That’s a Wrap: Texas’ 86th Legislative Session
by Kenneth Besserman & Rebecca Robinson
In what is already been characterized as one of the most cordial sessions in Texas legislative history, there was no name-calling, partisan shouting matches, or walkouts en masse as in years’ past. There was cooperation (overall) at the Capitol, united leadership, and very little (at least visible), drama.
Which was no great surprise, as Texas leadership vowed in January that the 86th legislative session would be a “kumbayah” year, according to local headlines. To a large extent, it was. The new House speaker Dennis Bonnen (R), united with Lt. Governor Dan Patrick (R) in the upper chamber, and Governor Greg Abbott prior to session, and certainly throughout to tackle three issues of critical importance to voters - school finance, property tax reform and the state’s two-year budget. All three goals were accomplished.
A whopping 7,324 bills were filed in the House and Senate this session, and approximately 19 percent passed. This is a slightly higher passage rate than last session (18 percent) but lower than 2015 (21 percent) and 2013 (24 percent). Session ended on Memorial Day (May 27, 2019) the Governor has 20 days to veto (Sunday, June 16).
Richie Jackson, TRA’s longtime CEO tackled his 24th session this year for the industry, and as predicted, felt that the state’s burgeoning Rainy Day Fund (Economic Stabilization Fund), which had reached a $12 billion surplus, along with the budget surplus, would play a significant role throughout. “Having more money doesn’t mean it’s going to be an easy session,” he remarked in January. “We were right,” he says now. Competition for funds across the board was fierce.
The two-year budget that ultimately passed, was an increase of 15.7 percent (a total of $250.7 billion) from two years ago, not including a $9.9 billion supplemental appropriations bill to cover gaps in Medicaid, and the Texas Tomorrow Fund (pre-paid college investment program), in addition to teacher retirement, Hurricane Harvey relief and flood control among other items. A big chunk - $6.1 billion of the supplemental spending bill - came from the Rainy Day Fund.
Property tax reform that dominated session wasn’t quite as dramatic as most had hoped, with new 3.5 percent limits on local government property tax increases, and 2.5 percent limits on school district property tax increases, which can be raised, but only with voter permission. The bill would also create a database for property owners to determine how proposed changes could affect their bills and include information on public participation in the process. A massive effort to counterbalance revenue from property taxes by raising the sales tax by 1 cent failed after research indicated that it would be unfair to lower income Texans.
As far as public education and school finance (55 percent of which is funded through property taxes), lawmakers agreed to earmark $6.5 billion in new state funding for schools, and use $5.1 billion to buy down local property taxes. Within the overall budget, $94.5 billion is allocated for funding for public schools and universities, up 16 percent from last session (Legislative Budget Board).
Moving beyond property taxes and school finance, TRA was laser-focused on supporting legislation that supports the restaurant industry, and blocking harmful bills. That means that out of the 7,000+ bills filed, TRA tracked nearly 300 bills throughout the legislative process, ranging from health and safety, to business, to tax policy, alcohol regulations, employment law, insurance reform and more.
Out of the 300 bills TRA closely tracked, there were a handful of key legislative priorities. Four of the five main bills that TRA worked on to secure passage have been signed into law by the Governor, and two of these wins, both alcohol delivery and the creation of oyster mariculture are major, historic victories. TRA legislative successes:
Alcohol Delivery – S.B. 1450
This historic legislation levels the playing field for restaurants by allowing the holder of a mixed beverage permit to deliver an alcoholic beverage from the permitted premises directly to a consumer as part of food delivery from a restaurant. Alcohol allowed to be delivered includes bottles of beer, wine and manufacturer-sealed, single serving, mixed drink containers, no larger than .375 ml.
Oyster Mariculture - H.B. 1300
Until now, Texas was the only coastal state that did not engage in oyster farming. With HB 1300, TRA has helped make history by establishing a brand-new industry of oyster farming. This will have a tremendous impact on the Texas restaurant industry, consumers, the economy and most importantly, protection of our coastal reefs. Farming will begin in 2020.
BBQ Bill – (a.k.a. BBQ 2.0) HB 2223
In 2017 the Texas Legislature passed HB 2029 which eliminated registration and certification requirements for scales “exclusively used to weigh food sold for immediate consumption.” In other words, establishments that sold food by weight, such as yogurt shops and barbecue restaurants were not required to have their scales registered.
The Department of Agriculture, through its rules and enforcement, didn’t implement the 2017 legislation as intended by the Texas legislature, deciding that businesses would only be exempt from regulation if they weighed foods to be eaten “on the premises.” The Attorney General eventually sided with the authors of HB 2029 and held that the TDA’s rules would be invalid if challenged in court.
H.B. 2223 clarifies and strengthens the language of the 2017 legislation and finally eliminates the registration and certification requirements for these scales.
TABC Wet/Dry Certification – HB 1443
This legislation requires a set time frame (no more than 30 days) for a city or county to certify the wet status for TABC permitting. This will streamline the permitting process, making it more efficient and effective for both permittees and TABC.
While focusing on its core advocacy issues, TRA was also involved with, and supported a number of other measures, some of which have been signed by the Governor and some of which did not pass. TRA worked closely with other business associations, like-minded trade groups and others that have similarly aligned interests.
HB 1545 – TABC Sunset bill. This legislation reauthorized TABC for another 12 years; removes the distinction between ale and beer (now it is all called “malt beverages”); significantly reduces the number of licenses and permits; modernizes the Code; allows beer-to-go from breweries; and opens up the number of package stores allowed per person.
HB 672 / SB 312 – These bills are the “beer-to-go” bills that will permit a brewery to sell a limited about of beer directly to consumers. While these bills did not pass, the “beer-to-go” language was added to the TABC Sunset Bill (HB 1545) which will allow consumers to purchase up to one case of beer per day from a brewery.
HB 1997 – This legislation will give distilleries more flexibility in providing distilled spirit samples to retailers.
HB 2792 – This legislation will clarify that specific intent is necessary in order to criminalize a false statement or false representation on an application. Mere accidents will no longer be considered to be prima facie evidence of a crime.
SB 1210 – This legislation addresses the issue of alcohol that is not fit for human consumption after a natural disaster. The bill authorizes the removal of alcohol from the inventory of a retailer and destroyed and disposed of under certain conditions.
HB 3768 – This bill will enable a licensed Texas alcohol producer the ability to safely and responsibly promote and offer tastings at the State Fair of Texas under the direction of the GO Texan program without additional licensure, permissions, or costs to the Texas Alcoholic Beverage Commission.
HB 3006 – This bill conforms the mixed beverage gross receipts tax and mixed beverage sales tax reporting dates so that separate reports on separate dates are no longer required.
Food and Safety
HB 2107 – This legislation will ensure that local health jurisdictions are required to provide requested health and food regulatory information to people requesting that information. The Texas Department of Health Services is already required to provide requested information and HB 2107 extends that requirement to local health jurisdictions.
HB 2321 – This legislation will increase the penalties and fines associated with the unauthorized harvesting of oysters. This legislation is necessary to help maintain coastal reefs and the depleted oyster population.
HB 410 – This legislation addresses low-volume livestock inspection requirements by exempting certain domestic rabbit and poultry processing establishments from inspection requirements. Most importantly, the legislation no longer includes onerous meat labeling requirements that were added late in the session.
SB 476 – This legislation will remove the difficult requirements imposed on restaurants that want to make their premises dog friendly. A restaurant will have to post a sign, require dogs to be tethered or leashed, and prohibit animals from entering the premises (must stay outside on patio)
Labor and Workforce
HB 2240 – This legislation will allow employers to pay employees through a payroll card. Current law does not expressly provide for payroll card as a means of wage payment. This legislation is necessary to help those individuals that are “unbanked”.
HB 4347 - Certain cities are authorized to receive a rebate for state hotel occupancy taxes and state sales taxes collected at certain convention center hotels, which may be used by a city to service the bonds or other obligations incurred for the construction of the project. Financing convention center hotels is challenging, and convention center hotels aid state and local economies by attracting out-of-state visitors and conventions to Texas. HB 4347 addresses this issue by authorizing certain municipalities to use specified tax revenue for hotel and convention center projects and other qualified projects.
Other legislative victories including blocking certain bills that would be harmful to the industry. The top three “blocked bill” wins for TRA include the following:
- Legislation that would have allowed consumer to bring in their own bottles of wine onto a mixed beverage establishment,
- TRA successfully passed a uniform minimum wage over 15 years ago which created statewide uniformity and consistency. This session there were efforts to roll back the uniform minimum wage, and TRA worked to successfully block it, and
- Legislation that would have prohibited an employer from deducting the credit card convenience fee attributable to an employee’s tips.
Unfortunately, one of the most important business issues of the session failed to pass, because of a fight that evolved into the Bathroom Bill Part II based upon a perceived threat to local non-discrimination ordinances. TRA, along with a number of other business associations heavily lobbied on behalf of bills that would have prevented cities and counties from enacting ordinances relating to paid leave, scheduling and benefits. These bills would have left it to the state to legislate these areas, creating a uniform playing field, and the prevention of unwelcome, local intrusion into business operations.
While disappointed, we will be supporting a Third Court of Appeals court ruling that finds local paid sick leave ordinances unconstitutional. That ruling is currently pending before the Texas Supreme Court.
The successes TRA has experienced this session would not have occurred without the support of TRA members. PAC contributions, phone calls, showing up to testify in committee, letter-writing, walking the Capitol and visiting with legislators – TRA members rolled up their sleeves and got the job done. Member involvement made the difference. Our success depends on you and we thank you for your continued support.
If you need more information about any of these bills or more information about TRA Advocacy or the 86th Legislative Session, please call 512-457-4100 or email Kenneth Besserman and Rebecca Robinson. You can also always visit our advocacy and current issues page here.