There are many major issues facing the Texas Legislature during the 2019 session. In early August I attended an event in San Angelo called the West Texas Legislative Summit which gave us insight into what those issues will be. The Summit was well attended this year with a handful of state senators, a good number of state representatives, lobbyist, staffers, trade association members, local elected officials and even some interested citizens.
Some of the themes I heard mentioned several times during the Summit included school finance reform, property tax reform, transportation, water, rural issues, eminent domain and health issues. Of course, several of these issues impact each other and the issues blend together.
School finance reform has not seen any major changes since 1993. The changes styled as “Robin Hood” allowed a portion of taxes collected by property-rich districts to be diverted to the state and sent to property-poor districts. Since that time, the property tax burden, namely school taxes, has grown exponentially. Some rural districts, especially in West Texas and the Eagle Ford area of South Texas, that were once property-poor districts are now considered property-rich districts because of oil and gas activity. Unfortunately, now these districts must send substantial amounts of money to the state, money they cannot use to build the infrastructure needed for their own districts. While there is a consensus that something needs to be done, there is no agreement on what is the best solution to the problem.
Property tax reform is another area that garnered a lot of interest. Since the biggest share of school finance money comes from property taxes and the majority of property taxes go to education, any change in this area will have a dramatic impact on school finance reform and vice versa. Depending on how those changes are made, they may drastically impact rural communities without serious consideration of those impacts by the majority of urban and suburban legislators passing the changes.
Transportation is another area where the rural/urban divide raises its head. The urban areas want new roads built to ease congestion. The rural communities want roads built to replace worn out and unsafe roads. One interesting statistic I heard at the Summit is that approximately 2.5 percent of the state’s population lives in the Permian Basin while 10 percent of the state’s traffic fatalities occur in the Permian Basin. Other transportation-related issues potentially arising this coming session are regarding using taxpayer funds to pay for the construction of toll roads, and ways to get money to rural counties that have roads that are heavily impacted by major oil and gas production in their areas. A warning was also issued about the potential problems ahead for transportation funding if electric vehicles gain in popularity. Since most funds collected for road building and maintenance come from the gas tax, large-scale adoption of electric vehicles will reduce the amount of tax collected. This will either reduce the amount of funding available for roads or will require new revenue sources.
Water, whether too much as from Harvey last August, or too little, like we have this August, is becoming a consistent issue in Texas. Several legislators suggested that laws surrounding the movement of water from one watershed to another might be revisited this session. If this is done it will be very controversial. We will once again see rural versus urban divide lines and well as different areas of the state lining up on different sides on these proposed changes. There are lots of ideas as to why Texas has water shortages. I think the single biggest problem is the rapid growth the state has had in the past 30 plus years and is projected to have for the next few decades.
If substantial quantities of water are moved from one watershed to another in Texas it’s going to take pipelines. If more pipelines are built in the state, the issue of eminent domain will become even more prominent. This may be the only issue that I discuss in this article that directly impacts the oil and gas industry (the property tax, transportation and water issues all have huge indirect impacts) but It seems that some of the agricultural and rural interest will make a big push to tighten up eminent domain law this next session. I have mixed feelings about this legislation.
As a former Texas Railroad Commissioner, I understand the important economic advantages the pipeline infrastructure has given Texas. However, it is a powerful thing to be able to take someone’s property and use it against their wishes. I would like to see eminent domain as something that is fair, rare and, yes, still legal. It is important that pipeline companies using eminent domain understand that by using this powerful tool they have certain moral and legal obligations to the people whose property they use. The pipeline companies need to pay a fair price for the property. They should use the property for the intended uses, and, if they claim to be a common carrier, they should behave as one.
The last general area that received several mentions was health. A couple of health-related issues mentioned by legislators were the opioid crisis and mental health — especially in the context of preventing school shootings. This area is going to be important next session since health is the largest budget item for the state.
To put these issues into some context let’s briefly look at some budget percentages. For Fiscal Year (FY) 2018, the State of Texas spent:
• Education – 25 percent
• Healthcare – 36 percent
• Transportation – 8 percent
• Pensions – 13 percent
In total, 82 percent of its budget on these 4 items.
Now, if you combine state and local spending for FY 2018 you get the following budget percentages:
• Education – 34 percent
• Healthcare – 23 percent
• Transportation – 8 percent
• Pensions – 7 percent
Making up 72 percent of the combined state and local budgets.
If you are concerned about these or other issues, the next few months are ripe with opportunity. There is still time to speak with your representatives regarding your views on the issues facing Texas in the 2019 session and beyond. My greatest advice is to educate yourself about these issues before the election. This November the voters of Texas will elect the Texas House and half of the Senate which will have a large impact on the issues I mentioned above.
About the author: David Porter has served as a Railroad Commissioner (2011–17) and Chairman (2015–16), as well as Vice Chairman of the Interstate Oil and Gas Compact Commission (2016). Prior to service on the Commission, Porter spent 30 years in Midland, Texas, as a CPA working with oil and gas producers, service companies and royalty owners. Since leaving the Commission, Porter works as a consultant for oil and gas companies. He also serves as Chairman of the 98th Meridian Foundation, a nonprofit concerned with water, energy and land issues.