In this issue:
Watershed Legislation
Drought Update
From the Comptroller: Your Money Back
Legislature Assigns New Duties to Comptroller
Lawmakers Set Spending Priorities
Disturbing the Peace
New Laws To Live By
School Finance Changes
Voters Face Decisions on Amending State Constitution
Texas stats -- Fiscal and economic data
Watershed Legislation
Texas enacts first statewide water management planFor the first time in history, Texans are mixing the concepts of development, conservation and management with the state's most precious resource: water.
The 1997 Legislature, urged by Lt. Gov. Bob Bullock to address the issue, passed a comprehensive statute that calls for a statewide water plan to cope with drought, population growth and environmental issues. The historic legislation, designated as Senate Bill 1, creates a blueprint for managing water resources and addresses drought planning, regulation of water rights, public information and financial and technical assistance.
Lawmakers addressed a forecast that, without major changes, water demand could exceed supply in some regions of Texas by 2030. The state's population is expected to double to 36.5 million by 2050. Municipal water use--even with the adoption of advanced conservation methods--also is expected to double from the 1990 level, according to the Texas Water Development Board (TWDB).
Most of SB 1 took effect September 1, 1997. The Legislature appropriated $36 million for implementation through August 1999, primarily for financial and technical assistance, enforcement and data management and collection.
Over the next 50 years, maintaining an adequate water-related infrastructure will cost Texas more than $65 billion, according to TWDB. Reservoir construction, wastewater facility construction and upgrades, dam repair, pipelines and treatment plant construction account for most of the needed funds.
Water planning: By 2000, water planning regions--as many as 20 throughout the state, which TWDB will designate before September 1, 1998--must submit a formal plan for maintaining water quality and quantity. The plan, which will be updated every five years, must be in place for any entity to receive state financial or technical assistance. The Texas Natural Resource Conservation Commission (TNRCC) may not issue water rights for municipal purposes unless a regional plan is in place.
TWDB will incorporate the regional plans into a statewide plan by 2001 and will update the master plan every five years. The regional plans will include plans submitted by municipal utility districts and underground water districts.
This marks the first time that state law has required any local or regional water entity to draw up formal water management and drought contingency plans. TWDB has produced five statewide water plans over the past 30 years, but the Legislature has never adopted one in its entirety.
Water transfers: SB 1 calls for stricter oversight of "diversion and reuse" of water. TNRCC must authorize any delivery of water down banks and beds, excluding electric utility cooling water. Because running water through riverbeds cleanses a significant amount of pollution from that water, municipalities or water districts often discharge treated water into a river and then withdraw it farther downstream. The new legislation pays more attention to downstream water rights and the environmental implications of this "indirect" reuse of water.
Though SB 1 provides for interbasin transfers, a complex approval process could discourage them. Before approving any transfers, TNRCC must conduct public hearings and economic and environmental studies. The municipality or water district requesting the transfer must detail the proposed uses and users, the costs of diverting, conveying, distributing and treating the water and the estimated effects on user rates and fees. New interbasin transfers will be "junior" or secondary in priority to all other water rights, which could make transfers unreliable in a drought.
A Texas Water Trust, established within the Texas Water Bank, will hold water rights dedicated to environmental needs such as water quality and fish and wildlife habitats. The new law enhances the Texas Water Bank by scrapping rules that hamper water sales and by requiring the bank to market water rights more actively.
Emergency authorizations: SB 1 relaxes the conditions required for TNRCC to grant emergency authorizations--for example, in the case of drought, flooding or other natural disasters where public safety is at stake.
The law raises the maximum fine from $1,000 a day to $5,000 for illegal water transfers and for violation of dam safety rules.
In the two areas with "watermaster" programs--the Rio Grande River basin and the San Antonio, Nueces and Guadalupe River basins--enforcement responsibilities have changed slightly. TNRCC watermasters and their staff are specialists in water rights and uses. Some of their responsibilities include coordinating water diversions in the basins and allocating supplies among users during periods of shortage. SB 1 authorizes watermasters to issue field citations for illegal diversions. Previously, the TNRCC central office and sometimes the Attorney General's Office were responsible for enforcement, which often took months.
Surface and groundwater supplies: The new law designates groundwater conservation districts as the preferred entity to manage groundwater resources. Currently, of the 40 underground water districts in the state, only three--the Harris--Galveston Coastal Subsidence District, Fort Bend Subsidence District and Edwards Aquifer Authority--actively regulate groundwater withdrawal.
SB 1 makes it easier for communities to form underground water districts by providing loans for planning, elections and initial operations. TWDB and TNRCC will help districts develop their management plans. A new partnership of TWDB, TNRCC, Texas Agricultural Extension Service and Texas Parks and Wildlife Department will educate residents about local water resources and management options, including possible annexation into underground water districts.
Conservation projects such as brush control and cloud seeding are now eligible for TWDB financial assistance. Also, the law exempts water-conserving equipment and wastewater recycling equipment from the sales tax.
Financial aid: The water law restructures TWDB's fund management system. A constitutional amendment on the statewide ballot in November 1997 would establish the Texas Water Development Fund II by consolidating bond authorizations for water development, water quality, flood control and state participation bonds into a single financial assistance pool. Currently, TWDB issues bonds to finance water-related infrastructure, but the board is limited to specific dollar amounts for specific purposes and issues separate bonds for each purpose. The $1.1 billion fund would provide more low-interest loans for economically distressed areas.
Another constitutional amendment on the November ballot would allow up to $10 million of the amount deposited in the Linked Deposit Program to be used to finance agricultural water conservation projects. The Linked Deposit Program was set up in 1989 to encourage commercial lending to improve production, processing and marketing of agricultural crops. SB1 increases the program from $5 million to $15 million.
Help for small communities: SB 1 expands financial aid for public water systems through the Safe Drinking Water Revolving Fund, created in 1996 and administered by TWDB. Previously, only political subdivisions could use the fund for water projects; now, all community water systems are eligible. This is important for private utilities that have been unable to obtain state financing to improve operations. About half of the systems cited for noncompliance with state water-quality standards have been ineligible for Safe Drinking Water Revolving Fund money.
The law also gives TWDBthe flexibility to set reduced lending rates or forgive loans to disadvantaged communities receiving Safe Drinking Water Revolving Fund loans.
Data collection and dissemination: SB 1 steps up efforts to improve research, data collection and dissemination and access to natural resources data. It creates an electronic mapping initiative for water and other resources and greatly expands research on water availability, stream flow and other topics.
The Texas Natural Resources Information System will serve as a clearinghouse and referral center for natural resource, census and socioeconomic data to be made available electronically.
Interim study: The House-Senate Interim Committee on Water Resources Development and Management is charged with studying Texas' water supply and wastewater infrastructure needs and overseeing the implementation of SB 1. A report on the committee's findings is due by January 5, 1999.
The 1997 Legislature considered tacking a sliding-scale fee onto residential water bills to fund future infrastructure needs. Though the measure failed, the interim committee likely will consider it or a similar measure again.
The comprehensive statute reflects the recognition that Texas cannot maintain an adequate water supply without management or long-term planning. With the SB 1 measures in place, future water availability and quality in Texas can be a reality.
Contributing to this article:
Tammy Fisher Jung
and Julie Crimmins
Some say Texas is a state of perpetual drought interrupted by brief periods of rain. The drought of 1996, when 86% of Texas counties qualified for emergency aid, has been interrupted in most parts of the state by the rains of 1997.
At the end of May 1997, storage levels in Texas' 77 major water reservoirs were at 88% of capacity, compared to 72% in late May 1996. Overall, Texas reservoirs were only 500,000 acre-feet lower than in 1995, and 46 reservoirs were at or above 100% of capacity.
In the Edwards Plateau region, including Del Rio and San Angelo, water supplies were up 12% from 1996. Storage levels in the Low Rolling Plains, including Abilene and Wichita Falls, were up 30%, and supplies in the southern region, including Corpus Christi and the Rio Grande Valley, were up 46%.
In the Coastal Bend region around Corpus Christi, long-term water supply remains in doubt. Reservoir storage has improved considerably since last year, and a 104-mile pipeline to transfer water from Lake Texana to Corpus Christi is scheduled for completion in 1998. However, the Choke Canyon/Lake Corpus Christi reservoir system is only at 31% of storage capacity, representing 18 to 24 months' supply of water, according to the Texas Water Development Board (TWDB).
The Dallas-Fort Worth area is a harbinger of the state's water needs. Metroplex cities and counties have been preparing for expected population growth for years with reservoir construction, reuse projects, conservation efforts and purchasing water rights and transfers. The region's water supply will meet its needs for the next 50 years, according to TWDB.
Anticipating that stored water in the area might become too salty, the U.S. Army Corps of Engineers has studied desalination projects in northern Texas and southern Oklahoma, although desalination is very costly.
While the Colorado River basin in West Texas was holding its own at the end of May 1997, and Lake O.H. Ivie near San Angelo was at 91% of capacity, the small and sparse towns in West Texas were still looking to the skies for relief from the drought. Nine counties surrounding San Angelo continue a cloud seeding project at a cost of $411,000 per season. In the High Plains of Lubbock and Amarillo, reservoir storage was at 64% of capacity, while storage in the Trans-Pecos area around El Paso was at only 21%.
The Edwards Aquifer in Central and South Texas, which provides drinking water for 1.5 million people and irrigation for farmers in six counties, has recovered from the 1996 drought. The aquifer's July 1997 level was near 680 feet above sea level, up from 630 feet in July 1996; the long-term average is around 660 feet.
Household Conservation
*Install low-flush toilets and showerheads.*Use less water in your bath.
*Keep a jug of water in the refrigerator so you don't run the tap until water turns cool. Insulate pipes and water heater to avoid running the tap until water turns hot.
*Wash full loads of clothes and dishes.
*Rinse dishes in a pan, not under running water.
*Turn off water when brushing your teeth or shaving.
Xeriscaping
Xeriscaping, saving water and energy through creative landscaping, offers many benefits, including low maintenance and resistance to pests and drought. Here are some tips.
* Water established trees and shrubs once a month or less.* Use mulches in flower beds to prevent water loss.
* Mow grass with blades elevated to establish deeper roots for better water use.
* Pick native Texas plants that don't require as much water.
* Water grass only when it shows signs of wilting; water after dark to avoid evaporation.
Rainwater Harvesting
Rainwater harvesting ranges from a barrel in the front yard to a contractor-designed system through which rainwater is caught from the rooftop and siphoned by pipes or gutters into a storage tank.
The quality of rainwater almost always exceeds that of groundwater or surface water, as long as the roof or catchment area is clean and free of contaminants.
From the Comptroller:
Your Money BackIt has been just over one year since the State Treasury was abolished and its duties were transferred to the Comptroller of Public Accounts. Many changes have taken place, but I am pleased to say that the average Texan hasn't noticed, because customer service has remained our top priority.
Three years ago, the Treasury had a staff of 262 and an $11 million annual budget. When I took over its duties a year ago, I relinquished about 36,000 square feet of valuable office space occupied by the Treasury. The staff was reduced to 123, including 44 to run the popular Unclaimed Property program. Today, my Treasury Division has 95 employees, and the Unclaimed Property staff is down to 16.
The Unclaimed Property program is not being phased out--it is getting better. In May 1997, I introduced a new site on the Internet to make this information more accessible. Texans can search for forgotten property simply by entering their name or social security number into their home computer--day or night, year-round.
Since the Unclaimed Property list went online, about 130,000 people have logged on. Convenient on-line information should help alleviate the deluge of phone calls when the names of thousands of owners of unclaimed property are published in Texas newspapers once a year.
My office will continue to publish an annual newspaper supplement. Watch for this year's Unclaimed Property list on Sunday, October 19.
Our vaults now hold about $700 million in unclaimed cash, stock and other valuables. This property has been turned over to the state, and it is my duty to try to locate the rightful owners. Giving money back to Texans is my favorite part of the job.
-John Sharp
Legislature Assigns New Duties to ComptrollerTexas' 1997 Legislature handed the Comptroller of Public Accounts many new duties and projects, including participating in a number of interagency work groups and producing several reports. As in other state agencies, the Comptroller's staff spent the summer implementing new laws by their effective dates, which most often fall on September 1, 1997, the start of the 1998-99 biennium.
The Comptroller's most extensive new duties were created by Senate Bill 55. This law, aimed at preventing teens and children from smoking, requires the Comptroller to establish a training program for employees of tobacco retailers and to work with law enforcement agencies to monitor and enforce the provisions of the legislation.
The Comptroller also will have to prepare fiscal impact analyses for sports and community venues financed by newly created local taxing districts. In addition, lawmakers made many technical changes to state tax collection procedures.
Beginning September 1, the Comptroller's Property Tax Division will maintain the state's Central Registry of Reinvestment Zones and Ad Valorem Tax Abatement Agreements. House Bill 1526 shifted responsibility for the registry to the Comptroller from the Texas Department of Commerce.
The Legislature assigned the Comptroller to produce more than a dozen special reports, some in collaboration with other agencies. Most reports are due in Fall 1998 to give lawmakers time to digest the information and use it to develop legislative initiatives.
The Comptroller is responsible for a study of racial disparity in higher education in Texas. This report, due January 15, 1999, will examine student recruitment, admissions, retention and financial aid.
Also, the Comptroller will work with the State Auditor and the Texas Education Agency to develop a reporting and auditing system for state and local compensatory education funds, which are allocated to schools according to their percentages of economically disadvantaged students.
The new interagency Medicaid and Public Assistance Fraud Oversight Task Force, chaired by the Comptroller, will monitor implementation of new Medicaid and welfare laws enacted by the 1997 Legislature.
The Comptroller also will chair an interagency group assigned to work with the banking community to develop and implement strategies to increase community reinvestment in Texas.
Contributing to this article:
Bee Moorhead
Lawmakers Set Spending Priorities
State budget for 1998-99
calls for 8% increaseTexas' state government began its new biennium September 1, 1997, with a total budget of $87.1 billion for the next two years, including $54.1 billion in general revenue (GR) and GR-dedicated funds. The fiscal 1998-99 budget calls for spending about $6.2 billion more than in 1996-97, an increase in all funds of almost 8%. The GR increase is $4.4 billion or almost 9%.
These figures represent the net effect of House Bill 1, the general appropriations act; House Bill 4, which reduces local property taxes; and other legislation containing fiscal 1998-99 appropriations.
Spending for education, health and human services (HHS) and business and economic development accounts for about 86% of the 1998-99 budget for all funds. Considering only GR and GR-dedicated funds, education and HHS retain the top two spots, while public safety and criminal justice spending comes in third.
Even as spending grows, state government employment will shrink over the next two years. By the end of fiscal 1999, the state work force will total about 222,800 full-time equivalent employees, a reduction of almost 4,400 from 1997. Each agency must reach a specific target for reduced employment during each year of the biennium.
Education: The appropriation for education in fiscal 1998-99 totals $38.3 billion, of which $32.7 billion or 85% is general revenue. Of the total, $26.2 billion or 69% is budgeted for public education, and the remaining $11.9 billion for higher education. Compared with the 1996-97 biennium, general revenue funding for education will rise by $3.2 billion or 11%.
Increasing numbers of students attending public schools require the state to provide additional funding. Statewide average daily enrollment in public schools is projected to grow by more than 175,000 over the next two years to reach nearly 3.7 million. The Legislature appropriated an additional $814 million to meet this enrollment growth and earmarked $165 million for a contingency fund in case enrollment is higher than projected.
Lawmakers replaced the School Facilities Assistance Grants program with a new guaranteed-yield program for facilities in which the state will become a long-term financial partner with school districts. Funding for the new program totals $200 million.
The Legislature also appropriated $256 million to increase the minimum salary schedule for teachers, a move required by the increasing state share of public education funding due to local property tax reduction.
Gov. George W. Bush's reading initiative received an appropriation of $32 million, of which 85% is to be distributed to schools for reading diagnostic assessments and in competitive grants for programs that include parental involvement to improve children's reading ability. School districts will apply to the Texas Education Agency for these funds and may use the money to identify and help students in lower grades who may need additional reading instruction.
Total funds for higher education will rise by about $810 million in fiscal 1998-99. The Legislature adopted new funding formulas for general academic institutions and provided funding for transition to the new formulas. Two-year institutions received an increase of about $33 million for enrollment growth, while health-related institutions received $8 million for start-up programs with increased enrollment.
Lawmakers budgeted an increase of $213 million for matching benefit contributions for public and higher education teachers to account for payroll growth. Funding for the insurance program for retired public school employees will increase by almost $16 million to maintain the state's current contribution rate.
Health and human services: HHS appropriations for 1998-99 total $26.1 billion, including $10.6 billion in general revenue. The net increase of $1 billion, slightly more than 4% in all funds (including a 3% rise in general revenue), is modest compared to the 10% increase in the previous biennium.
Temporary Assistance to Needy Families (TANF), the federal block grant replacing the welfare entitlement program called Aid to Families With Dependent Children, takes effect this biennium. The TANF program allowed the Legislature to use federal funds instead of state revenue for many HHS programs and to redirect general revenue to other programs.
Although the growth of Medicaid caseloads in Texas is slowing, the costs of serving clients are increasing, resulting in a budget increase of $156 million. This increase includes $84 million of general revenue to serve elderly and disabled legal immigrants and disabled children who are scheduled to lose Medicaid eligibility due to federal policy changes.
Funding for long-term care will rise by more than $880 million, split almost evenly between community-based services and nursing home care. Community care strategies help elderly and disabled people maintain their independence and avoid institutionalization. Increased funding will allow almost twice as many Texans to be served through the state's innovative community-care waiver program as in the past biennium. State reimbursements to nursing homes also will increase, in part because of the increase in the federal minimum wage.
These increases are partly offset by several reductions. One of the largest reductions of state spending, $84 million, is the result of recommendations made by Comptroller John Sharp's Texas Performance Review (TPR). About half of the reduction is associated with reducing fraudulent and erroneous payments for Medicaid and other public assistance benefits. All together, TPR proposals should save taxpayers $473 million this biennium (see pages 5-6).
Economic development: General revenue accounts for about 9% of the overall $10.3 billion budget for business and economic development in fiscal 1998-99. These figures reflect a general revenue increase of nearly 9% and an increase in all funds of 5%. Major federal fund increases include $102 million in the TANF block grant to provide employment and educational services, $79 million for child care, $26 million for the School-to-Careers program from a recently awarded School-to-Work implementation grant, $18 million for job training programs and $308 million for highway planning and construction.
To help defense-dependent communities, the Texas Department of Economic Development, successor to the Texas Department of Commerce, will receive a $20 million increase in general revenue to provide financial assistance and matching funds to communities applying for federal aid due to closure or realignment of defense facilities.
Public safety and criminal justice: Funding for these programs in fiscal 1998-99 totals $7 billion, including $5.8 billion in general revenue. Total spending will increase by $379 million or nearly 6% over fiscal 1996-97.
Almost half of the increase was appropriated to the Texas Department of Criminal Justice (TDCJ). By the end of fiscal 1998, all 18 state jails will be operational; TDCJ will receive an increase of $160 million in general revenue to operate these facilities. The agency also will receive an increase of almost $80 million for parole and supervision programs and $23 million to improve its information system. Funding for the Texas Youth Commission increases by $66 million to address the expected growth in the population of young offenders, and the Department of Public Safety receives a $5 million increase for additional troopers to locate parole violators. These increases are partly offset by reduced outlays for building new prisons.
Contributing to this article:
Ann Berasley
Disturbing the Peace
TPR proposals net $473 million in savings for 1998-99A record 77% of the recommendations in Comptroller John Sharp's most recent Texas Performance Review (TPR) will be adopted through new laws and administrative actions by state agencies--moves that should save Texas taxpayers $473 million over the next two years. This legislation lifted the total savings due to TPR's efforts to $8.5 billion.
Lawmakers created TPR in 1991, facing a projected shortfall in the state budget that many observers believed would necessitate either major tax increases or deep cuts in state programs. TPR forged a third path by applying the principles of streamlining and business-like competition to the first top-to-bottom review of state government ever conducted.
TPR's fourth major report to the Legislature, Disturbing the Peace: The Challenge of Change in Texas Government, was released in December 1996, with 428 recommendations worth an estimated $1.3 billion in fiscal 1998-99.
Combating fraud: Texas spent a staggering $7.3 billion for Medicaid services and $1.3 billion on financial assistance and food stamp programs in fiscal 1995. By some estimates, fraud may account for as much as 10% of this amount. Even a smaller loss would represent a serious ongoing drain on public resources.
TPR's proposals for reforming Texas' Medicaid and welfare fraud control efforts should save the state more than $48 million over the next two years. The resulting new laws offer a comprehensive series of antifraud measures, including:
* increased penalties for health care providers who defraud the system, particularly for those whose actions affect children;* a criminal fraud statute, similar to those in other states, that will make it easier to prosecute fraud cases in criminal court rather than through civil or administrative action;
* tightened requirements to become a Medicaid provider;
* introduction of the latest "neural network" technology to detect fraud;
* an Investigations and Enforcement Office within the Health and Human Services Commission (HHSC) to help detect fraudulent claims;
* new legal provisions allowing private citizens to sue in fraud cases on behalf of themselves and the state government; and
* increased coordination among state agencies charged with investigating fraud and enforcing the state's fraud laws.
Education: As always, many TPR proposals aimed at improving the efficiency of education in Texas. One successful proposal, designed to speed up the often sluggish process for updating public school textbooks, calls for using the Internet to provide schools with electronic textbook updates. Lawmakers directed the Texas Education Agency to conduct a pilot study in districts across the state and to report to the 1999 Legislature on the desirability of adopting the concept statewide.
A more controversial proposal resulted in eliminating state funding for courses at public colleges and universities taken by students who have earned 170 or more semester hours without earning a degree. The new law, dubbed an "anti-slacker" measure by the press, will allow higher education institutions to charge higher tuition for such courses taken by students in the Fall 1997 semester and thereafter. State support for excessive credit hours will end in Fall 1999.
Related legislation establishes minimum average classroom teaching loads at Texas public institutions and measures to ensure that students can more easily transfer credits among state colleges and universities. Still another TPR idea, a common admission application form for all public universities, should be available by the 1999-2000 academic year.
Finally, lawmakers adopted TPR's proposal to provide $20 million in additional funding for the state's tuition equalization grant program, which provides need-based financial aid for students attending private Texas colleges and universities and helps to bridge the gap in expenses between private and public institutions.
Health and human services: One TPR proposal prompted the creation of a Texas Healthy Kids Corporation that will administer a program to provide health benefits for uninsured children. The new state law will require parents paying child support to apply for health coverage for their uninsured children through the corporation's benefit plan. This measure should save $6.7 million in state Medicaid expenditures over the next two years by increasing private insurance coverage for these children. The proposal dovetails with a sweeping children's insurance package initiated by House Speaker Pete Laney.
TPR also recommended tougher child-support enforcement laws to help hundreds of thousands of Texas children who depend on the financial support of an absent parent. At present, only one Texas child in five who is eligible for child support actually receives it; two-thirds of these children live in poverty, and many have no health insurance.
New legislation proposed by TPR should boost the effectiveness of Texas' child support program by streamlining the procedures for filing liens on the property of child-support scofflaws, enhancing technology used to track delinquent parents and establishing a "most-wanted" bounty program to publicly identify parents who owe child support but refuse to pay.
Another provision calls for the state's Council on Competitive Government to identify child-support enforcement functions now performed by the Attorney General that seem suitable for competition with private companies. Strict guidelines will govern referrals of child-support cases to outside contractors, with the goal of dramatically raising the amount of money collected on behalf of Texas children.
In keeping with TPR's focus on streamlining government, another successful proposal requires the Texas Department of Protective and Regulatory Services to coordinate state inspections of licensed day-care centers, day-care homes and registered family homes, and to eliminate redundant inspections.
Diabetes is a major killer in Texas, claiming nearly 4,400 victims in 1994. The Legislature adopted TPR's proposal to create a Texas Diabetes Care Pilot Program for Medicaid recipients under the direction of HHSC. The pilot program will provide care, preventive services and case management for Medicaid recipients with diabetes-related conditions who live in counties with a particularly high incidence of the disease.
The law also requires the Texas Department of Insurance and HHSC's Texas Diabetes Council to set guidelines for minimum standards of care for diabetes patients under private health benefit plans and in health maintenance and preferred provider organizations.
Public safety and corrections: The Legislature adopted several TPR proposals intended to improve the state's criminal justice system.
One new law will require prisoners with the funds to do so to pay for part of their health care, just as average Texans do. Inmates will pay $3 for a visit to a prison health care professional beginning January 1, 1998. TPR found that many other states levy such fees and that Texas prisoners have a surprising amount of discretionary income. Also, Texas prisons will begin testing inmates for drug usage, as do the vast majority of state and federal prisons.
Three other measures will make the prisons operate more efficiently. One requires the Texas Department of Criminal Justice (TDCJ) to sell $8.5 million in excess prison land to defray the cost of its operations. Placing this land on local tax rolls will generate an added benefit for communities. Another law directs TDCJ to refocus its prison industry program on providing prisoners with job skills needed in the marketplace, to help keep them from coming back to prison. Still another law will improve the auditing and oversight of public money used for prisons.
About 1,800 people are killed on Texas roads in alcohol-related accidents each year, more than in any other state. Prompted by TPR, the Legislature adopted a major change in Texas' drinking and driving laws. Minors who drink may lose their driver's licenses for several months at a time. The law also will allow Texas to avoid federal penalties that would have cost the state $77 million a year in federal highway funds.
The task ahead: Another group of TPR proposals focused on ways to give Texas workers the skills and opportunities they need to succeed in today's economy.
The Legislature approved a new job-training and employment program to hire people on welfare. Businesses that can offer approved training programs may employ prescreened participants full-time for six to 12 months, in exchange for a $300 monthly donation per employee. Employees will continue to receive welfare benefits during training, as well as a $600 monthly stipend drawn from company donations and matching federal funds. Another new law will create a series of pilot programs to train welfare recipients in child-care skills, one of the state's fastest-growing job markets.
These and other TPR proposals, adopted wholly or in part, will save Texans an estimated $473.4 million in fiscal 1998-99. TPR analysts have had little time to bask in the achievement, however. The division already is working on its fifth major report, due before the 1999 legislative session begins.
Contributing to this article:
Bruce Lanier WrightTexas' 75th Legislature may be remembered more for legislation that did not pass than for many of the bills that did.
Lawmakers convened in January 1997 with a sound economy and more than enough projected revenue in state coffers to pay for services. Nevertheless, because Gov. George W. Bush made property tax reduction his top priority, the Legislature concentrated more heavily on tax and budget matters than it had in many years.
The all-out drive for property tax reform--which itself survived only in a scaled-down version--forestalled action on other headline-grabbing issues. For example, a bill restructuring Texas' electric utility industry, which many had expected to hold center stage during the session, never emerged from committee.
While the session's results may not have been as heady as those of 1995, many notable bills did become law. In most cases, the following new laws took effect on or before September 1, 1997.
Property tax push: Gov. Bush's property tax legislation, filed as the session began, became the vehicle for all subsequent deliberations on tax reform. Select committees in the Senate and House each began a detailed assessment of Texas' tax system, aimed at determining the scope of property tax relief.
As filed, the Governor's plan would have raised the basic homestead exemption for school taxes from $5,000 to $25,000, reduced school maintenance-and-operations tax rates by 20% across the board and exempted business inventories from school taxes. To pay for this relief, the plan called for a new 1.25% tax on business activity and for raising the sales tax and motor vehicle sales tax rates.
After lengthy consideration, the House select committee laid the Governor's plan aside and proceeded to build its own plan from the ground up. The committee explored every current exemption and deconstructed every tax from the sales tax to the little-known bedding tax for detailed examination.
The eventual House bill capped both residential and business property tax rates and cut property taxes by $4.8 billion. To pay for the cuts, the bill contained more than 70 new taxes that would have raised $3.8 billion.
The Senate substantially altered the House bill by limiting its scope. Whereas the House bill called for $4.8 billion in property tax relief during the 1998-99 biennium, the Senate approach granted $2.1 billion in relief. Also, the Senate significantly trimmed the House's list of taxes.
A House-Senate conference committee sought to resolve disagreements in the two bills but failed to do so. With that, broad-based tax reform was dead.
House Bill 4, the legislation that emerged from the conference committee, uses $1 billion of the state's projected balance at the end of fiscal 1997 to pay for increasing the basic homestead exemption from $5,000 to $15,000. This measure--estimated to save the average homeowner in Texas about $140 a year--is very similar to Bush's original proposal to use $1 billion of available state revenue as a "down payment" for property tax relief. In August 1997, Texas voters ratified a constitutional amendment to increase the homestead exemption.
K-12 and higher education: In House Bill 318, lawmakers authorized 100 open-enrollment charter schools to be set up during 1998-99, up from 20 now operating across Texas. These state-funded schools operate independently of school districts. An unlimited number of additional charter schools may be formed in areas where 75% of a school's student population is at risk of failing or dropping out.
The Legislature also modified the Public Education Grant (PEG) school-choice program to create more incentives for schools to accept transfer students from lower-performing schools. HB 318 allows students to receive PEG grants or to attend different schools in their district if at least half of the school's student body has failed the Texas Assessment of Academic Skills test in two of the preceding three years. The law also ensures free transportation to and from the designated school. The Texas Education Agency estimates that nearly 800,000 students at 1,150 campuses are eligible for transfer to other campuses.
Students who fail a class during the 1997-98 school year will have it tougher next summer, as House Bill 836 requires students to meet all academic requirements for promotion to the next grade. Previously, students with a 90% attendance rate were promoted regardless of their grades in summer school.
Other measures include a fine-tuning of Chapter 37 of the Education Code, which allows teachers to remove disruptive students from classrooms. Senate Bill 133 ensures that schools may expel students for misdemeanor drug and alcohol offenses and that students removed from class receive due-process rights.
To lessen the impact of the federal court ruling in Hopwood v. Texas eliminating affirmative action in college admissions, recruiting and scholarships, state legislators passed House Bill 588 requiring public universities in Texas to admit the top 10% of the state's high school graduating classes, beginning in Fall 1998.
Several new laws will make a college education more affordable for many prospective students. Educational aides, peace officers disabled in the line of duty, certain children in foster or residential care, and children and spouses of current and former military personnel are now eligible for tuition and fee exemptions at state colleges and universities.
Criminal justice and public safety: Under Senate Bill 123, Texas inmates convicted of sexual offenses may elect to undergo orchiectomy (castration) in some cases. Inmates who volunteer for this procedure must take part in a 10-year study to determine its effectiveness and must consult a psychiatrist or psychologist before the operation.
Senate Bill 97 toughens Texas' stalking laws, upgrading a second stalking offense from a Class A misdemeanor to a third-degree felony punishable by two to 10 years in prison and an optional $10,000 fine. A related law, House Bill 1050, allows judges to require psychological counseling as a parole condition for convicted stalkers if such counseling is available near the parolee's community.
In House Bill 485, the Legislature moved to codify Texas Department of Criminal Justice rules requiring out-of-state inmates incarcerated in Texas to be released in the states where they were arrested.
House Bill 2909 allows visitors to Texas with out-of-state concealed handgun licenses to carry guns in Texas without a state permit. A person with a license from another state can get a concealed handgun permit in Texas without taking the required gun safety course if he or she has had a federal background check.
The Legislature also acted to improve boating safety on Texas lakes. House Bill 966 prohibits persons born after September 1, 1984, from driving a boat unless they pass a boating safety course and are accompanied by someone at least 18 years old. No one under 16 may operate personal watercraft (such as Kawasaki's Jet Ski) unless they have passed a safety course and are accompanied by an adult. The Texas Parks and Wildlife Department will devise and administer the boating safety course.
Health and welfare: The Legislature passed a landmark law making Texas the first state to allow malpractice lawsuits against managed-care entities and health benefit plans. Senate Bill 386 allows patients to sue health maintenance organizations that delay or deny certain health care services.
Amid complaints about the quality of nursing home care, lawmakers stiffened penalties for nursing homes found negligent in caring for their patients. Under Senate Bill 190, nursing home operators face fines of $1,000 to $20,000 a day for health and safety violations; fines were previously limited to $100 to $10,000 a day.
The Legislature cleared the way for privatizing some segments of Texas' welfare system. House Bill 2777 authorizes the Health and Human Services Commission (HHSC) to develop a plan allowing private firms to deliver some welfare services, subject to approval by the Legislative Budget Board, the Governor and the federal government. The HHSC remains responsible for determining eligibility for public assistance.
Minors in Texas may now be fined up to $250 for buying or possessing tobacco products. Under Senate Bill 55, first-time offenders may choose to attend a tobacco education course; courts may order a parent to attend as well. Failure to attend the course will result in automatic suspension of the minor's driver's license. Second-time offenders will not have the option of attending the course.
Other notable laws: One of the most contentious issues addressed by Texas lawmakers this year was home equity lending. Currently, the state constitution forbids homeowners from borrowing money based on the equity they own in their homes, except to pay taxes or make home improvements. House Joint Resolution 31 provides for Texans to vote on a constitutional amendment in November 1997 that would legalize second mortgages.
Cities hoping to keep or attract professional sports franchises got what they asked for, as House Bill 92 allows local governments to create sports and community venue districts. If approved by voters, these districts may levy a wide variety of taxes to pay for new stadiums or arenas for sports teams, rodeos, expositions or other events.
Lawmakers gave Texas judges the authority to dismiss foreign or out-of-state lawsuits just as they may dismiss in-state suits. Senate Bill 220 closes loopholes in 1993 legislation that had allowed thousands of out-of-state suits to be brought in Texas courts, dealing mainly with asbestos-related injury claims.
Finally, Senate Bill 1581 initiates a crackdown on telephone solicitors, directing the Attorney General to establish and maintain a register of charitable organizations that raise funds through telephone solicitation. Solicitors who do not register can be fined up to $100,000. The law was a response to reports of solicitors who falsely claimed to raise funds for widows and children of slain peace officers, and of solicitors hinting that people might not receive police protection if they did not donate.
Contributing to this article:
Research and Revenue
Estimating DivisionsAlthough the 1997 Legislature faced no legal pressure to address school finance equity as in the past, the drive for property tax reform resulted in some adjustments to the state's funding formulas for public schools.
According to the Legislative Budget Board, lawmakers appropriated more than $18.4 billion to fund the Foundation School Program (FSP) in fiscal 1998-99. Local property tax revenues, the other part of the school finance equation, are projected at $19.5 billion for the biennium.
To make up for local school districts' loss of tax base due to increasing the basic homestead exemption by $10,000, the Legislature appropriated more than an additional $1 billion to the school finance system, using the estimated surplus in the 1996-97 budget. As a result, the state's share of the FSP will rise from 46% to almost 49%.
By law, the higher state share of FSP funding requires an increase in the minimum salary schedule for teachers. Teachers on the state minimum salary schedule will receive a 5.4% increase in fiscal 1998 and an additional 1% in fiscal 1999. One additional school day is added for each of the two years.
To help school districts with the added expense of a higher salary schedule, the Legislature adjusted school finance formulas slightly upward and will provide more aid to districts where teachers are now paid less than the minimum salary.
The new school finance law also formally dedicates the net proceeds of the state lottery to the FSP.
Another change in school finance affects property-wealthy school districts now required to share revenue with the state. Because the 1997 Legislature changed the law to exclude debt service revenue from "recapture" calculations, these so-called "Robin Hood" districts will be required to share an estimated $56 million less with the state over the next biennium.
Voters Face Decisions on Amending State ConstitutionTexas' 75th Legislature has disbanded, but not all the votes have been taken. On November 4, Texas voters will cast their ballots on 14 separate proposals to amend the state constitution.
On August 9, voters elected to increase the homestead exemption for school property taxes from $5,000 to $15,000. This proposal was considered earlier than the rest because local school districts had to adopt their official budgets by August 31. To meet that deadline, districts needed to know what their tax base would be to establish their budgets and tax rates. The amendment also allows homeowners over age 65, whose school taxes may be frozen under current law, to transfer the benefits of the freeze with them if they move to another house.
Proposals on the November ballot range from "housekeeping"--if approved, Proposition 4 would renumber certain sections of the constitution and delete others--to major reforms that would grant Texans new rights and protections.
The most sweeping change facing voters is Proposition 8, which would grant Texans the right to use home equity as collateral to secure loans. Currently, Texas is the only state in the U.S. that does not allow its residents to tap into this potential source of collateral. To overcome opposition in the Legislature, proponents of home equity lending built into the amendment a set of consumer protections. These provisions would:
Voter approval of Proposition 13 would establish the Texas Tomorrow Fund (TTF), the state's prepaid college tuition program, as a constitutionally protected trust fund. This would prevent future legislatures from raiding the fund for other purposes, and it would put the state's full faith and credit behind the fund.
* guarantee that individuals will not face any personal liability beyond their homestead;* require a formal judicial proceeding to foreclose on a loan;
* prohibit lenders from demanding payment on an equity loan as a result of a default on a separate loan;
* specify the locations where a loan closing may take place; and
* place a cap on the fees that borrowers can be charged.
Although the TTF is in very good financial health now, this amendment would ensure prospective purchasers that the state will guarantee the fund if a shortfall ever does occur. Texas would become the second state with a constitutionally guaranteed prepaid tuition program; Ohio already has one.
Along with Senate Bill 1, the major water statute, the Legislature passed a resolution appearing on the ballot as Proposition 7. This amendment would create a Texas Water Development Fund, freeing up $1.1 billion in existing bonding authority for water-related infrastructure projects.
For the second time in as many years, Texas voters will have a chance to change state investment practices in regard to companies doing business in South Africa. Currently, companies in which the Texas Growth Fund invests must disclose any investments they have in South Africa or Namibia. Texas is the last state to stigmatize these investments. Reflecting changing attitudes since the end of apartheid, Proposition 6 would eliminate this requirement.
Other proposed amendments would limit the amount of state debt payable from general revenue and allow municipal court judges to hold office in more than one city. A separate proposal would allow the state Supreme Court to convene outside of Austin, and another would clarify that a motion filed with the court is denied if not acted upon within 180 days.
Still other proposals would cap the rate of increase in the appraised value of homesteads at 10% a year; allow taxing units to grant tax relief on property where a water conservation initiative has been implemented; approve a property tax of 5 cents per $100 valuation to support rural fire-prevention districts in Harris County; and allow the Legislature to set qualifications for constables.
Since 1876, the Legislature has proposed amending the constitution 547 times. Of the 532 proposals voted on to date, voters have approved 364.
Turnout tends to be very low for these elections. In 1995, only 8% of Texas' registered voters turned out to vote on 14 proposed amendments. More interesting issues, however, tend to enhance turnout. In 1991, 26% of the registered electorate showed up to vote on the lottery issue, and in 1987, 31% voted on horse racing.
Contributing to this article:
Emmett Coleman
Fiscal Notes
September 1997
September 1997