The Texas Government Law and Policy section is pleased to provide you with an overview of the major issues of the 83rd Texas Legislature. The Texas Legislature meets biannually for 140 days in odd-numbered years. The 83rd Legislative session adjourned sine die on Monday, May 27th. Governor Perry immediately called the legislature into a special session upon final adjournment of the regular session. The First Called Special Session of the 83rd Legislature is currently underway and is discussed further below.

BUDGET

The Texas Constitution requires legislators to pass a balanced budget every session. The Texas budget for the 2014-2015 biennium is $197 billion which is an increase of 3.7% from the current budget. Major appropriations include restoring $3.9 billion of the $5.4 billion previously cut in 2011 from education, creating a state water fund and providing tax relief for businesses. Items of contention in the budget during the final days of session were public education, transportation funding, use the System Benefit Fund and the Rainy Day Fund. Use of the System Benefit Fund was controversial because it was originally designed to aid low income and senior citizens pay their utility bills but instead has been used to balance the budget in recent years. The money in the fund comes from a fee collected from electric customers in deregulated areas. The Rainy Day Fund, formally known as the Economic Stabilization Fund, is Texas’ “savings account,” which holds excess money from oil and gas production taxes and unspent general revenue. The fund is intended to provide assistance during unexpected budget shortfalls and it requires a two-thirds majority vote of the legislature.

Senate Bill 1, the general appropriations bill, was signed by the Governor on June 14th and is effective September 1st.  The Governor signed the bill but also used line item vetoes to remove funding for several items. Those specific items are discussed below.

EDUCATION

The education reform bill, House Bill 5 (HB 5), was signed by the Governor and was effective on June 10th. HB 5 reduced the number of end-of-course exams needed to graduate from high school from 15 to 5. The uniform graduation plan of four years each of math, science, social studies and English will be replaced with more flexible options that allow students discretion in choosing a course of study. They will select an “endorsement,” such as business and industry or science, technology, engineering and math, as a specialty on top of the foundational courses.

There were also numerous pieces of legislation filed addressing issues for colleges and universities. Lawmakers authorized a new university with a medical school in the Lower Rio Grande Valley which will be part of the University of Texas System. Legislation was passed which prohibits the University of Texas regents from voting on certain matters until they are confirmed by the Senate. Additional legislation was passed to address the cost of obtaining a college degree and to allow the University of Texas at Austin to continue limiting admission of top 10 percent students through the 2017-18 academic year.

Senate Bill 16 by Senator Judith Zaffirini (D-Laredo) would have authorized more than $2 billion in bonds for public university projects. The bill passed both the Senate and the House, but died in conference committee in the final week of session. 

WATER

The Legislature passed House Bill 4, Senate Joint Resolution 1 (SJR 1) and House Bill 1025, which together establish a revolving loan program available to governmental entities sponsoring local water projects and dedicate $2 billion to finance the loan program. 

SJR 1 must also be approved by voters in November since a constitutional amendment is required to use $2 billion from the rainy day fund to pay for projects developed by the state’s 16 regional water districts. Included in the plan are water conservation, pipelines, reservoirs, aquifer management, new wells and water treatment.

 HEALTH CARE

Passage of Senate Bill 7 and Senate Bill 8 furthered anti-fraud efforts in Medicaid, addressed the needs and costs of long-term care, and reformed the process to ensure cost-saving results.

The Texas Legislature did not authorize Medicaid expansion under the federal Affordable Care Act. Governor Perry and many legislators oppose expansion because of the potential costs and say that it does nothing to reform the Medicaid program. Supporters of expansion, such as Representative John Zerwas (R- Richmond), drafted a bill that required Governor Perry to develop a plan for a hybrid program that would allow Texas to claim Medicaid’s federal dollars. Despite the inclusion of protections that appealed to conservatives, the bill did not pass. 

TDI COMMISSIONER ANNOUNCEMENT

Texas Department of Insurance Commissioner Eleanor Kitzman did not receive confirmation from the Senate during the regular session. Governor Perry announced that Julie Rathgeber, former longtime deputy chief of staff to Lieutenant Governor Dewhurst, will be the new Commissioner. 

GUBENATORIAL VETOES

The Governor’s veto period ended on Sunday, June 16th. The Governor vetoed 26 bills and several line items in the state budget. Line items vetoed included: funding for the state’s Public Integrity Unit; funding for the Texas Department of Criminal Justice for repairs and renovations; authorization and funding for construction of an office building and parking garage in the Capitol Complex; start-up funding for a settlement house in northeast Houston; and several higher education projects. Below are the 26 bills that were vetoed.

SPECIAL SESSION

On Monday, May 27th, at 6:00 p.m., the Governor convened the first called special session for the 83rd Legislature. Special sessions may only last 30 days and only the Governor may call special sessions of the Legislature. The Governor also designates the agenda or “call” of the special session and only those items may be considered by the Legislature. 

The initial call for the special session only included redistricting. Attorney General Greg Abbott recommended that the Governor call a special session to allow the Legislature to approve district maps for Texas’ U.S. Congressional, State Senate and State House of Representatives seats. The maps were drawn by a San Antonio federal court after the Legislature passed maps in 2011, and several parties sued the state claiming the maps do not properly represent the state’s population. Additionally, the state is required by the U.S. Voting Rights Act to get federal approval for district maps. The state avoided pre-clearance by the Justice Department and instead requested that a panel of judges approve the maps. Both cases are still pending, but Abbott has said that passage of this redistricting plan by the Legislature will decrease the likelihood of a delayed primary election in 2015. 

On Friday, June 14tn, the Senate passed redistricting plans for the Senate, House of Representatives and U.S. Congressional districts. The plans are the same as the court drawn plans, and they will be considered by the House.

On Monday, June 10th, Governor Perry expanded the special session call to include transportation funding.

“Texas' growing economy and population demand that we take action to address the growing pressure on the transportation network across the state,” Governor Perry said. “As we enjoy the benefits of a booming economy, we have to build and maintain the roads to ensure we sustain both our economic success and our quality of life.”

The primary transportation funding bill, Senate Joint Resolution 2 (SJR 2), was passed by the Senate on June 18th. SJR 2 directs oil and gas taxes from the Rainy Day Fund to the state highway fund to pay for transportation infrastructure projects. The funds would not transfer to the state highway fund until the Rainy Day Fund exceeds $6 billion. 

Governor Perry added two issues to the call on June 11th: legislation relating to the regulation of abortion procedures, providers and facilities; and legislation relating to establishing a mandatory sentence of life with parole for a capital felony committed by a 17-year-old offender. 

On Friday, June 14th, the Senate passed Senate Bill 23 relating to the punishment for a capitol felony committed by an individual younger than 18 years of age. The bill was voted favorably from the House Criminal Justice committee and will be considered by the full House on June 21st.

The Senate passed SB 5, relating to the regulation of abortion procedures, providers and facilities by a 20-10 vote. Senator Eddie Lucio was the lone Democrat who voted with the Republicans for the bill. SB 5 and several other related bills were voted out of House State Affairs late last night and will now be considered by the full House if placed on the calendar.

HIGHLIGHTS OF LEGISLATIVE EFFORTS BY TEXAS GOVERNMENT LAW & POLICY SECTION

• Spaceport Legislation and Funding - We assisted Space Exploration Technologies (SpaceX) with the passage of legislation, which encourages growth of the private space industry in Texas. Two separate bills were filed on behalf of SpaceX. The first bill authorizes the Cameron County Commissioners’ Court to close the Boca Chica public beach (just Southeast of Brownsville) for launch activities. At this facility, SpaceX will launch rockets with satellites, cargo and eventually crew into outer space. The second bill protects SpaceX and other private spaceflight companies from nuisance lawsuits and criminal charges from spaceflight activities such as testing and launching rockets. Additionally, we assisted SpaceX in encouraging the legislature to fund the Spaceport Trust Fund in the 2014-2015 state budget. The fund is designed to provide funding for space companies that build space flight infrastructure and facilities in Texas. The legislature added $15 million to the fund which is administered by the Governor’s Office of Tourism and Economic Development.

• Police Escorts - Our team aided DFW Airport with the passage of legislation that clarifies an inconsistency in the Texas Transportation Code which allows airport police to perform police escorts for VIPs. 

• Biweekly Payroll for Certain County Officials - We assisted Harris County Commissioners Court in the passage of legislation that allows counties to convert all county employees who are currently on a monthly payroll system to a biweekly payroll system and therefore streamline their payroll process. It is estimated that this legislation will save Harris County $84,000 annually. The statute is permissive.

• Electric Automobile Sales in Texas - Tesla Motors, who manufactures and sells entirely electric cars, attempted to amend a longstanding Texas statute which prohibits automobile manufactures from directly selling cars. Despite the efforts of our team and a secondary team, the bills were not passed. The issue of the antiquated tier system for motor vehicle sales may be considered as an interim study in the House or the Senate later this year or next year, and likely will be revisited in the next regular session in 2015.

• Dialysis Providers - GT worked to defeat several bills that would have been harmful to renal dialysis providers.

• TWIA - There were several significant efforts, in both houses of the legislature, to reform the operations, funding, and coverage of TWIA, the Texas Windstorm Insurance Association. Ultimately, none were successful, and Texas heads into the summer storm season very low on money to pay for damages from a significant storm. There are strong rumors that the Governor may include TWIA reform in a later special session in the early fall. We have participated in these efforts on behalf of our client Texas Farm Bureau Mutual Insurance Company.

• On behalf of our client, Texas Mutual Insurance Company, the largest workers compensation insurance company in Texas, we participated in a strategic effort to eliminate the company’s last vestiges of control by the State of Texas which are holdover items from its formation 20 years ago. That effort was not successful, but it will be renewed either in a subsequent special session or in the next regular session in January 2015. 

• Subrogation - We represented the Texas Association of Health Plans in negotiations relating to a new Texas subrogation law. The new statute changes Texas common law relating to recovery by health insurance payors when there is a liability recovery from a third party. It excludes workers compensation, Medicare, Medicaid, Medicaid managed care, Children’s Health Insurance Program and self-funded Employee Retirement Income Security Act plans. When a plaintiff is not represented by counsel, payors of benefits may share in the plaintiff’s recovery up to 50% of benefits or the actual costs, whichever is less. When a plaintiff is represented by counsel, payors may share in 50% of plaintiff’s recovery less attorney fees and procurement costs or actual costs, whichever is less. Subrogation against first party uninsured motorist/under insured motorist and medical payment is allowed unless it was paid for directly by the plaintiff or the plaintiff’s immediate family. No declaratory judgment actions are authorized, and attorney fees may not be awarded for any brought under the Civil Practices and Remedies Code for issues related to this change in the law.

• CPR Training and Newborn Screening - We assisted the American Heart Association (AHA) with advancing legislation (HB 897 by Rep. Zerwas) that requires CPR training throughout Texas public schools before graduation. The bill allows for school districts to offer the 30-minute training anytime between 7-12 grades. Students would have 6 years to complete the one-time 30-minute training that will save lives. The bill ensures that students practice “hands-on” training with a mannequin to learn the psycho-motor skills necessary to perform CPR. Additionally, the AHA championed HB 740 by Representative Myra Crownover which requires newborn screenings for Critical Congenital Heart Disease (CCHD); updates the guidelines for required newborn screenings; authorizes physicians to delegate the responsibility for screening tests; and modifies the Newborn Screening Advisory Committee at the Department of State Health Services.