Gardere’s Government Affairs practice is preparing for the 2011 Texas legislative session, one that will pose major fiscal challenges to state government.While the 140-day legislative session is always challenging and intense, the current economic climate will have a great impact on the decisions made by the legislature in 2011.
In addition, several significant state agencies that regulate insurance, the environment and energy are currently up for major assessments this year. The recommendations developed during this 2010 “Sunset” review process will result in legislation that will be considered by the legislature next year in 2011. Therefore, those seeking to change or maintain the status quo at these state agencies will need to focus on these Sunset bills.
When the Texas Legislature convenes on Jan. 11, 2011, legislators will likely be looking at a two-year budget shortfall that some say could reach at least $18 billion. The shortfall stems from decreases in sales and franchise tax revenue matched with other structural issues that have allowed some expenditures – such as a property tax reductions – to outstrip revenues. While the state is expected to have about $10 billion in its “rainy day fund,” legislators are not expected to deplete the fund in order to close the budget gap. While several members of the state’s leadership are pointing to budget cuts to close the shortfall, others are likely looking to legislative changes that could raise additional revenue for the state.
Reviews of Texas State Agencies by the Sunset Advisory Commission
The Sunset Advisory Commission conducts assessments between each legislative session to determine if certain state agencies need to exist. The Sunset process is guided by a 12-member body appointed by the lieutenant governor and the speaker of the house. Recommendations from the Commission are developed into legislation to be introduced in the next session. As this legislation moves through the legislative session, numerous amendments not considered during the sunset process are proposed to the legislation. Thus, a Sunset bill is a time of great opportunity and risk for anyone who deals with Texas state agencies.
The Sunset process is unique during this interim between Texas biennial regular legislative sessions because of the large number of major state agencies up for review. These agencies include:
Any industries that fall under the jurisdiction of the agencies listed above should pay close attention to the relevant Sunset legislation.
Federal Health Care Reform
Like other states, Texas is working to decipher what changes to state law must be made in order to implement the recently passed federal health care reform. The Texas Department of Insurance is actively reviewing state law to determine what changes must be made. Meanwhile, committees in both the Texas Senate and Texas House are considering what choices the legislature must make next year regarding state responsibilities under the federal law. Therefore, those with interest in the health care industry should pay close attention next session to determine the extent Texas will interface with the new federal reforms.
Texas, like many states, is facing major road congestion and maintenance issues. If no changes are made in 2011 regarding Texas procedures and formulas for funding highway construction, all Texas Department of Transportation funds for highways will be directed to maintenance, and no new state roads will be built. For this reason, legislators are looking for new funding opportunities in order to attempt to allow new highway construction to remain on par with the state’s needs.
If you have any questions regarding the information contained herein, the Texas Legislature or Texas state government, please contact one of the following Gardere partners in the Austin Office: Kimberly A. Yelkin (firstname.lastname@example.org or 512.542.7001) or Mark Vane (mvane@Gardere.com or 512.542.7077).