2018 TEXAS LEGISLATIVE INTERIM REPORT As previously reported (see attached 2017 TMDA Legislative Summary), TMDA had a very successful 2017 Texas legislative session. TMDA continues its activity during the legislative interim, preparing in advance to have a successful 2019 session. Border Sales Tax Issue TMDA’s main priority for 2019 will be efforts to address unfair competition from dealers in Oklahoma, Louisiana, and other border states who are selling “tax-free” vehicles to Texas residents. We continue to be hopeful that the recent legislation passed in Washington State will serve as a good template for new efforts in Texas. We have had initial conversations with TxDMV, and were pleased that agency staff was familiar with the issue and agreed in principle that the “Washington State model” was doable in Texas. They also offered some good ideas about how to translate the Washington state legislation into Texas law. We have also had very good introductory conversations with two potential legislative champions: Senator Robert Nichols (R - Jacksonville, Chair of Senate Transportation Committee) and Representative Chris Paddie (R – Marshall). Both are familiar with the issue, and have pledged to work with TMDA to fix the problem. As soon as the March 6 primary elections are past, most legislators, statewide elected officials, and trade associations will turn their attention to the 2019 session, and we will begin more intense conversations and lobbying. A key player in the process will be Texas counties, which may be resistant to play an active role in enforcing the Washington state model, if we can’t find a way to give them some type of “revenue enhancement” for doing so. Manufacturer Ownership of Dealerships

As always, the TMDA will continue to work hard to protect motorcycle dealer rights in Texas law. Tesla Motors is expected to once again launch a full-scale lobbying and media campaign to amend Texas law to allow for direct sales by manufacturers in Texas. TMDA will continue to work closely with TADA to ensure that leading legislators are educated on the negative consequences of such a bill passing.

Texas Political Update

Austin insiders are focused on the upcoming March primary elections, which will provide 5 key early indicators of where Texas politics and policy is heading.

1. What Direction for the Texas GOP?

Texas Capitol insiders are primarily focused on the bitter internal war for the soul and future of the Texas Republican party. On one side of the longstanding battle are “Traditional Republicans,” those who are fiscally and socially conservative but also focused on mainstream pro-business priorities. On the other side are “Movement Republicans,” a growing populist faction often more motivated by small-government orthodoxy and social conservatism.

The two camps have battled to a stalemate in recent cycles. Insiders are watching approximately 30 competitive Republican legislative primary races (a half dozen in the Texas Senate and two dozen in the Texas House) to see if one side gains the upper hand.

The Texas GOP primary results could be immensely important, indicating whether one of these camps will control the agenda in the 2019 legislative session, choose the next Texas House Speaker, and set the party’s direction for the next decade.

2. What Role for the Texas Business Community?

Insiders are watching to see whether the Texas business community puts its money (and votes) where its mouth is. Various groups within the community have been dismayed with what they see as an anti-business trend within the Texas GOP. These groups have pledged to provide substantial financial and organizational support for pro-business Traditional Republicans against their Movement Republican opponents. Insiders will inspect the post-election data to determine whether the business community actually followed through with the promised resources, and results.

3. The Start of the Speaker’s Race

With the recent retirement of House Speaker Joe Straus, legislative leader of the Traditional Republicans, Texans will see the first speaker’s race in a decade. House members will not officially elect their speaker until January 2019, but campaigning is expected to begin heating up as soon as the primaries conclude. Legislators and insiders will scrutinize the GOP primary results to guess which way the GOP House membership has shifted politically (either toward the Traditional Republicans or the Movement Republicans), and to try to determine which speaker candidates come out of the primaries with stronger chances for victory.

4. Upsets for GOP Statewide Leaders?

Governor Abbott, Lt. Governor Patrick, and most of the other GOP statewide officeholders have no serious competition in the March primaries. But two GOP officials do have races that insiders are watching. Land Commissioner George P. Bush is being challenged by former Land Commissioner Jerry Patterson, who is hitting Bush hard on issues tied to hurricane recovery and the proposed renovation of the historic Alamo site. This race will be a good test of how strong the Bush brand remains in Texas politics. And Agriculture Commissioner Sid Miller is being challenged by attorney Trey Blocker, who is hitting the incumbent on fiscal and ethics issues.

5. Signs of Hope for Texas Democrats?

Austin insiders know that Texas Democrats will eventually make a comeback; the question is When? Democrats are in decided minority status in both statehouse chambers, and have not won a single statewide office since 1994. So the best hope for Texas Democrats in 2018 is probably to pick up several of the competitive legislative seats in November, to play some role in the election of the next House Speaker, and to continue their long slow climb back toward legislative influence. Insiders will look at primary turnout to see whether Texas Democrats are more energized than Republicans, signaling that Democrats may gain some ground in the November general elections.

2017 TEXAS LEGISLATIVE SUMMARY TMDA had a very successful 2017 Texas legislative session, positively impacting proposed legislation to protect and promote the interests of TMDA members. TMDA was once again represented at the Texas Capitol by Royce Poinsett of Gardere Wynne Sewell LLP., working in conjunction with the TMDA Legislative Committee, analysing, tracking and lobbying on dozens of separate pieces of legislation which impacted the rights and bottom lines of Texas motorcycle dealers. TMDA Priority Legislation The legislation described below received the most intense attention and advocacy from the TMDA Legislative Committee and the TMDA lobbyist, because they most directly affected the interests of TMDA members. 1. Dealer Rights

As always, the TMDA’s most important legislative priority is protecting motorcycle dealer rights in Texas law. Unfortunately, once again vehicle manufacturers and other groups promoted several pieces of legislation which would harm our interests. Royce worked closely with the Texas Automobile Dealers Association (TADA) to keep these bills from becoming law:

SB 2093 (Hall)/HB 4236 (Isaac): Manufacturer Ownership of Dealerships. Did not pass.

This legislation was the biggest threat posed to auto and motorcycle dealers in 2017. Tesla Motors once again launched a full-scale lobbying and media campaign to amend Texas law to allow for direct sales by manufacturers in Texas. Royce worked closely with TADA to ensure that leading legislators were educated on the negative consequences of such a bill passing. The legislation did not make it out of committee in either chamber.

HB 3505 (S. Thompson)/SB 1572 (Watson): Cummings Bill. Did not pass.

This legislation was intended to allow the Cummings company to act as both a manufacturer and dealer for its engine products. Royce worked with TADA to oppose this bill.

SB 2279 (Hancock): “Buffett Bill.” Did not pass.

This high-profile legislation was intended to allow Warren Buffet’s Berkshire Hathaway holding company to own and operate both a motor home manufacturer and automobile dealerships. TMDA

worked to ensure that if the bill did pass, it would have included new creative language further strengthening the rights of motorcycle dealers.

SB 453 (Hancock)/HB 1084 (Goldman): Insurance Holding Companies. Did not pass.

Would have allowed an insurance holding company to acquire, own, and operate an interest in a motor vehicle repair facility. TMDA monitored closely.

2. Debt Cancellation Agreements

HB 1985 (Flynn). Passed into law.

HB 1985 gives Texas motorcycle dealers a new product to offer to customers. A debt cancellation agreement is a non-insurance product that a borrower may purchase to cover the difference between an item’s value and the amount owed to a lender in the event of theft or total loss. Existing law authorized these products for automobiles in Texas, but excluded other types of motor vehicles. HB 1985 expands debt cancellation agreements to be available to be sold for motorcycles, boats, RVs, as well as other vehicles financed in Texas. It also standardizes regulation of debt cancellation agreements across certain types of loans, retail instalment contracts and leases. The regulation of these agreements is conducted by the Office of Consumer Credit Commissioner.

Unfinished Work for 2017-2019 We expect our main priority in the coming months to be continued efforts to address unfair competition from dealers in Oklahoma, Louisiana, and other border states who are selling “tax-free” vehicles to Texas residents. We are hopeful that the recent legislation passed in Washington State will serve as a good template for new efforts in Texas. We will be working with TxDMV, Comptroller Glenn Hegar and the Legislature in the hopes that they will take a fresh look and agree to take action to help solve this longstanding issue.

528 Texas Bar Journal • September 2017 texasbar.com

THE

85THSESSION

The 85th Texas Legislature will be remembered as the point whenRepublican leaders clashed publicly like no time in recent memory,fisticuffs broke out on the House floor, and major legislation wasintentionally scuttled—culminating in the governor calling a Julyspecial legislative session to complete unfinished business.

Republican tension has been building over the past few sessions. Onone side are “moderate Republicans,” those who are fiscally andsocially conservative but also focused on mainstream pro-businesspriorities. On the other side are “movement Republicans,” a growingpopulist faction often more motivated by small-government orthodoxyand social conservatism.

OVERVIEWBy Royce Poinsett

PHOTOGRAPHS BY LINDSAY STAFFORD MADER

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Lt. Gov. Dan Patrick served as legislative leader of themovement Republicans, unveiling an ambitious list of 30conservative agenda items. And a Senate dominated bylike-minded legislators promptly passed and sent such billson to the House.

Perhaps no issue could so illustrate the GOP divide, anddefine the session itself, as Patrick’s proposal to enact NorthCarolina-style “bathroom legislation” to require individuals touse bathroom facilities designated for their “biological sex.”Movement Republicans supported the proposal whole-heart-edly as a public safety measure. Democrats and moderateRepublicans (and many in the business community) deridedthe proposal as frivolous, discriminatory, and an invitation tobusiness boycotts that could hurt the state’s economy.

House Speaker Joe Straus led the latter camp. He and theHouse focused on their own agenda, deliberately slow-playingconsideration of the Senate’s most controversial proposals.Those bills languished in the House committee process,emerging—if at all—significantly narrowed.

In the final tense week of the regular session, each chambertook the other’s priority bills hostage, seeking to gain leverageand force surrender. Gov. Greg Abbott, long popular withboth camps of the Republican Party, pushed Patrick andStraus hard in the closing days to negotiate compromises ona number of major measures. Instead, Patrick and Straus dugin, holding dueling press conferences and openly blamingeach other for the various stalemates.

Once it became clear that several of Patrick’s prioritieswould die in the House—most importantly the Senate’s versionsof bathroom legislation and local property tax reform—thelieutenant governor scuttled a few “must-pass” bills, includingone reauthorizing the state agency that licenses and regulatesTexas doctors. Patrick’s stated goal was to force the governorto call a special session, which he hoped would include con-tinued work on the Senate’s agenda items. And the Capitolcommunity halfheartedly celebrated the regular session’send, knowing the summer break would be woefully brief.

Major Legislation of the Regular SessionTexas legislators filed more than 6,600 bills in 2017, and

enacted over 1,200 into law—a reduction from prior sessions.Numerous significant bills were killed in major areas such aswater, transportation, and school finance. Some of the mostsignificant legislative action is summarized here.

State Budget. SB 1, the state budget, was one significantexception to the gridlock. Budget writers for the two chambersbegan negotiations billions of dollars apart in terms of bothspending priorities and methods of finance but in the endsurprised many by finding compromise. SB 1 enacts a two-yearbalanced budget with $217 billion in overall spending, anincrease of less than 1 percent over the prior budget. Perhapsmost surprising, the Senate relented to finally dipping intothe state’s $10 billion Economic Stabilization Fund (alsoknown as the “Rainy Day Fund”), agreeing to utilize $1 bil-lion of the stockpile to help fund certain expenditures.

Immigration. Republicans succeeded in enacting a so-called “sanctuary cities ban.” SB 4 imposes criminal penal-ties on local law enforcement officials who refuse to honorfederal detention requests for noncitizen inmates subject todeportation and bans local policies that prevent local offi-cers from inquiring about the immigration status of peoplethey have lawfully detained. This legislation was bitterlydebated, leading to a scuffle between Republicans andDemocrats on the House floor. Several Texas cities havealready filed suit to stop the law. SB 1 continues the existingsurge of Department of Public Safety troopers and equip-ment along the border with an additional $800 millionappropriation.

State vs. Local Control. HB 100 preempts cities fromregulating ride-hailing companies like Uber and Lyft, andinstead enacts a statewide regulatory framework. HB 1449prohibits cities from pursuing housing affordability objectivesthrough “linkage fees” on new development. On the otherhand, cities were successful in defeating legislation thatwould have removed their ability to enact local plastic bagbans, tree protection ordinances, or regulations on short-termrental companies like Airbnb.

Child Welfare Reform. Legislators responded to federalcourt rulings and headlines detailing foster child deaths,slow response times, and unplaced children housed in stateoffices. SB 1 appropriates $500 million in new money forChild Protective Services, targeted toward raises for caseworkersand 600 new caseworker hires. A package of bills (SB 11,HB 4, HB 5, and HB 7) enacts a major overhaul of theorganization and policies of the system.

Abortion. SB 8 bans certain second-trimester abortionprocedures, restricts fetal tissue and cord blood donations,and requires health care facilities to bury or cremate fetalremains. Opponents plan to challenge the new law in court.

Texting. HB 62 enacts a statewide ban on texting whiledriving and creates a new Class A misdemeanor offense forviolators who kill or injure others.

The Special Session Abbott announced a 30-day special session slated for July 18.

Look for coverage in the October issue of the Texas Bar Journal.

New Laws That Affect the Real WorldAs always, the broad work of the Legislature’s regular session

extended into countless nooks and crannies of “everyday life.”Guns. SB 16 lowers the Texas concealed handgun fee to

$40, one of the lowest in the nation. In 2011, legislation waspassed that allowed Texas hunters to shoot feral hogs from heli-copters; HB 3535 allows them to shoot the species from hotair balloons as well.

Schoolyard. SB 179 criminalizes cyberbullying of minors,provides schools with new tools to combat it, and allows victimsto seek injunctive relief. SB 7 heightens criminal penaltiesfor teachers who have inappropriate physical relationshipswith students and for school administrators who fail toreport them to parents or authorities.

530 Texas Bar Journal • September 2017 texasbar.com

Ballot Box. HB 25 ends “straight-ticket” or “one-punch” voting, which has allowed Texas voters to cast aballot for all of a party’s candidates at once, beginning in2020.

Looking ForwardOnce the Legislature finally concludes its 2017 sessions,

however many there might be, Capitol observers will beginlooking toward the 2018 elections and the 2019 session. Amajor question will be whether movement Republicans con-tinue to gain power and boldness, or whether moderateRepublicans and the business community can reorganize toregain seats and momentum.

Texas Democrats are watching the Republican infightingand hoping for a healthy midterm election bump to deliverthem more seats in the Texas House. Democrats also hope tofield serious candidates for at least some of the statewideoffices that will be on the Texas ballot—none of which aTexas Democrat has won since 1994.

ACCESS TO JUSTICE By Bruce P. Bower

This article focuses on developments in the 85th TexasLegislature affecting access to justice, specifically legislationduring the regular session including SB 1, SB 1911, and HB1020.

The state budget for fiscal years 2018-2019 adopted bythe Legislature provides $44,583,854 for basic civil legalservices for 2018 and $34,983,854 for 2019.1 For fiscal year2018, the Legislature also directed that $9.6 million must beused for basic civil legal services to victims of sexual assault.2

Receipts from the pro hac vice fee and filing fees also con-tribute to the amounts available for basic civil legal services.3

The budget specifies that $1.5 million in general revenueeach year is for basic civil legal services to veterans and theirfamilies.4

The amounts for fiscal years 2018-2019 include fundsfrom the settlement with Volkswagen for emissions violations.The Texas Supreme Court received $42.5 million in one-timecivil penalties as a result of that settlement.5

The Volkswagen settlement funds are available to legalaid thanks to the Chief Justice Jack Pope Act, or TexasGovernment Code §402.007(b). This section provides forcrediting to the Judicial Fund up to $50 million per bien-nium of recoveries by the state for violations of the Busi-ness & Commerce Code. These recoveries in the JudicialFund are administered pursuant to order of the TexasSupreme Court. Recognizing the one-time nature of theVolkswagen settlement funding, the 85th Texas Legisla-ture provided: “It is the intent of the Legislature that dur-ing the years subsequent to this biennium, to the extentallowed by law, funding for Basic Civil Legal Servicesshould be continued beyond use of one-time civil penal-ties provided through Judicial Fund No. 573 funding froma settlement such as that between the State of Texas andVolkswagen.”6

The Supreme Court includes funding for legal aid in itsbudget request to the Legislature. The Supreme Court isacknowledged nationally for its leadership in supportingaccess to justice. The appropriations to the Supreme Courtfor basic civil legal services are administered by the TexasAccess to Justice Foundation, pursuant to orders of thecourt.

SB 1911, effective September 1, 2017, amends the TexasGovernment Code by adding Section 51.808 and amendsLocal Government Code 323.023(b). Section §51.808(a)(1)of the Texas Government Code will require the clerk ofeach court in Texas to post notice of self-help resources forpro se litigants. If the particular court has a website, the noticeposted must contain a link to “the self-help resources Internetwebsite designated by the Office of Court Administration ofthe Texas Judicial System, in consultation with the TexasAccess to Justice Commission.” The linked website willhave information on lawyer referral services certified under

594 Texas Bar Journal • October 2017 texasbar.com

eaders will recall that the 85th regular session of theTexas Legislature concluded in June with Republicanleaders clashing publicly. Lt. Gov. Dan Patrick, leg-

islative leader of the “movement Republicans,” had successfullypushed an ambitious, populist conservative agenda throughthe Texas Senate. House Speaker Joe Straus, leader of the“moderate Republicans,” had led the House in defeatingseveral of the Senate’s most controversial proposals, heedingcalls from many local officials and business leaders.

Once it became clear that several of Patrick’s priorities(particularly the Senate’s versions of local property taxreform and bathroom legislation) were going to die in theHouse, he scuttled a few “must-pass” sunset bills, includingone reauthorizing the state agency that licenses and regulatesTexas doctors. Patrick’s stated goal was to force RepublicanGov. Greg Abbott to call a special legislative session, whichhe hoped would include continued work on the Senate’sagenda items.

Abbott complied, and more. The governor called a 30-dayspecial session for work on sunset, property tax reform, andbathroom bills, as well as 17 other agenda items designed toplease Patrick and the conservative base.

In many ways the special session was a replay of the regularsession. Patrick and the Senate quickly passed most of thegovernor’s proposals out of the upper chamber, cheered on

by Abbott and grassroots conservatives. Straus and the Houseproceeded much more deliberately: agreeing to some of theproposals, narrowing others, and outright killing several.

ENACTED LEGISLATION OF THE SPECIAL SESSIONWhen the special session concluded on August 15, the

Legislature had enacted bills substantially accomplishing 10of the governor’s 20 agenda items:

Sunset legislation. SB 20 and SB 60 successfullyextended the life of several important state agencies, resolvingthe issue that forced the special session.

Annexation reform. SB 6 requires cities seeking to annexan area to first obtain approval from a majority of residentsin that area.

Mail-in ballot fraud. SB 5 increases criminal penaltiesin the hope of combating mail-in voter fraud, particularlyfraud involving elderly voters.

Abortion insurance. HB 214 makes Texas one of eightstates to bar private insurance companies from includingabortion procedures in base coverage; Texas women will haveto buy supplemental policies to cover abortions performedoutside of medical emergencies.

Abortion reporting. HB 13 requires health care providersto report more details about abortion complications. HB 215requires doctors to report more details on whether minors

R

A RECAP OF THE85TH TEXAS LEGISLATURE’S

SPECIAL SESSIONBY ROYCE POINSETT

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receiving abortions did so as a result of parental consent or ajudicial bypass.

End of life. SB 11 requires explicit patient approvalbefore doctors can act on do-not-resuscitate orders, creates acriminal penalty for doctors who willfully violate a patient’sdo-not-resuscitate wishes, and creates an exception to thatpenalty for doctors who err “in good faith.”

Local tree ordinances. HB 7 restricts the ability ofmunicipalities to prevent landowners from removing treeson their private property. The bill allows landowners toremove trees and to offset any local fees or penalties byplanting new trees in their place.

Maternal mortality. SB 17 extends the life of the state’sTask Force on Maternal Mortality and Morbidity, providingit more time to study the rapidly rising death rate amongTexas mothers.

Teacher retirement benefits.HB 21 injects $212 millionin new money into the Teacher Retirement System of Texasto offset rising health insurance premiums and health carecosts. However, neither chamber passed Abbott’s proposal toincrease teacher salaries by an average of $1,000 out of existingfunding; legislators may have been swayed by the many schoolleaders who opposed the measure as an “unfunded mandate.”

School finance reform. The House pushed an ambitiousschool finance reform package that would have injected$1.8 billion in new state funding into the Texas schoolfinance system, and then reluctantly agreed to the Senate’smuch more limited proposal. HB 21 puts $351 million innew money into public schools and creates a new commissionto study and recommend more comprehensive reforms forthe 2019 session.

UNPASSED LEGISLATION OF THE SPECIAL SESSIONThe Legislature failed to pass legislation addressing 10 of

the governor’s 20 agenda items:Property tax reform. The Legislature failed to deliver

on the top priority of the governor and lieutenant governor.The Senate’s proposal would have required property tax rateelections before a local entity could raise tax revenues morethan 4 percent over the prior year. The House counteredwith a proposal setting a more lenient 6 percent trigger rate,and the two chambers failed to reach a compromise beforethe special session ended. House leaders continue to maintainthat more comprehensive school finance reform (and increasedstate education spending) is a prerequisite to meaningfulproperty tax reform that will actually lower local taxes.

Bathroom legislation. The Senate once again passedlegislation barring individuals from using restrooms that donot match their biological sex, but no related legislationever made it to the floor for a vote in the House.

State government spending cap. The Senate passedlegislation to further restrict the permitted annual growth instate spending, proposing a new, lower cap based on the esti-mated combined growth in the state’s population and inflation.However, the proposal died in the House.

Local government spending cap. Neither chamberpassed legislation to create a cap on the annual growth inspending by local governments.

Local government permitting. The Senate passed leg-islation seeking to speed local government permitting, byimposing a new statewide uniform process and timeline forcertain local permit applications, but the measure did notpass the House.

Local government regulations. Neither chamberpassed legislation to restrict local governments from enforcingnew local regulations against a landowner who acquired aproperty before the regulation was enacted.

Texting ban preemption. The Legislature did pass astatewide texting-while-driving ban during the regular session(HB 62). But neither chamber heeded the governor’s call topass further legislation during the special session to pre-emptany existing local ordinances. The stricter existing ordinancesthat exist in more than 40 Texas cities will remain in effect.

Union dues deduction.The Senate passed a bill to preventgovernmental entities from collecting membership dues fromthe paychecks of government employees who are members oflabor unions, but the bill did not receive a vote in the House.

Abortion funding. The Senate passed legislation tobroaden the existing state and federal bans on abortion fundingby prohibiting Texas governmental entities from enteringinto any contractual relationships with clinics affiliated withabortion providers. The measure did not succeed in the House.

“Private school choice” for disabled students. TheSenate passed legislation to subsidize private school tuitionfor students with disabilities, but the measure never emergedfrom the House.

LOOKING FORWARDThe special session ended with Abbott and Patrick openly

blaming Speaker Straus for the failure of several agenda items.Abbott left open the possibility that he might call yetanother special session at some point, particularly on theissue of property tax reform.

The governor and lieutenant governor have also stronglysuggested that they plan to get involved in the upcomingspring 2018 House Republican primary races. Presumably,they hope to influence the speaker’s legislative priorities bymoving the House’s Republican membership in a more con-servative direction. Some business groups, on the other hand,have applauded the legislative defiance of Straus and theHouse and have pledged to defend incumbent Republicansagainst more conservative primary challenges.

The results of this upcoming GOP electoral battle willdetermine whether one of the Republican camps gains theupper hand going into the next regular session of the Legis-lature, which begins in January 2019. The unresolved issuesof school finance and property tax reform, state versus localcontrol, and bathrooms are certain to return. TBJ

ROYCE POINSETTis a government relations attorney and registered lobbyist in theAustin office of Gardere Wynne Sewell. He previously served as anadviser to former Texas Gov. Rick Perry and former House SpeakerTom Craddick, and he now represents businesses and associationsat the Texas Capitol.