The primaries and runoffs are completed, and we have a full slate of candidates for the fall elections from both parties.  While there were not many surprises, the margin of General Paxton’s win was probably larger than some might have expected.  Senator Cornyn and the Republican Senatorial Campaign Committee spent in excess of $100 million against General Paxton but that did not seem to deter his supporters.  After entreaties from both sides President Trump did finally endorse General Paxton about a week before election day.  It certainly may have added a few points to the final numbers for General Paxton but clearly Senator Cornyn and the Senate Republican Campaign committee saw the writing on the wall well in advance of election day and spent every dollar possible to drive up General Paxton’s negatives, all to no avail.  Going forward, the biggest benefactor of that large spend will be State Representative Talarico, the Democratic nominee for US Senate.  While the negatives brought up by Senator Cornyn’s campaign did not seem to impact Republican primary voters, it remains to be seen how more moderate and independent votes respond to those same issues.  Both campaigns should have sufficient resources to get their messages out, but clearly Representative Talarico is ahead in the messaging, thanks to Senator Cornyn’s efforts.  Current polling (obviously very early) has Talarico ahead but within the margin of error.  We should expect a tightly contested very bombastic few months between now and November. 

Republicans should win the remainder of the statewide races, most of the Democratic nominees will have minimal funds to get their names out much less develop messaging enough to appeal to independent voters.  Further down the ballot in State Senate and State House races may be a different matter, these local races will be highly contested and expect the Democrats to pick up several seats in the Texas House and perhaps hold on to the surprise Senate seat they got in a recent special election in Tarrant County.  While not much of a structural change in the Senate, expect the Speaker to have a smaller margin in the House coming into next session.  All of this is subject to change based on what is going on at the Federal and internation level most of which has little to do with what happens in each of these regions specifically but if people are feeling the pinch or gas prices are high they want to blame someone, and it is usually whomever is currently in office. 

The House Natural Resources committee conducted a hearing yesterday on several Interim Charges.   Items on the agenda included agency updates on HJR 7 and SB 7 implementation and the current capacity of the various finance programs overseen by the TWDB.  Much of the hearing was otherwise dedicated to discussions on DATA CENTERS. 

With more than 120 witnesses and a hard stop at 8 pm, a significant number of public witnesses were not heard despite a 2-minute testimony limit on each witness. With those who are unfamiliar with House and Senate committee testimony, time limits are common to allow as many attendees as possible to speak. It would be fair to say that most if not all of the public comments were anti data centers.  Many individuals had personal stories to tell regarding the impact these facilities have had on them specifically and their communities in general. Data center industry representatives were also present to give the opposing view that “all is well, they are being transparent, etc.  However, some of the most compelling testimony given on data center behalf was regarding national security.

Yet the overwhelming call from the public was the request for some type of moratorium on new data center construction.  Clearly, based on the questions and comments from many of the committee members present they have all received considerable input from their local constituents on these centers and the request, even demand that something be done to slow or limit their proliferation. 

The other notable group of witnesses were local county officials, county judges and commissioners.  Their message was straightforward, “we have no authority to limit or even influence these developers, please give us something.”

It was yet another compelling hearing on water, I think I am seeing a pattern here.  If you have the time and inclination, you can watch the hearing at Texas Legislature Online (capitol.texas.gov).

Based on the questions and comments from both elected officials and the public, I think we can expect 2 significant types of legislation next session. 

• More counties/communities seeking creation of GCDs
• Some effort to give counties very limited authority over certain types of development

Establishing GCDs is always tricky.  Every session there are several proposed, most don’t pass.  This issue could bring opposing sides to the GCD question together. 

Counties have often sought limited “zoning” authority, the Texas legislature has always, regardless of the administration said no. There just has never been an appetite for allowing this type of local authority.  It remains to be seen whether this issue is the one to crack that barrier but listening to the questions and comments from the committee members, expect to see legislation filed (and heard) that gives counties some type of narrow/limited authority to interject themselves into specific types of new developments.  Passing a bill is a different question, certainly urban members will have an opinion on the possible expansion of county authority.

Stay tuned, this issue is just getting started.

Kyle

What an unusually strange world in which we live. Earlier this month the discussions were about the President possibly committing genocide and today we have a ceasefire and attempts to negotiate a peace settlement. Tomorrow, who knows. How this impacts Texas, other than higher gas prices and our military’s increased risk, remains to be seen. Even though Texas has significant amounts of oil refining capacity and produces a large percentage of the gas, diesel and jet fuel for the US, oil being an international commodity, ensures that per barrel price increases will impact our state economy as well.

And increase our state’s tax revenue, the state’s oil severance tax is based on the market value of oil. Certainly a mixed blessing.

Closer to home, here in Texas we have a runoff for a US Senate seat between the incumbent US Senator John Cornyn and our current Attorney General in what will probably be a very close primary runoff to be decided in May. Most experts agree this race is probably a toss-up especially since President Trump did not make an endorsement, at least not yet. Early on the President suggested if he endorsed, the candidate not receiving the endorsement should withdraw, neither Senator Cornyn nor General Paxton would agree to that stipulation, so no endorsement. Therefore close race.

The March primary produced some other surprising results, we will have a new AG Commissioner. Commissioner Sid Miller lost his reelection bid to primary opponent bee keeper/honey producer Nate Sheets from McKinney. He will face democratic primary winner, Lampasas rancher Clayton Tucker in November. We also have runoffs for AG (office vacated by AG Paxton) in both the Republican and Democratic tickets. Current state Senator Mays Middleton will face Congressman Chip Roy on the Republican ticket and State Senator Nathan Johnson will face Galveston attorney Joe Jaworski on the Democratic ticket.

There is also a runoff for Lt. Governor on the Democratic ticket between State Representative Vicki Goodwin and Marcos Velez, the winner will face current Lt. Governor Dan Patrick. Railroad Commissioner Jim Wright will face Bo French in the Republican primary runoff for Commissioner Wright’s current Railroad Commissioner seat as well.

There are also several regional runoffs for both Texas Senate and Texas House seats on both the Republican and Democratic side. To access additional information on the runoffs in your area go the Texas Secretary of State Elections division which offers an easy to use update on all our statewide, regional and local elections.

Both the House and the Senate have published the Interim Charges for their respective chambers. The issues covered in these charges range from high profile subjects like Data Center power usage and fraud and abuse within the state’s Medicaid system down to the obscure study of the state’s Cultivated Oyster Mariculture (which if you are in the oyster business or like to eat them is not obscure at all). If you are interested in seeing all the Interim Charges you can find these documents on the State House and Senate websites.

The hearings on these Interim Charges have already begun, the House hearing on data centers actually occurred late last week. If you are interested in either attending or just watching any of these hearings you can get scheduling information on both the House and Senate websites. The video is free and easy to use. I am including the website here: capitol.texas.gov

A very specific charge in the Senate Water, Agriculture and Rural Affairs Committee Interim Charges deals with desalination.

The Texas Desalination Association has been contacted to provide testimony at this upcoming hearing as have several other members of the Texas Desal family. The hearing is on Monday May 11th beginning at 9:00am. You can either attend the hearing in person at the Texas State Capitol or watch online on the website referenced above.

This interim promises to be an active and possibly impactful one for the future of desalination in Texas. Our ongoing drought conditions have focused state leadership on the need to find meaningful and long term answers to Texas’ water needs. Desalination, both inland brackish and marine will be part of that answer.

Kyle

We have reached the halfway point in the 88^th legislative session.  The House Appropriations Committee has concluded its work on HB 1 (budget) and the bill will head to the House floor to be considered in early April.  While it is assumed that there will be considerable debate on the House floor about specific points of contention within the bill, it should pass with minimum changes from what the committee members voted out of the Appropriations Committee last week.

A few highlights in the House version of the bill:

• Health and Human Services increase 15.8% to $44B
• Education (Public and Higher) increase 10.4% to $66B
• Public Safety and Criminal Justice increase 54% to $18B
• Natural Resources increase 58% to $4B
• Business and Economic Development increase 48% to $1.7B

These highlights give just a glimpse of the state priorities and where your tax dollars are spent.  The other item of significance that has emerged within the House budget proposals is the House version of “property tax relief”.

Under the Speaker’s proposal the state would cut school district property taxes by 28%.  The more controversial aspect of the plan is to place a tighter cap on how much more school districts can tax property owners each year and expand the benefit to include commercial property owners. 

The Senate budget process is a bit more opaque. The Senate considered its version of the budget on Monday March 27^th but won’t have final committee vote until mid-April.  The Senate version spends increased state money on community colleges, mental health services, property tax cuts and raises for current and retired teachers. The Senate Finance Committee also set aside $5 billion for teacher pay raises, other educator programs and money to offer parents private school vouchers. 

The Senate property tax proposal is considerably different than the House version.  The Senate version of property tax relief came out in 3 different bills that have already passed the Senate.  The most popular portion of the package is SB 3 which raises the homestead exemption from $40k to $70k.  SB 4 would also add an additional $5.3B into public schools.

The 2 proposals are considerably different not the least of which are the proposals to address property tax relief.   The Lt. Governor recently announced that he was not going to consider the House version of the property tax relief effort, feeling the Senate version was superior. 

The Lt. Governor also recently stated that he had no plans this summer and would be happy to spend his time here on these and other issues of interest to him and the Texas Senate.

Out of the roughly 8,000 bills and resolutions that have been filed there is only 1 that must pass, that is the state budget.  Failing to pass the budget during the regular session rarely happens.  I can recall only once in the past 30 years or so.  Regardless, these initial comments and efforts on both sides have set the stage for a more contentious than usual finish.  The regular session ends on May 29, 2023.