early stage high-tech companies. Its mission is to attracted talented researchers and innovators to Texas; however, the bill has come under fire recently for transparency issues. Gov. Abbott has proposed eliminating TETF and splitting those funds between a modified Texas Enterprise Fund and a new program designed to recruit top scientists and engineers from other states and private institutions. Two bills that also abolish the TEFT and request an evaluation of the program’s efficacy have been referred to the Economic & Small Business Development committee: HB 1037 by Rep. David Simpson (R-Longview) and HB 523 by Rep. Phil King (R-Weatherford).
Patent Reform Bill
Sen. Van Taylor filed Senate Bill 1187 on Wednesday to protect Texas businesses from abusive patent litigation. Several states have adopted legislation to address "patent trolls," non-practicing entities (NPEs) that threaten businesses or file lawsuits on unmerited patent infringement assertions. Currently, Texas has no laws that protect residents from these burdensome claims. Some have raised concerns that patent legislation could limit the ability of patent owners to protect their individual property, while supporters emphasize that frivolous lawsuits stifle innovation, divert resources and limit business growth. SB 1187 prohibits patent trolls from sending demand letters that contain bad faith assertions and imposes hefty fines for each violation.
Tuition Revenue Bonds Request at State Higher Education Institutions
Sen. Judith Zaffirini, D-Laredo, has filed Senate Bill 21 to request tuition revenue bonds for construction projects at state public universities and colleges. Tuition revenue bonds are used to fund capital construction projects at public higher education institutions. Among the several projects listed for each university, the bill also requests $99 million for an engineering building and $95 million for a science building at the University of Texas at Dallas. SB 21 was referred to the Senate Higher Education committee last month.
Texas Tuition Freeze Bill
Sen. Charles Schwertner, R-Georgetown, has filed SB 233 as a response to the alarming rise of tuition rates and student debt in the past decade. Tuition at state universities and colleges has more than doubled since 2003, when Texas lawmakers passed a bill that transferred the authority to set tuition from the Legislature to the Boards of Regents at public universities. This growth far outpaces inflation during the same period, an especially concerning trend when the average graduate’s debt in Texas has reached $25,000. The bill was recently referred to the Senate committee of Higher Education. Schwertner has also set up a petition website for students to post their experience with student loan debt. The proposed bill prohibits schools from increasing tuition beyond the rate of inflation, but allows fees to increase with a majority vote of the student body. SB 233 also caps tuition for one year. Rep. Four Price, R-Amarillo, filed an identical bill that has been referred to the House Higher Education committee.
Expanding Accountability Measures for Public Schools
Senate Bill 176 by Kel Seliger, R-Amarillo, proposes adding certain new criteria correlated with academic success to the existing Texas School Accountability Dashboard, including participation in the University Interscholastic League (UIL), the number of college credits earned, and the percentage of students who have either satisfied the Texas Success Initiative benchmarks or scored at a certain level on the ACT or SAT. The Commissioner of Education would be required to update these data by September 1st annually. The current public school accountability system’s indices laid out in HB 5 (2013R) include - Student Achievement, Student Progress, Closing the Performance Gaps and Postsecondary Readiness. SB 176 was referred to the Senate Education Committee last month.
Rep. Mary Gonzalez, D-El Paso, filed House Bill 87 in an effort to curb harmful waste generated by improperly disposed electronic equipment. HB 87 would require large retailers that sell electronics to accept computer and television equipment for recycling and ensure that all equipment collected is legally disposed of, recycled or reused, free of charge. Currently, only manufacturers are required to collect and recycle their own products at no cost to consumers. The Texas Retailers Association opposes the bill, contending that it will be burdensome to retailers. A similar bill was halted in the House Calendars committee last session, but legislators are hoping for a different outcome this time. HB 87 has been referred to the House Environmental Regulation committee.
Sources: Governor’s Budget 2016-2017
Legislative alerts go out each week on Friday during the Texas Legislative Session. Check out past legislative alerts below: