Legislators, Start Your Engines!

I have been head down in some very real, very serious legal research in preparation for this issue of Fully Regulated.

And what I found is that in 2007, comedian and actor Kevin James gave the all-time greatest Daytona 500 starting cue.

How did I miss this?

I think I would have personally given the award to Matthew McConaughey’s 2005 performance but I think we’d all agree that today’s markets are a bit oversubscribed on McConaughey. Seems that NBC agrees.

Anyway, down to business. I've got three things for you:

• It’s Bill Filing Day at the Texas Capitol.
• An Early Christmas for Administrative Lawyers.
• How NOT to use a Municipal Management District.

It’s Bill Filing Day at the Texas Capitol.

If you don’t know what pre-filing is, well, congratulations. You have a life outside of politics and government. But for us that don't, today is a holiday. A ritual. A starting of the policy engines.

Every even-numbered year, a week after the election, Texas legislators and legislators-elect may start filing bills ahead of the session that will start in January.

Today was that day.

Some eager staffers even slept in the Capitol overnight to get a choice filing position and bill number for their boss. You love to see it.

We're off to the races.

We've got a lot of policy discussions to be had and priority lists to be shared, but Lt. Gov. Dan Patrick has already declared that his top priority this session is school choice. Patrick said that while Senate Bill 1 will have to be the state budget—because it’s the Senate’s turn to introduce the budget bill—Senate Bill 2 “will be the Senate’s School Choice Legislation.”

As of this writing:?

• the House has filed 1,167 bills
• the Senate has filed 239 bills

For context, a typical legislative session will see approximately 10,000 bills filed with a roughly 25% passage rate.?

Early Christmas for Administrative Lawyers

Some huge news for my Texas administrative law aficionados.

Speaker Dade Phelan announced today that he intends for House committees to spend the first 60 days of the session conducting "agency oversight hearings." (This is in contrast to previous sessions where committees tend to wait until bills are referred to begin conducting hearings.)

Among the intended scope of the hearings is "reviewing agency rulemaking, including agency compliance with the rule-review process required by Texas Government Code [Section] 2001.039."

A.K.A: The Administrative Procedure Act's directive to state agencies to review their own rules every four years.

60 days of uninterrupted legislative APA hearings? An early Christmas indeed.

How NOT to Use a Municipal Management District.

One thing is certain: we can expect some bills aimed at special purpose districts.

Although it has received plenty of news before, an Austin-area MMD is in the news again ($) as it continues to draw the ire of state legislators for its spending habits and property tax workarounds. ?

It goes like this: the MMD creates a Public Finance Corporation (PFC). The PFC then purchases property and leases it to developers. Developers are then free to build on the land, usually with some requirement that a portion of that development be affordable housing. ?

But because the property is technically owned by the government—the PFC—it is not subject to property taxes. And what do you know, the developers’ lease agreements with the PFC are calculated based on a percentage of their property tax savings—millions of dollars.

It's operating like a private development firm, not like a municipal government.

But the real point of contention is the district's spending habits. Its Executive Director was collecting more than half a million dollars in annual compensation and officing from an expensive downtown Austin office. Meanwhile, the district's outside attorney had billed the district more than $14 million in just over two years both through his law firm and an adjacent compliance company.

This is an extreme outlier for MMDs. But it’s a good reminder that special districts are largely creatures of statute—you can only create them by passing legislation.

In other words, “The Legislature giveth, and the Legislature taketh away.”

While MMD activities largely fly under the radar (because they are on the whole pretty boring), things won't always stay there if you start doing things that MMDs weren't really designed to do.

Sen. Paul Bettencourt, Chairman of the Senate’s Local Government Committee, has promised to give a lot of attention this session to the use and governance of special districts.

“This whole special district question is going to get a lot of hearing time,” Sen. Bettencourt said.

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