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A Preview of the 84th Legislature

84th Texas Legislature

The 84th Texas Legislature will convene on the second Tuesday in January 2015 with historic new leadership at the helm. A new governor and new officeholders in all the major statewide offices will usher in a new era in Texas politics.

Whether the successors will adopt the priorities of their predecessors or have a different focus remains to be determined. However, after two decades of GOP dominance and the usual long-odds faced by Democrats running for statewide office, Texas should continue to be the epicenter of the conservative movement for the immediate future. This does not mean, of course, that there will not be division within the Republican ranks.

In the Governor’s office, for the first time since 2001, Texas will have a new governor: Republican Attorney General Greg Abbott or State Senator Wendy Davis, a Democrat. The Lieutenant Governor’s office will be assumed by either Texas Senator Dan Patrick, R-Houston or San Antonio’s Senator Leticia Van De Putte, a Democrat. The next Attorney General will be State Representative Ken Paxton, R-McKinney or Houston lawyer Sam Houston, the Democrat. And the State Comptroller’s office will be headed up by Senator Glenn Hegar, R-Katy or former energy company CFO Mike Collier, hailing from Houston.

Both Republican and Democratic candidates recognize the role that oil and gas development has played in making the Texas economy the strongest in the country. However, Republicans differ from Democrats on the role of government in maintaining that growth and funding priorities from the growth. Candidates also have contrasting positions on oil and gas regulation and fiscal and social policy issues that will impact the direction of policy making and legislation.

Each of the statewide positions plays a pivotal role in the legislative process. But the absence of Rick Perry, arguably the most powerful governor in Texas history, will likely produce a void in leadership to be filled in ways yet to be seen.

Governor: In addition to the power of making appointments to boards and commissions, the ability to call a special session and to veto legislation are the governor’s chief powers. Following the end of the 83rd Regular Session, Governor Perry called three legislative sessions to take up specially-called items. It was on the issue of restrictions on abortion that Senator Davis raised her state and national profile. The constitutional authority to veto laws and budget provisions can be a formidable threat to influence and manipulate legislative action. Historically all governors have exercised that prerogative. But no veto in modern history has generated the attention wrought by Governor Perry’s veto of a state appropriation to the Travis County District Attorney’s Public Integrity Unit, overseen by DA Rosemary Lehmberg, who refused to resign following an arrest for drunk driving. The constitutional limits of the governor’s veto power will now be subject to review in the wake of Perry’s indictment on charges of abuse of power and coercion of a public official.

Both Republican and Democratic candidates recognize the role that oil and gas development has played in making the Texas economy the strongest in the country

Senate: The lieutenant governor presides over the Senate and is regarded by some as the most powerful person in state government. The 2015 Senate will likely tilt to the right with at least seven new senators taking office. It is anticipated there will be changes to senate committee structure and procedural rules which will affect the balance of power. Such changes may also impact the historic role the Senate has played as a consensus body and the part Democrats will play. The absence of Perry assures that the next lieutenant governor will continue to have significant power.

State Comptroller: The Texas Comptroller of Public Accounts is the state’s chief fiscal officer, bookkeeper, tax collector and economic forecaster. As revenue estimator, the comptroller is responsible for annually reporting the state’s financial condition to the Legislature and providing estimates of revenue for future years. The comptroller also projects the state’s cash flow position and produces fiscal analyses of legislation, administrative rules and other proposals affecting state revenue. The revenue estimate can make or break a piece of legislation. The timing of the revenue estimate release as well as the estimate itself can be used as political tools.

House: Speaker Joe Straus of San Antonio will likely continue as speaker of the House of Representatives with a coalition of Republicans and Democrats. One third of the House will be composed of freshman members. As leader of the House, the speaker will name committee chairs and the members to those committees and therefore guide the policy and fiscal direction to be taken by House leadership during the 2015 legislative session. The House of Representatives led by the strong, deliberative Speaker Straus is expected to serve as a brake to controversial initiatives during next year’s session.

Priorities for the 2015 Legislative Session

Rainy Day Fund: The Comptroller projects that the state’s Economic Stabilization Fund commonly referred to as the Rainy Day Fund will grow to more than $8.4 billion next year, with some experts projecting upwards of $12 billion by end of 2015. The Texas oil and gas boom – fueled by hydraulic fracturing and new horizontal drilling techniques and the record increase in drilling on state lands, including acreage in the Barnett Shale and the Eagle Ford Shale – has generated the budget surplus. Unlike previous sessions where the Legislature had to deal with budget shortfalls, distribution of the Fund will be the major challenge for the 84th Legislature as different interests compete for funding.

The state’s systematic shortfalls relative to four primary functions of state government are poised to take center stage in the funding discussion: education, health and human services, water and roads.

Education and school finance: A $1.26 billion contribution to the state’s Permanent School Fund from the Rainy Day Fund will help finance public education but won’t change the fact that several hundred school districts in Texas remain underfunded. Unless overturned, a recent court decision in Austin, which ruled that Texas’s current system of funding education is unconstitutional, will require the Legislature to come up with a new plan to adequately and fairly fund all Texas schools.

Health and human services: The Health and Human Services Department is up for sunset review, and with that will come an examination of all its key services. The expansion of Medicaid under the Affordable Care Act displays the contrasting visions between the Republican and Democratic parties on the issue and the role of the states, with Democrats supporting expansion and Republicans opposing the federal mandate.

New leadership at the state level and in the legislature will likely create a new dynamic in the legislative process

Infrastructure – Water & Roads: The oil and gas industry has drawn increased scrutiny from those who have raised concerns about the industry’s impact on the environment, public health and local infrastructure. Although the 83rd Legislature took steps to address infrastructure funding of water and roads, the 2015 session will continue to have to deal with ongoing shortfalls.

Water: The passage of House Bill 4, Senate Resolution 1 and authorization for Proposition 6 by the 83rd Legislature laid the foundation for funding of the State Water Plan. Water priorities for the 2015 Legislative session include continued state investment in meeting water needs, funding seawater desalination projects, reviewing water use and ways to reduce freshwater use in oil and gas and other industrial uses, and providing incentives for new technology, conservation and recycling. Transfer of water – particularly interbasin transfers – is also expected to be a hot issue that will require the Legislature to review current law related to water rights and the movement of surface water and groundwater. Whether the role of groundwater conservation districts should be expanded and authority made uniform across the state may also be the subject of legislation.

Roads: A continuing issue from the 2013 session is concern about the impact of oil and gas activities on county and state road infrastructure. The 83rd Legislature passed H.B. 1747 establishing a grant program for counties and an additional budget appropriation of $225 million, providing some necessary relief. And similar to Proposition 6, the water initiative approved by the voters in 2013, the Legislature passed a law authorizing a referendum, Proposition 1, to dedicate a portion of the state’s energy production tax revenues into a savings account for roads. If it is approved by the voters on Nov. 4, an estimated $1.4 to $1.7 billion would be transferred from the Rainy Day Fund to the State Highway Fund in the first year alone.

However, road funding is projected to be short even if Prop 1 passes. The Texas Department of Transportation estimates it needs about $5 billion more a year to maintain the current infrastructure and build new state highways and roads to keep up with expected population growth. Additional funding sources to be considered by the 2015 Legislature include: re-dedicating highway funds that have been diverted for other uses; increasing registration fees; increasing fees on main users including service providers, truckers and water haulers; dedicating a portion of the motor vehicle sales tax to road construction and maintenance; using sales tax on automobile parts to fund transportation; and authorizing more toll and non-tolled roads. In addition, counties will continue to challenge policies that channel revenues from oil and gas production directly to the state and pursue options to ensure that funding of county road infrastructure remains a priority.

The Senator's Microphone

Local versus state control: The encroachment of oil and gas activities into both urban and bucolic settings in rural Texas has generated increased hostility and resistance. Some communities have initiated local control ordinances which would restrict or outright ban drilling within city boundaries. The 84th Legislature will undoubtedly consider measures that would consider local control over functions presently reserved for state government.

Liability and insurance: The chairman of the  Department of Transportation has called on Texas officials to address motor vehicle deaths and multiple-fatality crashes involving trucks and other commercial vehicles that have accompanied the state’s oil and natural gas boom since 2008. Worker’s compensation issues are also expected to be reviewed.

As can be seen, the 84th Legislature will deal with new, old and evolving issues. New leadership at the state level and in the legislature will likely create a new dynamic in the legislative process.

About the author: Gloria Leal is an attorney and government affairs consultant in Austin, Texas. Ms. Leal has a solo practice primarily relating to energy, environmental and healthcare matters. She also represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers. She can be reached at [email protected].

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