The House Pensions Committee met on April 16 to discuss a number of bills. This report covers HB 35 (Swanson et al.), HB 664 (Landgraf), and HB 1852 (Sanford). Part one of the hearing can be found here.
This report is intended to give you an overview and highlight of the discussions on the various topics taken up. It is not a verbatim transcript of the discussions 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.
Vote Outs
- CSHB 4131 (Parker) (9-0)
- New committee substitute contains technical corrections
- HB 4474 (Parker) (9-0)
- New committee substitute contains technical corrections
- HB 4307 (Lucio) (8-1); vote was reconsidered, and changed to (9-0)
- CSHB 4534 (Gates) (9-0)
- CSHB 4108 (Guerra) (6-3)
Testimony
HB 35 (Swanson et al.) – Relating to an election authorizing the issuance of bonds or an increase in taxes by a political subdivision.
Withdrawn from hearing notice
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HB 664 (Landgraf) – Relating to a proposition to approve the issuance of bonds or other debt.
- Somewhat different than the bill offered by Swanson
- Increasing correlation between local property taxes and government debt
- Turnout in May is minimal compared to November for debt elections
- By requiring it to be on ballot in November, more voters will have the opportunity to vote on whether or not they want more debt
- Communities will make decisions, does not change this
- Maximizes transparency and voter participation
James Quintero, Texas Public Policy Foundation – For
- Bond propositions best decided with more voters, maximum input
- Proposals settled by a few in many cases
- May 2019, An ISD sought approval for over $1 billion more debt with just 4% of the voters voting, similar cases elsewhere
- System is not optimal and unpopular
- Poll conducted amongst 800 registered voters found that 80% of responses said they supported this change, 9% said they opposed the idea
- Munoz – Do you have any examples that would show that if the election were held in November then the turnout would have been higher?
- Yes, I can send the data to you
- Munoz – Is this specific for bond elections?
- It is aimed only at bond propositions
- Munoz – So we don’t know if it will make more people vote since it is turnout in general?
- It is a fairly safe assumption that maximum input will be given in a November election
- Munoz – Would they know the same amount of information?
- That could be anyone’s guess
- Munoz – So it would have a better chance of getting defeated?
- We don’t take a position on that
- Munoz – What happens if it is just a 4% turnout? What else can we do?
- I would like more transparency in the process with voter education
- Rogers – I would like information from other states with similar circumstances
Bill Longley, Texas Municipal League – Against
- We understand the intent and share the desire for greater turnout
- We think it would limit the flexibility of the state
- Some states have multiple election dates, this would take it down to one
- Fastest growing areas in the country need to adjust accordingly to pay for the growth
- Issuing debt for major capital projects requires flexibility
- Over the last 7 years, there have been more ballot propositions on the November date than the May date, more defeated in May compared to November
- Stephenson – When would you support this bill?
- We are certainly in the midst of growth. Preserving the May date makes sense. Cities do attempt to drive up turnout as is
- Stephenson – What were the other dates?
- I think in August and February
Jeannie Stone, Texas School Alliance – Against
- School districts rely on bonds to upgrade facilities
- Average age of a Richardson ISD school building is 53 years old
- May elections are good for voters, we work hard to drive up turnout
- May enables more focused electorate
- Improvements allowed over summer in preparation for school year in August
Heather Sheffield, Legislative Advisory Council Texas Association of School Boards – Against
- Maintenance will be hindered
- Should have best rate for market bonds, same time results in weaker buying power
- Will have to wait longer for projects to be completed
- Schools are being fiscally responsible as is
Landgraf, in closing
- Not designed to be a limiting factor to incur debt through a public debt election
- Empowers voter participation when voters are engaged
- Presumption of higher turnout in November
- I would also like to find other state data
HB 664 left pending
HB 1852 (Sanford) – Relating to the definition of “closing” for purposes of certain private activity bonds.
- Under chapter 1372
- Interest on bonds is exempt from taxation
- Texas is only state that requires full funding, typically would be drawn down
- Partial funding is allowed in other states
- Texas requires full payment of bonds, will require partial payment, no less than 10% at closing
- Reduces unnecessary burdens to costs
- More infrastructure will be generated with interest savings
Bobken Simonians, ITEX Development – For
- Substantial savings on construction side with bonds
- $112 -$120 million would have been available to expand affordable housing throughout the state
- The interest cost savings and fees would be a substantial amount of money
- Anchia – Could you describe the fees?
- Lender origination is 1%
- Anchia – It is being wrapped into the issuance?
- Correct
- Anchia – Can you explain the closing costs?
- We close for the construction amount, the amount of the bond will be reduced in interest savings plus the percentage of fees that apply to the initial amount
- Anchia – So you could draw down as needed as opposed to all at once?
- Correct, if you need them
- Anchia – Are there any additional administrative fees for the issuers?
- The only fees are the origination, lender, and issuance fees. Other fees are fixed
- Stephenson – Do the contractors get paid in a reasonable amount of time?
- Yes, no bearing on the contractor
HB 1852 left pending