HOUSE RESEARCH ORGANIZATION • TEXAS HOUSE OF ...

Bill Callegari

Chairman

82(R) – 60

HOUSE RESEARCH ORGANIZATION • TEXAS HOUSE OF REPRESENTATIVES P.O. Box 2910, Austin, Texas 78768-2910

(512) 463-0752 • http://www.hro.house.state.tx.us

Steering Committee: Bill Callegari, Chairman

Jose Menendez, Vice Chairman

Rafael Anchia Tryon Lewis Joe Pickett Drew Darby Harold Dutton Eddie Lucio III Elliott Naishtat Ralph Sheffield Joe Deshotel Susan King Geanie Morrison Rob Orr Todd Smith

HOUSE RESEARCH ORGANIZATION

daily floor report

Wednesday, April 20, 2011

82nd Legislature, Number 60

The House convenes at 10 a.m.

Part One

Twenty-nine bills are on the daily calendar for second-reading consideration today. The

bills analyzed in Part One of today’s Daily Floor Report are listed on the following page.

Four postponed bills - HB 1825 by Price, HB 10 by Branch, HB 2433 by Callegari, and

HB 115 by McClendon - are on the supplemental calendar for second-reading consideration

today. The analyses of these bills are available on the HRO website at

http://www.hro.house.state.tx.us/BillAnalysis.aspx.

http://www.hro.house.state.tx.us/BillAnalysis.aspx

HOUSE RESEARCH ORGANIZATION Daily Floor Report

Wednesday, April 20, 2011

82nd Legislature, Number 60

Part One

Page: HB 3 by Thompson Life without parole for repeat sexual assault, aggravated sexual assault 1 HB 5 by Kolkhorst Adopting the Interstate Health Care Compact 5 HB 255 by Hilderbran Enforcement of tax laws and related criminal penalties 12 HB 290 by Jackson Higher penalty for repeat offense of employment harmful to children 19 HB 417 by Anchia Guidance on obtaining compensation for wrongful imprisonment and fees 21 HB 625 by Solomons Staff leasing services companies and workers’ compensation claim info 24 HB 627 by Woolley Fee collected by a district clerk for certain certified copies 27 HB 707 by Laubenberg Validation of actions by municipalities with 500 people or fewer 30 HB 782 by Y. Davis Property appraisals for property purchased with bond proceeds 32 HB 812 by P. King Allowing county fire marshals and inspectors to request wiretaps 34 HB 887 by Geren Prohibiting bars to registration for nonpayment of red light camera fines 36 HB 956 by Marquez State fire marshal’s investigation of firefighter deaths 40 HB 1052 by Patrick Disclosure of background checks by online dating service providers 42 HB 1061 by Otto Continuing certain investment authority for TRS 45 HB 1089 by Martinez Fischer Allowing a county or municipality to require the removal of graffiti 47 HB 1112 by Phillips Modifying powers of regional mobility authorities 50

HOUSE HB 3

RESEARCH Thompson, et al.

ORGANIZATION bill analysis 4/20/2011 (CSHB 3 by Gallego)

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SUBJECT: Life without parole for repeat sexual assault, aggravated sexual assault

COMMITTEE: Criminal Jurisprudence — committee substitute recommended

VOTE: 6 ayes — Gallego, Aliseda, Burkett, Carter, Rodriguez, Zedler

0 nays

3 absent — Hartnett, Christian, Y. Davis

WITNESSES: None

BACKGROUND: Penal Code secs. 12.31, 12.42 (c)(3), and 12.42(c)(4) authorize the

punishment of life-without-parole for capital murder, second convictions

of what is called ―super aggravated sexual assault‖ against children, and

second convictions of continuous sexual abuse of a child.

The term ―super aggravated sexual assault‖ refers to an enhancement of

the aggravated sexual assault statute. It applies to convictions for

aggravated sexual assault if the victim was younger than six years old, or

younger than 14 and the offense included certain aggravating factors,

including bodily injury or the use of a weapon. Like continuous sexual

abuse of a child, a first offense for super aggravated sexual assault carries

a minimum sentence of 25 years in prison and a maximum sentence of

life, and offenders are not eligible for parole.

Under Penal Code, sec. 12.42(c)(2), second offenses of sexual assault and

aggravated sexual assault are punished by life in prison. Under

Government Code, sec. 508.145(c), persons serving this type of life

sentence are not eligible for parole until they have served 35 years in

prison, without consideration of good conduct time. Government Code,

sec. 508.046 requires a two-thirds vote of the seven-member board of

pardons and paroles.

Code of Criminal Procedure, Art. 42.12, sec. 5(d) lists the offenses for

which a defendant may not receive deferred adjudication. Under deferred

adjudication, a judge may, after receiving a plea of guilty or no contest,

defer further proceedings without entering an adjudication of guilt and

place the defendant on community supervision (probation). If the

HB 3

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defendant successfully completes probation, the judge must dismiss the

charges and discharge the defendant.

A defendant may not receive deferred adjudication if charged with:

second offenses of sexual assault and aggravated sexual assault and

was placed on community supervision for the first offense;

continuous sexual abuse of a young child or children; or

super aggravated sexual assault.

DIGEST: CSHB 3 would require a sentence of life-without-parole for persons

convicted of aggravated sexual assault and sexual assault who were

previously convicted of sexual assault, aggravated sexual assault, or

continuous sexual abuse of a young child or children.

This punishment would not apply if either of the convictions was for

sexual assault in which the defendant was under 19 years old and the

victim at least 13 years old.

CSHB 3 also would prohibit deferred adjudication for persons charged

with sexual assault or aggravated sexual assault if they had a previous

conviction for continuous sexual abuse of a young child, sexual assault, or

aggravated sexual assault.

The bill would take effect September 1, 2011, and apply only to offenses

committed on or after that date.

SUPPORTERS SAY:

CSHB 3 would impose life-without-parole on certain repeat sexual assault

and aggravated sexual assault offenders to make Texas’ punishment more

appropriately fit these crimes and to help protect the public. Repeat,

violent sexual assault is the type of serious crime that deserves the most

serious punishment available. Punishing these crimes with life-without-

parole would align them with the current crimes receiving this

punishment.

CSHB 3 would ensure that violent, repeat sex offenders never leave prison

to victimize anyone else. Sexual assault and aggravated sexual assault are

heinous crimes, and these offenders have high recidivism rates. The

possibility of parole for these offenders is unacceptable, even if remote.

Although these sex offenders cannot be paroled under current law until

they have served at least 35 years behind bars, many offenders, especially

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young ones, could live well beyond that 35 years. Instead of accepting

plea agreements in these cases, prosecutors should obtain convictions for

the actual crimes committed so that offenders would be subject to life-

without-parole and the public would be protected from these dangerous

sexual predators.

Although 2009 parole rates were about 17 to 21 percent, in the past they

have been much higher. The possibility of never being released from

prison may be more of a deterrent for some offenders.

CSHB 3 could bring peace of mind to victims by guaranteeing that certain

repeat, violent sex offenders actually stayed in prison for life. Currently,

family and friends of victims are forced to monitor an inmate’s status

throughout a life sentence, because release on parole remains possible.

Although this change would be important to ensure these offenders never

would be released, it would not impose significant additional costs to the

criminal justice system because these offenders already must serve at least

35 years without parole consideration and are rarely, if ever, paroled.

The Texas Department of Criminal Justice (TDCJ) has the expertise and

resources to manage offenders who are ineligible for parole. The agency

currently houses about 330 offenders with life-without-parole sentences

with no serious problems. The department houses many hard-to-manage

inmates, and privileges and punishments within a prison can be used as

management tools. Studies have shown that these offenders do not pose a

disproportionate risk of violence in prison.

OPPONENTS SAY:

Texas’ current law works adequately to punish and supervise persons

repeatedly convicted of sexual assault and aggravated sexual assault.

The law effectively imposes life-without-parole for repeat sexual assault

and aggravated sexual assault by imposing life in prison. Under this

sentence, they must serve 35 years of actual calendar time in prison before

they are even eligible for parole, and being eligible for parole does not

guarantee that an inmate will be released. Two-thirds of the seven-member

board of pardons and paroles must approve these offenders for parole, an

unlikely scenario in light of the tough parole policies of the last decade.

Requiring life-without-parole for these offenders would prevent the board

of pardons and paroles from evaluating these offenders and making release

decisions that best serve society. The board has been extremely cautious

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about releasing violent, repeat sex offenders on parole. Although few are

approved, it would be better to continue allowing these offenders to be

eligible for parole, for both prison management reasons and to recognize

that some offenders could be rehabilitated and society best served if they

were released on parole.

With incarceration costs at about $18,000 per inmate per year, the expense

of housing an ever-growing prison population of inmates sentenced to life

without parole could tax criminal justice resources, especially considering

that medical expenses incurred by aging inmates are significantly higher

than those of younger offenders.

Expanding life-without-parole beyond capital cases and the most serious

sex crimes against children could distort the relationship between offenses

and punishments in a system that currently reserves the harshest penalty of

life-without-parole for these offenses. With a mandatory punishment of

life-without-parole, it could be difficult to reach an agreement for a guilty

plea in these cases, if prosecutors thought a plea agreement was advisable.

As the number of crimes that carry a sentence of life-without-parole

increases, it can become irresistible to continue to add new offenses.

CSHB 3 could result in problems with prison management. Managing

inmates without being able to use parole as an incentive for good behavior

could be difficult and expensive.

OTHER OPPONENTS SAY:

A better approach could be to make life-without-parole optional, rather

than mandatory, for the repeat sex offenders described by the bill.

NOTES: The committee substitute added the provision excluding convictions for

sexual assault in which the defendant was under 19 years old and the

victim at least 13 years old from the punishment of life-without-parole.

HOUSE HB 5

RESEARCH Kolkhorst, et al.

ORGANIZATION bill analysis 4/20/2011 (CSHB 5 by S. Miller)

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SUBJECT: Adopting the Interstate Health Care Compact

COMMITTEE: State Sovereignty, Select — committee substitute recommended

VOTE: 5 ayes — Creighton, Branch, Darby, S. Miller, Pitts

0 nays

2 absent — Martinez Fischer, Thompson

WITNESSES: For — Susanna Dokupil, Health Care Compact Alliance; Mario Loyola,

Texas Public Policy Foundation; Susan Nawojski; Suzanne Rogers; Julie

Turner; Peggy Venable, Americans for Prosperity (Registered, but did not

testify: Kathy Barber, National Federation of Independent Business;

Gareth Ellzey; Rebecca Forest; Andrew Kerr, Texans for Fiscal

Responsibility; Maria Martinez; Dustin Matocha, Young Conservatives of

Texas, Empower Texans; Lee Spiller, Citizens Commission on Human

Rights; Arlene Wohlgemuth, Texas Public Policy Foundation; Thomas

Wolfe, Texas Conservative Coalition)

Against — Trey Berndt, AARP; Anne Dunkelberg, Center for Public

Policy Priorities; Laura Guerra-Cardus, Children’s Defense Fund - TX;

Melanie Lantrip; (Registered, but did not testify: Miryam Bujanda,

Methodist Healthcare Ministries; Ashley Harris, Texans Care for

Children; Bob Kafka, ADAPT of Texas; Jodie Smith, Texans Care for

Children)

On — John Hawkins, Texas Hospital Association; Bee Moorhead, Texas

Impact

BACKGROUND: The U.S. Constitution, Article 1, section. 10, clause 3 prohibits states,

without the consent of Congress, from entering into agreements or

compacts with other states or a foreign power.

DIGEST: CSHB 5 would amend the Insurance Code to place into law the provisions

of an Interstate Health Care Compact and to direct Texas to join the

compact with other states to secure from the federal government primary

responsibility to regulate and improve health care by its own legislature.

A ―member state‖ would be a state that signed the compact and had

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adopted it under its laws. The bill would define health care to include a

wide range of services, including preventive, therapeutic, physical or

mental health and functioning, pharmacy, and individual or group health

plans, except for plans provided by the U.S. Department of Defense and

U.S. Department of Veteran Affairs or for Native Americans.

The bill would authorize Texas, as a member state, to suspend by

legislation the operation of all federal laws, rules, and regulations that

were inconsistent with the state’s health care laws and regulations. Federal

laws and regulations would remain in effect unless suspended, and Texas

would be responsible for funding any unsuspended federal health care law

or rule in effect after the compact’s effective date.

The bill would provide that Texas as a member state would have the right

to federal money up to an amount equal to its federally funded mandatory

health care spending in fiscal 2010 and adjusted by factors that took into

account changes in the state’s average population as determined by the

U.S. Bureau of the Census and inflation as measured using a Total Gross

Domestic Product Deflator determined by the U.S. Department of

Commerce.

The bill would create the Interstate Advisory Health Care Commission,

whose membership would be determined by each member state and would

be funded as agreed by the member states. Texas, as a member state, could

not appoint more than two members and could withdraw membership at

any time. The commission would be required to collect information and

data to assist member states in their health care regulation and to share

their information with the member states’ legislatures. The commission

could study health care regulation issues and make non-binding

recommendations. The commission could have other responsibilities and

duties as conferred by the member states’ legislatures.

Member states by unanimous agreement could amend the compact, and

the amendment would remain in effect unless Congress disapproved the

amendment within one year. Texas, as a member state, could withdraw

from the compact by adopting a law, but the withdrawal could not take

effect until six months after the governor had informed the other member

states.

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The bill would take immediate effect if finally passed by a two-thirds

record vote of the membership of each house. Otherwise, it would take

effect September 1, 2011.

The bill provides that Texas would agree that the compact’s effective date

would be the latter of the date the compact was adopted under Texas law

or the date when the compact was adopted by at least two states and

received consent of the U.S. Congress. The compact would not take effect

if, in consenting to the compact, Congress altered the compact’s

fundamental purposes.

SUPPORTERS SAY:

Federal health care requirements are driving rising and unsustainable state

expenditures that are ―breaking the banks‖ of Texas and other states.

Medicaid spending, in particular, has grown by more than 170 percent

over the last decade. State spending will grow exponentially when federal

health care reform takes effect and an additional 2.1 million Texans

become eligible for Medicaid by 2019. Texas must wrest control of health

care spending and chart its own course that better responds to its unique

demographic, geographic, and economic characteristics. A health care

compact between Texas and at least one other state would allow us to gain

this control.

The U.S. Constitution authorizes interstate compacts, which take the place

of federal law. More than 200 compacts now exist to help states meet a

range of issues, including transportation, supervision of former prisoners,

and low-level radioactive waste disposal, and offer unused potential for

other activities, including health care. Congress would have to pass a law

to give consent to the compact, but no other legislation would be needed.

Its approval of the Washington Metropolitan Area Transit Authority

compact shows precedent for approving a compact that provides for the

suspension of certain federal laws.

An interstate compact would preserve federalism by allowing each

member state to create a health care system that aligned with their needs.

Texas needs to use all legal tools at its disposal to protect areas of

authority traditionally reserved for states and the health care interests of

Texans.

The bill would initiate the state’s membership into a potential compact and

not bind its participation. The state could withdraw at any time because the

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controlling provisions on withdrawal would be entirely specified within

the compact.

Texas’ control of health care regulation and programs would mean the

state could apply innovative approaches and tailor programs to meet

specific state needs. Federal Medicaid requirements are a ―one size fits

all‖ kind of approach that leaves little room for innovation. Federal

maintenance of effort requirements prohibit Texas from making changes

that would tailor Medicaid eligibility or make other meaningful reforms.

The compact would allow Texas to choose which federal programs it

wanted to suspend, and Texas could choose to keep in place programs that

were popular, such as Medicare, if warranted. Seniors may have paid into

Medicare through their payroll taxes, but Medicare also is funded by other

tax revenue, and the compact would give Texas the flexibility and control

to assure that all Medicare spending was appropriate and in the best

interest of Texans. Among the options would be to contract with the

federal agency that now administers Medicare to assure program

continuity, if warranted. Additional controls on Medicare would help

prevent the federal government from shifting to the states the entire cost of

care for individuals who were both Medicare and Medicaid eligible, which

are now being split among the programs. Appropriate and effective use of

the state’s authority under the compact would be further assured by the

passage of HB 273, which would establish a committee to examine and

make recommendations about the state’s capability to assume regulatory

authority over health care.

Making meaningful changes would not mean reducing eligibility to

publicly funded health care services, but participation in the compact

would allow the state to better evaluate and respond to priority needs and

populations. By re-directing funds from less important services or overly

restrictive or prescriptive regulatory requirements, we can meet current

eligibility levels, improve provider rates, and build health care capacity in

other areas.

CSHB 5 would ensure adequate federal funding to meet changing capacity

and service needs because the compact appropriately would calibrate

Texas’ share of federal funding to account for population growth and

inflation. By establishing 2010 as a baseline year, federal funding would

be pegged to the year when Texas enjoyed its highest federal matching

rate for Medicaid due to federal stimulus funding. It is uncertain whether

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Texas in subsequent years would forgo additional funding related to

federal health care reform because of the compact, since health care

reform is being challenged by several states and entities and ultimately

may be invalidated or repealed.

Congress is too distant and gridlocked to devise laws and regulations that

respond to issues as personal as health care. These decisions should be

made as close to home as possible, by Texans for Texans.

Fears of Texans having reduced access to safe, quality health care when

compared to other states are unwarranted. The bill specifically states that

member states would pledge to improve health care policy within their

jurisdictions. The bill also would require states’ federal funding to be

audited by the U.S. Government Accountability Office.

The health care compact would be governance reform, not health care

reform, and would leave health care policy decisions entirely in the hands

of Texas. The compact would allow Texas to provide safe, high-quality

health care in a way that was fiscally responsible under the control of state

lawmakers who were more responsive, accountable and accessible to

Texas citizenry and able to increase marketplace competition and options.

Texas could set health care service standards other states may want to

emulate.

Congress would have trouble saying no to a compact that was enacted by

several states. Legislatures in many more states are now considering

participation in the compact. The legislatures in Arizona and Georgia have

already adopted this legislation. At the very least, enactment of this bill by

Texas and other states would require Congress to better address states’

demands for more state control. For example, state demands were critical

in reforming welfare programs in the 1990s.

OPPONENTS SAY:

Rising state health care expenditures are largely related to population

growth, health status, aging and the emergence of new technologies and

therapies. Increased health spending in both the public and private sectors

is nothing new, and it has typically outpaced economic growth since the

1960s. Since the interstate compact proposed by CSHB 5 could not slow

these trends and Texas has continuously implemented reforms to contain

Medicaid costs and incentivize innovation, the most likely result of Texas’

participation in the compact would be kicking low-income, often aged or

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unhealthy, and mentally, developmentally or physically disabled people

off of much-needed, federally supported health care services.

The bill would not require Texas to build capacity to meet the needs of its

population, and therefore would not guarantee that Texas would have a

better health care system or would keep eligibility standards in place.

Medicaid eligibility in Texas is among the lowest in the United States, and

with 6.4 million uninsured people, many are now going without needed

health care.

It is unrealistic to believe that under the compact’s funding scheme, Texas

would have the financial resources to be able to extend and improve

services or keep eligibility levels. This session, the state is unable to create

a budget for fiscal 2012-13 that meets current service levels on most

health and human service programs, even with dramatic cuts in provider

rates and cost-reducing improvements in program administration. Any

increase in capacity would be financed solely by state dollars, since the

compact would lock Texas’ federal funds at a 2010 level that would

adjust only for growth and inflation. Since Texas’ current Medicaid

expenditures are well below the national average, we would receive less

initial funding relative to other states. Additionally, the funding formula

would mean Texas would lose about $120 billion in new federal funds

related to health care reform.

This bill could jeopardize Medicare, which is a crucial health care support

for seniors of all income levels. Medicare is a program that people earned

by paying into it during their working years, and should not be tampered

with. Texas has no experience administering Medicare, and even if it kept

federal Medicare laws and rules in place, it would still be responsible for

running and funding it. Keeping Medicare a federally run and funded

program also will help seniors maintain a similar level of quality care,

regardless of where they moved or traveled within the United States. No

serious federal proposals exist to pass onto states the entire cost of

individuals called ―dual eligibles,‖ whose health care costs are now shared

by Medicare and Medicaid. The only proposals recently considered have

been to shift the entire cost of dual eligibles to the federal government.

It would be irresponsible of Texas legislators to agree to this

unprecedented compact that could bind Texas to an unknown fate. The

governor of Arizona wisely vetoed that state’s compact bill on April 18,

citing the likelihood that that the state’s citizens, especially seniors, would

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be penalized if the state assumed control of health care spending from the

federal government.

Interstate compacts do not replace or nullify federal law, but are designed

to facilitate states’ interactions in common regulatory activities. An

interstate compact has never been used for health care. Congress does not

relinquish any powers by consenting to a compact. It is unclear whether

Congress could consent to this compact without passing legislation

authorizing states to suspend federal law and whether Texas could

unilaterally withdraw from a Congress-approved compact without

Congressional approval.

Suspending federal health care laws and regulations could endanger the

health of Texans and create a lower level of health care for Texans when

compared to residents of other states. Federal health care regulations

provide the most equitable basis for health service access for all U.S.

citizens and often are needed as a check and balance to lapses in state

regulation or enforcement.


This bill is more a political and symbolic exercise against recent federal

actions than a realistic way of addressing our health expenditures. The

chances are slim that Congress would approve a compact that required

them to give states money without directing its spending. The Texas

Legislature directs all spending of state tax dollars because it is the

prudent and fiscally responsible way to manage money, and Congress

should be expected to act similarly. There is no reason to believe that

state lawmakers would be more responsive or fiscally responsible than

members of the U.S. House or Senate.

NOTES: The committee substitute removed a statement that the preliminary

estimate of Texas’ base funding level is about $60.4 billion.

HB 273 by Zerwas, which would create a committee to study and make

recommendations to the governor and the Legislature about the most

efficient use of the authority provided by an interstate health care compact,

was reported favorably, without amendment, by the Select Committee on

State Sovereignty on April 14.

HOUSE HB 255

RESEARCH Hilderbran

ORGANIZATION bill analysis 4/20/2011 (CSHB 255 by Otto)

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SUBJECT: Enforcement of tax laws and related criminal penalties

COMMITTEE: Ways and Means — committee substitute recommended

VOTE: 10 ayes — Hilderbran, Otto, Christian, Elkins, Gonzalez, Lyne, Martinez

Fischer, Murphy, Ritter, Villarreal

0 nays

1 absent — Woolley

WITNESSES: For — (Registered but did not testify: Doug DuBois, Texas Petroleum

Marketers and Convenience Store Association)

Against — None

On — Ann O’Connell, Texas Comptroller of Public Accounts

BACKGROUND: Tax Code, sec. 151.7032 criminalizes the failure by retailers and sellers to

pay taxes owed to the state. The penalty, depending on the amount of taxes

collected and not paid to the comptroller, is a:

class C misdemeanor (maximum fine of $500), if the amount is less

than $10,000;

state-jail felony (180 days to two years in a state jail and an

optional fine of up to $10,000), if the amount is between $10,000

and $20,000;

third-degree felony (two to 10 years in prison and an optional fine

of up to $10,000), if the amount is between $20,000 and $100,000;

or

second-degree felony (two to 20 years in prison and an optional

fine of up to $10,000), if the amount is more than $100,000.

DIGEST: CSHB 255 would make various changes to the Tax Code related to the

comptroller’s criminal investigation efforts. These changes would include:

linking certain tax crimes to existing crimes in the Penal Code;

broadening the venue for prosecuting tax crimes;

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expanding certain tax enforcement powers of the comptroller;

increasing sales-tax reporting requirements for retailers;

allowing photographic evidence in certain tobacco cases; and

removing possible double-jeopardy risks in existing law.

Linking tax crimes and the Penal Code. The bill would make the failure

to pay already collected sales taxes prosecutable under existing money-

laundering statutes in the Penal Code. Tax Code felonies would be

prosecutable under the organized-crime statutes in the Penal Code. Penal

Code statutes on conspiracy, certain defenses, and organized crime would

apply to tax offenses and their prosecution.

The bill would amend the penalties for the existing crime of failure to pay

taxes that had already been collected. The penalty would depend on the

amount of taxes collected and not paid to the comptroller:

class C misdemeanor (maximum fine of $500), if the amount was

less than $50;

class B misdemeanor (up to 180 days in jail and/or a maximum fine

of $2,000), if the amount was between $50 and $500;

class A misdemeanor (up to one year in jail and/or a maximum fine

of $4,000), if the amount was between $50 and $1,500;

state-jail felony (180 days to two years in a state jail and an

optional fine of up to $10,000), if the amount was between $1,500

and $10,000;


of up to $10,000), if the amount was between $20,000 and

$100,000;


fine of up to $10,000), if the amount was between $100,000 and

$200,000; and

first-degree felony (life in prison or a sentence of five to 99 years

and an optional fine of up to $10,000), if the amount was $200,000

or more.

Under CSHB 255 if the tax collected and not paid was part of an ongoing

scheme or continuous course of conduct, prosecutors would be able to

aggregate the amounts for purposes of determining the degree of the

offense.

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CSHB 255 would amend the Code of Criminal Procedure to direct a court

to make findings of civil tax fraud if the evidence during a criminal trial

showed that the defendant’s failure to pay a tax or file a required form

stemmed from fraud or intent to evade the tax.

Venue for tax cases. CSHB 255 would broaden the venue for prosecution

of conspiracy, organized criminal activity, and money laundering. If the

prosecution was based on a criminal offense that also would be classified

as a felony under the Tax Code, then the offense could be prosecuted in

any county where the venue was proper under the Tax Code.

Alcohol and tobacco reporting rules. CSHB 255 would require retailers

and sellers to keep records in the form of all sales receipts, invoices, or

other records showing sales and use tax received or collected on each sale,

rental, lease, or other service transaction.

The bill also would create a new crime of failure to produce certain

records after using a resale certificate. A person would commit an offense

if the person intentionally failed to submit to the comptroller records that

documented a taxpayer’s taxable sales of alcohol and tobacco that were

received tax free from another seller using the exemption for resale.

Dependent on the amount of tax avoided through use of the resale

exemption, an offense would be a:

class C misdemeanor (maximum fine of $500), if the tax avoided

was less than $20;

class B misdemeanor (up to 180 days in jail and/or a maximum fine

of $2,000), if the tax avoided was between $20 and $200;

class A misdemeanor (up to one year in jail and/or a maximum fine

of $4,000), if the tax avoided was between $200 and $750;


of up to $10,000), if the tax avoided was between $750 and

$20,000; or


fine of up to $10,000), if the tax avoided was $20,000 or more.

It would be an affirmative defense to prosecution if the items purchased

tax free under the resale exemption had not yet been resold when the

comptroller requested pertinent records. If the avoided taxes were part of

an ongoing scheme or continuous course of conduct, prosecutors would be

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able to aggregate the amounts for purposes of determining the degree of

the offense.

Tax enforcement powers. CSHB 255 would allow the comptroller or the

attorney general to use confidential tax information or records to enforce

any Texas or federal crime in addition to those under the Tax Code.

The bill would grant investigators employed by the comptroller the

authority to investigate any criminal tax offense or any criminal offense

under any other law if the offense related to a tax, fee, penalty, or charge

administered, collected, or enforced by the comptroller. An investigator

commissioned by the comptroller as a peace officer would have the

powers of a peace officer within Texas.

CSHB 255 would amend the Government Code to allow the comptroller

to receive federal property or federal money from a federal equitable

sharing program.

The bill would allow the comptroller to retain, not just sell, forfeited

property from cigarette, cigar, and tobacco tax enforcement efforts for

official use by the comptroller’s criminal investigation division.

Evidence in cigarette, cigar, and tobacco tax prosecutions. The bill

would allow the comptroller to use photographs of cigarettes, cigars, and

tobacco in related cases to be used as evidence instead of the actual

tobacco product.

Double jeopardy. CSHB 255 would amend the Tax Code to remove

certain instances of possible double jeopardy concerning motor fuels tax

penalties, cigarette, cigar, and tobacco forfeiture, and penalties on

delinquent taxes or tax reports.

Effective date. The bill would take effect on September 1, 2011, and

would apply only to an offense committed on or after that date. The

provision related to broadened venues for tax cases would apply to cases

in which the indictment or information was presented to the court on or

after the bill’s effective date.

SUPPORTERS SAY:

Linking tax crimes and the Penal Code. Not all crimes are listed in the

Penal Code, but the Tax Code lists several crimes related to taxes. Often

the Penal Code and the Tax Code take different approaches to crimes and

HB 255


page 5

- 16 -

procedures even though the crimes often are similar or related. CSHB 255

would increase judicial efficiency by allowing certain crimes under the

Tax Code to be prosecuted under existing parts of the Penal Code, and by

allowing certain existing crimes in the Penal Code be prosecuted under the

Tax Code.

CSHB 255 would add tax felonies to the list of crimes that could be

prosecuted under the existing organized crime sections of the Penal Code.

The bill would amend the Tax Code to explicitly allow the crimes of

conspiracy and engaging in organized crime to be prosecuted under the

Tax Code. The bill would add the failure to pay sales taxes to the existing

statutes on money laundering in the Penal Code.

Making the connections explicit would save prosecutors and courts a great

deal of paper and procedural work. These changes are necessary in case

certain elements of a crime in the Penal or Tax Codes require an element

from the other code as a predicate to prosecution.

CSHB 255 would enhance the penalty ladder for failure to pay taxes

collected to match the penalty ladder for theft. This change would be

appropriate because not paying taxes that have already been collected on

behalf of the state is theft from the state. Existing law is clear that

collected taxes are held in trust for the state and must be remitted during

the appropriate reporting period.

CSHB 255 bill would increase judicial efficiency by directing a court to

make findings of civil tax fraud if the evidence during a criminal trial

showed that the defendant’s failure to pay a tax or file a required form

stemmed from fraud or intent to evade the tax. This would save

prosecutors and courts the trouble of holding a second trial on the same

facts in order to find a civil penalty. Since one court had already heard and

weighed evidence under a criminal proceeding, CSHB 255 would extend

those findings to cover applicable civil tax fraud findings as well.

Venue. Under current law, crimes in the Tax Code and crimes in the Penal

Code have different statutes that determine where prosecuting the crimes

would be appropriate. Most tax crimes can be prosecuted in Travis

County, but most crimes in the Penal Code must be prosecuted in the

county where they allegedly took place. CSHB 255 would streamline

these venue rules to allow prosecution where most appropriate for judicial

and prosecutorial efficiency.

HB 255


page 6

- 17 -

For example, if a criminal conspiracy was formed along I-35 to cheat on

motor fuel taxes, some of the applicable crimes in the Penal Code would

have to be prosecuted in the counties along I-35. Under current law the

motor-fuels tax issues could be prosecuted in Travis County. CSHB 255

would allow the prosecution of both the criminal and tax issues to take

place in Travis County, saving considerable judicial effort.

Alcohol and tobacco reporting rules. In 2007, the 80th Legislature

enacted HB 11 by Cook, which increased the reporting requirements for

wholesalers and distributors of alcohol and tobacco products. Under the

law they must report to the comptroller the amount of goods sold to

retailers. This allows the comptroller and other enforcement agencies to

know how much the retailers are selling to the public and how much they

should be reporting in applicable taxes.

CSHB 255 would specify the kind of records that retailers are required to

keep regarding alcohol and tobacco sales. It also would create a new crime

of failure to produce records of sales of alcohol and tobacco. The bill

would make it an offense for a retailer to purchase alcohol or tobacco from

a distributor or wholesaler and not pay taxes on the purchase under the

exemption for resale and then not produce pertinent records of the sale of

those goods to the public. Essentially, the retailer in violation promised the

state that it would collect the taxes upon ultimate sale to the consumer and

then failed to do so. CSHB 255 would be a critical step in allowing

prosecutors to keep retailers honest about the taxes they must collect and

pay.

Tax enforcement powers. CSHB 255 would make it easier for state and

federal agencies to cooperate on joint tax enforcement efforts.

CSHB 255 would allow the comptroller or the attorney general to use

confidential tax information to enforce any Texas or federal criminal law

in addition to their existing powers to enforce Texas tax laws.

CSHB 255 would allow the comptroller’s tax enforcement efforts to

become more self sustaining. The bill would allow the comptroller to

retain forfeited property from tobacco tax enforcement. The comptroller

already can receive forfeited funds that stemmed from a joint enforcement

effort with the federal government. In addition, the bill would allow the

comptroller to receive certain forfeited property from joint state and

federal efforts.

HB 255


page 7

- 18 -

The bill would clarify issues surrounding the jurisdiction of the

comptroller’s peace officers. Their jurisdiction would be limited to Texas

and to crimes under the Tax Code and Penal Code where the particular

details of a violation dealt with a tax administered by the comptroller.

Evidence in cigarette, cigar, and tobacco tax prosecutions. CSHB 255

would allow prosecutors to use photographs of tobacco products instead of

the items themselves during a prosecution where items were an element of

the underlying crime. Public policy dictates that merchandise be returned

to rightful owners by courts as soon as possible, so that it can be sold

while still fresh and marketable. This policy would encourage merchants

to cooperate with authorities because it would minimize disruption to their

business activities.

If defense attorneys objected to the use of photographs instead of the

underlying evidence itself, they still would be able to argue that the

evidence be given less weight.

OPPONENTS SAY:

The creation of new crimes and the enhancement of penalties for existing

ones would be disproportionate to the seriousness of the crimes. For

example, the range for a class C misdemeanor (maximum fine of $500) for

failure to pay taxes would be collapsed from up to $10,000 to up to $50.

These are simple property crimes and new felonies should not be created

for them. Existing law provides tax collectors and prosecutors ample

remedies to enforce tax laws, such as the seizure of business assets or the

revocation of business licenses.

NOTES: The committee substitute removed a provision in the original version of

the bill that would have allowed the comptroller to commission any

criminal investigators as peace officers.

The companion bill, SB 934 by Williams, passed the Senate by 31-0 on

March 31 and was referred to the House Ways and Means Committee on

April 11.

HOUSE RESEARCH HB 290

ORGANIZATION bill analysis 4/20/2011 Jackson, et al.

- 19 -

SUBJECT: Higher penalty for repeat offense of employment harmful to children

COMMITTEE: Criminal Jurisprudence — favorable, without amendment

VOTE: 7 ayes — Gallego, Aliseda, Burkett, Carter, Y. Davis, Rodriguez, Zedler

0 nays

2 absent — Hartnett, Christian

WITNESSES: For — (Registered, but did not testify: Rene Lara, Texas AFL-CIO; Ann

Lemis, Redeemed Ministries; Diana Martinez, TexProtects, The Texas

Association for the Protection of Children; Jason Sabo, Children at Risk;

Gary Tittle, for Dallas Police Department Chief of Police David Brown)

Against — None

BACKGROUND: Under Penal Code, sec. 43.251, a person who employs, authorizes, or

induces a person under 18 years of age to work in a sexually oriented

commercial activity, or any place of business that permits, requests, or

requires a child to work nude or topless, commits the offense of

employment harmful to children. An offense is a class A misdemeanor (up

to one year in jail and/or a maximum fine of $4,000).

―Sexually oriented commercial activity‖ is defined as a massage

establishment, nude studio, modeling studio, love parlor, or other similar

commercial enterprise the primary business of which is the offering of a

service that is intended to provide sexual stimulation or sexual

gratification to the customer.

DIGEST: HB 290 would make the repeat offense of employment harmful to children

a third-degree felony (two to 10 years in prison and an optional fine of up

to $10,000).

The bill would take effect September 1, 2011, and would apply only to

offenses committed on or after that date.

HB 290


page 2

- 20 -

SUPPORTERS SAY:

By increasing the penalty for repeatedly employing a child in a sexually

oriented commercial activity, HB 290 would encourage these employers to

determine more diligently that they did not employ minors. Unscrupulous

employers would be deterred from employing children, and other

employers would be more stringent about age verification.

HB 290 would protect children by preventing exposure to sexually

oriented employment. Children exposed to sexually explicit media content

have negatively shaped sexual values, are prematurely sexualized, are

encouraged to experiment with risky behavior, and are at a higher risk for

victimization, exploitation, and sexually transmitted diseases. The

negative effects of live, sexually explicit content are almost certainly more

severe.

A repeat offender could be involved in human trafficking and should be

stopped. In those cases, everything possible should be done to deter that

person from exploiting another child, including increasing the penalty to a

third-degree felony with many possible years of prison.

OPPONENTS SAY:

Enhancing the penalty for this offense would not be an effective deterrent.

The cost of incarcerating offenders would be an additional financial

burden on the state and would divert resources from efforts that could do

more to reduce recidivism and promote prevention.


Although HB 124 would send the right message by penalizing repeat

offenders more harshly, sending a person to prison for up to 10 years for

employing a 17-year-old girl could be too harsh a punishment. The penalty

should not be bumped from a class A misdemeanor to a third-degree

felony. The penalty should go to the next step up, the state-jail felony (180

days to two years in a state jail and an optional fine of up to $10,000).

Another option could be to provide this higher penalty only for those

repeat offenders who employed children 14 and under, which would be

consistent with other laws that enhance penalties for offenses with victims

14 and under.

NOTES: During the 2009 regular session, an identical bill, HB 124 by Jackson

passed the House, but died in the Senate Criminal Justice Committee.

HOUSE HB 417

RESEARCH Anchia, Jackson, et al.

ORGANIZATION bill analysis 4/20/2011 (CSHB 417 by S. Davis)

- 21 -

SUBJECT: Guidance on obtaining compensation for wrongful imprisonment and fees

COMMITTEE: Judiciary and Civil Jurisprudence — committee substitute recommended

VOTE: 10 ayes — Jackson, Lewis, Bohac, Castro, S. Davis, Madden, Raymond,

Scott, Thompson, Woolley

1 nay — Hartnett

WITNESSES: For — (Registered, but did not testify: Joshua Houston, Texas Impact;

Brad Parker, Texas Trial Lawyers Association)

Against — Scott Henson, Innocence Project of Texas; Kevin Glasheen

BACKGROUND: Under Civil Practice and Remedies Code, ch. 103, a person is entitled to

compensation if the person served all or part of a sentence under Texas

law, received a full pardon or was granted relief on the basis of actual

innocence, and was not serving a concurrent sentence for another crime of

which the person was not exonerated. The exorneree must file an

application within three years of the pardon or not-guilty finding.

The comptroller must state the reason for any denied claim. No later than

the 10th day after receiving the denial, the claimant must submit an

application to fix any problem identified.

DIGEST: CSHB 417 would require the Texas Department of Criminal Justice

(TDCJ) to provide each wrongfully imprisoned person with written and

oral guidance on how to obtain compensation, as well as contact

information for nonprofit advocacy groups willing to assist wrongfully

imprisoned persons in filing claims for compensation. This information

would have to be provided either at the time of release from a penal

institution or, if not applicable, as soon as was practicable after the date of

the full pardon or granting of relief.

The bill also would extend the amount of time a wrongfully imprisoned

person had to file an application to fix a problem from 10 days to 30 days

after receiving a denial of compensation from the comptroller.

HB 417


page 1

- 22 -

The bill would limit the rate a person could charge for preparing, filing, or

fixing an application for compensation to a maximum of $250 per hour.

An attorney who charged or collected more than that would be referred to

the Office of Chief Disciplinary Counsel for the State Bar of Texas. An

attorney would have to disclose this maximum rate before entering into a

fee agreement and would not be able to charge or collect a fee before the

comptroller had made a final determination that the claimant was eligible

or ineligible for compensation.

Within 14 days of filing an application, the person who aided in preparing,

filing, or fixing the application would have to file a fee report with the

comptroller that included:

if the preparer was an attorney, a sworn copy of the attorney’s fee

agreement, signed by the attorney and claimant;

the total dollar amount sought for fees;

the number of hours the person worked preparing, filing, or fixing

the application; and

a brief description of work done during those hours.

The bill would take effect on September 1, 2011, and would apply only to

an attorney’s fee agreement entered into on or after January 1, 2012.

SUPPORTERS SAY:

CSHB 417 would provide additional protections to exonerees who were

applying for compensation through the Comptroller’s Office. The bill

would ensure that exonerees were notified of their right to compensation

and provided with a list of nonprofit organizations that could assist them.

It also would provide protection against excessive legal fees charged for

purely administrative duties. The exoneree compensation claims process is

straightforward and does not justify the high legal fees that some attorneys

have sought. The application for compensation is based on a one-page

form that requests documentation available to the exonerees regarding

their conviction and incarceration. Exonerees already have been subjected

to sweeping injustices and should not be preyed upon while seeking

compensation for their suffering.

The idea of limiting fees is not new. The Texas Disciplinary Rules of

Professional Conduct addresses excessive fees in the legal profession.

Violations of these tenets can lead to disciplinary action up to disbarment.

CSHB 417 would not affect mandamus actions for exoneree

HB 417


page 2

- 23 -

compensation. The bill would focus on fees for an administrative

application that did not require hiring an attorney.

OPPONENTS SAY:

It would set a bad precedent for the Legislature to specify a maximum rate

for professional services and be inappropriate to regulate private fee

agreements. While professional rules prohibit unconscionable fees, they

are based on a determination of whether the fee is reasonable. There is no

precedent for setting a maximum hourly rate for private attorneys such as

the one contained in the bill. The fee limits in the bill could hinder the

ability of exonerees to get the best lawyers.

NOTES: The committee substitute differs from the original version of the bill by

limiting attorney fees to $250 per hour instead of directing the comptroller

to set maximum fees by rule, removing references to a mandamus action,

and referring attorneys who charge excessive fees to the State Bar instead

of stating that

the attorney would violate a professional rule prohibiting illegal or

unconscionable fees.

The companion bill, SB 749 by Ellis, was referred to the Senate State

Affairs Committee on February 23.

HOUSE HB 625

RESEARCH Solomons

ORGANIZATION bill analysis 4/20/2011 (CSHB 625 by Cook)

- 24 -

SUBJECT: Staff leasing services companies and workers’ compensation claim info

COMMITTEE: State Affairs — committee substitute recommended

VOTE: 10 ayes — Cook, Menendez, Craddick, Frullo, Gallego, Geren,

Hilderbran, Huberty, Solomons, Turner

0 nays

3 absent — Harless, Oliveira, Smithee

WITNESSES: For — (Registered, but did not testify: Ronald Cobb, American Insurance

Association; Cathy Dewitt, Texas Association of Business; Jo Betsy

Norton, Texas Mutual Insurance Co.; David Van Delinder, Independent

Insurance Agents of Texas; Joe Woods, Property Casualty Insurers

Association of America; on the committee substitute: Galt Graydon,

National Association of Professional Employer Organization)

Against — None

On — (Registered, but did not testify: Victor Alcorta, Insperity; Amy Lee,

Texas Department of Insurance, Division of Workers’ Compensation;

Nancy Moor, Texas Department of Insurance)

BACKGROUND: Insurance Code, sec. 2051.151 requires a workers’ compensation

insurance company to provide, on the written request of a policyholder, a

list of claims charged against the policy, claims payments and reserves,

and a statement explaining the effect of claims on premium rates in

writing no later than the 30th day after receiving the request. The

information is considered provided to the policyholder when received by

the U.S. Postal Service or personally delivered to the policyholder. An

insurance company failing to comply with this section commits a class D

administrative violation.

Some businesses choose to outsource their human resources functions

through staff leasing service companies, which assume duties such as

interviewing, drug screening, hiring, personnel recordkeeping, payroll,

insurance purchasing, and providing notices for clients’ employees. Under

HB 625


page 2

- 25 -

such agreements, the employees are hired, paid, and insured by the staff

leasing service company, but are employees of the client employer.

DIGEST: CSHB 625 would require a staff leasing service company that provided

workers’ compensation insurance for its clients’ employees to provide to

the client company, on written request, a list of workers’

compensation claims associated with the client company and payments

made and reserves established on each claim. The staff leasing service

company would have to provide the information in writing from its own

records if the company was a qualified self-insurer, or from information

received from its workers’ compensation insurance provider, no later than

the 60th day after receiving the client company’s written request. The

information would be considered provided to the client company

when received by the U.S. Postal Service or personally delivered to the

client company.

A staff leasing service company failing to comply would commit an

administrative violation. A staff leasing services company would not have

committed an administrative violation if it requested the information from

its workers’ compensation insurance provider and the provider did not

provide the information within the required time. However, a staff leasing

service company would have to notify the Texas Department of Insurance

of a provider’s failure to comply.

The bill would take effect September 1, 2011.

SUPPORTERS SAY:

CSHB 625 would solve a current problem involving companies that are

under contract with a staff leasing service company and are unable to

obtain their claims information from their workers’ compensation

insurance company. Companies require this information to acquire the

lowest premiums possible for their workers’ compensation insurance.

Currently, the workers’ compensation insurance carrier must respond to a

request for claims data from the staff leasing service company but not

from the company’s client, and the carrier only has to provide claims data

for all of the company’s clients, not individualized data for each single

client. It is important for companies to have all of the data when

evaluating their options of whether to continue paying for workers’

compensation insurance through the staff leasing service company or to

try obtaining a better deal by purchasing the insurance themselves.

HB 625


page 3

- 26 -

It also is important for companies to have this information in order to

obtain an accurate experience modifier, which is a rating assigned by an

insurance company to its policyholders based on how frequently and how

badly the policyholders’ employees are injured. The experience modifier

influences the cost of the policyholder’s premiums. Since the staff leasing

service company is the purchaser of the policy, the experience modifier

represents all of the company’s client employers. If a client employer has a

great safety rating but contracts with a service company whose other

clients have higher injury rates, its experience modifier will be impacted

negatively and its premiums may be higher than if the company’s modifier

was based solely on its own claims.

Under current law, a company would retain the experience modifier that

represents all of the staff leasing service company’s clients and would not

be able to demonstrate its individual claims history. CSHB 625 would

afford all companies an experience modifier based solely on their claims,

which could decrease the companies’ insurance premiums.

OPPONENTS SAY:

No apparent opposition.

NOTES: The committee substitute differs from the bill as filed by requiring staff

leasing service companies to use their own records in certain cases. The

substitute added a provision that a staff leasing services company would

not commit an administrative violation if the insurance carrier did not

provide the information within the required time and would require a

license holder to notify the Texas Department of Insurance of an insurance

carrier’s failure to comply.

HOUSE HB 627

RESEARCH Woolley

ORGANIZATION bill analysis 4/20/2011 (CSHB 627 by Madden)

- 27 -

SUBJECT: Fee collected by a district clerk for certain certified copies

COMMITTEE: Judiciary and Civil Jurisprudence — committee substitute recommended

VOTE: 10 ayes — Jackson, Lewis, Bohac, S. Davis, Hartnett, Madden, Raymond,

Scott, Thompson, Woolley

0 nays

1 absent — Castro

WITNESSES: (On original bill:)

For — Chris Daniel, Farrah Martinez, Harris County District Clerk;

(Registered, but did not testify: Cindy Bloodsworth, Texas Conference of

Urban Counties; Pat Haggerty, Center Point Energy)

Against — Keith Elkins, Freedom of Information Foundation of Texas;

Randy Kildow, Texas Association of Licensed Investigators; Larry

Molinare, Texas Land Title Association; (Registered, but did not testify:

Michael Schneider, Texas Association of Broadcasters; Ken Whalen,

Texas Daily Newspaper Association, Texas Press Association)

BACKGROUND: Title 2 of the Government Code governs the judicial branch of government

in Texas. In two separate subtitles that apply to judicial personnel and to

court fees and costs, respectively, specific fees are listed for services

district clerks provide to the public. Secs. 51.318(b)(7) and 101.0611(14)

require district clerks to collect $1 for each page of a certified copy of a

court record, judgment, or other document filed or recorded with the

office.

DIGEST: CSHB 627 would limit the cost for certified copies of documents filed or

recorded in the district clerk’s office to no more than $1 per page.



effect September 1, 2011. It would apply to requests for certified copies

made on or after the effective date.

HB 627


page 2

- 28 -

SUPPORTERS SAY:

CSHB 627 would reduce costs for taxpayers and make it more convenient

to obtain certified court records. By limiting the fee to no more than $1 per

page of each certified copy, district clerks would have the discretion to

make changes to staff, printing, and other associated costs to lower the fee

to below $1 per page. They could then set fees that were more appropriate

for the cost of producing certified copies, such as for electronic copies,

and would have the flexibility to make decisions that suited the needs of

their offices. These savings would be passed on to taxpayers by allowing

clerks to make more efficient use of the tax money that funds the offices.

District clerks’ offices could choose to redirect consumers to their

websites to obtain copies of court records. As a result, consumers no

longer would have to spend additional resources, such as for gas and

parking, to travel to physical offices. The bill ultimately would increase

convenience for the consumer and reduce costs for clerks’ offices.

District clerks also could set rates more appropriate for organizations with

established financial need, such as certain non-profits.

The committee substitute addressed several of the initial concerns about

the original version of the bill and still would accomplish its original intent

by focusing on limiting the fee charged for certified copies to the fee

established in current law. The bill would not affect the cost of

noncertified copies.

OPPONENTS SAY:

Although the bill ultimately could reduce costs for producing certified

copies of court records, it could increase costs to district clerks' offices

initially if they were to spend money and time for staff and other personnel

to create the infrastructure to access documents electronically. The bill

also would not ensure that district clerks across the state could or would

implement changes that reduced costs and fees associated with certified

copies.

NOTES: The committee substitute differs from the original version of the bill by

changing the language in the current law on the cost of certified copies

from $1 to a cost not to exceed $1. The original bill addressed electronic

certified copies specifically.

HB 627


page 3

- 29 -

The companion bill, SB 680 by Gallegos, passed the Senate by 30-1 on the

Local and Uncontested Calendar on April 7 and was referred to the House

Judiciary & Civil Jurisprudence Committee on April 11.


ORGANIZATION bill analysis 4/20/2011 Laubenberg

- 30 -

SUBJECT: Validation of actions by municipalities with 500 people or fewer

COMMITTEE: Urban Affairs — favorable without amendment

VOTE: 7 ayes — Dutton, Alvarado, Callegari, Mallory Caraway, Parker, Paxton,

Simpson

0 nays

2 absent — Gutierrez, P. King

WITNESSES: For — (Registered, but did not testify: Timothy Green, World Land

Developers)

Against — None

BACKGROUND: The Legislature periodically enacts legislation retroactively validating

certain municipal actions, such as annexations and incorporations, that

may have violated procedural requirements. The Legislature also has

enacted bills to validate acts related to public improvement districts (PID).

The Public Improvement District Assessment Act, established by Local

Government Code, ch. 372, authorizes cities and counties to create PIDs to

undertake and fund targeted infrastructure improvement projects. Cities

and counties are authorized to levy and collect special assessments on

properties that are within the city or its extraterritorial jurisdiction.

Additional financing options are available to certain large counties.

PIDs may be created to address a variety of issues, including development

of affordable housing; water, wastewater, health and sanitation, or

drainage improvements; street and sidewalk improvements; mass transit

improvements; landscaping and other aesthetic improvements; art

installation; creation of pedestrian malls; supplemental safety services;

supplemental business-related services; and advertising and business

recruitment and development.

DIGEST: HB 707 would validate all governmental acts and proceedings of a

municipality taken before the bill’s effective date to establish a PID,

designate improvements, levy assessments, or finance costs of

HB 707


page 2

- 31 -

improvements. The bill would apply only to a municipality with a

population of 500 people or fewer according to the 2000 federal census.

The bill would not validate an act or proceeding that:

was the subject of pending litigation on the effective date; or

was a misdemeanor or felony under Texas law at the time that it

occurred.




SUPPORTERS SAY:

HB 707 is needed to validate the prior actions of the city of Lavon, which

established Heritage Public Improvement District No. 1 to serve the Grand

Heritage development. Despite the benefits of PIDs and their successes in

the communities they serve, there are technical issues with the PID

statutes that are not clear and hinder cities that want to use PIDs to fulfill

their economic development objectives, especially with relation to issuing

bonds. Validation bills not unusual and sometimes are needed to ensure

that small municipalities doe not run afoul of technical or procedural

requirements.

Grant Heritage is a master-planned community in Lavon, which is in

Collin County about 30 miles northeast of downtown Dallas.

Approximately 490 homes have been built to date. The community offers

extensive amenities, including an elementary school. Without the

improvement projects provided through the PID, the development would

not have been feasible.

While the general statute authorizing PIDs could be made clearer, HB 707

would allow the city of Lavon to go forward and issue bonds secured by

the PID assessments.

OPPONENTS SAY:

No apparent opposition.


ORGANIZATION bill analysis 4/20/2011 Y. Davis

- 32 -

SUBJECT: Property appraisals for property purchased with bond proceeds

COMMITTEE: Urban Affairs — favorable, without amendment

VOTE: 7 ayes — Dutton, Alvarado, Callegari, Mallory Caraway, Parker, Paxton,

Simpson

0 nays


WITNESSES: None

BACKGROUND: Under Government Code, ch. 505, a municipality may authorize a Type B

corporation to carry out public-purpose projects, usually taking the form

of an economic development corporation.

Government Code, ch. 1331, and Local Government Code, ch. 505,

authorize a municipality and a Type B corporation to issue bonds and use

the proceeds to purchase property.

A municipality or Type B corporation is not required to obtain an

independent appraisal to determine the property’s market value before

purchasing property with bond proceeds.

DIGEST: HB 782 would prohibit a municipality or Type B corporation from using

bond proceeds to purchase property until an independent appraisal of the

property’s market value was performed.

The bill would take effect September 1, 2011, and apply to bonds issued

on or after the effective date.

SUPPORTERS SAY:

HB 782 would ensure that a municipality or Type B corporation was

paying the market value for a property and no more. This would ensure

that municipalities and economic development corporations were held

accountable when spending public funds.

HB 782


page 1

- 33 -

Although some cities in Texas are seeking appraisals before property

acquisitions, many economic development corporations are not. HB 782

would ensure a uniform practice for all municipalities and Type B

corporations.

OPPONENTS SAY:

HB 782 would remove flexibility from municipalities to make the best

decision for their communities. Municipalities and Type B corporations

already are seeking appraisals before acquiring property when necessary.

However, small acquisitions of property such as easements and rights of

way often do not need an appraisal, and HB 782 would take away the

flexibility to decide this. Requiring appraisals in all property acquisitions

would be inefficient and could cost taxpayers more money.

It is not efficient to require an appraisal before a municipality issues

bonds. If the bond measure is not approved, the municipality has wasted

money on the appraisal.

NOTES: A floor amendment is expected to address the issue raised regarding the

potentially wasted cost of the appraisal if the bonds were not approved.


ORGANIZATION bill analysis 4/20/2011 P. King

- 34 -

SUBJECT: Allowing county fire marshals and inspectors to request wiretaps

COMMITTEE: Homeland Security and Public Safety — favorable, without amendment

VOTE: 8 ayes — S. Miller, Fletcher, Beck, Burnam, Driver, Flynn, Peña, Walle

0 nays

1 absent — Mallory Caraway

WITNESSES: For — (Registered, but did not testify: Mark Clark, Houston Police

Officers’ Union; Shanna Igo, Texas Municipal League)

Against — None

BACKGROUND: In 1989, the 71st Legislature enacted HB 241 by T. Smith, which

authorized the use of tracing and tracking devices to intercept electronic

communications. It listed city, county, and state law enforcement officers

authorized to request warrants to conduct wiretaps and electronic

surveillance. In 2009, the 81st Legislature enacted HB 3201 by P. King,

which added fire marshals, inspectors, and inspectors to the list of those

considered peace officers in Texas.

DIGEST: HB 812 would amend, Code of Criminal Procedure, art. 18.21, to include

county fire marshals, inspectors, and investigators to the list of peace

officers authorized to request wiretaps and other electronic surveillance.

The bill would take effect on September 1, 2011.

SUPPORTERS SAY:

HB 812 would correct an oversight in legislation enacted last session that

was intended to provide protection from liability for county fire marshals

and other inspectors conducting arson investigations. Fire marshals

already are peace officers subject to the same Texas Commission on Law

Enforcement Officers Standards and Education training and certification

as other law enforcement officers in the state. Sometimes fire marshals

need certain investigational tools to conduct their duties. They should have

the discretion to seek authorization for such tools independently. HB 812

HB 812


page 2

- 35 -

would help eliminate duplication and confusion caused by bringing in

additional law enforcement agencies for this purpose.

Investigations of this type would be rare and would be subject to the same

safeguards applying to wiretaps and electronic surveillance conducted by

other law enforcement agencies.

OPPONENTS SAY:

HB 812 is unnecessary and would expand authority for wiretaps to

individuals that are not as well suited or trained in relevant constitutional

and civil liberties issues as other peace officers. Currently, any fire

marshal who needs to conduct such an investigation can simply request

either the local police department or sheriff's office to work with them, or

ask the Department of Public Safety to handle the wiretap in a joint

operation.


ORGANIZATION bill analysis 4/20/2011 Geren

- 36 -

SUBJECT: Prohibiting bars to registration for nonpayment of red light camera fines

COMMITTEE: Transportation — favorable, without amendment

VOTE: 9 ayes — Phillips, Darby, Y. Davis, Fletcher, Harper-Brown, Lavender,

Martinez, McClendon, Rodriguez

1 nay — Pickett

1 absent — Bonnen

WITNESSES: For — Katelyn Kubosh; Luke Kubosh; Michael Kubosh; Paul Kubosh

Against — Suzanne deLeon, City of Balcones Heights; David Morgan,

City of Richardson; Jerry Vesely, City of Corpus Christi Police

Department (Registered, but did not testify: Amy Buckert and Frank

Garza, City of Balcones Heights; Brian Gruetzner, Austin Police

Department)

On — (Registered, but did not testify: Randy Elliston, Texas Department

of Motor Vehicles)

BACKGROUND: The 80th Legislature in 2007 enacted SB 1119, which established

procedures for local entities opting to use red-light cameras to cite owners

of vehicles illegally running red lights. The bill allowed the governing

body of an entity authorized to enact traffic laws to implement, by

ordinance, a red-light camera system to issue a civil penalty to the owner

of a vehicle that runs a red light. The bill capped civil penalties at $75 and

late fees at $25. Net proceeds were required to be split between the state

and local entity for health and safety programs.

Under the bill, a civil penalty may not be considered a conviction, and a

local entity may not forward information on a civil penalty to a credit

bureau. Failure to pay the penalty may not result in an arrest warrant, nor

may it be noted on the owner’s driving record. It may, however, result in

TxDOT or a county assessor-collector refusing to register the vehicle.

DIGEST: HB 887 would prohibit a county assessor-collector and the Texas

Department of Transportation from refusing to register a motor vehicle

HB 887


page 2

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belonging to a person who was delinquent in paying a civil penalty

assessed as a result of a red-light camera system.


SUPPORTERS SAY:

HB 887 would correct unfair practices stemming from the use of red light

cameras by prohibiting counties and the state from barring vehicle

registration for Texans who were delinquent on payments for infractions

detected by red-light cameras.

Red light cameras are required only to record the license plate of the motor

vehicle responsible for the violation, and the resulting tickets are not

issued to the driver, but rather to the vehicle owner. As a result, many

vehicle owners end up being responsible for a civil penalty for a violation

they did not commit. This injustice is compounded by current practices

that allow a government entity to bar registration for the owner of a

vehicle who is delinquent in paying for an infraction detected by a red-

light camera. As there is no legal means by which the driver, as opposed to

the owner, can be held accountable for paying related civil penalties,

vehicle owners may effectively be forced to pay a penalty they do not owe

in order to register their vehicles.

Vehicle owners further may not be aware they have been issued a ticket.

Many Texans do not receive notice that they have been cited for a red light

violation. These unsuspecting residents are dealt a major disappointment

upon learning, when they attempt to register their vehicles, that their

registration has been barred. The cost of registering a vehicle, inflated by

civil penalties and late fees from these red light infractions, may prevent

many Texans from being able to afford to register their vehicles. This may

result in an increase of unregistered vehicles on the road and a revenue

impact to the state. A worse predicament faces those vehicle owners who

wish to sell their vehicles, only to find that their registration has been

barred.

HB 887 would not preclude a local government from taking measures to

collect unpaid civil penalties through sufficient legal remedies available

under current statutes. A local government, for instance, could file suit

against a vehicle owner to collect the unpaid penalties. The option to bar

registration is not necessary for effective enforcement of red light camera

laws. The bill would have no effect on other penalties, civil or criminal,

HB 887


page 3

- 38 -

assessed for any infraction other than those imposed by a red light camera

system.

Many of the concerns about not barring registration ultimately stem from

concerns that it could impact revenue for local governments. Some local

governments use these enforcement systems as a source of revenue to

augment their budgets. Red light camera systems, however, should be

exclusively established to enhance public safety. The Legislature has

affirmed that revenue generation is not a valid use for red light cameras, as

it encourages abuse of these systems.

OPPONENTS SAY:

HB 887 would severely impair local governments’ ability to collect

penalties assessed for violations detected by red light cameras. The 80th

Legislature in 2009 established that such infractions could be imposed

only as civil penalties. This removed many avenues for local governments

to pursue penalties stemming from criminal infractions, such as by

pursuing an arrest warrant and recording a violation in a vehicle owner’s

driving record. As filing suit is far too costly and burdensome in most

cases, the only viable means of pursuing these fines under current law is to

bar owners from registering their vehicles.

Removing the option to bar registration could significantly diminish the

safety benefits of red light camera systems. Many studies have confirmed

the benefits of red light cameras to public safety, and many Texas cities

and towns have seen accident rates fall at dangerous intersections fitted

with red light cameras. Without a viable means of enforcing the penalty

those systems assess, the effectiveness of these systems likely would be

compromised. If HB 887 were enacted, many drivers would quickly learn

that they faced no real penalty from flouting automated red light systems.

Many drivers likely would revert to the dangerous behaviors that gave rise

to these cameras in the first instance.

Prohibiting local governments from barring vehicle registration for

nonpayment of red light penalties likely would have a negative fiscal

impact. Many cities already are grappling with mediocre payment rates for

red light infractions. If enacted, HB 887 could cause payment rates to

plummet. Cities that have invested payments into transportation safety

programs — Corpus Christi, for instance, has used revenue from red light

HB 887


page 4

- 39 -

infractions to fund crossing guards at school intersections — would be

hard pressed to find alternative sources of funds, given current budget

conditions.


ORGANIZATION bill analysis 4/20/2011 Marquez

- 40 -

SUBJECT: State fire marshal’s investigation of firefighter deaths


VOTE: 6 ayes — Dutton, Alvarado, Mallory Caraway, Parker, Paxton, Simpson

0 nays

1 present not voting — Callegari


WITNESSES: For — Jerry Gardner, Texas Fire Chiefs Association, City of Killeen;

Scott Kerwood, Hutto Fire Rescue, Texas Fire Chiefs Association;

(Registered, but did not testify: Chris Barron, State Firemen’s and Fire

Marshals’ Association; Chris Connealy, Texas Fire Chiefs Association;

Glenn Deshields, Mike Higgins, Texas State Association of Fire Fighters;

Scott Houston, Texas Municipal League; Johnny Villarreal, Houston Fire

Fighters Local 341)

Against — None

On — Ed Salazar, State Fire Marshal-Texas Department of Insurance

BACKGROUND: In 2001, the 77th Legislature enacted HB 1450 by Tillery, which required

the state fire marshal to investigate the death of any firefighter killed in the

line of duty. The report must investigate the cause and origin of the fire,

the conditions of the structure, and the suppression operation.

DIGEST: HB 956 would require the state fire marshal to investigate the death of a

firefighter that occurred in the line of duty or while on duty. It would

delete references to deaths that occurred during firefighting, and would

require the fire marshal to consider any factor that may have contributed to

the firefighter’s death, rather than just the cause and origin, conditions of

the structure, and suppression operation.




HB 956


page 2

- 41 -

SUPPORTERS SAY:

HB 956 would grant the state fire marshal authority to investigate all on-

duty fatalities involving firefighters, including training accidents. Deaths

during such activities are not common. According to the U.S. Fire

Administration, training accidents accounted for about 6 percent of

firefighter deaths during the last decade. However, the January 2009

deaths of two Kilgore firefighters and injuries to three more demonstrate

the dangerous nature of the profession even during drills. The fire marshal

should be allowed to investigate such accidents to improve firefighter

safety and develop best practices for the profession.

Additional investigation by the fire marshal would not change much about

how litigation is handled in firefighting training fatalities. The goal of the

fire marshal reports would not be to assign liability in a legal action. That

determination would remain for the courts.

OPPONENTS SAY:

Information found during official investigations into fatal accidents is

routinely used as part of the legal process. The same would probably be

the case with fire marshal reports.

NOTES: The companion bill, SB 396 by Deuell, passed the Senate by 31-0 on the

Local and Uncontested Calendar on March 17. The House Urban Affairs

Committee has scheduled a public hearing on SB 396 for today.

HOUSE HB 1052

RESEARCH Patrick

ORGANIZATION bill analysis 4/20/2011 (CSHB 1052 by Eissler)

- 42 -

SUBJECT: Disclosure of background checks by online dating service providers

COMMITTEE: Technology — committee substitute recommended

VOTE: 4 ayes — Peña, Eissler, D. Howard, Muñoz

0 nays

1 absent — Button

WITNESSES: None

DIGEST: CSHB 1052 would amend the Business and Commerce Code to add chapter

106, which would be known as the Internet Dating Safety Act.

The bill would require an online dating service provider to disclose to all

Texas members whether it did or did not conduct criminal background

checks before permitting a Texas member to communicate through it with

another member. The disclosure would have to be in bold, capital letters in

at least 12-point type on the provider’s website.

If performed, the criminal background check would have to include a name

search for felony convictions, sex offenses, and offenses related to family

violence.

A provider who conducted criminal background checks would have to state

the number of years of criminal history that were included in the

background check and a statement on its website that:

criminal background checks were not foolproof, could give members

a false sense of security, and were not a perfect safety solution;

criminals could circumvent even the most sophisticated search

technology;

not all criminal records were public in all states and not all databases

up to date;

only publicly available convictions were included in the criminal

background check; and

HB 1052


page 2

- 43 -

the criminal background check did not cover other types of

convictions other than those specified above, nor did it cover

convictions from foreign countries.

An online dating service provider that offered services in Texas also would

have to provide a safety awareness notification on its website that included

a list and description of safety measures designed to increase awareness of

safer online dating practices.

An online dating service provider in violation would be liable for a civil

penalty not to exceed $250 for each Texas member registered with the

online dating service provider during the time of violation. The attorney

general could seek an injunction to prevent or restrain a violation, bring suit

to recover civil penalties, and recover reasonable expenses incurred in

doing so.

CSHB 1052 would not create a private right of action.


SUPPORTERS SAY:

CSHB 1052 is a consumer transparency and protection measure that

would empower consumers with information about online dating websites.

Approximately 20 million Americans use online dating website services.

Out of 1,500 Internet dating sites, only one major site requires criminal

background searches of its members. There have been numerous reports of

sex offenders and violent criminals using these sites to locate their victims.

CSHB 1052 would give consumers a measure of transparency when they

choose an Internet dating website.

CSHB 1052 would not require an Internet dating site to perform a criminal

background check, but simply would require a website to disclose whether

it did or did not conduct background checks. The bill would provide

further transparency for Texans by requiring an Internet dating site to

disclose the number of years included in the criminal background check.

Similar measures have already been enacted to increase transparency for

consumers in other states.

OPPONENTS SAY:

Stating that an online dating service provider performs background checks

could create a false sense of security and lead to a larger number of

dangerous interactions.

HB 1052


page 3

- 44 -

Name-based background checks can be highly inaccurate and result in

false negative results that could mislead dating website members. State

and county databases often are incomplete or out of date, and many

counties do not report criminal records to a central database that is

publicly accessible for searches.

A lack of a criminal record does not make a person safe. A person who

was arrested on a felony charge but had that charge pleaded down to a

misdemeanor would not be prohibited from using a dating website. Also, a

person could register on the dating website under a false name to evade a

background check.

CSHB 1052 would place an undue burden on Internet communications.

Once convicted felons are released from prison, they are free to socialize

in other venues such as bars and at public events. Their ability to use an

online dating website service should be no different. Users of Internet

dating websites already are able to have background searches on others

performed.

NOTES: The committee substitute added a provision not in the original version of

the bill that would require a statement regarding the number of years

included in a member’s criminal background check. The substitute also

added a provision specifying that its provisions would not create a private

right of action.

The companion bill, SB 488 by Van de Putte, passed the Senate by 31-0

on the Local and Uncontested Calendar on March 24 and was reported

favorably, without amendment, by the House Technology Committee on

April 7, making it eligible to be considered in lieu of HB 1052.

HOUSE HB 1061

RESEARCH Otto

ORGANIZATION bill analysis 4/20/2011 (CSHB 1061 by Legler)

- 45 -

SUBJECT: Continuing certain investment authority for TRS

COMMITTEE: Pensions, Investments, and Financial Services — committee substitute

recommended

VOTE: 9 ayes — Truitt, Anchia, C. Anderson, Creighton, Hernandez Luna,

Legler, Nash, Orr, Veasey

0 nays

WITNESSES: For — Tim Lee, Texas Retired Teachers Association

Against — None

On — Ronnie Jung, Teacher Retirement System; Ted Melina Raab, Texas

American Federation of Teachers

BACKGROUND: Government Code, sec. 825.301 authorizes the board of trustees of the

Teacher Retirement System (TRS) to buy and sell futures contracts,

options, options on futures contracts, forward contracts, and swap

contracts, including swap contracts with embedded options to manage and

reduce the risk of the overall investment portfolio.

The board of trustees is permitted to contract with one or more private

professional investment managers for investment and management of no

more than 30 percent of the retirement system’s total assets.

The investment and contracting authority will expire on September 1,

2012.

DIGEST: CSHB 1061 would continue the investment and contracting authority

afforded to the Teacher Retirement System in sec. 825.301, Government

Code, until September 1, 2019.




HB 1061


page 2

- 46 -

SUPPORTERS SAY:

CSHB 1061 would continue to allow TRS to buy and sell any investment

instrument commonly used by institutional investors to manage

institutional investment portfolios. The ability to diversify investments

minimizes the portfolio’s exposure to risk and helps insulate the retirement

fund from market downturns. The investment authority already has

shielded the fund from additional loss due to the recent market downturn.

TRS is known as the best-performing pension of its kind.

The continued ability to contract with investment managers would permit

the fund to continue to evaluate new opportunities. Fund managers are

able to exercise due diligence on behalf of the fund by investigating

opportunities outside of the United States because they are able to travel,

whereas board members usually cannot investigate these options.

The bill would extend the authority of TRS to perform these functions for

seven years, which would permit the Legislature to continue to monitor

the use of these tools.

OPPONENTS SAY:

CSHB 1061 should include a provision to require TRS to report annually

to the Legislature on its use of this authority.

It is not necessary to extend the expiration date. Since TRS undergoes the

Sunset process every 12 years, these provisions would be included in the

Sunset Advisory Commission’s examination of the agency,

NOTES: The committee substitute added an expiration date for the investment and

contracting authority. The original version of the bill would have

eliminated the expiration date.

The companion bill, SB 1665 by Duncan was referred to the Senate State

Affairs Committee on March 23.


ORGANIZATION bill analysis 4/20/2011 Martinez Fischer, et al.

- 47 -

SUBJECT: Allowing a county or municipality to require the removal of graffiti


VOTE: 5 ayes — Dutton, Alvarado, Gutierrez, Mallory Caraway, Simpson

0 nays

4 absent — Callegari, P. King, Parker, Paxton

WITNESSES: For — David Garza, City of San Antonio; Scott Houston, Texas

Municipal League; (Registered, but did not testify: Julie Acevedo, City of

Baytown; Larry Casto, City of Dallas; T.J. Patterson, City of Fort Worth;

Frank Sturzl, City of Arlington, Texas)

Against — None

BACKGROUND: Local Government Code, sec. 250.006 stipulates that a city or county may

require a property owner to remove graffiti from the owner’s property.

The city or county may not notify the property owner of a requirement to

remove the graffiti unless the city or county has offered to remove the

graffiti from the property free of charge and the property owner has

refused the offer.

If a property owner fails to remove the graffiti on or before 15 days after

receiving a notice for removal, a county or municipality may charge the

property owner for the removal expenses.

DIGEST: HB 1089 would remove the requirement that a county or municipality

giving notice to a property owner requiring the removal of graffiti have

offered to remove the graffiti free of charge and the property owner have

refused the offer. A county or municipality still would be authorized to

enact an order or ordinance with these requirements.


SUPPORTERS SAY:

HB 1089 would make a simple but significant change to current law on

the way that many cities combat graffiti. Current law requires that before a

city or county may require a property owner to remove graffiti from their

HB 1089


page 2

- 48 -

property, the city or county must first offer to pay for the removal and the

owner must decline the offer, which they never do. This has created a huge

unfunded mandate for the governmental entities. Graffiti abatement in the

United States is estimated to cost $12 billion annually in taxpayer money.

In fiscal year 2008-2009 alone, Fort Worth spent $500,000 on graffiti

abatement. Houston spent almost $600,000 during the same time period.

These numbers account only for the direct efforts of these cities to abate

graffiti. It does not include the cost to other political subdivisions of the

state. It needs to be a shared responsibility.

Graffiti is the type of crime that eats away at neighborhoods, lowering

property values and creating a false sense of insecurity. Graffiti laws also

are difficult to enforce. Graffiti no longer is merely an urban problem and

has expanded to include suburban and rural areas. It contributes to lost

revenue from reduced ridership on transit systems, reduced retail sales,

and declines in property value. It also generates the perception of blight

and heightens fear of gang activity.

Stopping and reducing graffiti requires abatement, enforcement, and

appropriate punishment. HB 1089 would allow cities to get back to the job

of abatement. It would allow a city or county to offer to clean up the

graffiti free of charge, but it would not require them to do so.

Before 2009, when the law was amended, these governmental entities had

authority to require a property owner to remove graffiti from their

property, similar to other nuisance ordinances like requiring high grass to

be mowed and trash to be removed. Larger home-rule cities such as

Houston, Dallas, San Antonio, and Corpus Christi had ordinances that

helped relieve the burden on property owners who could not afford to

remove graffiti through abatement grants. Some property owners neglect

their property, and cities and counties need authority to require that graffiti

be removed. Larger cities still would be able to offer assistance to

property owners who needed help with the removal to mitigate the cost.

Even smaller cities that have limited grant funding still might be in a

position to provide free removal, but in these times of tight budgets, the

bill would provide some flexibility in dealing with graffiti removal.

OPPONENTS SAY:

HB 1089 could be a burden on some property owners. The duty of cities

and counties to ensure the swift removal of graffiti should be retained.

Immediate removal is the key to successful graffiti prevention. If

HB 1089


page 3

- 49 -

a property owner declined the offer of free removal of the graffiti, then the

city still would be able to require them to do it.


ORGANIZATION bill analysis 4/20/2011 Phillips

- 50 -

SUBJECT: Modifying powers of regional mobility authorities

COMMITTEE: Transportation — favorable, without amendment

VOTE: 11 ayes — Phillips, Darby, Bonnen, Y. Davis, Fletcher, Harper-Brown,

Lavender, Martinez, McClendon, Pickett, Rodriguez

0 nays

WITNESSES: For — Brian Cassidy, Alamo RMA, Central Texas RMA, Camino Real

RMA, Cameron County RMA, Grayson County RMA, North East Texas

RMA (Registered, but did not testify: Victor Boyer, San Antonio Mobility

Coalition; Mike Heiligenstein, Central Texas RMA)

Against — Melissa Cubria, Texas Public Interest Research Group; Terri

Hall, Texas TURF, Texans for Accountable Government; Don Dixon;

Paul Westmoreland

On — John Barton, Texas Department of Transportation

BACKGROUND: Transportation Code, ch. 370 allows the Texas Transportation

Commission to create a Regional Mobility Authority (RMA) at the request

of one or more counties. The chapter establishes and assigns RMAs

powers related to constructing, maintaining, and operating regional

transportation projects. It also provides guidelines for assessing the

feasibility of a transportation project and outlines financing options

available to RMAs.

Current law also states that if an RMA determines that it has surplus

revenue from transportation projects, it must reduce tolls and spend the

surplus revenue on other transportation projects in the counties the RMA

serves or deposit the surplus revenue to the credit of the Texas Mobility

Fund.

DIGEST: HB 1112 would modify a number of provisions governing RMAs,

including definitions of key terms, assessment and collection of toll fees,

operations of RMA boards, intergovernmental agreements, and other

provisions.

HB 1112


page 2

- 51 -

Definitions. The bill would modify the definition of ―surplus revenue‖ to

include revenue that exceeded an RMA’s payment obligations under a

contract or agreement for constructing, maintaining, and operating a

transportation project. It would add to the definition of ―transportation

project‖ a parking area, parking structure, parking fee collection device, or

improvement in a transportation reinvestment zone.

The bill also would amend the definition of construction costs to include

an RMA’s payment obligations under a contract to construct, maintain,

operate, or finance a transportation project.

Toll fees and revenue. The bill would add factors that an RMA may

consider when setting tolls and any other payment obligations under a

contract or agreement for constructing, maintaining, and operating

transportation projects. RMAs would have the same toll collection and

enforcement powers for their projects as current law grants to Texas

Department of Transportation (TxDOT), regional tollway authorities and

other tolling entities.

An RMA could pay debt service on bonds with proceeds from the sale of

other bonds. An RMA could use existing revolving funds to issue bonds.

The bill would add language stating that an RMA could pledge all or part

of its revenues and other funds available to paying obligations for

transportation projects.

RMA board. The bill would authorize the board of an RMA to borrow

money from or sign a loan agreement with TxDOT, the Texas

Transportation Commission, or any other public or private entity. The

board of an RMA could participate in the state travel management

program administered by the comptroller to purchase reduced airline fares

and travel agent fees, provided the comptroller could recover costs by

assessing a fee for the services.

The bill would allow the commissioners court of a county that is

subsequently added to an RMA to appoint more than one director to an

RMA board, provided that the commissioners courts of the other counties

in the RMA agreed unanimously to the appointments.

Agreements. The bill would specify that an RMA entering into an

agreement with a government entity could approve the terms and

conditions of such an agreement, including payment obligations of each

HB 1112


page 3

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party. A local government entity could agree with an RMA to create a

transportation reinvestment zone and collect and transfer to an RMA any

taxes or fees collected for developing a transportation project. The bill

would delete a requirement that a local government wishing to enter an

agreement with an RMA receive approval from TxDOT.

Other provisions. Statutes allowing RMAs to pay for feasibility studies

would be amended to include in the studies costs for the design and

engineering of a transportation project. RMAs could pay for a study

through a pledge of bonds or a loan with the proceeds or sale of additional

bonds. Money spent for a proposed transportation project for a feasibility

study would have to be returned to the transportation project from which

the money was spent unless the project was part of a formally designated

transportation system under current law.




SUPPORTERS SAY:

HB 1112 would clarify statutory language that governs RMAs to address

some legal obstacles that have arisen in recent years. The bill would make

small statutory changes to expand and refine financing practices available

to RMAs, add some minor powers for RMA boards, and grant greater

flexibility in other areas of operation.

There was only one RMA in 2003, the Central Texas RMA, when the

Legislature expanded RMA powers to grant more flexibility in generating

revenue, such as with bonds, and to partner with TxDOT and other public

and private entities to help address a growing mobility crisis. There are

now eight RMAs in the state, each working with local entities such as

counties, cities, and metropolitan planning organizations in their regions to

address pressing transportation needs. Since RMAs are established and

operated regionally, they are well equipped to focus on local transportation

needs. TxDOT, on the other hand, must attend to statewide mobility

problems with limited resources.

Most concerns about HB 1112 stem largely from a misunderstanding of

what powers the bill would grant and a general distaste for toll roads and

any entity involved in building and operating a toll project. Claims that the

bill would allow ―system financing‖ and would in effect authorize

perpetual tolls are misplaced. First, RMAs already are allowed to engage

HB 1112


page 4

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in system financing — in short, rolling revenue and debt associated with

one transportation project into an agreement to develop another project in

a different corridor — and this flexibility is key to obtaining beneficial

financing arrangements for new projects.

Second, it is impossible to tell whether a road will need to sustain tolls 30

or more years in the future when the bond financing is satisfied for the

project. If conditions permit, tolls on these projects may be dissolved if

HB 1112 is enacted. But if financing is needed to sustain the safety and

condition of the road, they could be continued. Predicting 30 years ahead

is impossible, and for this reason RMAs need the flexibility to adapt

tolling practices to meet changing mobility challenges.

Concerns about financial provisions that would allow bond proceeds to be

used to satisfy debt service on other bond proceeds are also exaggerated.

Financing transportation projects is a very complicated enterprise. Some

financing arrangements mix short-term and long-term financing options to

meet different funding needs for different stages of development. Granting

more flexibility in financing arrangements would allow RMAs to engineer

financing arrangements to obtain the most advantageous packages.

The bill would allow RMAs to use toll enforcement authority available to

other tolling entities in the state to promote best practices in collection

policies and would include parking lots, structures, and parking fee

collection devices on the list of projects RMAs could construct. This

would allow RMAs to fund a transportation project that supports mobility

but is not an actual highway improvement, such as an airport parking lot.

The provision that would allow RMA board members to participate in the

state travel program would extend a benefit already afforded to local

governments at no fiscal impact to the state.

OPPONENTS SAY:

HB 1112 would expand already unjustified powers afforded to RMAs

under current law. RMAs are not accountable to the public, since their

boards may not include elected officials. Board officials are appointed by

county commissioners courts, and board chairs are appointed by the

governor, distancing these officials from voters enough to make them

unaccountable to residents in the communities they serve. Many RMAs

have fallen far short of expectations for improving mobility, and others

have lost favor with the public they were established to serve — any

measure to enhance their authority would perpetuate the abundant

problems they pose.

HB 1112


page 5

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HB 1112 would expand powers available to the state’s eight RMAs and

move in the direction of creating micro-versions of TxDOT with even less

transparency and accountability than that department has exhibited in

recent years. In particular, the bill would change definitions of ―surplus

revenue‖ and would broaden the factors used to set toll rates so that RMAs

would be able to establish, in effect, perpetual tolls on roads they control.

The bill also would expand ―system financing,‖ which would allow

revenue from one highway corridor to be dedicated to financing another. If

HB 1112 is enacted, these provisions would promote expanding networks

of toll roads that likely would never revert to public, nontolled roads. The

bill would also allow RMAs to use additional methods for toll collection

that have proven highly problematic elsewhere in the state.

The bill would allow RMAs to adopt irresponsible spending practices,

such as securing borrowed money with a payment from borrowed funds.

This practice is reminiscent of the financial ―smoke and mirrors‖ that

wrought devastation in the financial sector and beyond in 2008. The bill

also would remove from TxDOT oversight over approving agreements

between local entities and RMAs, shaving off one of the few checks on

RMA authority on the state level. RMAs would be given some authority

that not even TxDOT possesses, such as the ability to collect fees on

parking meters. Since there is no clear reason why RMA board members

need to travel extensively through discounted rates, the travel program

provided by the state should not be available to unelected officials.

Provisions to allow RMAs to participate in transportation reinvestment

zones, which could have expanded uses if legislation already passed by the

House (HB 563) is enacted, would expand the troubling practice of using

property taxes to fund transportation projects. Reinvestment zones are a

questionable use of property taxes —problematic and antiquated in

themselves — and could create an incentive to increase appraisals of

property and divert this revenue from other pressing local needs.

NOTES: The companion bill, SB 581 by Nichols, has been scheduled for a hearing

by the Senate Transportation and Homeland Security Committee today.

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