This Week at the Capitol

Transcription

1 This Week at the Capitol February 27, 2015 SENATE: This week, the Senate was in session on Monday, Tuesday and Wednesday conducting routine business. Tuesday was Senator Leticia Van de Putte s last day in the Senate. Her resignation is effective when her replacement, Jose Menendez (D-San Antonio) is sworn in next week. Several of her Senate colleagues reminisced about her House and Senate tenure. Senator Van de Putte thanked them saying, We are all so very blessed to be a part of a legacy of service blazed long ago in this most deliberative body. The Texas senate is the place where we work hard to find common ground despite our political differences. We are family here, and we are family here forever. We are united in this most sacred chamber - in times of ecstatic joy and in times of the deepest personal sorrow. My Senate brothers and sisters have held me, Pete, and our family up and for that I am eternally grateful. Finally, nothing is possible without the confidence of the people in my hometown of San Antonio. I thank my fellow San Antonians for allowing me the privilege and honor to have been their voice here at our beloved Capitol for almost a quarter of a century. Next Week: The Senate adjourned until Monday, March 2, 2015 at 2:00 p.m. HOUSE: This week, the House was in session Monday through Thursday conducting routine business. Next Week: The House adjourned until 2:00 p.m. on Monday, March 2, BUDGET: Senate Finance Committee The Senate Finance Committee met Monday through Thursday this week wrapping up the first round of hearings on SB 2, the appropriations bill. On Monday, they took up Article V (Public Safety and Criminal Justice) and had a lengthy discussion on border security, one of the issues designated by the governor as an emergency item. On Tuesday, they took up Article VII (Business and Economic Development) agencies. On Wednesday, they discussed Article VIII (Regulatory) agencies. On Thursday, they took up Articles I (General Government, V (Public Safety and Criminal Justice, Article VII (Business and Economic Development), and Article IX (Special Provisions). House Appropriations Committee The full House Appropriations Committee met on Wednesday, Thursday, and Friday of this week. On Wednesday, they heard budget recommendations on Article IV (Judiciary) agencies and invited testimony. On Thursday, they heard budget recommendations on Article V (Public Safety and Criminal Justice) and invited testimony.

2 On Friday, the committee heard invited testimony on Article VI (Natural Resources) and Article VIII (Regulatory). House Appropriations Committee s Subcommittees: Subcommittee on Articles I (General Government), IV (Judiciary), and V (Public Safety and Criminal Justice) met Monday through Thursday this week. Subcommittee on Article II (Health and Human Services) met Monday through Friday this week. Subcommittee on Article III (Education) met Monday through Wednesday this week. Subcommittee on Articles VI (Natural Resources), VII (Business and Economic Development), and VIII (Regulatory) met Monday through Wednesday this week. House Appropriations Committee's Adopted Decision Documents: The House Appropriations Committee adopted decision documents for Articles IV, V, VI and VIII of the budget this week. All of the decision documents adopted can be found here. Next Week: Senate Finance Committee The Senate Finance Committee is hearing tax bills next week. Details of their posting are in the TAX section below. House Appropriations Committee The House Appropriations Committee will meet on Tuesday, March 3, 2015 at 7:30 a.m. in E1.030 of the capitol extension to take up budget recommendations in Article VII (Business and Economic Development). Other committee hearings are expected next week but have not yet been posted. ECONOMIC DEVELOPMENT: House Economic and Small Business Development Committee - On Thursday, the House Economic and Small Business Development Committee received invited testimony from Dale Craymer of Texas Taxpayers and Research Association, who gave an overview on the tax system in Texas and economic development incentives. Josh Goodman of Pugh Charitable Trust discussed the importance of measuring the results of economic development incentives. Keith Phillips of the Federal Reserve Bank of Dallas gave an overview of the state s economy. The committee also heard from representatives of the Texas Workforce Commission and the Texas Public Policy Foundation. House International Trade and Intergovernmental Affairs Committee - On Monday, the House International Trade and Intergovernmental Affairs Committee held an organizational meeting and to received invited testimony from Jose Romano from the Governor s office of Economic Development and Tourism and from Jerry Strickland of the Office of State-Federal Relations. House Business and Industry Committee- On Tuesday, the House Business and Industry Committee met for an organizational meeting and to take testimony on the general state of the Texas Economy, and the entities under the committee s purview. Comptroller Glenn Hegar gave the committee an overview of the state s fiscal outlook. Tom Currah, from the Comptroller s office discussed his revenue estimate. Ursula Parks, director of the Legislative Budget Board discussed the House budget proposal. The committee also heard from representatives of Texas Oil and Gas Association, Texas Taxpayers and Research Association, and Texas Department of Insurance. Next Week: The House Economic and Small Business Development Committee will meet on Thursday, March 5, 2015 at 8:00 a.m. in E2.010 of the capitol extension to take up:

3 HB 900 by Jason Isaac (R-Dripping Springs) would expand the definition of a site selection organization within the Major Events Trust Fund to include an entity selecting a site for the Pan American Games. HB 902 by Tan Parker (R-Flower Mound) would add National Association for Stock Car Auto Racing to the definition of a site selection organization under the Major Events Trust Fund. ENERGY: The House Energy Resources Committee and the House Natural Resources Committee held a joint meeting on Monday to discuss water use and various technologies associated with the recycle and reuse of water in oil and gas production. The three Railroad Commissioners spoke to the committees. Chairman Christi Craddick said, Since the Railroad Commission revised its recycling rules in 2013 to make it easier for oil and gas operators to recycle water, industry has reported significant advancements in their water recycling efforts with some operators reporting they no longer need to use fresh water in their operations. Commissioner David Porter added, The only thing more important to the economic future of Texas than oil and gas is water. One of the Commission s most important roles is our regulation of well construction to ensure the protection of groundwater. Last year, after extensive modifications at the Commission, Statewide Rule 13 went into effect, adding even more protection for our state s precious water. Commissioner Ryan Sitton concluded, Instilling confidence in how our energy is produced includes providing information to the public on how our operators are producing Texas oil and gas in a way that conserves and protects our water resources by complying with the Commission s recycling and well construction rules. The committee also heard from representatives of Texas Commission on Environmental Quality, Texas Water Development Board, Apache Corporation, Fasken Oil and Ranch Ltd., Texas Water Recycling Association, Pioneer Natural Resources, Environment Texas, and Omni Water Solutions. Southern States Energy Board On Tuesday, Governor Greg Abbott announced the appointment of Christi Craddick to serve as his designee to the Southern States Energy Board for a term to expire at the pleasure of the Governor. Interstate Mining Compact Commission On Thursday, Governor Greg Abbott announced the designation of Railroad Commissioner Ryan Sitton to serve as a designee to the Interstate Mining Compact Commission (IMCC) for a term to expire at the pleasure of the Governor. The IMCC is a multi-state governmental organization representing natural resource and environmental protection interests with the purpose of advancing protection and restoration of land, water and other resources affected by the mining industry. TxOGA Report on the Oil and Gas Industry On Tuesday, the Texas Oil and Gas Association released a report indicating that the Texas oil and natural gas industry paid a record $15.7 billion in state and local taxes and royalties in 2014, and that the oil and gas industry supports 41 percent of the Texas economy, up from 33 percent in the previous year. Todd Staples, president of TxOGA said, As production in Texas has skyrocketed, local taxes and royalties paid by the Texas oil and natural gas industry reached a record $15.7 billion in 2014, more than double the total in Taxes and royalties paid by the oil and gas industry directly fund our roads, schools, first responders, essential public services, and more. We are proud to see safe and responsible oil and gas production contributing so significantly to help the state meet the needs of Texans. Railroad Commission Chairman Christi Craddick commented on the report saying, This report proves the industry remains a strong and vibrant part of the Texas economy. Through effective regulation and responsible operation, we will continue to work together to create opportunities for Texans.

4 ENVIRONMENT: The House Environmental Regulation Committee met on Tuesday for an organizational meeting and to hear invited testimony from representatives of Texas Commission on Environmental Quality, Texas Chemical Council, the Environmental Defense Fund, and Public Citizen. Land and Water Conservation Fund On Wednesday, Governor Greg Abbott announced the re-designation of Brent Leisure as State Liaison Officer and Tim Hogsett as Alternate State Liaison Officer to the Land and Water Conservation Fund (LWCF) for a term to expire at the pleasure of the Governor. The LWCF program provides matching grants to states and local governments for the acquisition and development of public outdoor recreation areas and facilities in an effort to create and maintain high quality recreation areas and facilities across the nation. Brent Leisure is the Director of the Texas State Parks Division of the Texas Parks and Wildlife Department responsible for the operation of all 95 state parks, natural areas and historic sites in the Texas State Park system. Next Week: The House International Trade and Intergovernmental Affairs Committee will meet on Monday, March 2, 2015 to hear invited testimony on international and intergovernmental efforts to mitigate climate change. The House Environmental Regulation Committee will meet on Tuesday, March 3, 2015 at 8:00 a.m. in E1.026 of the capitol extension to hear invited testimony. GENERAL BUSINESS: Next Week: The House Judiciary and Civil Jurisprudence Committee will meet on Tuesday, March 3, 2015 at 2:00 p.m. in E2.026 of the capitol extension to take up: HB 610 by Sarah Davis (R-Houston) would establish the 180th day after the date of the last payment on a credit card account as the statute of limitations for civil action on the credit card account. HEALTH: The House Human Services Committee met on Monday and received invited testimony from representatives of the Health and Human Services Commission, Department of Family and Protective Services, and the Sunset Advisory Commission. HIGHER EDUCATION: Higher Education Funding Emergency Designation Last Friday Governor Greg Abbott issued a proclamation designating legislation relating to funding higher education as an emergency item allowing the legislature to consider it in the first 60 days of the session. His proclamation said, Top research universities not only drive innovation, but also foster economic development, thereby creating job opportunities for hardworking Texans. I support legislation to provide funding for Texas' higher education institutions for the strategic purpose of enhancing research programs and attracting nationally-recognized researchers and Nobel Laureates to Texas universities. The House Higher Education Committee met on Wednesday and took up: HB 123 by Allen Fletcher (R-Tomball) exempts students with not more than 20 semester credit hours earned by a student working toward an associate s degree that do not count toward the baccalaureate degree program in which the student is enrolled from the statute that prohibits formula funding for students that have more than 30 semester credit hours in excess of those

5 required for completion of the program for which the student is enrolled. In support were representatives of Texas American Federation of Teachers and Community College Association of Texas Trustees. It was left pending. HB 495 by Donna Howard (D-Austin) would extend the nursing education program from 2015 to In support were representatives of Texas Nurses Association, Texas Health Resources, Texas Association of Community Colleges, Austin Chamber of Commerce, Texas American Federation of Teachers, Texas Association for Home Care and Hospice, Independent Colleges and Universities of Texas, Texas Association of Business, Texas Hospital Association, and Texas Nurses Association. It was left pending. PROCUREMENT: Accountability in Contracting Procedures On Tuesday, Senator Carlos Uresti (D-San Antonio) filed SB 705, which he says will improve accountability in Texas contracting procedures. It would require an agency with a contract that has increased in cost by more than 20% to submit the contract to the Comptroller's Contract Advisory Team for a full review. Senator Uresti said, It s amazing how enormous a government contract can balloon once the bidding process is complete and no one is looking. We need to get a better hold on what we re contracting for, and the best way to do that is to bring in another set of eyes. The State Auditor's Office (SAO) recently examined the fourteen largest contracts and found that state agencies generally failed to follow their own rules regarding contract oversight. As a result, agencies made payments without corresponding invoices, prices increased inexplicably, and ethical disclosure provisions were amended out. We ve all seen the headlines recently - competitive contracts, which were initially authorized in the tens of millions, increased to the hundreds of millions, often under little scrutiny. SB 705 will require that agency leadership and the Legislature be notified when a contract doesn t pass the smell test--no more plausible deniability. We have a responsibility to the taxpayers to account for every single penny, and I'm going to ensure we do. PROPERTY: Windstorm Insurance On Wednesday, Senator Larry Taylor (R- Friendswood) filed SB 750, the second of three bills, to ensure coastal residents have access, affordability and availability to windstorm insurance coverage. Representative Greg Bonnen (R-Friendswood) filed the companion legislation, HB 1875, in the Texas House. Senator Taylor said, This legislation provides much needed relief to public school districts that pay higher than average premiums for windstorm and hail insurance coverage by authorizing a finance allotment to cover the financial expenditure. Public school districts along the coast have struggled to provide adequate wind and hail coverage at an affordable price. The Texas school finance system strives to equalize every district, yet the schools in my district are unfairly impacted by this financial burden. Geography should not be a hindrance to educating our students, but instead recognized as a value added characteristic of the great state of Texas." Representative Greg Bonnen added, "Windstorm Insurance is a disproportionately large expense for coastal-area school districts. Unfortunately, our schools are paying hundreds of thousands or even millions of dollars in coverage premiums for their campuses. This legislation will allow our schools to focus their resources on providing a quality education for students." Next Week: The House Judiciary and Civil Jurisprudence Committee will meet on Tuesday, March 3, 2015 at 2:00 p.m. in E2.026 of the capitol extension to take up:

6 HB 604 by Sarah Davis (R-Houston) would eliminate one of the grounds upon which a judgment creditor can obtain injunctive or other relief from a court of appropriate jurisdiction to obtain satisfaction of a judgment by deleting Section (a)(1) which currently allows a judgment creditor to obtain relief if the judgment debtor owns property that cannot be readily attached or levied on by ordinary legal process but would retain subsection (b), which allows such relief if the property is not exempt from attachment, execution, or seizure. HB 750 by John Frullo (R-Lubbock) would provide liability protection for private landowners for aviation activities if the landowner maintains a landing strip that is available to the public without charge. PUBLIC EDUCATION: Governor s Emergency Proclamation on Early Childhood Education Last Friday, Governor Greg Abbott issued a proclamation declaring early childhood education an emergency item to allow the legislature to consider it within the first 60-days of the session. The proclamation said, The cornerstone of Texas' future is education. The literacy and mathematics skills children learn in prekindergarten (pre-k) through third grade form the foundation for their futures, both in school and in life. Our primary goal should be to ensure all Texas students perform at grade level by the third grade in reading and math. House Public Education Committee - On Tuesday, the House Public Education Committee took up: HB 66 by Mary Gonzalez (D-El Paso) would prohibit the Commissioner of Education from including the performance of students with Limited English Proficiency that have been enrolled in a school in the United States for less than three years in a school s performance rating. In support were representatives of Del Valle ISD, Elgin ISD, Texas Association for Bilingual Education, Arlington ISD, Texas PTA, Texas Association of School Administrators, Goodwill Central Texas, Texas State Teachers Association, Texas Association of School Boards, Association of Texas Professional Educators, Texas Classroom Teachers Association, Texas Association of Community Schools, Texas Elementary Principals and Supervisors Association, Texas Rural Education Association, and Texas School Alliance. David Hinojosa with MALDEF testified in opposition. It was left pending. HB 181 by Cecil Bell, Jr. (R-Magnolia) would eliminate the inclusion of endorsements, performance acknowledgements and distinguished level of achievement on high school diplomas. In support were representatives of Waller ISD, Arlington ISD, Texas Association of School Administrators, Texas Association of Community Schools, Texas Rural Education Association, Austin ISD, and Huntsman Corporation. It was left pending. HB 256 by Donna Howard (D-Austin) would authorize the use of compensatory education funds to provide assistance with childcare for students at risk of dropping out of school. In support were representatives of Texas Catholic Conference of Bishops, Arlington and Austin ISD s, Texas PTA, Texas Association of School Administrators, Goodwill Central Texas, Texas State Teachers Association, Texas Association of School Boards, United Ways of Texas, Association of Texas Professional Educators, Texas Classroom Teachers Association Texas Association of Community Schools, Texas Association of Goodwills, Texas Elementary Principals and Supervisors Association, Texas Criminal Justice Coalition, Texas AFT, Texas Rural Education Association, The Equity Center, Texas School Coalition, Texas Association of Business, Texans Care for Children, and Texas School Alliance. It was left pending.

7 HB 370 by Jason Villalba (R-Dallas) would require school districts to notify a parent or guardian upon request if an employee has been appointed a school marshal. Registering support were representatives of Texas PTA, Texas Association of School Administrators, Texas Association of Community Schools, and Texas Rural Education Association. It was left pending. HB 440 by Larry Gonzalez (R-Round Rock) would add students with a mental disability to the type of students for whom the physical education curriculum must be developmentally appropriate. Registering support were representatives of Texas PTA, Goodwill Central Texas, Texas State Teachers Association, Association of Texas Professional Educators, Texas Classroom Teachers Association, Texas Association of Community Schools, Texas AFT, Texas Rural Education Association, Texas Medical Association, and Texans Care for Children. It was left pending. HB 456 by Roland Gutierrez (D-San Antonio) would prohibit the use or possession of vapor products at school-related or sanctioned activities on or off school property. In support were representatives of Texas Medical Association, Texas State Teachers Association, Texas Classroom Teachers Association, Texas Association of Community Schools, Texas School Nurses Organization, Texas Rural Education Association, and Texas Association of Business. It was left pending. HB 505 by Eddie Rodriguez (D-Austin) would prohibit the Texas Higher Education Coordinating Board from adopting a rule that limits the number of dual credit courses or hours in which a high school student may enroll. In support were representatives Career and Technology Association of Texas, Arlington and Austin ISD s, Texas PTA, Texas Association of School Administrators, Texas State Teachers Association, Texas Association of School Boards, Texas Classroom Teachers Association, Texas Association of Community Schools, Texas AFT, Huntsman Corporation, Texas Rural Education Association, Texas Association of Business, Austin Chamber of Commerce, and Texas School Alliance. It was left pending. High School Graduation Rate On Monday, Education Commissioner Michael Williams commented on figures released by the U.S. Department of Education s National Center for Education Statistics, which showed that the Texas Class of 2013 high school graduation rate was 88 percent, outpacing the national rate of 81 percent. The Texas graduation rate hit 88 percent for the second consecutive year, tying Nebraska, New Jersey, North Dakota and Wisconsin for the nation s second highest. Only Iowa at 90 percent posted a higher graduation rate for the Class of Commissioner Williams said, "The work being carried out in school districts and charters across our state continues to bear fruit in the high percentage of high school students successfully earning a diploma. Whether it be college, career or military, Texas educators are working daily to better prepare students for life after high school, and it is our state that benefits." Commissioner Williams noted that 2013 marked the third consecutive year that Texas high school graduation rate surpassed the national average. Governor Greg Abbott also responded saying, The Department of Education s data release is reflective of our state s enormous strides to ensure all students are educated and graduate on time but there is still so much work left to be done. By returning genuine local control to school districts, reducing one-size-fits-all mandates and empowering families to make meaningful educational choices for their children, the state of Texas will ensure graduation numbers continue to rise so more of our students graduate high school college- or career-ready.

8 High Quality Pre-Kindergarten Program On Thursday, Representative Dan Huberty (R- Houston), filed legislation that outlines a High Quality Prekindergarten Program. He said that HB 4 is designed to encourage Texas public school districts to implement high quality, accountable prekindergarten standards, and to provide additional funding for those districts already operating a program. Representative Huberty said, The overall goal of HB 4 is to implement a long term, successful prekindergarten system for all public schools in the state. This bill is a significant step toward making effective, accountable pre-k available to more Texas children." House Speaker Joe Straus also commented saying, "These programs can make a real difference in children s lives and in the future of our state. Early childhood education is a priority for the Texas House, and I look forward to working with Representative Huberty and all of our colleagues on this important issue." In order for districts to qualify, they must fully align their curriculum with the Texas Prekindergarten Guidelines and measure progress to meet the learning outcomes underlined in those guidelines. Prekindergarten teachers must also be appropriately certified in early childhood education. Finally, individual districts are required to develop a parental engagement plan to establish and maintain high levels of family involvement in the student's educational career. Next Week: The House Public Education Committee will meet on Tuesday, March 3, 2015 at 2:00 p.m. in E2.036 of the capitol extension to take up pending business. The House Public Education Committee s Subcommittee on Educator Quality will meet on Tuesday, March 3, 2015 at 2:30 p.m. or upon adjournment of the full committee in E2.036 for an organizational meeting with invited testimony to consider issues related to educator quality. TAX: House Ways and Means Committee - On Tuesday, the House Ways and Means Committee heard invited testimony. Four panelists from the Comptroller s office discussed the franchise tax deductions, exclusions, special accounting methods, and credits and refunds. Dale Craymer of Texas Taxpayers and Research Association gave an overview of Texas state and local taxes from the taxpayers perspective. He said, The biggest tax businesses pay in Texas is not the franchise tax. The biggest tax paid by the business community is the property tax. Senate Tax Relief Proposals On Tuesday, Senator Jane Nelson (R-Flower Mound) filed SB 1 and SB 7, together providing approximately $4 billion in tax relief during the biennium. SB 1 would raise the homestead exemption to 25 percent of the home median market value. SB 7 would reduce the state's business franchise tax rate by 15 percent. Senator Nelson, who chairs the Senate Finance Committee said, "Because of our economic success, we have more than enough revenue to both meet our needs and provide for tax relief. Every dollar the government takes is a dollar that someone has earned, and so we have an obligation to return some of those dollars to taxpayers whenever possible." Lt. Governor Dan Patrick added, "I am pleased to support one of the largest and most significant tax relief packages in the history of Texas. These reforms will provide immediate and lasting economic relief to both homeowners and businesses. We worked closely with Senator Nelson over the last four months and I appreciate her leadership on this issue. I strongly support Senate Bill 1." SB 1 includes approximately $2.5 billion in property tax relief by setting the homestead exemption to 25 percent of the state's home median market value. For FY2016, the median home market value is projected to be $134,500, resulting in an exemption of $33,625. For FY2017, the projected value is $143,915, so the exemption would be $35,979. In future years, SB 1 would provide that the exemption will rise or fall along with property values in the state. This will be put before voters under SJR 1, also filed by Senator Nelson. SJR 1 would also constitutionally prohibit the establishment of any tax on real estate sales.

9 Small Business Tax Relief Act On Wednesday, Senator Charles Schwertner, MD (R- Georgetown) filed SB 8, also known as the Small Business Tax Relief Act. SB 8 would establish a permanent $4 million total revenue exemption from the state's business franchise tax. Senator Schwertner said, "Today, I'm proud to file a landmark tax cut for the hard-working small business owners that create jobs and drive our Texas economy. For many small and medium-sized businesses struggling to make it, the state franchise tax represents an unreasonable and unnecessary tax burden that only serves to limit job growth and stifle new investment." The Texas Comptroller's Office estimates that SB 8 would provide over $380 million in annual tax relief, while exempting over 61,000 small businesses that would otherwise pay the state's business franchise tax. These small businesses represent over 52% of all entities required to remit payment under the current franchise tax structure. The Comptroller's Office estimates that raising the exemption to $4 million would result in a 7.92% decrease in overall revenue collected by the franchise tax. Next Week: The Senate Finance Committee will meet on Monday, March 2, 2015 at 9:00 a.m. in E1.036 of the capitol extension to take up the following bills. NOTE: they will not take public testimony on these bills until Wednesday. SB 1 by Jane Nelson (R-Flower Mound) would increase the mandatory homestead exemption for school district taxes from $15,000 to 25% of the median market value of all residential homesteads in the state. (This is the enabling bill for SJR 1.) SB 182 by Paul Bettencourt (R-Houston) would lower the permissible rate of annual revenue increase without being subject to rollback from 8% to 4% (for taxing units other than schools); and would automatically trigger a rollback election, instead of allowing a petition for an election if a proposed tax rate exceeds rollback. SB 278 by Kirk Watson (D-Austin) would increase the residence homestead exemption for public school purposes from $25,000 to $25,000 and indexed to inflation after the 2016 tax year. (This is the enabling bill for SJR 21.) SB 279 by Kirk Watson (D-Austin) would authorize political subdivisions other than school districts to adopt a residential homestead exemption of at least $5,000. (This is the enabling bill for SJR 20.) SB 516 by Paul Bettencourt (R-Houston) would extend the Freeport exemption period from 175 to 365 days. (This is the enabling bill for SJR 29.) SB 744 by Judith Zaffirini (D-Laredo) would require the wording of a motion to adopt an ordinance resolution, or order setting a property tax rate that exceeds the effective rate to state I move that a tax rate of (x) be adopted, which exceeds the effective tax rate by (x percentage) percent. SB 758 by Paul Bettencourt (R-Houston) would exempt from property taxes tangible personal property used by the property owner to manufacture, process, or fabricate tangible personal property for ultimate sale. SB 762 by Paul Bettencourt (R-Houston) would increase the exemption amount for tangible personal property held for the production of income from $500 to $2,500.

10 SB 763 by Paul Bettencourt (R-Houston) would increase the threshold for simplified rendition of tangible personal property to less than $50,000 (instead of $20,000). SJR 1 by Jane Nelson (R-Flower Mound) would propose a constitutional amendment increasing mandatory homestead exemption for school district taxes from $15,000 to 25 percent of the median market value of all residential homesteads in the state and prohibiting a real estate transaction tax. (The enabling bill is SB 1.) SJR 20 by Kirk Watson (D-Austin) would propose a constitutional amendment authorizing political subdivisions other than school districts to adopt a residential homestead exemption of at least $5,000. (The enabling bill is SB 279.) SJR 21 by Kirk Watson (D-Austin) would propose a constitutional amendment increasing the residence homestead exemption for public school purposes from $25,000 to $25,000 and indexed to inflation after the 2016 tax year. (The enabling bill is SB 278.) SJR 29 by Paul Bettencourt (R-Houston) would propose a constitutional amendment extending the Freeport exemption period from 175 to 365 days. (The enabling bill is SB 516.) SJR 35 by Paul Bettencourt (R-Houston) would propose a constitutional amendment authorizing the legislature to exempt from property taxes by one or more political subdivisions tangible personal property used by the owner to manufacture, process, or fabricate the tangible personal property for ultimate sale. (The enabling bill is SB 758.) SJR 36 by Paul Bettencourt (R-Houston) would propose a constitutional amendment increasing the exemption for tangible personal property held for the production of income from $20,000 to $50,000. (The enabling bill is SB 763.) The Senate Finance Committee will meet on Tuesday, March 3, 2015 at 9:00 a.m. in E1.036 of the capitol extension to take up the following bills. NOTE: they will not take public testimony on these bills until Wednesday. SB 7 by Jane Nelson (R-Flower Mound) would reduce the business franchise tax rate by 15 percent. SB 8 by Charles Schwertner (R-Georgetown) would increase the total revenue exemption in the franchise tax from $1 million to $4 million. SB 31 by Judith Zaffirini (D-Laredo) would authorize volunteer firefighter and emergency services organizations to hold up to ten tax-free sales or auctions of no more than 72 hours each per calendar year. SB 105 by Craig Estes (R-Wichita Falls) would repeal the franchise tax effective January 1, SB 138 by Charles Perry (R-Lubbock) would phase out the franchise tax over four years by lowering the rates by 25% each year from 2016 through 2018, reaching zero in SB 140 by Charles Perry (R-Lubbock) would institute a sales tax exemption for telecommunications services exclusively provided for the navigation of machinery and

11 equipment exclusively used or employed on a farm or ranch in the building or maintaining of roads or water facilities or in the production of food for human consumption, grass, feed for animal life, or other agricultural products. SB 186 by Brandon Creighton (R-Conroe) would require the Comptroller to study the effectiveness of the franchise tax and alternative methods to generate revenue; and would repeal the franchise tax effective January 1, SB 330 by Brandon Creighton (R-Conroe) would exempt businesses operating at a loss from the franchise tax and would allow profitable businesses to deduct their costs of goods sold as well as compensation paid to employees; and would provide an across-the-board $1 million revenue deduction. SB 331 by Brandon Creighton (R-Conroe) would provide franchise tax rebates by returning half of the unencumbered balance at the end of the biennium to businesses after transfers to the Economic Stabilization Fund (Rainy Day Fund). (This is the enabling bill for SJR 23.) SB 687 by Juan Chuy Hinojosa (D-McAllen) would exclude health care institutions from the type of health care provider that can exclude from its total revenue for franchise tax purposes payments received from Medicaid, Medicare, the Children s Health Insurance Program, and workers compensation claims. SB 752 by Paul Bettencourt (R-Houston) would repeal the state inheritance tax and the tax on admission to combative sports events. SB 755 by Van Taylor (R-Plano) would clarify that software used for web-hosting should be taxed once, specifically during the transaction where the end-user purchases software as part of the hosting package. SB 756 by Van Taylor (R-Plano) would authorize entities to use the federal cost of goods sold for determining their taxable margin. SB 757 by Charles Perry (R-Lubbock) would repeal the production taxes on crude petroleum and sulphur. SB 759 by Lois Kolkhorst (R-Brenham) would repeal the tax on the rental of premises for conducting bingo and the tax on vehicles that operate on propane. SB 761 by Brandon Creighton (R-Conroe) would repeal Chapter 161 of the Tax Code that assesses an additional two percent sales tax on fireworks. SB 765 by Kevin Eltife (R-Tyler) would repeal the $200 annual licensing fee imposed on chiropractors, physicians, dentists, optometrists, psychologists, certified public accountants, architects, engineers, real estate brokers, investment advisers, attorneys, and veterinarians. SJR 23 by Brandon Creighton would propose a constitutional amendment to provide franchise tax rebates by returning half of the unencumbered balance at the end of the biennium to businesses after transfers to the Economic Stabilization Fund (Rainy Day Fund). (The enabling bill is SB 331.)

12 The Senate Finance Committee will meet on Wednesday, March 4, 2015 at 9:00 a.m. in E1.036 of the capitol extension to take public testimony on all the bills presented to the committee on Monday and Tuesday. TRANSPORTATION: Emergency Designation for Transportation Last Friday, Governor Greg Abbott issued a proclamation designating legislation related to transportation as an emergency matter allowing the legislature to take it up before the 60 th day of the session. The proclamation said, A robust and reliable road system is vital to the success of the Texas economy and is demanded by Texas families. Currently, there are insufficient funds exclusively dedicated to funding our state's transportation needs, and the state has been unable to adequately develop a long-term transportation plan. I support constitutionally dedicating existing motor vehicle sales tax on new and used vehicles to transportation infrastructure funding and ending the practice of diverting significant state highway funds away from building and maintaining roads, without raising taxes, fees, tolls, or debt. Toll Free Texas On Tuesday, Representatives Scott Sanford (R - McKinney), Jeff Leach (R - Plano), and Matt Shaheen (R - Plano), announced a series of bills to move Texas toward a toll road free future. Bills in the package include: HB 856 by Scott Sanford would require that the regional transportation planning organizations stream and archive videos of their meetings on their publicly accessible website. HB 1834 by Scott Sanford would require a County Commissioner Court resolution of approval for toll projects; and would require toll roads to be paid out in 20 years and then transition into a nontoll road. HB 1835 by Scott Sanford would prohibit the conversion of current free lanes of highway to toll lanes. HB 1836 by Scott Sanford would direct 10% of sales taxes to be utilized for the construction and maintenance of free highways. HB1837 by Scott Sanford would require toll road decisions (study, design, and construction) be made by elected officials; and would require approved toll roads to be paid off in twenty years or less. HB 1838 by Scott Sanford would require that all current toll roads to become free roadways in 30 years or less. HB 1734 by Matt Shaheen would require toll roads to become part of the free highway system when the cost of construction have been recovered. HB 1183 by Matt Shaheen would require new toll projects to be approved by the County Commissioner's Court. HB 202 by Jeff Leach would dedicate half of the motor vehicle sales tax to the State Highway Fund towards the maintenance and construction of free, non-tolled roadways.

13 HB 203 by Jeff Leach would dedicate auto parts sales taxes to the State Highway Fund for the maintenance & construction of free, non-tolled roadways. Senate Transportation Committee - On Wednesday, the Senate Transportation Committee took up: SB 5 by Robert Nichols (R-Jacksonville) would dedicate annual motor vehicle sales tax revenue above $1.5 billion to the highway fund to be used for road construction, maintenance, acquisition of right-of-way, and repayment of road bonds. It was voted favorably as substituted. SJR 5 by Robert Nichols (R-Jacksonville) would propose a constitutional amendment dedicating annual motor vehicle sales tax revenue above $1.5 billion to the highway fund to be used for road construction, maintenance, acquisition of right-of-way, and repayment of road bonds. It was voted favorably as substituted. Lt. Governor Dan Patrick said, "Today's near unanimous vote, just six weeks into the 84th Legislative Session, demonstrates that the Texas Senate considers transportation funding a top priority. This is one of my major initiatives and one of Governor Greg Abbott's emergency issues. I am hopeful the full Senate will approve and send these two bills to the Texas House very quickly. House Transportation Committee On Thursday, the House Transportation Committee heard invited testimony from representatives of Texas Department of Transportation who gave an update regarding energy sector roads and TX Tags. Next Week: The Senate Transportation Committee will meet on Wednesday, March 4, 2015 at 8:00 a.m. in E1.016 of the capitol extension to take up four bills designating local highways, legislation related to fingerprints collected by the Texas Department of Public Safety, and a bill relating to annual permits to move equipment. State Websites - Additional information can be obtained via the Senate, House, and capitol websites: