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Governor Abbott has announced he will reconvene the Legislature for a special session on July 8th. Below is a sneak peek at what to expect over the next several months. Download PDF version.

Governor Abbott has announced that he will convene a special session of the Legislature on July 8. However, he declined to enumerate the specific issues he would ask the Legislature to consider when they reconvene early next month, stating only that “[a]genda items will be announced prior to the convening of the special session.” We expect the full agenda to be announced roughly a week before July 8.

The Governor’s announcement all but confirms speculation that there will be at least two special sessions in the coming months. The census data required to comply with constitutional requirements to redraw legislative districts will not be released in time for the July special session. As discussed in more detail below, redistricting is without question an issue that must be accomplished in the coming months. And, as such, we expect yet another special session to be convened later this fall.

Below is a brief preview of the issues we expect the Governor will add to the “call” for the upcoming special sessions. We also briefly discuss other issues we expect to at least get some discussion – even if they are not ultimately added to the agenda.

1. Redistricting

One issue above any other must be accomplished in the coming months – Texas must redraw the lines that shape its state House, Senate and congressional districts. As we approached the regular legislative session, it was unclear whether the federal Census Data would be made available in time for the legislature to address redistricting. In February, the Census Bureau announced that final data would be delayed until possibly the end of September 2021. As a result, we expect that a special session to tackle redistricting will not occur until late September or October. We expect the legislative portion of redistricting to be finished by Thanksgiving.

What to watch: Despite not having finalized detailed data, the Census Bureau did announce the results of the reapportionment of congressional seats among the states. Texas will receive two (2) additional congressional seats, raising the total number to 38. We expect there to be considerable debate about where these two new districts will be geographically situated, and, of course, the political complexion of the district.

Tag-a-long issues: Wherever there is redistricting, litigation follows. Expect to see both sides – but especially the party in the minority – posturing for future litigation. Slight tweaks in the lines can structurally alter the long-term complexion of legislative districts. With much at stake in Congress and the Texas House in the upcoming 2022 elections, we expect that much of the legislative machinations will act as a prelude to legal challenges. We also expect legal challenges to be filed immediately after the fall special session. Depending on certain factors, such as the panel assigned and the strength of the legal arguments against the maps, the litigation could threaten to delay primary elections and will almost certainly become an immediate wedge issue during the 2022 elections. Indeed, Governor Abbott has been one of 15 GOP governors urging the Biden Administration to speed up release of the data.

2. Election Law Reform / Bail Reform

Although the Governor declared election integrity and bail reform to be emergency items during the regular session, neither piece of priority legislation reached his desk as a result of the House Democrats walking out before a final vote on Senate Bill 7 on the final day it could be considered. We expect that both issues will be added to the call for the first special session.

The conference committee report for Senate Bill 7 would have made several changes regarding election laws. Most of them were aimed at practices that were instituted by certain counties during COVID-19. The final version of the bill would have standardized early voting hours, enhanced access to poll watchers, and tightened rules around mail-in ballots.

House Bill 20, which died as a result of the House Democrats breaking a quorum on the election reform bill, would have significantly changed bail requirements by making it more difficult for people with a history of violent crime from being released before their criminal case is resolved. If passed, it would have banned release from jail on personal bond for people accused of violent or sexual crimes. The bill also would have prevented charitable groups from posting bond for people accused or previously convicted of a violent crime, with some limits.

What to watch: Both bills nearly made it to the finish line. As a result, both bills were thoroughly vetted by both chambers, with considerable compromise. While we expect both bills to pass in a form that significantly resembles the form they were in when the regular session concluded, Republicans could seek to strengthen S.B. 7. The majority party typically wields more strength in a special session, where the legislative issues are fewer and the calendar more open. But a move to strengthen S.B. 7 could antagonize Democrats all over again, potentially prompting another walkout.

Tag-a-long issues: Shortly after the Democrats broke quorum, effectively killing S.B. 7, Governor Abbott announced he would reconvene the Legislature to reconsider the bill. In order to avoid history repeating itself (i.e., Democrats breaking quorum or no-showing), the Governor announced his intention to use his line-item veto power to veto the legislative budget – a promise he has since followed through on. We expect the Governor to give legislators a shot at reinstating this funding during the first special session, with an eye towards keeping Democrats inside the building for long enough to give final consideration to his key priorities.

We also are watching several other hot-button issues to see if they will be included in the special session. These include further restrictions on the teaching of critical race theory. The Legislature did pass a bill addressing the issue, but in a signing statement the Governor said he’d like to see more done. The crisis at the border continues to escalate, with Governor Abbott promising that Texas will begin its own work on a border wall. Given that Texans also view this as a pressing issue, we will not be surprised to see the issue of border security on the Governor’s agenda. The Governor has also said he will ask the legislature to reconsider a bill that would limit social media platforms from blocking or banning users based upon their political viewpoints. One thing we are watching is the potential for an agenda that is overwhelmingly aimed at conservative priorities to drive Democrats to re-engage in.

3. Federal Funds – American Rescue Plan

Earlier this year, Congress allocated $16 billion to the state of Texas in the American Rescue Plan Act of 2021. Because guidance from the Treasury Department did not materialize until late in the legislative session, these funds were not considered during the appropriations process and therefore were not included in the budget. Governor Abbott told lawmakers that he would place the allocation of these federal funds for COVID-19 recovery on their agenda during a special session in the fall. This announcement comes after lawmakers were critical of the Governor’s control over federal relief funds while the legislature was not in session and a related House budget amendment which would bar expenditure of any monies received under the American Rescue Plan Act without the approval of the legislature. Eligible uses for the $16 billion include support for public health expenditures, addressing the negative economic impacts of the pandemic, replacing lost public sector revenue, and investing in water, sewer, and broadband infrastructure.

What to watch: Sixteen billion dollars is a lot of money, even for the State of Texas. To put it in perspective, $16 billion equates to roughly 20% of the amount of state funds budgeted per annum. We expect there to be significant conversation about how much to spend and when to spend it. States have until the end of 2024 to allocate the funds, meaning the legislature would have another opportunity in 2023 to allocate some portion of the funds.

Tag-a-long issues: Two specific funding items are likely to receive significant attention: Medicaid expansion and broadband development. We expect Democrats to renew their push to expand Medicaid, utilizing the federal windfall to stymie the argument that it would be too costly to expand. Indeed, just recently House democrats sent a letter to the Governor requesting that expansion be added to the special session agenda.

The second is broadband development. Texas joined many other states in establishing a statewide broadband development office when it passed H.B. 5. And while H.B. 5 also established a broadband development incentive program, the program did not receive funding in the budget just authorized by the legislature. According to guidelines released by the Treasury Department in May, broadband infrastructure is one of the eligible uses of relief provided to the states by the American Rescue Plan Act.

Down the home stretch we go … Here’s the latest from Austin, with only 2 weeks to go.

Texas receives nearly $16 billion in federal relief; cities and counties in Texas will receive billions more. Congress allocated nearly $16 billion to the state of Texas in the American Rescue Act. Texas cities and counties will receive another $10 billion. Treasury guidance outlines broad eligibility for the funds, including support for public health expenditures, addressing the negative economic impacts of the pandemic, replacing lost public sector revenue, and investing in water, sewer, and broadband infrastructure. This is additional good news for appropriators, who learned a couple of weeks ago that they would have an additional $3.1 billion to spend this budget cycle.

AG Paxton sues Biden Administration over rescission of 1115 Waiver. The Attorney General sued the Biden Administration over its recent decision to rescind the federal government’s renewal of Texas’ longstanding 1115 Waiver. The Waiver provides billions of dollars in Medicaid savings back to the state of Texas to fund its safety net hospitals. The extension – approved by the Trump Administration – was rescinded due to alleged procedural defects. We expect the state to resubmit the extension once the procedural defects have been remedied. But, most observers believe that the procedural defects are nothing more than a pretext to undue a decision by the previous administration. Many believe that the real motivation for rescinding the waiver – which helps reimburse the costs of treating the uninsured – was to coerce Texas into expanding Medicaid. If true, that might suggest that resubmission will not be approved. Meanwhile, the Biden Administration’s gambit seems to have failed; Medicaid expansion appears all but dead in the Texas legislature.

Fetal heartbeat bill heads to Governor’s desk. A bill that would ban abortion once a heartbeat can be detected is headed to the Governor’s desk. The legislation was given final approval by legislators last week. Although the Governor intends to sign the bill, we expect significant litigation will ensue.

Bill banning hormone therapy on transgender children dies in the House, but lives on in the Senate. A key deadline has come and gone and a contentious House Bill that would have prohibited hormone therapy on transgender children failed to pass. Nevertheless, the Senate companion is still alive and could see the Senate floor later this week.

Constitutional carry bill heads to conference committee. After some delay, a bill that would allow the “permitless” carry of firearms made its way back to the House of Representatives, where the Senate amendments were rejected. The bill will now head to conference committee. Both chambers have appointed conferees. Both the Speaker of the House and the Lieutenant Governor traded Twitter volleys expressing their willingness to work out their differences. The Governor has said he will sign the bill if it hits his desk.

With deadlines looming, we are entering the mad dash to the finish line … this week will see several major deadlines in the House of Representatives; House Bills must be reported out of committee by today and must have finally passed the full chamber by Friday.

Comptroller revises Biennial Revenue Estimate upwards as conference committee begins on Budget. Last Monday, the Comptroller updated his Biennial Revenue Estimate. As we suspected, the update came immediately on the heels of April’s revenue collections and the revision was to the upside. In total, the Comptroller told appropriators they had $3.12 billion in additional revenue. This includes an increase in the remaining available balance of $1.67 billion. The announcement came on the heels of April’s revenue collections, which show the Texas economy is running red hot. Sales tax collections – the primary revenue for the state – broke records and represented a whopping 31% increase over April 2020 collections and a 19% increase over April 2019 collections.

Core GOP bills are making substantial progress. Key bills to the GOP platform are moving towards the finish line. These include the bill known as “constitutional carry,” a bill that would ban elective abortion once a heartbeat can be detected in the fetus, the well-known efforts to reform some of Texas’ election laws, and a bill that would require high-schoolers to participate in leagues that correspond to their biological sex.

The “constitutional carry” bill, once considered dead in the Senate, passed the senate floor last week. The bill was heavily amended. The House will have the choice to concur on the amendments, which would send the bill directly to the Governor’s office or reject the changes and go to a conference committee. We believe the latter scenario is more likely – leaving the bill’s fate still in question.

The House passed Senate Bill 8, with amendments last week, after a very contentious and charged debate. At a high level, the bill would ban elective abortions after a heartbeat is detected. Or, as early as 6 weeks. Thus, the Senate will need to either accept the changes or the bill will head to a conference committee as well. Regardless, we expect to the bill – like nearly every other bill that touches abortion rights – to be heavily litigated.

The House also passed Senate Bill 6, the Texas election law reform bill. But, the House removed some of the more controversial components – including a proposed ban on drive-thru voting and limits on polling hours. The bill does include a prohibition against sending out mail-in ballots unless they have been requested – a measure in response to Harris County’s decision to send out mail-in ballots to every voter.

The House committee on Public Education revived Senate Bill 29 late last week, after initially failing to do so earlier in the week. The bill, which requires high school athletes to compete in leagues that correspond to their biological sex, largely codifies existing UIL rules in Texas.

Austin voters reinstate camping ban. In perhaps one of the most interesting legislative side-shows inside the Austin bubble, Austin voters voted overwhelmingly (57% - 43%) to reinstate the city’s ban on camping on public property. The city had removed the ordinance in 2019 without much of a plan to combat the growing homelessness problem in Austin. Despite the response from Austin voters, the House moved forward with a statewide ban on camping in public places.

Texas picks up two more congressional seats; electoral college votes. The Census Bureau released is apportionment from the 2020 Census. Texas will receive 2 additional congressional seats and electoral college votes. The news surprised some who expected Texas to possibly receive three additional seats. Somewhat symbolic of the in-migration experienced by Texas in recent years, Texas is receiving two seats while California and New York both lose a seat. The more detailed data required to redraw districts is still not expected for several months. We expect a special session for redistricting to occur in the October timeframe.

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