Senator Carona's Capitol Update
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June 2003

Dear Friends:

For those of you still with us, this is Capitol Update, with your legislator, Senator John Carona. We take you to the aftermath of a difficult legislative session, where government offices are just beginning to assess the implications of laws that passed and those that failed. The 78th Legislature marked the end of session with a number of legal vehicles for government and insurance reform negotiated in conference committees and passed on the floor with only hours to spare, in some cases. The tasks before the Legislature included balancing the budget, reforming public school and higher education finance, reversing skyrocketing homeowners' and medical malpractice insurance rates, developing a stronger Texas Ethics Commission, streamlining government agencies, funding the Texas Emissions Reduction Plan, and capitalizing the Trans-Texas Corridor and Texas Mobility Fund, among others.

On Monday, June 2 the 78th Legislature closed shop for the regular session. Of the 5,750 bills and joint resolutions introduced, 1,334 became law, 48 were vetoed, and 21 will be submitted to the voters on the Sept. 13 election ballot. Governor Perry has now called a 30-day special session that began on June 30 to address congressional redistricting and unresolved issues from the regular session such as government reorganization. Another special session on public school finance is expected to be called later this year or early next year.


After intensive debate in public hearings, on the floor, and in conference committees, we were able to produce a balanced budget without raising taxes. The state's budget, outlined in HB 1, came in at $117.4 billion, with $2.2 billion more in federal funds and $2.6 billion less in state dollars than the current biennium. The Legislature also passed legislation that would reform the size and scope of government by consolidating state agencies and maximizing the use of their facilities and their human resources. For example, Governor Perry signed into law HB 2292 on June 10, a cost-cutting social services reorganization bill that will consolidate 12 departments into four and is expected to save the state more than $1 billion. Other measures, such as SB 1771, which created the Texas Enterprise Fund, were passed to help spur job growth and indirect investment in the private sector. Under that bill, the Governor--with the approval of the House Speaker and Lieutenant Governor--could use a portion of the Rainy Day Fund for economic development, infrastructure development, community development, job training programs, and business incentives to draw nationally or internationally recognized employers like Toyota to Texas.


School Finance

Although the Legislature could not agree on a worthy successor to the Robin Hood method of school finance, Texas state leaders fought hard to make education funding the number one priority. Even as the budget was trimmed in other areas, budget writers put an extra $1.2 billion into public schools (HB 3459) and set a deadline of September 1, 2004, for reforming the school funding system. The House and Senate passed different plans that would have abolished the current recapture funding mechanism, but neither plan finally passed.

Special Session

The Governor must now call a special session on public school finance that could be scheduled as early as Fall 2003 or as late as Spring 2004 in order to meet the Sept. 1, 2004, deadline and avoid a court-ordered system. In addition, the constitutionality of the school funding system is once again in question as a result of the Texas Supreme Court ruling at the end of May which validated an earlier claim by four property wealthy school districts that the $1.50 property tax cap constituted an unconstitutional state property tax, overturning a decision by a lower court to dismiss the case. Legislative committees have already begun meetings to prepare for the special session on school finance.


The major voucher bill, HB 2465, would have established the Education Freedom Program in school districts where enrollment exceeds 40,000 and a majority of students are educationally disadvantaged, but this school choice measure met with considerable resistance in the House and died before reaching the Senate.

Teacher Retirement System

Under HB 3459, most full-time active members of the Teacher Retirement System will receive a $500 pass-through (down from $1,000). The Senate was able to add an amendment that would limit these reductions to the 2003-2005 biennium, forcing the Legislature to revisit the issue next session. These changes are effective Sept. 1. Two other related bills, SB 1369 and SB 1370, signed by the Governor, implement cost-saving measures for the state by modifying definitions for different employees and eligibility criteria to restrict participation in state group health benefit plans for public education and state employees.

Higher Education

The Legislature narrowly approved HB 3015, a bill that provides for tuition deregulation to help Texas public colleges and universities budget for increasing costs and a reduction in overall state appropriation levels. The new law authorizes flexible pricing for undergraduate, out-of-state, and graduate school tuition; including lower rates for afternoon or evening classes to help schools maximize efficient use of building space. Consumer protection measures in the bill require that 20 percent of the additional revenue from tuition increases be set aside for student grants and financial aid, including incentive programs such as work-study. Oversight by a joint House-Senate committee was established to monitor the performance of the institutions of higher education and their use of tuition revenue.


Insurance Regulation

The 78th Legislature responded to skyrocketing Texas homeowner's insurance rates by passing SB 14, which overhauls the system in an effort to lower rates for both homeowners' and auto insurance. The new law requires that rates not be excessive, inadequate, or unfairly discriminatory; creates a prior approval system for homeowners' insurance rates until December 1, 2004; allows the state's Insurance Commissioner to simplify filing requirements for small insurers entering the market to help foster competition and lower rates; requires a refund for excessive or discriminatory premium discounts; provides for consumer protections and safeguards regarding the use of credit by insurers; and requires credit scoring use to be disclosed to consumers and prohibits the use of credit scores based on unfair discrimination. Inclusion of credit scoring was controversial, but the Legislature ultimately decided that setting parameters for the practice would prevent future abuses of the credit information by the industry under another name. Consumer protection was also enhanced by making all filing and supporting information for rates, forms, and credit scoring subject to the Public Information Act. Most of the changes are effective immediately, while some are delayed until 2004.

Mold Remediation and Water Damage Claims

Regulation of mold remediation in Texas under HB 329 imposes minimum standards, requires mold assessors and remediators to be licensed, and authorizes the Texas Department of Health (TDH) to require employees to be registered. The bill takes effect Sept. 1. Senate Bill 127 establishes certain basic claims handling procedures so that insurers respond promptly and effectively to water damage claims, and protects both people and property from being stigmatized for previous water damage claims. It also authorizes licensing and regulation of public insurance adjusters. The bill becomes effective immediately, but several of its provisions do not go into effect until Jan. 2004.


Responding to the high cost of medical malpractice liability insurance and related lawsuit abuses, the 78th Legislature passed comprehensive tort reform legislation, HB 4 and HJR 3, this session. The final version of HB 4 addresses many issues affecting the civil justice system, including: class action lawsuits, offers of settlement, venue and forum non conveniens, proportionate responsibility, products liability, pre-judgment and post-judgment interest, appeals bonds, medical malpractice health care liability claims, charitable volunteer immunity and liability, admissibility of evidence regarding nursing homes, and liability relating to asbestos claims. In order to receive final approval of the health care liability damage caps in HB 4, Texas voters must approve a constitutional amendment (HJR 3) in a September 13, 2003, election (Amendment #12 on the ballot) that specifically allows the Legislature to set statutory caps on non-economic damages and other damages in the future.


Under the direction of the State Comptroller and Governor, legislators filed numerous bills related to the structure and efficiency of the state tax system in order to maximize tax revenue and help address the nearly $10 billion budget deficit. Most of these proposals, including revision of the state's franchise tax, did not pass. One tax-related bill that did survive the session was HB 2458 concerning motor-fuel taxes and federal highway matching funds, signed into law by Governor Perry on June 10 and effective January 1, 2004. This bill moves the motor-fuel tax collection from the distributor level to suppliers, the highest point in the marketing chain. Several measures to generate revenue from an increase in cigarette taxes failed as separate bills and as amendments to government reorganization bills; but HB 3139 effective Sept. 1, will regulate the delivery and sale of cigarettes and tobacco by telephone or voice transmission, mail order, or over the Internet by prohibiting delivery without age verification and confirmation of payment of state excise taxes.


Abortion and Prenatal Rights

Two bills concerning unborn fetuses were passed this session. House Bill 15, the Woman's Right to Know Act, mandates that, at least 24 hours before an abortion, a clinic or abortion provider offer a woman seeking an abortion specific information (developed by the Texas Department of Health), including the risks involved in the procedure. Senate Bill 319, the Prenatal Protection Act, provides for criminal and civil penalties to be imposed for the death (failure to be born alive) or injury of an unborn child at every stage of gestation from fertilization until birth. Both bills are effective Sept. 1.


Governor Perry recently signed into law SB 104 which would enhance the Texas State Board of Medical Examiners' ability to regulate doctors efficiently and effectively by establishing priorities for investigations and complaints about doctors. It also directs the agency to incorporate an expert physician panel into its enforcement process. The bill would also effectively give the board a better legal staff, funded in part by an increase in doctors' licensing fees. The bill, made effective immediately, was part of a set put on the legislative fast-track to curb the state's skyrocketing medical malpractice insurance rates.

Patient Protection

A bill designed to address complaints against doctors directs the Health Professions Council (HPC) to establish an Office of Patient Protection (OPP). The OPP will provide public information regarding the complaint process at each member licensing agency, carry out a public awareness campaign to increase awareness of the telephone complaint system, and supply information to the public regarding complaint procedures and the sanctions processes used by the HPC member agencies through the Internet and other media. This bill, HB 2985, is effective Sept. 1.


Limited Coverage Plans

Senate Bill 541, effective Sept. 1, will allow insurers and health maintenance organizations (HMOs) to offer policies that, in whole or in part, do not provide state-mandated health benefits, and requires that documents related to such policies notify the insured or enrollee that the coverage is limited in that way.

Employer Health Benefit Plan Groups

For many small businesses, the cost of providing health insurance for all employees often proves to be prohibitive. Beginning Sept. 1, small employers will be able to form group health cooperatives with other small and large employers in order to obtain health coverage for employees (SB 10).

Information for Health Benefit Plan Groups

Senate Bill 494, beginning Sept. 1, will require insurers, group hospital service corporations, and HMOs that maintain an Internet site to list the physicians and providers that may be used by insureds or enrollees, and to indicate which providers are accepting new patients.

Prompt Pay

Senate Bill 418 establishes new prompt-payment regulations for transactions between health-care providers and insurers, including preferred provider organizations and health maintenance organizations. The new regulations cover clean claims, payment timelines, audits, coordination of payment, verification, penalties, and applicability. The bill also creates a technical advisory committee and requirements for electronic transactions. A previous version was vetoed last session, but now that the bill has been signed it takes effect immediately.


Capital Punishment

Efforts to reform capital punishment in the state including proposals to clarify Texas' standards for determining whether capital murder defendants are mentally retarded, place a moratorium on the death penalty, transfer authority to regulate indigent defense attorneys, and provide juries the option of sentencing defendants in capital punishment cases to life without parole, provoked considerable debate but did not yield any new laws this session. One measure that did pass, and is now in effect, is HB 2703 which will require the public safety director of the Texas Department of Public Safety (DPS) by rule to establish an accreditation process for crime laboratories, including DNA laboratories and other entities conducting forensic analyses of physical evidence for use in criminal proceedings, and to regulate DNA laboratories.

Drug Enforcement

The question of corroborating evidence for peace officers' testimony was addressed in two bills filed this session that were prompted by the 1999 drug bust in Tulia that is still being fought in the courts. Senate Bill 515 would have required the supporting testimony of anyone operating in an undercover drug sting as an agent of law enforcement, but the bill died in the Senate. A Dallas judge ruled in April that the undercover agent involved in the Tulia convictions was not a credible witness and recommended to the Texas Court of Criminal Appeals that all 39 convictions be overturned and new trials ordered. In response, the Senate approved SB 1948, which places the remaining 14 in question on bond pending the Court of Criminal Appeals' review of the case, with the expectation that the review would result in the overruling of the trial court's decision. The bill, which is bracketed for this case only, was recently signed by the Governor and was made effective immediately.

DWI and Sobriety Checkpoints

Legislators proposed several key bills this session to improve road and water safety and protect passengers from drivers operating vehicles while under the influence. House Bill 292, which did not pass, would have required a blood alcohol content analysis of a person if any individual has died or might die, or if an individual other than the person has suffered serious bodily injury as a result of a motor vehicle or water-craft accident. Under SB 45, which did pass, a person who is driving while intoxicated and has a child in the motor vehicle can be charged with a new offense, "DWI with a child," which is a state jail felony. The 78th Legislature decided against passing SB 44 this session, a law that would have established sobriety checkpoints along highways in Texas to help the state qualify for an additional $2.3 million in federal traffic safety funds.

Identity Theft

Credit card numbers and personal identifiers such as social security numbers will soon be harder to steal once two identity theft bills go into effect. Senate Bill 235, beginning Sept. 1, will require that a receipt or other document issued from a credit or debit card transaction list only the last four digits of the account number and prohibit the printing of the expiration date on the paper documents, providing a civil penalty of up to $500 a month for violation of these requirements. Senate Bill 611, beginning March 1, 2005, will prohibit the display of an individual's social security number on any device required to access products or services and would provide a civil penalty for a violation, except as required by law for internal verifications.


Different aspects related to homeland security that balanced security with open government were addressed in two main bills passed this session. The major bill, HB 9, requires the Governor to develop a statewide homeland security strategy and create a Critical Infrastructure Protection Council in line with the federal plan and was made effective immediately. Senate Bill 408, signed into law on May 28 and effective Sept. 1, provides that a terroristic threat that places any person in fear of imminent serious bodily injury is a Class A misdemeanor, rather than a Class B misdemeanor, if it is committed against the actors' family or household or against a public servant.


House Bill 3588 integrates existing and recent transportation policies with new initiatives and financing mechanisms designed to accelerate project delivery and to generate additional cash flow. The new law incorporates provisions from at least eight other bills, creating new chapters and amending several existing ones in the Transportation Code. The final version was divided into 12 major articles which include: designating, building, and operating the Trans-Texas Corridor Plan; expanding the powers and duties of Regional Mobility Authorities; authorizing spending on additional exclusive development (design-build) agreements; giving Texas Department of Transportation (TxDOT) advance right-of-way acquisition; creating a driver responsibility program to fund certain emergency medical service facilities and trauma care systems in the state; allowing TxDOT to build rail facilities; capitalizing the Texas Mobility Fund; increasing highway bonding authority; allowing pass-through (shadow) toll financing; applying highway contract claim procedures to the Texas Turnpike Authority Division (TTAD); transferring historic property; and reallocating traffic violation fine increases. Full implementation of HB 3588 will be complete by 2005, providing voters also approve HJR 28 on Sept. 13 (Amendment # 14 on the ballot).


Senate Joint Resolution 42 would allow for the availability of home equity lines of credit up to 50 percent of the fair market value of the home. This resolution would increase the opportunities for more, lower-priced loans by authorizing the legislature to delegate interpretative authority to a state agency, providing all interested parties a forum for participating in the process. In addition, the resolution includes a cure provision that specifies guidelines for a lender to follow in correcting or curing an error in a home equity loan, allows mortgage brokers to make home equity loans, and authorizes a homeowner to utilize a reverse mortgage loan to refinance an existing home equity loan. SJR 42 must be approved by voters in the Sept. 13 election (Amendment #16 on the ballot).


Workers' compensation had a major overhaul in 2001, and this session several bills that streamlined those changes were passed by both houses. Those that made it were SB 1572 (workers' compensation treatment guidelines and protocols), SB 1574 (administration and regulation of the state's workers' compensation insurance system), and SB 1804 (certain health care treatment plans and pharmaceutical services and medical necessity reviews). All three have been signed by the Governor and SB 1804 will take effect Sept. 1 while the other two are already in effect.


Judicial Selection

This session the Senate passed SB 794 and SJR 33, legislation that would have created an appointment/retention system whereby every judge would face voters at the end of every term, but the bill lacked House support and died.


Redistricting in Texas proved to be one of the prickliest issues up for consideration this session, resulting in the exodus of 51 Democrat House members to Oklahoma in order to break quorum and prevent the passage of HB 3398. The House bill would have redrawn Texas' congressional districts, but resistance to redrawing political boundaries to reflect new voting patterns prompted legislators to walk out, which killed the redistricting bill during the regular session. As this Update goes to press, the Governor has called a special session to once again attempt to redraw the state's congressional districts.


The Legislature passed the first ethics reform in a dozen years, HB 1606, which toughened ethics laws and campaign contribution reporting. The new law updates the Texas Ethics Commission's sunset review date to 2015 and strengthens its enforcement authority. Under the bill, campaign finance reports would have to include the occupation, job title, and name of employer for each contributor who contributes at least $500 and the reports would have to report future cash balances as of Sept. 1. In addition, the bill extends the ban on political contributions through the 20th day after the Legislature's adjournment, increases lobbyist late filing fines, and compels legislators to provide greater disclosure. All of the changes take effect Sept 1.



Another example of agency housekeeping this session was the Agriculture Code cleanup bill, SB 1413 signed by the Governor on June 18. The bill repeals many duplicate and outdated provisions in the Agriculture Code including provisions relating to government sealers and weights for agricultural products and government-sponsored farm institutes. A controversial amendment added on the House floor, which essentially would have accomplished the objective of HB 1324 legalizing the sale of horsemeat for human consumption outside the United States, was removed from SB 1413 before final passage.


House Bill 1365 establishes a funding mechanism for the Texas Emissions Reduction Plan (TERP) enacted last session to target diesel emissions and raise revenue to comply with the federal Environmental Protection Agency air quality deadline by 2007. The new law will cover the costs of the diesel emissions reduction incentive program, the new technology research and development program, and the related administrative costs to the Texas Commission on Environmental Quality (TCEQ), while providing the flexibility of transferring unexpended funds from one TERP program to another.

Electronic Waste

Reducing electronic waste was the goal of a few bills filed this session, none of which passed. Two similar bills, SB 1239 and HB 2967, would have required electronics producers to be responsible for their products, through recycling and safe disposal of obsolete electronic equipment.

Hazardous Waste

As the result of passage of HB 1567, Texas will have two privately run, state-licensed disposal facilities to accept low-level radioactive waste from federal sources and states under the Texas Low-Level Radioactive Waste Disposal Compact Consent Act passed by the Texas Legislature in 1998. The TCEQ will be responsible for enforcing the rules relating to the transportation of low-level radioactive waste in accordance with those of the U.S. Department of Transportation (DOT) and U.S. Nuclear Regulatory Commission (NRC). The bill is effective Sept. 1.


Water Rights - Senate Bill 1374, which did not pass the House, would have set forth state policy regarding the state's water, created the Study Commission on Water Environmental Flows, and made provisions regarding water rights permits for instream flows.

Conservation Plans - Another water bill, HB 2660, now in effect, establishes minimum levels of water conservation plans to be determined jointly by the TCEQ and the Texas Water Development Board (TWDB). The goal is to improve compliance with water conservation plans required by the Water Code among municipal water suppliers, by requiring them to submit specific, quantified 5-year and 10-year targets for water savings based on the joint agency guidelines beginning May 1, 2005.

Riverbed Protection - Senate Bill 155 will prohibit the operation of a motor vehicle in or on the beds or banks of Texas rivers, with certain exceptions, and provide penalties beginning Sept. 1. The bill is designed to protect public freshwater areas and riparian vegetation from contamination and destruction caused by recreational vehicles without infringing upon private property rights or necessary transportation routes.


The regular session of the 2003 Texas Legislature was arduous for constituents and lawmakers alike, and has surely tested our leadership and communication skills as we set out to address the many sides of these important issues. As always, I ask that you help keep us on track by staying abreast of the issues and keeping us informed about your positions. Remember, I am always just a ring, click, or beep away. I can be reached at 800-662-0334 and news updates on my legislative projects can be found on my website at:

For more information, please avail yourself of the following resources:

Legislative Resources

Texas Legislative Information:

Legislative Reference Library:

*Toll-free phone number (to check bill status): 877-824-7038 (through June 2 or end of special session)

*Checking bill status while in Austin: (512) 463-2182 (through June 2 or end of special session)


Use the following link to download or view this document in PDF format: CONSTITUTIONAL AMENDMENTS (PDF)