News & Press: Capitol Report

Capitol Report June 1, 2015

Monday, June 1, 2015  
Posted by: Michael Hancock
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CAPITOL REPORT

 

June 1, 2015

 

84th LEGISLATURE ADJOURNS

(Part 1)

 

The 84th Regular Session of the Texas Legislature adjourned sine die today, leaving a fairly strong record of accomplishments for a new set of state leaders.

 

From the perspective of engineering firms, the highlights were:

 

Prohibition on Duty to Defend Provisions in Governmental Contracts - HB 2049 by Rep. Drew Darby and Sen. Kevin Eltife makes void and unenforceable a contract provision that requires an engineer or architect to defend a governmental entity against a claim that is based wholly or partly on the entity's negligence, fault, or breach of contract. These provisions are unfair and uninsurable and absent the passage of HB 2049 would have caused drastic implications for firms.

 

Transportation Funding - SJR 5 by Sen. Robert Nichols and Rep. Joe Pickett proposes a constitutional amendment that will be voted on November 3, 2015. The proposal will dedicate state sales tax revenue above $28 billion to the state highway fund, up to a cap of $2.5 billion annually, starting in fiscal year 2018. The proposal would also dedicate, starting in FY2020, 35 percent of the state sales tax on motor vehicle sales and rentals.

 

SJR 5 is a big step forward, if not perfect. The biggest flaw is its interruptibility. Both transfers can be reduced by 50% by a 2/3 vote of both houses on the Legislature. This will require constant attention by transportation advocates in future years to make sure transportation remains a priority.

 

However, assuming a modest growth in the motor vehicle sales and rental tax and no diversions of the money by the Legislature, the proposal, if adopted by the voters, could generate more than $42 billion dollars in new money for highway design and construction by 2030.

 

In addition, the budget adopted by the Legislature for the 2016-17 biennium stops the long-standing practice of diverting transportation user fee revenue for non-highway purposes, especially for the DPS. This budget funds the Department of Public Safety out of general revenue rather than the highway fund, which means an additional $600 million annually for roadway projects. On the other hand, the Legislature stopped the issuance of debt from the Texas Mobility Fund, which will have a slight negative impact on available funds.

 

University Construction - The Legislature, for the first time in several sessions, approved a slate of over 50 college and university facility construction projects totaling $3.1 billion on campuses across the state. A list of these is available at www.acectx.org .

 

Tax Cuts - In addition to increasing the homestead exemption for homeowners, the Legislature reduced the current state franchise tax rate by 25% for all business taxpayers. Although small firms may not pay this tax, HB 7 by Rep. Drew Darby and Sen. Kevin Eltife also abolished the $200 occupational tax paid by every licensed P.E. Since most firms pay this tax for their P.E.s, this will have broad benefit.

 

Project Delivery - There were no major changes in project delivery legislation, although the Legislature did pass HB 2634, which revises the construction-manager-at risk statute to prevent an engineer from also serving as a CM-at risk on the same project. (Currently, this is permitted under a separate procurement.) In addition, Sen. Nichols added language into HB 20 that continues TxDOT's current limitation on use of design-build procedures to three projects per year and increases the minimum dollar threshold to $150 million.

 

There were a number of other less significant bills related to contracting and procurement, disclosure of conflicts of interest, use of drones by engineers, aquifer storage and recovery, and other issues. We will update you on these later in the week but wanted you to be aware of the outcomes on these most important issues. All in all, the session yielded what could be a major increase in the transportation market, coupled with improved contract protections and tax cuts that will return millions to the industry.


 

IN THE NEWS

Go to www.acectx.org for current articles on construction, engineering, public works, transportation, politics and more including:

  • US construction jumped 2.2 percent in April
  • $27M+ in infrastructure damage from flooding.
  • Legislature sends $209.4 billion budget to Abbott.
  • Floods in vulnerable Houston no surprise, in spite of controls.
  • Environmentalists likely to ask feds to oversee Texas coal plants.
  • Dallas residents roll out Trinity Parkway concerns.
  • Fort Bend County to shell out millions to utility companies to avoid delays.
  • Decade after Katrina, pointing finger more firmly at Army Corps of Engineers.
  • Budget rider that could have stopped high-speed rail voted down.

 

 

Follow ACEC Texas on Twitter - @acectx

1001 Congress Ave., Suite 200 - Austin, Texas 78701

512-474-1474 - fax 512-474-1490

www.acectx.org

 



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