June 4, 2015
APPROVED: Nearly $5 billion in construction funding, 25-percent cut to franchise tax

This week's Capitol Roundup:
  • Long-awaited $3 billion college construction bill heads to Abbott
  • Approved budget contains $1.7 billion for construction 
  • Lawmakers pass $2.56 billion in franchise tax relief
  • Bills signed and bills sent to the governor
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$3.1 billion for college construction approved in 2016-17 budget

 

Texas contractors will see more than $3 billion in bids for construction projects at public universities over the next two years under the state Legislature's approved budget.

 

The final piece of approved legislation - House Bill 100 - easily passed the House and Senate earlier in the session. However, the bill came to a standstill this month when there was some debate on the levels of funding. Ultimately, the two versions of funding were worked out by a 10-member conference committee led by Rep. John Zerwas (R-Richmond) and Sen. Kel Seliger (R-Amarillo).  The final version, which funds 64 projects across the state with each capped at $90 million, has been sent to Gov. Greg Abbott and awaits his signature. This session's approved budget contains about $240 million to pay the debt service on the bonds.

 

The tuition revenue bond (TRB) funding came at a crucial time, as state colleges have been searching for funding to squeeze increasing enrollments into aging facilities. Legislators have not approved such a deal since 2006 when $1.9 billion was bonded, though they came close last session only to see the measure fail at the last minute. Only about $5 billion in TRB funding has been authorized since the practice began in the 1970's. 

 

Here is the complete list of funding for the 64 campus projects:

 

Texas A&M University System (16 projects, $800.8 million), University of Texas System (15 projects, $922.6 million), University of Houston System (7 projects, $362.5 million); Texas State University System (8 projects, $256.4 million); University of North Texas System (4 projects, $269 million); Texas Woman's University ($38 million); Midwestern State University ($58.4 million); Stephen F. Austin State University ($46.4 million); Texas Tech University System (6 projects, $247.1 million); Texas Southern University ($60 million); Texas State Technical College System (4 projects, $41.7 million). 
New budget contains $1.7 billion for construction of state facilities

With the passage of the 2016-17 budget, Texas is poised to see roughly $1.7 billion in the construction of new buildings and repair of aging structures over the next two years.

The lion's share of construction funding is contained in the budget for the Facilities Commission, which has been granted $1.34 billion in its total budget for the next two fiscal years. That figure is a more than 600-percent boost from its current budget of $187.9 million. 

Most of the Facilities Commission funding (via revenue bonds) - $983.6 million - is set aside for construction of new state buildings. The projects include two office buildings and two parking structures in the Capitol Complex ($509.9 million) with walkable underground utility tunnels ($71.3 million); an office building and parking structure in North Austin ($186.4 million); new Department of Motor Vehicles headquarters ($58 million); new facility and parking structure at the G.J. Sutton Building in San Antonio($132 million); new parking garage for the Elias Ramirez Building in Houston ($26 million). 

The rest of the Facilities Commission funding - about $217 million - is dedicated for health and safety and deferred maintenance projects at state facilities, along with an additional roughly $20 million for emergency repairs in the current budget. Those emergency repairs include $9.5 million for general health and safety concerns at state buildings and $10.9 million for repairs at the Texas School for the Deaf. 

Other state departments receiving deferred maintenance funding include Transportation ($200 million), Parks and Wildlife ($91 million), Criminal Justice ($60 million), Public Safety ($21 million), Military ($19.5 million), Historical Commission ($825,000). Deferred maintenance funding, though approved in the budget, will need to be approved by a joint oversight committee made of three House members appointed by the speaker and three Senate members appointed by the lieutenant governor. The members will be chosen by July 1, 2015 and will be tasked with assigning funding and reporting facilities updates to the Legislature.

The budget also contains $107.6 million in miscellaneous funding for the Facilities Commission. The projects include maintenance at the Capitol, Capitol Visitor Center and State History Museum ($15 million); courthouse preservation grants ($20 million); Historical Commission building repairs ($5.1 million); capital improvement grants for Parks and Wildlife ($12.5 million); Alamo master plan at General Land Office ($25 million). 
Across-the-board 25-percent cut to franchise tax heads to Abbott's desk  

Lawmakers fulfilled Gov. Greg Abbott's demand for business tax relief last week when they gave final approval to a business franchise tax cut totaling $2.56 billion over the next two years. 

The House and Senate overwhelmingly approved House Bill 32 last week, which cuts the state's franchise tax rate by 25 percent for all businesses. The bill raises the revenue threshold on the flat-rate portion of the tax from $10 million to $20 million, meaning businesses with revenue levels over $1 million and up to $20 million can claim a tax rate of 0.331 percent. Businesses with revenue under $1 million will still avoid the tax altogether.

"For our economy to continue to thrive, for businesses to grow and for jobs to be created, we have to support our businesses," said Senate Finance chair Sen. Jane Nelson (R-Flower Mound). "This is a smart investment, not just for our economy but also for young Texans to grow up in a state with jobs and opportunities."

The tax cut is a critical victory for the Legislature, considering Abbott had promised in February to veto a budget that did not include business tax relief. The final version of the bill - which passed 137-8 in the House and 26-5 in the Senate - adopts House language that called for the 25-percent cut, rather than the 15-percent cut contained in the Senate tax relief package.

The franchise tax cut is part of a broader $3.8 billion tax relief package that also includes a break for homeowners on their property tax bills. By raising the homestead exemption from $10,000 to $25,000, Senate Bill 1 provides the average homeowner with about $125 in yearly savings.
Key Bill Roundup

Signed into law by the governor: 

State Office of Administrative Hearings (HB 2154) -
Authorizes State Office of Administrative Hearings to remand default cases to referring agencies for informal disposition. Prohibits occupational licensing agencies from changing a SOAH judge's order. Prohibits a SOAH judge from recommending a sanction or action in an occupational license case. 

School district contracting (SB 810) - Allows school districts and municipalities located wholly or partially in a county in which the district is located to contract with district resources to pay a portion of costs for design, improvement or construction of an instructional facility, stadium or athletic facility that is owned by, controlled by or on the property of the municipality. 

Local government contracting (SB 1281) -  Allows a local government to participate in a cooperative purchasing program with another local government of this state or another state or with a local cooperative organization of this state or another state. 

Deferred maintenance of state buildings (SB 2004) - 
Creates a "deferred maintenance fund" to be funded by the Legislature for the purpose of repairing state buildings. Creates an oversight committee comprised of six legislators. 


Sent to the governor:

College Construction (HB 100)  - A $3.1 billion college construction bonding bill that would fund 64 academic building projects over the next two years.

Franchise tax cut (HB 32) - Reduces the franchise-tax rate by 25 percent for all businesses, allows businesses with annual revenues under $20 million to use the 'E-Z Computation' method and lowers E-Z rate.

Consolidated Insurance (SB 1081) - Requires construction project principals to provide contractors and subcontractors with consolidated insurance information prior to signing a contract. 

E-Verify requirement (SB 374) -  Requires state agencies and public universities to vet new employees by using the federal electronic verification of employment authorization program, or E-verify. 

Construction manager at risk (HB 2634) -  Prohibits entities with any relationship to a governme ntal entity's architect or engineer from serving as the governmental entity's construction manager-at-risk on a project. 

Public-Private partnerships (HB 2475) - A bill to establish the Texas Facilities Commission's center for public-private partnerships.

State contracting (SB 20) - A state contracting bill to tighten and strengthen oversight on contracts with state government agencies by increasing oversight of large state contracts awarded to private companies and adding more reporting requirements. 

Duty to defend (HB 2049) -  Would prohibit cities and counties from including 'duty to defend' clauses in contracts with architectural or engineering firms, bu t would allow cities and counties to seek att orney's fees if there is final determination of liability against the firm. 

Data Center sales tax exemption (HB 2712) - Provides a 20-year sales tax exemption for large data centers that invest at least $500 million. 

Texas Mobility Fund (HB 122) - Prohibits Texas Transportation Commission from issuing obligations for certain highway and mobility projects under the Texas Mobility Fund after 1/1/15. Allows TTC to issue those obligations if TTC or TxDOT requires toll roads to be included in a regional mobility plan for a local authority to receive an allocation from the fund.

Texas Windstorm Insurance Association (SB 900) - Amends several policies of the Texas Windstorm Insurance Association Act, including capping the maximum liability limits for coverage on single properties to $1.5 million. Changes the TWIA funding structure. Requires TWIA to meet a 1 in 100 year probable maximum loss to ensure claims are paid in the aftermath of a major catastrophe. Changes the makeup of the association's board of directors. 

 

Local government contracting (HB 23) - Requires disclosure of certain relationships with local government officers and vendors regarding contracts and purchases.
2015 AGC Texas Building Branch Calendar

July
28-31 - 39th Annual AGC-TBB Convention, Resort at Squaw Creek - Olympic Valley, CA

August
20-21 - Safety Committee Meeting - Dallas/TEXO Office

September
18 - AGCTBB Board Meeting, Austin AGC Office

November
5-6 - Safety Committee Meeting, Rio Grande Valley
20 - AGCTBB Board Meeting, Austin AGC Office

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