The bill of major interest to members of the Texas Desalination community, SB 28 (Perry) was finally passed on the 28^th of May, sent to the Governor on the 29^th and signed on June 9^th. The earliest effective date for the majority of SB 28 is September 1 of this year.  The funding mechanism for SB 28 is contained within SJR 75 which finally passed on May 28^th as well.  This constitutional amendment (SJR 75) must be voted on by the voters of the state and that election occurs on November 7^th, later this year.  If the amendment passes the funding portion of SB 28 will go into effect on January 1 of 2024.

A significant portion of the other bills tracked by the Texas Desalination Association died, while a few became law without the Governor’s signature, or were vetoed.  As of 6 p.m. June 19th there were 250 bills that the Governor had taken no action on. The delay seems to have had more to do with the larger picture, (property taxes and vouchers) and the bill’s author and sponsor than the actual merits of the legislation. If you have followed the press over the past several days, the contention and lack of civility  does not bode well for a fast resolution to our current legislative impasse.   

In total the Governor vetoed 73 bills. That is his record on vetoes since he became Governor.  52 of those bills were senate bills.  Included within those vetoes was SB 1080 by Senator Kolkhorst dealing with mitigation fees for Lost Pines GCD. 3 additional bills that were being tracked, SB 2379 (Schwertner) dealing with Edwards Aquifer storage and recovery and SB 2052 (Nichols) dealing with permit fees for SE Tx GCD, and HB 2416 (Paul) dealing with the Gulf Coast Protection Trust were also vetoed.  The Governor did sign a number of bills we were tracking as well.  HB 3731 (Murr) Dealing with the Bandera River Authority and GCD, HB 3278 (Price) dealing with joint planning for DFC in certain GMAs, HB 2443 (Harris) dealing with the ability to petition GCDs, HB 1565 (Canales) TWDB Sunset bill, HB 1971 (Ashby) dealing with GCD Board members, SB 1047 (Perry) increased funding for the Produced Water Consortium and SB 2440 (Perry) regulating the platting of subdivisions and taking into consideration groundwater availability. Two other bills we were tracking, HB 1699 (King) was allowed to become law without the Governor’s signature as was HB 3059 (King) dealing with GCD export fees. 

The discussion regarding what to do with approximately $18B and what your property taxes will look like going forward continues to be the current focus.  The end of the first called session is fast approaching.  The next called session is not an “if” but a “when”.  That “when” will occur very quickly.  Leadership does not appear to be any closer now than they were at the end of May.  Today it’s 104 degrees in Austin.  It’s going to be a long hot summer.

The 88^th legislative session has come to a conclusion.  The House and Senate both adjourned, Sine Die, which actually means (for those who do not remember their high school Latin) indefinitely, without any future date being designated, late afternoon of the 29^th.   Although, the Governor called a Special Session at 9:00 p.m. just a few hours after both the House and Senate adjourned so the interim was very short-lived.  The Special Session was short-lived as well, the House passing both bills the Governor declared on the call, a property tax relief bill and increased penalties for human trafficking, both done on the 30^th.  The House then determined that the Senate bills that were passed, also in record time, were not germane to the Governor’s call and refused to refer the bills to committee.  Once this parliamentary procedure was accomplished, the Speaker gaveled the House out and Sine Die was once again declared, leaving the Senate to deal with the House bills as they were passed in the House.

The prediction is that the Senate will NOT pass the bills as they come over from the House and the House no longer being in session, the Senate will Sine Die as well and we can start this all over again or whenever the Governor sees fit to call them back. 

Wash, rinse and repeat.  This particular sitcom can be rerun any number of times until someone, anyone decides to initiate a compromise.  When that occurs is anyone’s guess, but most of these members will have to go home, earn a living, spend time with their families, attend to summer plans, etc. at some point. The Lt. Governor has recently proclaimed that what the Governor and Speaker are attempting to pass, is something he will never agree with.  Since it is often proclaimed that there is only one vote in the Senate that matters, the situation does not appear to be ending anytime soon.     

As a point of reference, there is approximately $40 B unspent in the state Treasury including what is maintained in the “Rainy Day” fund.  Those are your tax dollars the Government can’t seem to decide what to do with.  They seem to agree they want to give some of it back to tax payers, just not sure how to go about it.  Stay tuned…

A couple of side notes, the House expelled one of its own during the session.  Representative Bryan Slaton (R) Royse City, a second term House member.  For those unfamiliar with Royse City, it is outside the Metroplex in the Collin Co. Rockwall area.  Representative Slaton was investigated by the House Investigating Committee and expelled for giving alcohol to and having sex with his 19-year-old intern and then attempting to cover it up. The House leadership and the members took this issue very seriously. 

The last time a House member was expelled was over 100 years ago, so this does not happen very often.  The other unique piece of business was the Impeachment of current Attorney General Ken Paxton.

 Also, something that does not happen very often.  There have only been 2 impeachments in Texas history. Governor James “Pa” Ferguson was impeached during his second term of office, July 1917 and was removed from office and barred from ever holding office again.  The other was the impeachment of District Judge O.P. Carrillo in 1975. 

General Paxton’s problems began when in March he asked the legislature to pay the settlement of $3.3 M to the whistleblowers who filed complaints against him and initiated an investigation by the FBI on suspicion of bribery (among other charges).  This led to a list of 20 articles of impeachment. While many of these issues and charges were well known around the capitol, I think it was the first time anyone had actually put them all together.  The House Investigating Committee laid out the articles to the entire House which voted 121 to 23 for impeachment.  The case now goes to the Senate where an actual trial will be held in which the Lt. Governor acts as a judge and the Senators are the jury.  One other interesting note, Senator Angela Paxton is the AG’s wife.    

The Texas water industry and desalination in particular had a very active session.  2 bills that Texas Desal supported in particular passed with overwhelming support. CSSB 28 and SJR 75 were carried in the Senate by Senator Perry and in the House by Chairman Tracy King.  These 2 bills provide new financing for various water projects including both brackish and marine desalination.  SJR (Senate Joint Resolution) 75 and its enabling legislation SB 28 set out to establish several new entities with the goal of creating new water and repairing old water infrastructure.

SJR 75 is the constitutional amendment authorizing the expenditure of $1Billion on the projects that qualify under the final version of CSSB 28. The vote to approve or not this particular amendment will be this upcoming November.

Specifically, CSSB 28 would establish the New Water Supply for Texas Fund, the Texas Water Fund, and the Statewide Water Public Awareness Account to be administered by the Texas Water Development Board (TWDB).  The bill would create the New Water Supply for Texas Fund as a special fund in the state treasury that would consist of:

• Money appropriated for transfer or deposit to the credit of the fund
• Money from any available source that TWDB transferred to the fund;
• Depository interest allocable to the fund and other investment returns on money in the fund;
• Money from gifts, grants, or donations to the fund; and
• Any other fees or sources of revenue that the Legislature dedicated for deposit to the fund

The fund would be exempt from statutory provisions concerning the use of dedicated revenue for managing treasury funds. TWDB would be required to use the fund to finance projects that led to the acquisition or creation of seven million acre-feet of new water supplies by December 31, 2033.

The fund could be used to:

• Provide financial assistance to political subdivisions to develop water supply projects that created new water sources for the state, except for maintenance or operation expenses of certain water supply projects;
• Make transfers for such financial assistance to the State Water Implementation Fund for Texas or to the Texas Water Development Fund II; and
• Make transfers to the water bank account only for the acquisition or transfer of water originating outside the state.

A loan made from the fund could provide for repayment terms of up to 30 years, at TWDB’s discretion. Interest or principal from the repayment of the loan would have to be deposited to the fund. The fund could provide financial assistance to certain qualifying infrastructure projects. The bill would establish additional procedures on the distribution of financial assistance, including factors that TWDB would be required to consider when evaluating an application for financial assistance. An application would have to comply with statutory water conservation plan requirements.

Texas Water Fund. The bill would establish the Texas Water Fund as a special fund in the state treasury outside the general revenue fund. The fund would consist of:

• Money from any source transferred or deposited to the credit of the fund by general law;
• Any other revenue that the Legislature dedicated to the fund;
• Investment earnings and interest earned on amounts credited to the fund;
• Money from gifts, grants, or donations to the fund; and
• Money returned from any authorized transfer

Money deposited to the credit of the Texas Water Fund or transferred from the fund for authorized purposes would be subject to criteria developed by TWDB and to general law. TWDB could use the fund to pay necessary and reasonable expenses of its administration. The bill would require TWDB to ensure that a portion of the money transferred was used for:

• Water or wastewater infrastructure projects, with priority for certain risk or need factors;
• Projects for which all required state or federal permitting had been substantially completed;
• The statewide water public awareness program; and water conservation strategies.

The fund could be used only to transfer money to:

• The water assistance fund;
• The New Water Supply for Texas Fund;
• The State Water Implementation Fund for Texas;
• The State Water Implementation Revenue Fund for Texas;
• A revolving fund established for financial assistance for water pollution control;
• The rural water assistance fund;
• The statewide water account; and
• The Texas Water Development Fund II state participation account. er public awareness account;
• The Texas Water Development Fund II water financial assistance

The bill would take effect September 1, 2023, except for provisions regarding the Texas Water Fund, which would take effect January 1, 2024, only if the constitutional amendment creating the fund was approved by voters.

With 12 days left in the 88^th legislative session there are still many unanswered questions.  Will a budget compromise be reached, will a voucher program of some type be established, what will the property tax situation look like and will anything be done on behalf of our schools and their employees?

Here are a couple of questions that have been answered so far this session. 

There won’t be any new gambling in Texas this year. 

Former Representative Bryan Lee Slaton (R-Royse City) will not be voting on the budget, school vouchers or anything else for that matter; he was expelled from the Texas House. The last time someone was expelled was 1927.  

If all of this sounds like the set up for an evening soap opera or a particularly juicy Telenovela you are correct.  Throw in a $160 Billion budget that must be passed by August 31^st and a $32 Billion surplus and you have the makings of excellent theatre.

The unique “strangeness” of this session was to be expected before the session even began.  With the large budget surplus and the number of new members in both the House and Senate, the stage was set for deals done, deals undone, big ideas dashed and ultimately promises unfulfilled.  In other words, the making of a typical legislative session  just amplified. 

So far in that aspect this session has not disappointed.  As of today, a budget still eludes the grasp of those making decisions.  Of the 8,000 plus bills and resolutions introduced this session, the only one that must pass is the budget.  So far, nada.  Is there time?  Sure, but is there a willingness?  If an issue like vouchers is to pass, the promoters of that issue must have something with which to bargain.  If the budget is passed, a budget that almost always includes points of interest to individual members, then the ability to use those interests to entice support of something that the member otherwise might be against, evaporates.  The budget is always an excellent bargaining tool. 

And the Governor apparently wants some form of vouchers.  And there still seems to be a group of rural republican House members who don’t want vouchers.  An unstoppable force meeting an immovable object.  Something’s got to give and usually does.  We are not there yet. 

Another issue of interest is of course, property taxes.  The 2 bodies are still quite a bit apart on this issue and what the final version might entail.  The most recent version of the House property tax legislation includes a 5% cap and $100,000 homestead exemption.  Undoubtedly there is more to come on this issue and this could also be a point of contention and cause a special session. 

In issues of direct interest to those members of the Texas Desalination Association our support (and virtually all others associated with the water industry) appear to be paying off.  SB 28, the bill which is creating the “New Water Supply Fund” within the Texas Water Development Board passed in the House on third reading 139-1.  This legislation authored by Sen. Perry in the Senate and Rep. Tracy King in the House creates new money for new water infrastructure including both marine and brackish desalination.  The companion legislation SJR 75 also passed 135-4.  This legislation proposes a constitutional amendment that will be on the ballot this coming November.  This requires voter approval for the allocation of funds in the future. The actual amount that will be associated with the fund is still to be determined.  Those decisions are part of the overall budget negotiations that are currently ongoing. Both of these bills should be headed back to the Senate for concurrence and then on to the Governor for his signature. 

In addition, another piece of legislation of interest to our industry was the Produced Water Consortium legislation continuing the current research that was begun during the last legislative session.  This legislation, SB 1047 has already passed both Houses and was signed by the Governor on May 13^th. This bill continued the Consortium’s activities and increased the funding so that pilot projects can be undertaken. 

Still much to be determined in the last 12 days of the session, while the threat of a special session continues to loom large over the activities, often times just when it seems they will never reach an agreement, someone gives in and they finish. Can all this and other exciting and pressing issues be resolved in 12 days?  Stay tuned, the cliffhanger continues. 

The budget (HB 1) was voted out of Senate Finance late last week and could be up on the Senate floor later this week.  Once this action is taken, both the House and the Senate can appoint conference committee members to begin the budget deliberations.  In addition, the supplemental appropriations bill (SB 30) has passed both Houses, but has not yet had conferees appointed.  The finance and budget process have begun taking center stage in the current “charged” atmosphere.  In addition, internal off-color alleged personal behavior adds to the cacophony of noise in what was and is a very strange legislative session. 

The recently passed House version of property tax reform is dead on arrival according to the Lt. Governor.  The versions in each house are worlds apart and at this point neither side appears interested in compromise, the Lt. Governor loudly proclaiming that he has no plans this summer and is happy to be here working on this issue.

The Governor has spent the past 2 months traveling the countryside speaking to potentially “pro” voucher groups in an attempt to persuade locals to pressure enough key rural Republicans needed to pass some sort of a voucher program.  There was a test vote that occurred on an amendment presented during the House budget process.  The House voted 86 to 52 in favor of amending the House version of the budget to “ban state funding for school vouchers or other similar program”. 

The amendment vote came on an interesting day,  the same day the Senate voted to create a “voucher” like program and 5 days before a House committee considers the subject.  The 86 votes were less than the 115 votes that a similar amendment received on the budget bill last session.  The Senate approved measure would establish an “education savings account” program that would give parents up to $8,000 per student each year.  I am sure there is more to come on this issue.

All 3 of these issues are taking up a significant amount of interest, time and oxygen from the session and the time left is brief.  While the session does not conclude until May 29^th, the House has self-imposed deadlines that bring hard stops to bills that have yet to move through the process.  Realistically, if your House bill is not out of committee by the end of this week, that bill will have a difficult time successfully working through the system. 

The House is significantly behind on the number of bills passed to date so far this session compared to past sessions and the current pace of the Senate.  As of this past Friday, the House has passed 75 bills while the Senate has passed 310 bills.  For context, last session at this time the House had passed 191 bills and the Senate 195. In 2019 those numbers were House 180 and Senate 288.  It is possible for the House to increase its pace, but these slowdowns are almost always intentional.  SB 28 and its enabling legislation SJR 75 are up for a hearing in the House Natural Resources Committee Tuesday April 18^th at 8 am.  As was the case in the Senate AG/Water committee hearing, Mark Ellison (IDE) and Ronnie Woodruff from Brazosport Water Authority will be testifying on behalf of desalination. The current financial commitment at this point remains $3B.  How much of that amount is actual money or illusionary money remains to be seen.   Until leadership in the House and Senate decide on many of these other pressing big-ticket items (property tax relief, school funding, retired teacher raise, state employee raise etc.) the actual amount contained within the bill will be somewhat fluid.  Our only course of action is to work with what is proposed in the legislation and be nimble enough to adjust as the legislation adjusts.  While time is short, much can happen in the waning days of a legislative session.