The Texas Report 6/30

The Texas Report 6/30

What’s Happening:

• Texas Senate Property Tax plan now includes salary increases for Texas Teachers (More here)

• Texas House investigation into Ken Paxton dives into recent real estate purchases (More here) (More here/paid)

• Texas to receive $3.3 billion from the Federal Government to expand broadband infrastructure development

• Governor Abbott marshals state resources to respond to fires in Northeast Texas

Texas Senate Property Tax plan now includes salary increases for Texas Teachers

Quick Hits

• The Texas House & Senate have yet to compromise on a property tax relief plan.

• The Governor has now called two special sessions to try and get something done.

• Wednesday, the Texas Senate added pay raises for Texas teachers into their relief plan.

On Wednesday, the Texas House and Senate met for the first day of special session #2 with a goal of delivering record property tax cuts.

Both chambers sent their bills to the respective committees, where they were quickly voted out. The Senate went a step further and brought the bill up on the floor, where Senator Roland Gutierrez proposed an amendment adding teacher pay increases to the property tax relief legislation. After the amendment was laid out, there was significant discussion amongst the Senate, and in the end, language providing teacher salary increases was adopted.

Senator Roland Gutierrez (D-San Antonio), who at times has been at odds with the Lt. Governor over the state's handling of Uvalde and lack of policy changes, thanked Patrick for his leadership on the issue and for allowing the inclusion of pay increases for Texas teachers.

As amended S.B. 1 by Senator Paul Bettencourt (R-Houston) would result in $2,000 for every full-time Texas teacher. And If a teacher teaches in a district with less than 20,000 students, they will receive an additional $4,000.

In his statement on the issue, Patrick said, "With under 45 days until the school year begins, the time is now for the Senate to provide Texas teachers with much-needed supplemental payments. The Senate added a provision to SJR 1 to make sure Texas teachers get the supplemental payments they need for the next two years.”

"The Texas Senate will continue to fight for homeowners, teachers, and businesses. We look forward to working with the House to pass property tax relief and supplemental payments for teachers in the coming weeks."

Sen. Joan Huffman, R-Houston, the chamber's chief budget writer, stressed that the payments were not permanent. The bill would cost $3.2 billion from the state budget for the next two years. But she did express support for a long-term increase.

Senator Gutierrez told the Texas Tribune, "It'd be a hell of a time for anybody to veto this." "Our teachers are demanding this. They should not be held hostage to anybody's political ambitions."

What does all this mean:

• The Texas House and Senate have struggled to compromise on a property tax relief proposal, causing the Governor to call "additional" special sessions since the issues weren't resolved in the 88th Regular session.

• With the Texas Senate including teacher pay increases, this potentially adds more pressure on the Texas House to take up the Senate proposal and certainly changes the dynamic of negotiations.

• Abbott has narrowed the agenda for the special session to focus solely on legislation reducing the school district's maximum compressed tax rate. Causing questions if the Senate bill is even germane to the call considering its increase of homestead exemptions.

• Teacher pay raises were used during the regular session by Senate Republicans as a bartering chip to try and pass a school voucher proposal.

Abbott is expected to call a special session on both vouchers and teach pay raises early this Fall. The Texas House and Senate still have to find some form of compromise on the $12.3 billion intended for property tax cuts.

More analysis on the two plans:

Texas House investigation into Ken Paxton dives into recent real estate purchases

The Wall Street Journal reported Thursday that Paxton, his wife, and a family trust spent nearly $3.5 million on six properties from July 2021 to April 2022 in Oklahoma, Florida, Utah, and Hawaii.

The amount of money and timing reportedly drew the attention of Texas House investigators.

Paxton's lead lawyer, Tony Buzbee, told the Wall Street Journal that Paxton used "long-term savings from a brokerage account" to invest in real estate when interest rates were low. "There is nothing more to it than that," Buzbee said.

This drew further eyebrows as Paxton reported in his 2021 personal financial disclosure that he and his wife owned four properties in Texas - two in Austin, one in McKinney, and one in College Station. That disclosure did not show any properties outside of Texas.

The Paxtons' annual financial disclosures show they have significant assets, including investments in numerous mutual funds, although the total holdings amount is unclear. The Paxtons rental home in Austin is the subject of one of the impeachment accusations.

Local property-tax records confirm some of the purchases cited in the Journal's reporting. Records in Maui County, Hawaii, show the trust owns a parcel of land worth almost $600,000, while records in Marion County, Florida, show the trust owns a home worth more than $200,000.

The most expensive property in Paxton's portfolio is the $1.6 million, five-bedroom lodge in a resort area of eastern Oklahoma.

Towards the end of the 88th Texas legislative session, the Republican-led Texas House voted to impeach Ken Paxton on 20 charges in late May. The majority stem from Paxton's alleged abuse of office to protect friend and political donor Nate Paul. Paul is an Austin real-estate investor indicted early this month on federal charges of lying on bank-loan applications (he pled not guilty).

As Attorney General, Paxton makes $153,750 a year, and his wife is a longtime high-school math teacher and school counselor.

There is certainly nothing illegal about owning real estate, which has often proven to be a very successful investment strategy. However, it does raise eyebrows when a public employee reportedly owns nine properties across the United States.

Paxton's impeachment trial in the Senate is scheduled for September 5th.

House investigators can bring additional articles of impeachment against the Attorney General if done within a certain time frame. The real estate purchases may be nothing, but at a minimum, it's another interesting layer in one of the craziest stories in Texas politics.

More here:

Texas to receive $3.3 billion from the Federal Government to expand broadband infrastructure development

Earlier this week, the Federal Government announced funding allocations for state governments to improve broadband infrastructure from the $1 trillion infrastructure law passed in 2021. The funding is through the Broadband Equity Access and Deployment (BEAD) program.

Texas topped the list of future recipients with $3.3 billion. Funding is expected to start flowing to states and territories early next year with the goal of projects beginning my mid-2024. The program aims to connect each American to high-speed internet service by 2030.

In 2021, Texas established the Broadband Development Office (BDO) within the office of the Comptroller, who will be responsible for allocating the $3.3 billion.

In his statement on the announcement, Comptroller Glenn Hegar said, "Historically, Texas has typically been a donor state, meaning our tax dollars would go to Washington and then get sent out to fund projects in other states. It's good to see our hard-earned tax dollars coming back to Texas, and you can be certain that each of those dollars will be spent wisely."

Before the BDO can begin implementing the $3.3 billion in funding, it must submit a proposal to the federal government describing its strategy, which is supposed to be based on public feedback. States are required to provide at least a 25% match to draw down Federal funding, and Texas voters will decide on that issue in the November election.

That 25% match makes the actual investment in broadband development even larger than $3.3 billion. It still isn't evident how much providers will be expected to contribute towards matching funds, but the Comptroller will consider applicant's potential contributions during the grant process.

The importance of broadband has become clearer since the COVID-19 pandemic, and the Texas legislature has routinely made it a priority over the last several legislative sessions.

Despite record funding, industry experts are concerned about the need to establish a more permanent funding mechanism for upkeep and incentive build-outs in the most rural areas where it's difficult for providers to keep costs low on consumers.

From rural broadband providers, there is significant uncertainty around the Texas Universal Service Fund, which traditionally subsidized phone lines but is now more used for broadband deployment. The program is funded off assessments traditionally felt on phone bills by those with landlines, and in recent years the fiscal stability has come under question, resulting in significant policy discussion on the appropriate way to subsidize telecommunications infrastructure.

Additionally, some of the more conservative legislators in Texas have expressed frustration with the amount of broadband funding and the federal government prioritizing fiber over unproven technologies like satellite. The discussion around improving broadband infrastructure will continue, but Texas now has a firm idea of the size of an investment it can make to build something that lasts.

Governor Abbott marshals state resources to respond to fires in Northeast Texas

Yesterday, Governor Greg Abbott directed the Texas Division of Emergency Management (TDEM) to deploy state firefighting resources to support local officials as wildfire conditions impact North Texas. These state resources are supporting local firefighting efforts in response to the Storage Fire in Palo Pinto County, which has burned over 500 acres as of today.

“The State of Texas is swiftly deploying critical fire resources to support firefighters and emergency personnel responding to the Storage Fire in Palo Pinto County,” said Governor Abbott. “Extreme heat in the region, and all across Texas, over the last few weeks has made conditions especially vulnerable to wildfire activity. Texans are urged to regularly monitor fire weather conditions and limit any activities that may cause sparks or flames to protect themselves, their loved ones, and their property. I thank all of our brave firefighters and first responders who are working around the clock to keep their fellow Texans out of harm’s way.”

According to the Texas A&M Forest Service, excessive heat over the past two weeks has resulted in wilting, dry grasses across portions of North, Central, Southeast, Southwest and South Texas. Areas with dry grass may increase potential wildfire activity due to accidental ignitions from fireworks during the holiday weekend or other activities that cause a spark.

At the Governor’s direction, TDEM has deployed the following resources in support of wildfire response operations:

• Texas A&M Forest Service: Over 15 personnel, an air attack platform, and heavy equipment such as bulldozers; two Texas Intrastate Fire Mutual Aid System (TIFMAS) strike teams comprised of approximately 30 firefighters, 10 fire engines, and a water tender

• Texas Division of Emergency Management: Emergency Response personnel to support local requests for assistance

• Texas Department of Transportation: Emergency Response personnel to support local requests for assistance

• Texas Department of State Health Services (Texas Emergency Medical Task Force): Wildland Fire Support Packages including paramedics, ambulances, and all-terrain vehicles

• Texas National Guard: Blackhawks with fire-suppression capability and 15 personnel

The Wildland Fire Preparedness Level was raised to Preparedness Level 2 due to fuel and weather conditions, current and expected wildfire activity, regional preparedness levels, and fire-suppression resource availability in the state.

Texans are encouraged to limit activities that may cause sparks or flames, make an emergency plan, and keep emergency supplies easily accessible. Texans can visit texasready.gov and tfsweb.tamu.edu for wildfire tips and safety information.