88th Texas Legislative Session Report - Vol. 20
May 30, 2023
Executive Summary
The End of the Regular Session and Beginning of an Immediate Special Session
The final days of the regular session saw a back-and-forth triangulation on property tax relief between the Senate, the House, and Gov. Abbott. At some points, it looked like a deal had been reached. At others, the negotiations spilled into public squawking. To understand the context of the special session, here is a recap of the final days of property tax negotiations:
May 28 (Sunday)
The House and Senate both missed a Saturday night deadline for distributing conference committee reports for major pieces of legislation, including electric grid measures and an economic development replacement tool. But on Sunday, both chambers began suspending rules and the major packages began moving. This revived the outlook on an imminent property tax deal.
At about 10:00 p.m. Sunday night, the Speaker’s Office?tweeted?that the House conferees had signed the conference committee report “and are waiting for their Senate counterparts” to sign. Rumors were swirling that a deal had been struck. At the same time, the Senate stood at ease for thirty minutes.
The House was rumored to have sent over a deal that included $12 billion in school district tax rate compression, $4.3 billion for a $100,000 homestead exemption, and a 5% appraisal cap on all property types.
But at 10:40 p.m., the House gaveled out for the day. No deal.
May 29 (Monday)
The Senate gaveled in on Monday and Lt. Gov. Patrick?remarked?from the dais that it appears there “won’t be much of an interim.”
Then rumors and confusion swirled on what was contained in the House’s offer and the reasons for the Senate’s rejection.
Shortly after 1:00 p.m., Patrick?took to Twitter?to say that Speaker Phelan had offered an 8% appraisal cap for all commercial properties and that Gov. Abbott was present. Patrick added, “If Phelan drops the 8% for business property, then we have a deal. There is still time.”
Shortly before 2:00 p.m., Abbott?then tweeted favorably?toward a tax rate compression plan put out by the CEO of the Texas Public Policy Foundation. A few minutes later,?Patrick responded?and said Abbott’s plan to only include rate compression in a special session call was “not acceptable to the Senate.” Meanwhile, Phelan was on the House dais and?remarked?that the House remained willing to work with the Senate on “some unfinished business.”
To recap, the House was adamant about an appraisal cap reduction, the Senate was adamant about a homestead exemption, and the Governor was adamant about rate compression.
That’s when Patrick?again took to Twitter?and shared the text message he sent Phelan after learning of Phelan’s comments from the dais. “Why don’t you and Bonnen or Burrows come over,” Patrick apparently told Phelan, referring to?Reps. Greg Bonnen (R—Friendswood)?and?Dustin Burrows (R—Lubbock).?Both Rep. Bonnen and Rep. Burrows were then seen in the Senate chamber.
The chambers each then adjourned Sine Die without a property tax deal. Within a few hours,?Patrick?sent a letter?to Abbott detailing a litany of special session requests.
Finally, at 9:00 p.m., Abbott released the call for what he referred to as the first of multiple special sessions. “[M]ore must be done for the people of Texas. Many critical items remain that must be passed,”?Abbott said in his press release?announcing an immediate special session. “Several special sessions will be required.”
Included in the call?are only two items. Note the phrasing of how Abbott directs the Legislature to address property tax relief.
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It is also important to note that the immediate special session overlaps with the Governor’s veto period, which runs out on June 18. This could be a major tool in the Governor’s pocket as many bills will await the Governor’s signature as the special session unfolds.
Recapping the Regular Session
Below is a high-level overview of where the major issues landed at the end of the regular session.
Budget. Both?HB 1?and?SB 30?(the Supplemental Budget) were signed and sent on to the next steps. We’d recommend?this summary?as a good recap of key provisions. Keep in mind, Legislators had allocated $17.4 billion for property tax relief. How those funds will be spent remains to be decided in the immediate or a future special session.
School Choice.?Education Savings Accounts did not make it out of the Legislature. The issue is almost certain to receive its own special session in the upcoming series of special sessions. We believe it will likely occur in September.
Electric Grid. HB 1500?by?Rep. Justin Holland (R—Rockwall)?and?Sen. Charles Schwertner (R—Georgetown)?was the Sunset bill for the Public Utility Commission. It included not only standard administrative updates to the agency but was also amended at the final hour in the Senate to include several key Senate priorities related to the Performance Credit Mechanism and electric market design. In other words, the PUC Sunset bill became the vehicle for several priority Senate bills related to the electric grid.?
The Senate tacked on roughly 25 amendments to HB 1500. While most did not survive the House, the House nonetheless left many of the major amendments in place and passed the HB 1500 conference committee report 140-1. Key additions included:
Further,?SB 2627?by Chairman Schwertner originally proposed $10 billion in 0% interest loans to cover 75% of the full cost of a new natural gas power plant over 100 MW and up to 10,000 MW total. The House amended the bill, passed it, and a conference committee was formed.
At the last hour, the Senate adopted the conference committee report with the House’s changes. The final version will fund loans up to 60% of total project cost at 3% interest. It will also provide tiered completion bonuses meant to incentivize early completions.
Economic Development.?Closely linked?to the Senate’s priority electric grid legislation was??HB 5, the replacement tool for the expired Chapter 313 economic development tool. Both HB 5 and the above electric grid legislation passed almost in unison on Sunday. While electric grid legislation took on the House’s amendments, HB 5 was passed looking like the Senate’s version. Important to the Senate, it prohibits any incentive from going toward renewable energy.?
School Safety.?HB 3,?the House’s omnibus school safety legislation, cleared both chambers and is headed to the Governor’s desk. The Senate version, among other things, removed the requirement that would have placed armed security personnel at every school. But the final conference committee report included the armed security provision.
Around the Capitol
The House announced a 12-member Board of Managers that will handle the prosecution of?Attorney General Ken Paxton?in the Senate. The Board is chaired by?Rep. Andrew Murr (R—Junction)?and is comprised of seven Republicans and five Democrats.
The group yesterday formally delivered the Articles of Impeachment to the Senate, which then announced it will hold the trial no later than August 28.
The Senate appointed a special committee to recommend trial procedures to the full Senate. That committee is led by?Sen. Brian Birdwell (R—Grandbury)?and will present its recommendations to the full Senate on June 20.
Meanwhile, Paxton remains the officeholder but is suspended from carrying out his duties.?Brent Webster, the First Assistant Attorney General, is Acting Attorney General in Paxton’s absence.?Here is the memo?that Webster sent to the entire Office of Attorney General agency after Paxton’s impeachment.
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