AND WE’RE BACK!

Texas Legislature adjourns and is back in session.

By GINA ERWIN, HAA Legislative Chair, with BRADLEY PEPPER, Vice President of Government Affairs

ON The Afternoon of Monday, May 29, the Texas House of Representatives and Senate adjourned Sine Die (last day of session). After 140 days and nights of work, the members of the House and Senate were ready to return home and resume their normal lives. But a few hours later, Governor Greg Abbott convened the first called Special Session of 88th Texas Legislature.

Only the Governor has the authority to call the legislature into a special session, which can only last up to 30 days. Unlike the regular session, the Governor has sole discretion on what topics are addressed during the special session. The agenda for those issues is deemed “the call.”

As the regular session closed, there were still several priority issues of the House, Senate and Governor that remained unresolved. One of the biggest, and a priority to all three, was property tax relief.

So the Governor made cutting property taxes and cracking down on illegal human smuggling the only issues on the call. Specifically, only:

• legislation to cut property-tax rates solely by reducing the school district maximum compressed tax rate in order to provide lasting property-tax relief for Texas taxpayers, and

• legislation solely for the purpose of increasing or enhancing the penalties for certain criminal conduct involving the smuggling of persons or the operation of a stash house, could be passed.

Property tax relief has been priority number one of the Governor, the Senate and the House, with all three announcing intentions to use at least $17 billion of the record $33 billion budget surplus to reduce property taxes.

The budget that was passed during the regular session included $5 billion in school tax rate compression for property tax relief, so how to best use the remaining $12 billion was the primary topic of the first special session.

Lt. Governor Dan Patrick and the Texas Senate’s strategy was to use those monies to increase the homestead exemption on single family homes from $40,000 to $100,000. However, the Governor and the Texas House chose to direct all those dollars to reducing school taxes, which would help not only homeowners, but all property types, including apartments.

The House gaveled in on May 30 to start the Special Session. Within hours, they had passed bills to reduce school taxes and increase the penalties for human smuggling. The House then adjourned Sine Die for the remainder of the special session. That decision essentially left the Senate with a choice to either take the deal that the House passed or wait out the 30 days and have the Governor call another special session. At press time, the Senate was still in the special session.

What happened during the regular session?

Now that the official work of the regular session is complete and lawmakers will not meet again for another regular session until January of 2025, what happened?

Members of the House and Senate filed 8,046 bills. This was over 1,000 more than the COVID year of 2021 and 700 more than 2019. Out of those 8,046, 1,246 passed which is roughly 15%. That pass rate tracks with previous sessions which generally see 15 to 18% of the bills filed pass.

Lawmakers entered the session with a record setting $32.7 billion budget surplus and an all-time high $188.2 billion in state money available to spend (federal money makes up the other part of the budget), which was 26% more than the last biennium. As we said earlier, decisions on how to allocate some of those dollars are still pending.

There is only one item that the Texas legislature is constitutionally required to pass: The

Budget. The budget is written to cover the biennium following that legislative session, in this case 2024-25.

The two chambers ultimately agreed to a $321.3 billion two-year spending plan that used those historic numbers to invest unprecedented amounts of money into tax cuts, mental health, state parks, colleges and universities, the state’s energy grid, broadband and water infrastructure.

Aside from the regular legislative order of business, the Texas House made two historic votes. One expelling a member of the House of Representatives and one impeaching Texas Attorney General Ken Paxton.

On May 9, the Texas House unanimously voted 147-0 to expel Bryan Slaton (R-Royse City) one day after he submitted his resignation after an internal investigation determined that he had sex with a 19-year-old aide after getting her drunk. This made Slaton the first member of the Texas Legislature to be removed from office since 1927.

On May 27, two days prior to adjourning for the session and after months of investigating, the Texas House voted 121-23 to impeach Texas Attorney General Ken Paxton for allegations of bribery, abuse of office and obstruction. This was the first such impeachment since a Duval County District Judge in 1975.

Paxton has been suspended from his duties as Attorney General and awaits a full trial in the Texas Senate that will determine whether he is removed from office.

May is always the most frantic and chaotic time during a legislative session and these proceedings helped turn the session on its head.

As we finish out this special session and monitor additional sessions that the Governor is likely to call, we will continue to keep our members informed.

Results of TAA/HAA Supported Legislation

House Bill 2035 by Rep. Shelby Slawson/Senate Bill 986 by Senator Brandon Creighton: The eviction process should be uniform across Texas. A patchwork of local requirements creates confusion and unintended consequences. Justices of the Peace follow state law and court rules in eviction proceedings and cities have no defined role. However, some cities have recently tried to intervene by passing ordinances that prolong the process.

For example, the City of San Marcos currently has a 90-day notice before you can file an eviction. HB 2035 and SB 986 would have prohibited cities from imposing their own notice requirements outside of state law.

Result: Did not pass, but were amended onto another bill. These bills fell victim to legislative timelines that are meant to kill bills not pass them. That said, TAA staff and lobbyists were able to amend the language from these bills onto HB 2127, which is an omnibus city preemption bill. Cities will no longer have the authority to enact ordinances or policies on things that they are not expressly given power to do so by the state. This bill was signed by the Governor and is effective September 1.

House Bill 2457 by Rep. J.M. Lozano/Senate Bill 767 by Senator Tan Parker: City fees fund essential services but stakeholders – and sometimes even council members – are often not aware of new or increased fees until after they have been adopted. These bills would increase transparency when cities are considering increasing fees in city budgets. They would require a fee schedule of new/increased fees to be included on the city budget’s cover page – similar to requirements cities already meet when proposing new property tax rates. It would also require a separate vote by the city council to approve the use of the revenue raised by the new or increased fees, and will allow interested parties to register for email notification about proposed new/increased fees.

Result: Did not pass. This bill fell victim to another legislative tactic called a Point of Order which can be a technicality in the way a sentence is written, how something was filed in a committee, whether witness was listed correctly, etc. This was the third time these bills had been filed and we can expect them to be filed again next session.

House Bill 4057 by Rep. Mano DeAyala/ Senate Bill 2147 by Senator Joan Huffman: The City of Houston recently created conservation districts in six pilot Houston neighborhoods. These districts will regulate many of the same items found in deed restrictions and potentially circumvent existing state law on the creation of deed restrictions by allowing 51 percent of property owners to implement newly created regulations without a property owner opt-out provision.

These bills will afford property owners in a City of Houston conservation district the same right found in state law for newly created deed restrictions by providing for a one-year time period to opt out of the conservation district.

Result: Passed. These were bills supported and worked on by HAA staff. HB 4057 was signed by the Governor and is effective immediately.

House Bill 2071 by Rep. Jacey Jetton/Senate Bill 1278 by Senator Paul Bettencourt: A Public Facility Corporation (PFC) can be created by a municipality, county, school district, housing authority or special district for the purpose of creating affordable housing. According to statute, a PFC is exempt property taxes if at least half of units in the development are reserved for households earning less than 80% of the area median family income.

Some elected officials and government entities questioned these properties being removed from the tax rolls for up to 100 years. These bills were filed In an effort to add guardrails and transparency to the PFC process to satisfy those concerns.

As written, the bill limits property tax exemptions to 30 years for properties that are acquired and transitioned to PFCs and 60 years for new construction, increases the affordability provisions to require 10% of units at 60% of AMI and 40% of units at 80% of AMI, will require city council approval, if located in the city, or county approval if in unincorporated area, and regular audits done by a third party.

Result: Passed. Passed and effective immediately. HB 2071 passed both the House and the Senate prior to being sent to the Governor. The Governor had until June 18 to either, sign, veto or let it become law without his signature. Governor Abbott chose to let his veto period expire without taking any action resulting in the bill becoming law effective immediately.