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The House Committee on Natural Resources met on May 11 to discuss a number of items; this report covers SB 387 (Schwertner) and SB 784 (Creighton et al). The video for this hearing can be found here.

 

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions

 

SB 387 (Schwertner) – Relating to the appeal of rates for water or sewer service charged to certain customers of a municipality

  • Seeks to ensure water and sewer utility tax rate payers in an ETJ are afforded an appeal process through PUC for the rate when their utilities are transferred from one provider to another

SB 387 left pending

 

SB 784 (Creighton et al.) – Relating to rates established by municipalities for water and sewer services

  • Seeks to protect entities that qualify for sales tax exemptions from discriminatory water rates established by municipality or municipally owned utilities
  • Current statute eliminates tax benefit
  • Lucio – There was a situation that sparked this but it was already coming? Was there a lawsuit that amplified this subject? In Magnolia?
    • Magnolia was sued by local churches because a rate class was created specifically for them
    • If the constitution affords churches that exemption, governmental entities should not work to usurp those rights
  • Lucio – This bill is retroactive, would not effect that lawsuit?
    • No, it would not
    • Would be effective September 1, 2021

 

David Welch, Texas Pastor Council – For

  • Churches are asking to pay commercial rates
  • Rate disparity discrimination to offset the tax exemption is not a precedent we should set

 

Milt Eichler, First Baptist Church Magnolia – For

  • We pay a higher rate because we are non profit
  • Any increase in our fixed cost effects what we can do in the community
  • King – What size congregation do you have?
    • 800
  • King – What is the typical water bill each month?
    • Last month $850, $1000 in the summer
  • King – Are there separate non profits in your area?
    • Yes, a few
    • Churches, school districts, nonprofits, and city buildings
  • King – That $1000 bill would be closer to $6-700 under this provision

 

Hope Wells, San Antonio Water System – Against

  • SAWS does not have concern with the intent of the bill; our concern is breadth of language and possibility of unintended consequences
  • We do not have a rate that distinguished tax exempt entities, we are concerned that we might have a rate class that impacts that entity though the rate is not based on the exempt status
  • Bill says rate cannot be higher than a rate established for entities that receive comparable utility services; comparison is broad, all of our rate classes receive comparable services
  • Worried that someone could argue that because they are tax exempt, they are entitled to the lowest possible rate
  • Working with Rep. Bell and Creighton
  • Price – In San Antonio, is your commercial rate different than residential rate?
    • Yes, and residential rate is tiered by consumption
  • Price – If you had an apartment complex, is there a rate applicable to the whole complex that is passed on to the tenants?
    • I am not certain about the apartment structure
  • Price – We toured the Haven for Hope in San Antonio; are you saying that it would qualify for residential rate because it houses people? I am trying to understand
    • Someone who is tax exempt, like YMCA, is in a rate class because of their usage, they are a larger user
    • The tier that they are in is because of the volume of their usage, not because they are tax exempt
    • We are worried that the language in this bill will facilitate entitlement about rates and argue to pay the lowest possible rate we offer

 

David Klein, Lloyd Gosselink Attorneys at Law, City of Magnolia – Against

  • City created the rate structure to provide equality, to ensure fair share payment
  • The lawsuit does not include every church in Magnolia
  • King – I understand it is a disproportionate share, but I hoped the city would recognize this unique situation and create a commercial rate to equal out costs
  • King – We did not make the decision to make those entities nonprofits, but it was never intended for them to pay it on the back end
  • With any rate, someone will be upset so the best solution is making it equal among payors
  • King – The committee will be hesitant to pass something that effects every community in the state, that will be our pause

SB 784 left pending