Texas Legislative Session Round-Up
Texas legislators are on the back nine of their latest session. With hundreds of bills making their way through the Capitol, we broke down the key issues with the biggest effect on commercial real estate.
The State Budget
Much of the drama in Austin has been focused on the proposed $218.3B budget approved by the House last Thursday. The Senate approved an altered $212.7B budget two weeks ago. The difference is only about $500M in spending, and the rest is accounting techniques.
This week negotiators will begin to work out the details. One point of contention will be the governor's Texas Enterprise Fund, which is used to offer an economic incentive to businesses moving to Texas. Lawmakers seek to reallocate the funds to struggling social services. Gov. Greg Abbott has defend the fund, telling a group of business leaders last week the money is essential to keeping Texas at the vanguard of new business.
E-Commerce Sales Tax
Struggling brick-and-mortar retailers in Texas could soon see assistance from the state government. SB 1713 could raise the price of online goods by requiring all e-retailers to start collecting sales tax. The current law states you have to have a physical presence in Texas to be required to collect sales tax. Requiring retailers to remit sales tax could net Texas up to $1.8B in additional tax revenue.
Property Tax Reform
Rapidly rising property taxes have been a key issue. The Senate approved SB 2, which would force local governments to hold elections if they want to increase the amount of tax revenues they collect by a certain amount. It would also change the makeup of many of the boards that oversee appraisal districts that determine property values and the panels that decide landowners’ appeals of appraisals.
In a unanimous 31-0 vote on Monday, the Texas Senate also approved SB 730 by Sen. Paul Bettencourt (R-Houston) to bring property tax relief to small businesses around the state. SB 730 raises the exemption amount from $500 to $2,500 for business personal property.
Texas High-Speed Rail
Few issues have sparked as much legislation as the proposed Houston-to-Dallas bullet train. The state's transportation committee sent five bills to the full Senate relating to the high-speed train. Combined, the bills would prevent lawmakers from using any state funds for the project, require Texas Central Rail to build in a way that would allow multiple types of rail to run on it, and force the company to give back land acquired for the project if it never happens. These five bills are the most prominent of the 20 pieces of legislation targeting the project.
A major source of contention is Texas Central's claim that it has the right to use eminent domain to obtain property as a railroad. Critics have argued in court that Texas Central is not a railroad yet. Texas Central and Texas Rail advocates say the bills discriminate against the new mode of transportation, which could be a vital lifeline between car-centric cities with constant congestion.
HB 4046 seeks to require elections every two years for board members on more than half of Houston's TIRZes. Currently, TIRZ leadership is appointed by the city. The bill would also increase the number of board members to 11, and require members to live or own property within two miles of the TIRZ boundaries. Lastly, the bill would save a seat on the board for the state representative and senator with the biggest district overlap, and a representative of the city. Rep. Wayne Bohac proposed the bill — his district includes TIRZ 17, which was involved in a lawsuit over flooding last year.
Texas Bathroom Bill
Hoteliers and hospitality professionals are keeping a close eye on SB 6, known as the "bathroom bill." The bill would regulate bathroom use in government buildings based on "biological sex" and is being promoted by Republicans as a public safety initiative.
SB 6 is similar to North Carolina's HB2, which was passed into law in March 2016. North Carolina lawmakers faced serious opposition from the tourism industry, and overturned the law at the end of March 2017 rather than damage the state's relationship with the NCAA. While there are minor differences between the North Carolina and Texas bills, those in the Texas tourism industry fear a similar backlash.