Last Week in the Legislature

Big Moves

TXCPA’s Legislative Agenda Makes Significant Progress

By Kenneth Besserman
Director of Government Affairs and Special Counsel

March 17, 2023 | Issue 7

AUSTIN - Just as the bill filing deadline passed for the 88th Texas Legislative Session, TXPCA’s legislative agenda made significant strides in both the Texas Senate and the Texas House.

First, on Tuesday, March 14, the Senate Business & Commerce Committee voted SB 159 – 120 hours to test legislation – unanimously out of the Committee after hearing the bill the previous week. The bill will be eligible to be heard on the Senate floor on Tuesday, March 21. The Committee also recommended the bill to be placed on the Senate Local & Uncontested Calendar (an expedited path to full Senate passage) in case the full Senate cannot take up the legislation.

The House Licensing & Administrative Procedures Committee heard HB 797 (companion legislation to SB 159) on Wednesday, March 15. Representative Angie Button talked about the importance of the bill to the CPA profession and how it will allow flexibility for students to take the CPA Exam when they are ready after completing at least 120 semester hours. The Committee had a favorable reception to the legislation, and on March 16 they voted out HB 797 unanimously.

Now, both SB 159 and HB 797 are headed to the Senate and House floors, respectively, for full passage. With both bills moving very quickly through their respective chambers, there is a race to see which bill becomes law.

With committee hearings in both the Senate and House now getting into full gear, TXCPA and its members should be proud that the 120 hours to test legislation has been heard in both chambers’ committees. This is great news, as very few bills this session have made progress in both chambers.

The busy days of session, along with the inevitable slowdown due to negotiations on hot button issues (property tax reform, state budget, infrastructure needs and social issues) still lie ahead. Having a bill moving simultaneously in both houses increases the chances of final passage. 

You can follow the legislative path of TXCPA bills on our Legislative Tracker. 

TXCPA’s other major legislation this session – SB 951 and HB 2504 (expanding the fifth-year scholarship to more accounting track students) have now both been referred to the Senate Business & Commerce Committee and the House Higher Education Committee. TXCPA is working closely with the bills’ authors and the committees to get hearings set. Stay tuned for more to come on the fifth-year scholarship bill. 

This session has seen some interesting bill filing numbers. This year, there have been 5,497 House bill filed (compared to 4,728 in 2021) and 2,656 Senate bills filed (compared to 2,191 filed in 2021). In total, there was an almost 18% increase in filed legislation. With the pandemic mostly behind us, legislators have taken the opportunity to file more bills – possibly making up for the slower session in 2021. The pace of committee hearings, bills set for hearing and bills voted out of committee is slightly ahead of the 2021 pace. With many more bills filed, committee hearings are going to be long and late into the night in the coming weeks.

Looking at the session in general, there are also some interesting statistics on bills that have been filed. Both Lt. Governor Dan Patrick and Speaker Dade Phelan had their priority legislation filed last week prior to the deadline. There was some overlap on their priorities for property tax reform/reductions, border security, and job creation programs. There were also significant differences, with Phelan focusing on infrastructure needs, higher education reform and school safety issues, while Patrick set his priorities on parental rights, power grid reform, eliminating tenure in higher education, adopting a business courts system, and other issues. 

 Property Taxes

The central issue of the session – property tax reform and reduction – is set to be the biggest battle. The House is focusing on limiting tax appraisal increases – moving from 10% to 5% – and putting more state funds directly into the public school system to limit the need for property tax increases by local jurisdictions. The savings to a homeowner with a $350,000 home would be about $1,300 over two years.  

Business groups have voiced some opposition to the House plan as the appraisal cap limit would move the tax burden to businesses rather than homeowners. In the Senate, the focus has been to increase the homestead exemption from $40,000 to $70,000 and $100,000 for disabled/elderly homeowners. The savings would be approximately $360 per year.  

In addition, the Senate is focused on some sort of tax reduction or franchise tax credit on the amount of property taxes paid on inventory. This is an attempt to provide property tax relief to businesses. The negotiations on property tax reform are going to be long and heated and will take up a lot of the legislature’s time in the last two and half months of the session.  

Local Control

Another major issue the legislature is facing this session is the perennial battle between local and state regulation in several areas including labor law, health and safety measures, environmental matters, and other business regulations. Recent years have seen some cities pass ordinances in areas where the legislature has not passed laws and cities still feel the need to regulate in those areas.  

The last few sessions have seen the House and Senate debate preemption legislation – mandating that local jurisdictions cannot pass local laws in certain areas. This session, the debate is heating up again with many bills making it more difficult for cities and counties to engage in passing local laws where the state has chosen not to legislate.  

Cities and local jurisdictions are fighting hard against this legislation by pointing out that local control is important to their constituents and, without the ability to regulate in certain areas, cities will lose all their authority to the state legislature. This issue has been simmering for years and the outcome is still uncertain this session. We will be keeping an eye on this issue.  

We are almost at the halfway point of the session. The good news is that TXCPA’s bills are moving along. The bad news is there are still 72 days left for the Legislature to go off the rails. 

See you next week.