From the Office of State Senator John Carona

76th Legislative Session Wrap-Up
State Senator John Carona

June 1999

Of the nearly 6,000 bills and resolutions introduced this session, the Legislature passed over 1,600 separate pieces of legislation. Governor Bush now has the task of sorting through most of them and deciding whether to sign, veto, or let the bills become law without his signature. While it is difficult to try to summarize all the work of this Legislature, this wrap-up will provide some of the highlights.
State Budget: Although the flurry of legislation each session can be overwhelming, the only Constitutionally required action of the Legislature is passage of the biennial budget. This session, the Legislature was blessed with a $6.4 billion surplus, along with nearly $1.8 billion in tobacco settlement funds which prevented the need for any discussion on tax increases. In fact, even with passage of a $98.1 billion budget for the next two years, the Legislature managed to provide nearly $2 billion in property, sales, and business tax reductions.
Business Tax Reductions: Early in the session, the Legislature passed and Governor Bush signed into law a bill to provide economic relief to small oil and gas well producers who suffered through many months of slumping oil prices. The law will exempt certain wells from state severance taxes when oil prices fall below a minimum price. * To encourage small business growth in Texas, the Legislature passed a bill to exempt small businesses with gross receipts under $150,000 a year from having to pay state franchise taxes. This will eliminate the costly and time consuming paperwork for what often was a tax bill of less than $100. * During the final days of the session, legislation was approved to allow corporations to obtain franchise tax credits for investments made in research and development and job creation. This will allow Texas to remain competitive with other states that already offer these types of tax breaks.
Consumer Tax Reductions: Texas consumers will benefit from sales tax reductions passed this session. Beginning April 1, 2000, Texas shoppers will no longer have to pay any sales taxes on the purchase of over-the-counter medicine. This measure alone will save Texans $161.2 million next year. In addition, the state Legislature approved a three-day sales tax holiday every August on school clothing and footwear costing less than $100. The timing of the sales tax exemption is intended to coincide with the time families are shopping for back-to-school clothes. This tax break is estimated to save Texas shoppers $69.3 million over the next two years. The third sales tax break for consumers will exempt the first $25 of monthly Internet access charges and 20 percent of other data and information services form sales taxes. This change will provide an additional $46.3 million in tax savings for Texans connected to the Internet.
Property Tax Reductions: After last session's record $1 billion property tax reduction, the Legislature this session targeted the budget surplus as a means to provide additional relief to taxpayers. In the end, the Legislature will send $1.35 billion back to the people by requiring local school districts to reduce their property tax rates in exchange for additional state education funding. The reduction will vary among school districts based upon the district's property wealth and debt load. On average, there will be approximately a 6 cent reduction which will save taxpayers roughly $60 a year based upon a home with an appraised value of $100,000.
Education: Nearly every legislator came to Austin this session realizing that education would be the top priority. The budget surplus provided legislators an historic opportunity to invest in the future of Texas by significantly increasing the state's share of funding public education. After months of debate, including intense negotiations as the session was drawing to a close, the Legislature responded to this challenge by producing a $3.8 billion school finance bill. This expenditure represents the largest increase in education spending in the history of the state of Texas. * The most visible provision is a $3,000 across-the-board pay raise for every school teacher, counselor, nurse, and librarian. This demonstrates to teachers long overdue appreciation for the critical job they have in educating our children. * Social promotion is also eliminated by requiring students in grades 3, 5, and 8 to pass the state's academic skills test before advancing to the next grade. By addressing learning shortfalls early in a student's education career, schools will be able to provide the foundation for better academic and professional success in later years. This initiative will be phased in over the next several years. * The Legislature also revamped the Texas Assessment of Academic Skills (TAAS) test to add testing in additional grades, as well as new tests in science and social studies. * Money will also be provided to pay college tuition costs for academically-qualified and financially needy Texas students under the new TEXAS (Towards Excellence, Access, and Success) scholarship program. The $100 million appropriated for this program will help 20,000 students pay for a college education.
Health Care: As people continually need medical care, health care will always be a source of high demand for limited state financial resources. With extra dollars from the state surplus, the Legislature increased general revenue funding by $370 million for the Health and Human Services programs for Medicaid costs, to offset losses in federal matching rates; to cover increased foster care and adoption caseloads; to provide for higher needs nursing home clients; to continue services to community care clients; and to fund rate increases for various provider groups. * The highlight of health care issues this session was the creation of the Children's Health Insurance Program (CHIP) funded by a portion of the tobacco-settlement dollars. This program addresses the critical need of providing health insurance and care for children of families that cannot afford coverage on their own, yet do not qualify for Medicaid. CHIP will provide coverage for approximately 471,000 qualified children 18 years of age and younger. * In addition to funding health care in Texas, one bill which received a tremendous amount of attention would allow Texas doctors to band together to negotiate their contract with HMOs. Many people mischaracterized this as providing collective bargaining for doctors, but this bill simply allows individual doctors to continue to provide quality health care without having to join large physician networks.
Electric Restructuring: After falling short of passing a bill last session to restructure the regulations governing the generation of electricity, the 76th Legislature used the work of an interim committee to craft a bill that won passage in both houses. While Texans pay lower than average electric rates, our bills are among the highest in the nation. Under this legislation, electric rates will be frozen for residential consumers for the next two years. Upon introduction of competition on January 1, 2002, residential rates will automatically be cut by 6 percent and competitors to the current investor-owned utility providers will be free to offer even further rate reductions. Municipally-owned utilities and electric coops are exempt from restructuring unless they attempt to provide service outside of their service area or elect to participate in competition. There are benchmarks to ensure competition is taking place, and the Public Utility Commission will maintain an oversight role to protect the reliable service Texans rightfully expect from their electric provider.
Telecommunications Reform: While the Legislature passed a telecommunications reform bill in 1995, the expected competition for local phone service has not materialized. This session the Legislature prepared the way for full competition in the residential, local business, and long distance phone markets. The major consumer benefit from this bill is the reduction by nearly half of the access charges on intrastate long distance phone calls. This change will result in consumer savings of an estimated $300 million. The bill also freezes basic business and residential rates until 2005, but provides Southwestern Bell increased pricing flexibility for packaging basic residential services with other optional services.
Environmental Issues: Probably the most significant environmental issue addressed this session was the focus on industrial plants grand fathered from the requirements of the Clean Air Act. As more areas of the state are approaching or surpassing noncompliance air quality standards, cleaning up these grand fathered facilities becomes a greater priority since they are the source of 36 percent of all industrial air pollution. Under legislation passed this session, grand fathered facilities will be required to reduce their emissions by 50 percent or face stiff fines. In addition, industrial plants will be required to pay a fee for their emissions starting in September 2001. * Under the electric restructuring bill, provisions were included to mandate emissions reductions in power plants by May 1, 2003. The costs for retrofitting older plants will be recouped through the stranded cost recovery under the bill. * The Legislature also added to the work begun last session with passage of the comprehensive, statewide water management plan, by creating 17 groundwater districts. These districts will regulate the transfer of groundwater to areas outside of their districts.

Miscellaneous Issues:

Welfare Reform: To continue the successful programs that have dramatically reduced welfare rolls in Texas, the Legislature passed reforms to assist those making the transition from welfare to work. The changes include: allowing the welfare recipient to keep more of their state benefits for the first few months they begin working; providing child care to more welfare mothers; and reduce the work exemption for parents with young children.
Parental Notification: After several attempts, legislators finally approved a bill requiring a physician to notify a parent or legal guardian 48 hours before performing an abortion on a patient 17 years old or younger. A bypass is allowed if permission is obtained from a judge.
Border Initiatives: Despite hundreds of millions of dollars spent to address problems in colonias located near the Texas-Mexico border, living conditions are still abysmal in many areas. Legislation passed this session will clarify and strengthen development requirements to ensure access to basic water and wastewater services.
Annexation: In an attempt to provide for better communication and a more orderly process, the Legislature passed comprehensive reforms to the annexation process. With these changes, cities will be required to establish better plans for absorbing annexed areas, and the people in the annexed areas will be included in the negotiations.
Reverse Mortgages: Reverse mortgages allow senior citizens to take out a loan secured by the equity in their home without having to repay the loan until they move or die. While Texans believed they had approved reverse mortgages for Texas senior citizens two years ago, conflicts with federal regulations prevented any reverse mortgages. The changes made this session have resolved those conflicts.
Lottery: To try to revive slumping sales of Texas Lottery tickets, the Legislature will allow the Lottery Commission to raise the level of prize payouts. Speed Limits: Trucks will be allowed to travel the same speed as cars on state and federal highways in Texas under a bill approved by the Legislature. DWI limit: The blood alcohol limit for drunk driving in Texas has been lowered from .10 to .08.

Major Bills That Did Not Pass:

Vouchers: While providing school students in Texas public dollars to attend private schools was given a lot of attention, no bills passed approving this in Texas.
Hate Crimes: The Legislature did not approve proposed changes to the state's hate crimes law that would have enhanced penalties for crimes motivated because of the victim's race, gender, disability, religion, or sexual preference.
Judicial Selection: Although debated for several sessions already, legislators could not agree on a way to reform the ways Texas judges are elected. The proposal which failed this session would have allowed for appointment by the governor of judges and then subjecting them to retention elections.
Red Light Violators: A proposal to install cameras at red lights to photograph violators failed passage in the House.
Open Containers: Although initially included in comprehensive legislation, a proposal to ban open containers of alcoholic beverages in automobiles in Texas did not receive final approval.
Speed Limits: One failed proposal would have increased to 80 mph the speed limit on rural stretches of east-west highways.
Texas Constitution: Legislators proposed a complete rewrite of the Texas Constitution, but the challenge was insurmountable this session.

Sincerely,
John Carona

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