The 84th Legislative Session gaveled out on June 1 adjourning Sine Die. During the 84th Session there
were a total of 6,276 House and Senate bills filed and a total of 1,323 bills were passed (not including resolutions).*TLO To further break down the statistics there were 819 House bills passed (a 12% increase from the last regular session) and 504 Senate bills passed (a 29% decrease from last session).
Below is a “BILL SPOTLIGHT” on certain bills that passed out of the 84th Session broken out by various issues. There were also some notable bills that did not pass. For example, efforts to reform the Hazelwood Program were not successful this session. SB 1735 (Birdwell/Zerwas) was passed by both chambers but the conference committee could not come to an agreement in negotiations on what the final piece of legislation would look like. The original bill would have added residency requirements for out-of-state veterans. The original bill also changed eligibility provisions for the dependents of a veteran eligible for the program.
The final deadline of the 84th Session was June 21, the last day the Governor can sign or veto bills passed during the regular session. Governor Abbott ended up vetoing 42 bills from the 84th Regular Session not including line item vetoes.
Below is a review of the bills vetoed by the Governor. Additionally, click on the following links for the list of bills signed, vetoed or filed with a signature (including HCRs and SCRs):
- Signed by Governor (1,202) – signature statements
- Filed Without Signature by Governor (162)
- Vetoed by Governor (42) – veto statements
- Line item vetoes in HB 1 and HB 2
Governor’s Emergency Items
During the February 17 State of the State address, Gov. Greg Abbott listed five emergency items which included: border security, early education, ethics reform, higher education research and transportation funding which are listed below in their respective sections. Additionally the proposals in the Governor’s Bicentennial Blueprint: open carry and e-verify are also listed below in their respective sections.
Funding Spotlight
Education – For the 2016-17 biennium, public education saw enrollment growth funded and additional $1.5B in the Foundation School Program (FSP) over current law which includes: $200M from HB 7 addressing fractional funding; $55.5M for the Instructional Facilities Allotment to provide tax relief for property-poor districts issuing bonds for local facility needs; and $47.5M for the New Instructional Facilities Allotment to provide start-up funds for new district and charter school campuses.
Transportation – Funding for TxDOT for the 2016-17 biennium includes $1.3B in State Highway Funds (SHF) made available from ending certain diversions and $2.4B from oil and natural gas tax-related transfers to the State Highway Fund (Proposition 1 2014). Additionally, an estimated $2.5B would be credited to the SHF for 2018 and $2.5B for 2019 for a total of $5B for the 2018-19 biennium – if voters approved the Nov. 2016 Constitutional Amendment proposed in SJR 5. There would also be additional funding available for SHF in 2020 when 35 percent of the tax imposed on the sale, use or rental of a motor vehicle over $5B would be credited to the SHF – estimated $432M annually.
Tax Relief – An increase in homestead exemptions ($1.2B) and franchise tax relief ($2.6B) will result in $3.8B tax relief. Those two bills combined with other tax relief bill passed during session, resulted in the final total for the 84th Session of providing over $4B in tax relief.
Health Care – Funding for health care programs and services totaled $77.2 billion. The largest driver of this amount is the Medicaid program which received $61.2 billion, an increase of $2.1 billion over last biennium. $1.7 billion of that increase is attributable to Medicaid caseload growth. No additional appropriations were made to fund expected cost growth in the health care industry.
Border Security – $800.0 million in state funds is provided to fund border security initiatives many which are stipulated in HB 11.
Further details on the items spotlights are listed in the 84th Session Summary by respective topics.
Budget/Appropriations Process
Several bills passed during the 84th Session which addressed either the budgeting process or the budget overall some of those bills include:
HB 1 (Otto/Nelson) the general appropriations bill for the 2016-17 biennium totaled $209.4 billion in All Funds (AF) and $106.6 in General Revenue Funds (GR). No appropriations from the Economic Stabilization Fund (ESF) are included in the 2016-17 budget. The balance of the ESF will be $11.1 billion at the end of fiscal year 2017. Specific highlights will be listed in their respective sections below.
HB 2 (Otto/Nelson) the supplemental appropriations bill for 2015 totaled $503.2 (AF) and $284.8 (GR).
HB 6 (Otto/Hinojosa) relating to the creation and re-creation of funds and accounts. Bill provisions that would exempt select General Revenue-Dedicated accounts from Government Code, Section 403.095(b), would reduce the amount of funds available for general purpose spending in the 2016-17 biennium by $549.7 million. The bill was signed by the Governor June 19, 2015 and became effective immediately.
HB 7 (Darby/Nelson) relating to the amounts, availability, and use of certain statutorily dedicated revenue and accounts, and also address public education fractional funding. Among other provisions, the bill would implement certain recommendations in the Legislative Budget Board policy report, "Further Reduce Reliance on General Revenue-Dedicated Accounts for Certification of the State Budget" (February 2015) submitted to the Eighty-fourth Legislature, 2015. The bill also creates a new GR-dedicated account, the Tax Rate Conversion Fund, to provide increased state aid to ISDs with compressed tax rates below 1%. The bill was signed by the Governor June 15, 2015 and becomes effective September 1, 2015.
HB 903 (Burkett/V. Taylor) authorizes investments that increase the fund’s earning potential. Requires the comptroller leave an amount equal to 30 percent of the constitutional limit of the RDF. The CAP is estimated to be $16.1 billion for fiscal 2016-17. The bill was signed by the Governor May 23, 2015 and became effective immediately.
Tax Relief
Governor Abbott signed legislation on June 15 that is expected to provide approximately $4 billion in tax relief for businesses and homeowners. During the bill signing ceremony Gov. Abbott stated, “The best job creation program is tax reduction. While other states are increasing taxes and driving out businesses, the State of Texas is cutting more than $4 billion in taxes and fees.”
Property Tax Relief/Homestead Exemption
SB 1/SJR 1 (Nelson/Bonnen) provides for an increase in the homestead exemption from $15,000 to $25,000. The issue will be put before voters in the November 3, 2015 election. The ballot language will include language regarding the increase in the amount of the exemption to $25,000 and prohibit a transfer tax on a transaction that conveys fee simple title to real property. SB 1 was signed by the Governor June 15, 2015 and most provisions of the bill go into effect if and when the constitutional amendment is approved by voters.
Franchise Tax Relief
$2.6 billion in All Funds is provided in HB 1 for franchise tax relief provided in HB 32 (Bonnen/Nelson), which will reduce franchise tax rates by 25%. HB 32 was signed by the Governor June 15, 2015 and becomes effective January 1, 2016.
Specifically, HB 32 as passed out of the 84th Legislative Session and signed by the Governor, would:
- Amend Chapter 171 of the Tax Code, regarding the franchise tax, to permanently change tax rates applicable in determining franchise tax liability and the amount of total revenue at or below which a taxable entity may elect to use the EZ computation to determine tax liability.
- Set a tax rate of 0.75 percent for taxable entities not primarily engaged in retail or wholesale trade; the rate under current law is 1.0 percent.
- Set a rate of 0.375 percent for taxable entities primarily engaged in retail or wholesale trade; the rate under current law is 0.5 percent.
- Set a tax rate of 0.331 percent for taxable entities electing the EZ computation; the rate under current law is 0.575 percent.
- Provide that a taxable entity could elect the EZ computation if its total revenue were no more than $20 million; under current law the amount is no more than $10 million.
- Direct the Comptroller to conduct a study by Sept. 30, 2016 to identify the effects of economic growth on future state revenues. The report would identify revenue growth allocation options to promote efficiency and sustainability in meeting revenue needs of this state, including revenues currently allocated to the Property Tax Relief Fund from franchise tax revenue, upon the repeal of the franchise tax. The report would be due by September 30, 2016.
- Take effect on January 1, 2016, and apply to tax reports due on or after that date.
Economic Development
Funding in HB 1 for the Trusteed Programs within the Office of the Governor totals $576.4 million in All Funds for the 2016–17 biennium, a decrease of $301.5 million, or 34.3 percent, from the 2014–15 biennium.
Funding also includes an appropriation of $85.0 million from the Emerging Technology Fund to the Enterprise Fund ($45.0 million) and to the new Governor’s University Research Initiative ($40.0 million) to provide matching funds to Texas public universities to recruit Nobel Laureates and National Academy members to Texas, contingent on passage of legislation.
HB 26 (Button/Fraser) would establish the Governor's University Research Initiative (GURI) administered by the Texas Economic Development and Tourism Office within the Office of the Governor to award matching grants to eligible institutions to recruit distinguished researchers. The bill would require a biennial report on grants made from the Governor's University Research Initiative Fund. The bill would direct the winding up of contract and awards in connection with the Emerging Technology Fund (ETF), however, agreements in place before that date would not be affected. The bill would direct the GURI as the successor to the Emerging Technology Fund and royalties, revenue and other financial benefits received in the future would be deposited to Governor's University Research Initiative Fund. The bill would direct the disclosure of certain public information collected under the ETF program.
The bill would create the Economic Incentive Oversight Board that, for certain incentive awards, would be required to: review the effectiveness of certain programs and funds to business entities and other persons; evaluate the benefits and costs to the state, local governments and residents of the state from the economic development activity; develop a schedule for periodic review of certain state incentive programs; and make recommendations for audits to the Legislative Audit Committee. The bill would require a biennial report from the Board. The Board would be entitled to reimbursements for certain expenses. The Governor's office would be required to provide administrative support and staff to the Board.
The bill would shorten the approval period for a proposal for a grant from the Texas Enterprise Fund.
The Major Events Trust Fund (METF) would be renamed to the Major Events Reimbursement Program (MERP) and would base the reimbursement amount on the prevailing state sales tax. According to the CPA, the fiscal impact of changing the state portion of the MERP reimbursement to be based on the sales tax rate is unknown as the size and number of events that would become eligible and held in the state is unknown.
The bill was signed by the Governor June 18, 2015 and becomes effective September 1, 2015.
SB 633 (Fraser/Isaac) transfers the various event trust funds from the comptroller’s office to the governor’s office and expands the list of qualifying events. The bill was signed by the Governor June 18, 2015 and becomes effective September 1, 2015.
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