The new year has brought an intensity to the campaign season and an end (at least for now) of legislative Special Sessions.  With the campaign season now in full swing, fundraising has become the central focus for virtually all candidates/office holders.  Even those who are not on the ballot are raising money at an alarming rate, making it a bit more difficult for those who do have races to keep pace with their projected budget needs.  It has become a unique situation where the biggest opponent, certainly in the fundraising realm, to many rural House Republicans is their own statewide office holders, Governor Abbott, Lt. Governor Patrick, Attorney General Paxton and in some cases Ag Commissioner Sid Miller.  If it were not for the opposition support of these current office holders, many of these “targeted” House members might not even have primary opposition.  Once the primary season has concluded a large percentage of these members also have general election opposition.  This is not unusual in Presidential election years because of the large voter turnout, even in many of these strong Republican districts.

Over the past several days I have had the opportunity to hear from a number of incumbent candidates and those seeking open seats speaking about the current condition of their contested primary races.  Probably the single theme throughout these discussions has been the onslaught of money from both in-state and out-of-state interests. When this election cycle comes to an end, the amount of money spent will do doubt reach record heights. It has always been expensive to run for election in Texas, from the geographically smallest Texas House seat up to and including our statewide federal and state offices, and this year will be no exception.  While none of our state-wide Texas state government office holders (Gov, LT. Gov, AG, etc.) are up for election, one of our US Senators (Ted Cruz) is on the ballot this year and will have general election opposition in November. 

The bulls eye attached to a not insignificant number of Texas Republican House members was put there because of their votes on 2 issues.  Their vote to impeach current Attorney General Ken Paxton and their vote against ESAs (Education Savings Accounts) or vouchers.  In some cases (not all) some rural House republicans have both targets on their back.  Governor Abbott actively recruited candidates to run against members who voted against the ESA bill and is also supporting those candidates with monetary support.  That level of support could be substantial.  Governor Abbott is also actively campaigning for these candidates by attending local district events and providing other campaign assistance.  Attorney General Ken Paxton is engaged against his impeachment foes as well. He is actively participating in local district events in support of his endorsed candidates and may be providing campaign funds.  Certainly, his financial supporters, some of whom are very wealthy are supporting this group of hand-picked candidates.  Whether these efforts prove successful with a significant turnover in targeted members will be answered in March.  If this effort can influence potential legislative action in the future out of fear of retribution is a question we won’t know until 2025.   

As for campaign themes that bubble to the surface in these discussions, border security and inflation take top spots from both Republican and Democratic candidates.  While these issues are typically “national” in scope, they resonate with the local constituency who seek answers from all their elected officials, whether those local elected can impact these issues or not.  Border security or immigration is clearly a federal issue usually overseen by the US House, Senate and the President.  While these entities seem unable to address the issue to anyone’s satisfaction, Governor Abbott and the Texas legislature stepped into the void and have/are attempting to influence the situation.  The ultimate outcome will be determined by the courts and those decisions could have lasting and significant implications.  If every state is allowed to ultimately determine its own immigration policy, the havoc created would be substantial and confusing to say the least.  Recently the US Supreme Court told the US Border Patrol they could remove the razor wire that was installed across the Rio Grand by members of Operation Lone Star, the Texas state border security operation.  Will this set up a confrontation between those officers and the US Border Patrol?  That would not seem to end well, stay tuned…

I feel staying current on the issues discussed above is vital to our future success for any trade group.  These political activities, while not directly impacting the Texas Desalination Association directly impact the overall political climate in which we all work to a greater or lesser degree.  While there has always been a certain level of “discord” and disagreement within the legislative process, I firmly believe that people of good character can have reasonable differences on any number of issues, the current atmosphere makes it challenging to accomplish anything, even the non-controversial.  The times they are a-changing and we will all have to adapt to this new paradigm.   

After visiting briefly with TWDB leadership I got a tentative timeline on the rule making and finalization of the “New Water” funds.  We should expect rulemaking early this summer, “June-ish” and possible funding late in the year, even possibly early next year.    Recent headlines indicate that Corpus Christi MAY (emphasize may) have taken a step or steps to begin serious work on a substantial marine desalination facility.  I hope it’s true.  Pardon my skepticism but…

It’s impeachment season. In less than 30 days the current Texas Attorney General will face his impeachment jury made up of the 31 Texas senators, including his wife.  The judge, Lt. Governor Dan Patrick (non-lawyer) will oversee at least some portion of the trial and make judgements on the various legal questions that arise. General Paxton’s legal team is working hard at suggesting the Senate drop many of the 20 impeachment charges, only time will tell how successful that effort is. 

The discussion around additional special sessions has, at least for the moment, been put on the back burner till the conclusion of the impeachment proceedings.  The impeachment hearing is a “Senate only” event and does not require the Governor or anyone else for that matter to be involved.  The assumption is the Governor will call the legislature back into session upon the conclusion of the impeachment hearing.  The subject matter for that session will more than likely be some type of school voucher program.  This should occur sometime later this fall.

With no other real legislative activity currently under consideration, it is member retirement/campaign announcement/fundraising season.  5 current House members have already announced retirements: Tracy King (D) Uvalde, Four Price (R ) Amarillo, Lina Ortega (D) El Paso, Able Herrera (D) Robstown and Matt Schaefer (R) Tyler, there undoubtedly  will be more to come.

Its summer in Texas so it must be hot.  Just how hot this year? As of today, we are at 43 consecutive days of 100 degrees plus in Austin. This is the longest streak in recorded history.  As of the 10^th of August, most of Texas is in a Moderate Drought or worse.  At the beginning of this month Governor Abbott renewed and expanded the current drought declaration to 189 counties.  That number will probably be expanded. In addition, Governor Abbott recently issued a disaster declaration for 191 counties in response to widespread wildfire activity.  August is usually our hottest month and, traditionally with no rain projected till sometime in mid to late September, the drought situation and the fires will simply get worse.   2011 is the current 1-year drought of record, we will see if we break that this year. The recent tropical storm helped break the drought a bit in south Texas and some areas in west Texas but did not significantly impact the overall state condition.

This past legislative session SB 28 passed which authorizes (if the constitutional amendment passes in November) spending $1 Billion dollars on “new” water and fixing local water infrastructure (leaky pipes). Drought seems to the norm now rather than the exception.  Hopefully those who typically vote in November constitutional elections will vote in favor of this provision.  $1 Billion sounds like a considerable sum, but in the case of both new water and repairing infrastructure it is an actual drop in the bucket, but better than nothing.

An additional item on that ballot is a substantial increase in the “homestead” exemption.  This would raise this benefit for homeowners from the current $40,000 exemption to $100,000 exemption.  The cost of this increase accounts for the majority of the $29 Billion price tag on all the November Constitutional amendments.  That cost being approximately $18 Billion. 

There is an interesting article in the current issue of the Texas Tribune about our current water usage and the drought, particularly here in central Texas.  It is worth reading.  Regardless of whether we agree with everything in the article or not, there is no question that more people are living in this area and that we are using more water.  In future sessions, there will be on-going and intensified efforts to restrict, limit and/or curtail landowner rights to their property, namely their groundwater.  In addition, those who do not consider desalination a “viable” or environmentally friendly option will continue to speak against what they do not know or understand.  While conservation and reuse are certainly part of the answer, expanded desalination will continue to be a growing component of Texas water future.

 I am including a link with this update to the article in the Texas Tribune.

Dry springs in Central Texas warn of water shortage | The Texas Tribune

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.