Brian Christian Consulting

We are just shy of three weeks into a most unprecedented regular session of the Texas Legislature.  The House has elected its new speaker.  Both chambers have adopted their rules, including their COVID protocols.  And, both chambers took an extended break, which turned out to be indeed fortunate as at least two members present on opening day subsequently tested positive for COVID (get well soon!).

Ahead of session, there was a lot of speculation over priorities, scope, scale, and duration.  The prognosticators, including this one, made educated guesses based on prior knowledge and an understanding of the process, but the predictions were still marked by more unknowns than knowns.

Now, three weeks in, let us recap the knowns and see where they lead us when wondering about the future.

The Overall Budget.  I think this was surprisingly good news, considering the alternatives.  Recall that last Spring and Summer, the palpable fear was that the pandemic had wiped out the budget in a very big way.  The Comptroller conservatively estimated a shortfall for the current biennium of about $4.6 billion, and state agencies were directed to identify five percent budget reductions.  As for the 2022-2023 biennium, there were warnings that the shortfall could run into the billions as well.  What would this mean for the commitments to public education?  What more could be asked of state agencies?

Flash forward to January 11^th, and we got perhaps the best possible answer given our uncertainty.

First, the Comptroller reduced the current biennium’s deficit to about $950 million and noted that the five percent reductions already identified by state agencies came to $1 billion.  Thus, if those are applied, that will cover the gap.  And that does not even consider potential federal relief.

Second, his biennial revenue estimate (BRE) was not as dire as feared—he estimated that the Legislature will have $112.5 billion to spend, roughly $440 million less than the BRE he issued in January 2019.  Now, that is not to suggest that budget-writing will be a cakewalk.  The Legislature will still need to fund the growth in government necessary to meet projected demands and cover the commitments to public education made last session.  And, the Comptroller has been very clear about the uncertainties surrounding the BRE vis-à-vis the Pandemic.

Then, on January 21^st, both the House and Senate released their starting budget bills.  Both appropriate about $119 billion and have remarkably close in their numbers.  Still unclear is from where the additional $7 billion will come, with some speculation centering on the potential for federal COVID relief.

The Economic Stabilization Fund looks like it will be pretty healthy with $11.6 billion.  Traditionally, however, the Legislature has been conservative with covering expenditures from the Rainy Day fund, so I would expect other options to be explored before they consider tapping it.

What of the Article VI (Natural Resources) agencies?  Interestingly, a review of the LBB summaries of the House and Senate versions shows that much of the Article VI action is focused on the Texas Commission on Environmental Quality (TCEQ).  Overall, the agency’s budget is reduced, but this appears to be largely due to the Texas Emissions Reduction Plan (TERP) Trust Fund, which will live outside the Treasury when it comes into existence September 1, 2021.  Recall that House Bill 3745 (Bell) from last session created the trust fund, to be administered by TCEQ.  Revenues will go directly to the fund, with a transfer of any unencumbered balance in the fund to the TERP Account (GR-D 5071) at the end of each biennium.  It will be interesting to see where this approach changes at all during session.

Other highlights include $5.8 million in the House version for targeted pay raises to high-turnover positions, such as investigators.  This was one of the agency’s exceptional items, with the agency reasonably pointing out that comparable positions at other governmental agencies are paid more.  That amount is not included in the Senate version.  Both versions, however, include $2 million to support 10 air quality monitors the agency deployed during the current biennium and $1.3 million to cover expenses for more inspections of the aggregate production operations (more on those below).  Both bills also include $7.1 million to implement the Federal Lead and Copper Drinking Water Rules.

Bottom line, anyone interested in pursuing a policy change this session needs to watch the budget.  For reminder of how the budget process works, please check out my earlier article here.

So, What’s Been Filed?  Speaking of policy, let us take a quick look at the environmental bills filed so far.  Given the uncertainty still remaining around how session will function, it is difficult to predict what may ultimately pass.  But everything needs to be tracked, and we all need to prepare, right?

Aggregates.  Questions about aggregate production operations (APOs) and their allied industries (e.g., concrete batch plants) have been around for at least 20 years and probably longer.  When I was a Legislative Liaison for TCEQ back in 1999-2001, the hot spots included Harris, Burnet, Denton, and Collin Counties because of their growth and demand.  These operations still get a lot of attention today, including the appointment of a special House interim committee on APOs.  This session, more than 10 bills have already been filed, with topics including public participation in concrete batch plant permitting, land reclamation, and best management practices for APOs.  With the issuance of the special committee’s interim report, there could be more coming down the pike.

Water.  As of now, relatively few water-related bills have been filed (but it is early).  HB 271 by Murr would set up new procedures for determining whether a watercourse is navigable.  HB 152 by Buckley would require the Texas Water Development Board (TWDB) to study groundwater usage in the Trinity and Edwards Aquifers in Bell, Burnet, Milam, Travis, and Williamson Counties.  As I write this, only two bills affecting the TWDB have been filed, so we will just have to see.

Sunset Review Preview.  Given the questions surrounding how much new legislation will be passed this time around, many of the bills that have been filed may be viewed as previews of what may come up during TCEQ’s Sunset Review (assuming it stays on the 2022-2023 review schedule).  So far, bills have been filed to eliminate the affirmative defense for emissions events (SB 363 by Miles); create more robust environmental justice programs at TCEQ (HB 714 by Reynolds, HB  1191 by Goodwin, and SB 365 by Miles); mandate minimum penalties (SB 366 by Miles); modify the Texas Risk Reduction Program (HB 858 by Dutton); and create new regulations for above-ground storage tanks (SB 126 by Johnson).

So, some of the big issues we anticipated are in the hopper.  With TCEQ currently evaluating its compliance history rules, it will be interesting to see if anything is filed this session on that issue.  Additionally, interest in potentially moving contested case hearings back to TCEQ (they have resided at the State Office of Administrative Hearings since the mid-90s) never completely goes away.  Finally, the highly specialized, always controversial, and important issue of radioactive waste management can be expected to be hot (sorry, could not resist).

So, where do we go from here?  Well, this takes us back to the unknowns.  My initial read is that many of these environmental issues will be deferred until Sunset.  Nonetheless, everyone knows anything can happen during a session, so we will want to keep track and keep our ears to the ground.

Plus, as I write this, the new Administration is announcing a slew of climate-related initiatives that will no doubt inspire similar approaches from some quarters here in Texas.  This, coupled with previously announced environmental justice issues, means there will be lots of work to go around.  Good luck everyone!

xxx