The DMA Way

Texas Legislative Update

by DMA Staff | Jun 08, 2017
DMA-Texas-Legislative-Update-June 8 2017
The 85th Texas Legislature Regular Session ended May 29, 2017. DMA has summarized tax bills that have been enrolled (passed by the Legislature) in the regular session, and those summaries are available below.

Property Tax Bill Summaries
Other Tax Bill Summaries

The legislature adopted SB 1, the state’s biennial budget for the period September 1, 2017 through August 31, 2019, which spends approximately $217 billion from all available funds, of which approximately $107 billion is general revenue. The bill appropriates and uses $1 billion from the Rainy Day Fund. 

The budget has a rider that requires the Comptroller to establish a tax amnesty program for a limited duration to encourage voluntary tax reporting by delinquent taxpayers who do not hold a permit or by permitted taxpayers who may have underreported or owe additional taxes or fees. The rider excludes from the amnesty program taxpayers currently under audit review and provides appropriations from the general revenue fund to the Property Tax Relief Fund and other accounts that are contingent upon the tax amnesty program generating a net increase in available General Revenue Funds in the 2018-19 biennium of at least $46 million. The budget also provides additional appropriations to the Comptroller for the purpose of increasing tax compliance and state revenue. The additional appropriations for such are $8,284,250 in fiscal year 2018, and $9,335,000 in fiscal year 2019. The Comptroller’s office has indicated that the additional appropriations will be used to hire more enforcement officers, auditors, and criminal investigation officers.

This legislative session did not make significant changes to taxes. As DMA previously reported, the two bills that proposed to phase out the franchise tax - HB 28 (Bonnen, Dennis) and SB 17 (Nelson, Jane) – fell by the roadside. The only franchise tax bills that passed this session make minor tweaks that do not have wide impact. The same is true for sales tax. As Texas’ largest tax revenue source, sales tax typically garners a lot of attention each session, but that was not the case this session. The tight state budget stopped many legislators from filing sales tax bills that would create fiscal losses for the state. Many of the sales tax bills filed this session were repeats of bills filed in previous sessions and were not given hearings by the House Ways & Means Committee and the Senate Finance Committee. Only sales tax bills that contained the Comptroller’s legislative fixes advanced during the session, but even those proposals faced obstacles. SB 1359 (Watson, Kirk) contained the Comptroller’s proposed fixes to the resale provisions, but the bill ended up dying in a conference committee on the last weekend of the session. HB 2562 (Shine, Hugh) that would have prevented youtubers from claiming a sales tax exemption on certain recording equipment became stalled in the Senate Finance Committee. 

There were 254 bills relating to property tax introduced this session, which was the most number of bills for any tax type. SB 669 (Nelson, Jane), SB 2 (Bettencourt, Paul) entitled the Texas Property Tax Reform and Relief Act of 2017, and HB 15 (Bonnen, Dennis) entitled the Property Tax Payer Empowerment Act of 2017 received the most attention. When SB 2 and HB 15 met their demise from the operation of procedural deadlines, many of the proposals therein were added onto SB 669, which ultimately became the omnibus property tax reform bill. Governor Greg Abbott and Lieutenant Governor Dan Patrick had explicitly announced property tax reform must be given priority, but the Senate refused to concur with the changes made by the House to SB 669 because it did not include the rollback rate provisions that the Senate had passed. The differences were not resolved before the prescribed deadline, and SB 669 died in the conference committee. SB 669 would have provided for more transparency in the tax rate setting by requiring taxing units to calculate the tax rate using a standard worksheet form that would have to be certified by a designated officer of the taxing unit, would have required larger counties to provide specialized appraisal review board panels, and would have made changes to the appraisal districts’ protest process. Immediately upon the conclusion of the regular session, the consensus was that the Governor would call a special session because the legislature had failed to pass a bill that would extend the sunset provisions of certain state agencies, including the Texas Medical Board. The speculation was whether Governor Abbott would expand the special session call for other matters, including property tax reform. 

On June 6, 2017, Governor Abbott called a special session to start on July 18, 2017. He announced that once the state agency sunset extension is approved in a special session, the legislature could address the following 19 matters, which include property tax reform:

  1. Teacher pay increase of $1,000;
  2. Administrative flexibility in teacher hiring and retention decisions;
  3. School finance reform commission (the creation of an interim commission);
  4. School choice for special needs students;
  5. Property tax reform;
  6. Caps on state and local spending;
  7. Preventing cities from regulating what property owners do with trees on private land regulating trees on private property;
  8. Preventing local governments from changing rules midway through construction projects;
  9. Speeding up local government permitting processes;
  10. Municipal annexation reform;
  11. Texting while driving preemption;
  12. Bathroom privacy;
  13. Prohibition of taxpayer dollars to collect union dues;
  14. Prohibition of taxpayer funding for abortion providers;
  15. Pro-life insurance reform;
  16. Strengthening abortion requirements when health complications arise;
  17. Strengthening patient protections relating to do-not-resuscitate orders;
  18. Cracking down on mail-in ballot fraud; and
  19. Extending maternal mortality task force
Under the Texas Constitution, a special session cannot last more than 30 days, but there is no limit on the number of special sessions that the Governor may call.

Please do not hesitate to contact your local DMA office should you have specific questions or requests.