Several organizations, including the House Research Organization (HRO), statewide leadership, members of the 84th, and recent articles in the HillCo Client Advisory have all reported on topics the 84th Legislature could consider in the 84th session which started, January 13. Below is a list that utilizes those sources to pull out some general highlights* of what could be expected this session. In addition to the topics below, several interim reports have recently published as well as 20 agencies are under Sunset review which are expected to also broaden the purview of the 84th Legislature.
*The list below is not comprehensive.
Appropriations and spending
On Jan. 12 Comptroller Glenn Hegar said the state can expect to have $113.0 billion in funds available for general-purpose spending. This represents 2016-17 total revenue collections of $110.4 billion in General Revenue-related funds, plus $7.5 billion in balances from 2014-15, less $5.0 billion reserved for 2016-17 transfers to the Economic Stabilization Fund (ESF), also known as the Rainy Day Fund (RDF) and the State Highway Fund.
Absent any appropriations by the Legislature, the ESF balance is expected to be $11.1 billion at the end of the 2016-17 biennium, below the ESF constitutional limit of an estimated $16.1 billion. The Biennial Revenue Estimate published today is one part of the calculations legislators in the 84th will use during the appropriation process.
The other portion of the calculation is the limit on spending set by the Legislative Budget Board (LBB). As reported in the HillCo Client Advisory, on December 1, the LBB adopted a projected state personal income growth rate of 11.68 percent from fiscal 2014-15 to fiscal 2016-17. Subject to adjustments appropriated to the last biennium and without concurrent resolution, this limits spending from non-dedicated tax revenue in fiscal 2016-17 to $94.3 billion, up from $84.4 billion in fiscal 2014-15.
Supplemental appropriations for fiscal 2015
The Legislature will consider additional spending for fiscal 2015. General revenue funding for Medicaid related entitlement programs is expected to run out in 2015, requiring an estimated supplemental appropriation of $971.2 million according to the HRO. Other supplemental needs also could be considered.
Dedicated revenue
Lawmakers may discuss the use of statutorily dedicated accounts in the state budget. Lawmakers may consider proposals to stop using fees and dedicated accounts for purposes other than those for which they were originally intended. Other proposals could include reducing revenue collection in these accounts by lowering or suspending fees.
Spending limits
Legislators may consider imposing limits on expenditure growth. Lt. Governor-elect Dan Patrick stated on Jan. 8 when laying out his priorities, he would like to see legislation passed that would limit spending to no more than population and inflation. It is likely a discussion will happen as well on the definitions of population and inflation.
Contract Oversight
Speaker Joe Straus has said the House will release a budget that will require an agency that wants to award a contract, or make a purchase, worth more than $10 million to meet several new reporting requirements.
Taxes and revenue
The 84th Legislature may consider several tax proposals, including modifying the margins tax and adding requirements for imposing new taxes or increasing tax rates. The discussion of significant tax relief may also take precedence and may include but not be limited to: increasing the homestead exemption, cutting the appraisal rate, or changing the rollback rate. Changes to the margins tax, also known as the franchise tax, may be considered which could include, but is not limited to, increasing the current $1 million floor.
Business and economic development
Lawmakers may consider proposals to change the way the state awards tax incentives to attract businesses to Texas. Lawmakers may debate the use of state funds to attract businesses to locate or expand in Texas. The 84th Legislature could discuss proposals to abolish or restructure those funds and other economic development programs. Proposals may emerge to expand use of the federal E-Verify system.
Criminal justice and public safety
The 84th Legislature may address funding for border security and proposals to expand or make permanent Department of Public Safety (DPS) operations on the border.
Health and human services
The budget and the Sunset review of the state’s health and human services (HHS) agencies are likely to drive much of the discussion of health care. Lawmakers may prioritize proposals to increase access to mental health and women’s health services. Highlights include:
- Speaker Joe Straus has said the House will release a budget that will require an agency that wants to award a contract, or make a purchase, worth more than $10 million to meet several new reporting requirements.
- Lawmakers in 2015 may consider recommendations to move mental health and substance abuse programs from the Department of State Health Services to the Health and Human Services Commission (HHSC), to train all school personnel in mental health first aid, and to increase diversion of individuals with a mental illness from emergency rooms and jails.
- Lawmakers may consider changes to the redesign of the foster care system that began in 2010.
- The 84th Legislature may take up discussions relating to Trauma funding.
- Lawmakers may consider Sunset recommendations. One is to move the administration of Medicaid and other HHS programs under HHSC.
- Legislators may continue to debate cost containment for Medicaid and the Children’s Health Insurance Program (CHIP) this session.
Public education
The 84th Session will be quite similar to recent sessions in that education will be a leading issue throughout the 140 days. Issues that will be considered include, but are certainly not limited to:
- School finance, including the recently filed HB 654 that would establish school finance districts.
- Funding discussions that may gravitate toward local debt issues, including the appropriate use of various financial tools such as capital appreciate bonds.
- Proposals to help fast growing school districts by revisiting the limits established by the “50 cent debt test” that would allow those ISDs to continue to fund needed facilities.
- Pre-kindergarten policies and funding to improve the quality of pre-kindergarten programs.
- Proposals to reduce state-mandated testing requirements in grades 3-12 to conform to the minimum requirements in federal law.
- A response to the funding shortfall of over $700M in TRS-Care, the state’s health insurance program for retired teachers.
- School vouchers that would direct the use of public funds to pay private school tuition for some Texas schoolchildren.
Some lawmakers may prefer to hold school finance discussions until a special session that could be called by the Governor after the Texas Supreme Court’s consideration of the state’s appeal of the school funding case.
Higher education
Higher education topics during the 84th Legislature are expected to focus on funding issues. Lt. Gov.-elect Dan Patrick said on Jan. 8 that he would like to see scholarships for math and science teachers funded, funding for more residency slots for medical students and to look at funding in higher education since deregulated tuition has not worked in keeping costs within reach for an average family. The Legislature may consider funding issues for those institutions granting certain tuition and fee exemptions, such as those granted by the Hazelwood Act.
Energy, environment, and natural resources
The focus on federal regulations including recent EPA rule proposals are expected to draw lawmaker discussion. Discussions on a capacity market and the future of energy in Texas may also be a topic for the legislature. Possible legislation may also be vetted and discussed on the contested case hearing process with a goal for making the process less time consuming and more predictable as to when a decision in the process should be rendered. Recent rains in the new year did bring storage up in statewide reservoirs but still over 40% of Texas remains in a drought and lawmakers may consider proposals of ways to help address drought concerns.
Transportation
Funding for transportation will continue to be a focus for legislators. Lt. Governor-elect Dan Patrick said on January 8 while outlining his vision for the 84th Session that he envisions the budget ending diversions of the gas tax which would send nearly $600 million more annually to roads. Patrick also stated he would like to see legislation that will transfer some of the existing sales tax on cars and trucks to roads.
Government organization
The Legislature may consider proposals to address state employee health and retirement benefits. Topics may include but not be limited to funding of the Employees Retirement System to further make it more actuarially sound. The discussion of defined benefits in contrast to defined contributions may continue in the 84th and HillCo will continue to monitor any discussion on changes in governance of pension plans.
Regulatory issues
Proposals to change the regulation of alcohol, firearms, and gambling are expected also be a highlight during the coming legislative session. An examination of municipal regulatory powers and regulation of development may also occur during the 84th.
