News & Press: Capitol Report

Capitol Report May 22, 2015

Friday, May 22, 2015  
Posted by: Michael Hancock
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May 22, 2015

Prohibition on Duty to Defend Passes Senate

HB 2049 by Rep. Drew Darby and Sen. Kevin Eltife, the ACEC Texas-backed prohibition on duty to defend provisions in governmental E/A contracts, passed the Senate this morning on a 28-3 vote. HB 2049 provides that any contract provision that requires an engineer to defend a governmental entity against a claim based wholly or partly on the governmental entity's negligence is void and unenforceable. HB 2049 also ensures that contractual standards of care do not violate what is insurable under professional liability policies.


Procedurally, the House must concur in Senate amendments, or ask for a conference committee. If the House concurs, the bill goes to the Governor.


Highway Funding

SJR 5 by Sen. Robert Nichols and Rep. Joe Pickett, has passed both houses in different forms and is in conference committee. Sen. Nichols and Rep. Pickett are attempting to negotiate a compromise. As we noted last week, there seems to be general agreement on the idea of dedicating $2.5 billion in state general revenue funds to the state highway fund, subject to some sort of base or trigger. The unresolved issues apparently have to do with items such as a sunset date, what sort of growth factor (inflation protection) will be built in, and whether these escalator funds will be subject to appropriation. All of this, of course, would be subject to passage of a constitutional amendment in November 2016.


In the absence of the passage of SJR 5, the outlook for transportation funding is somewhat grim. Originally, the House included $1.5 billion in general revenue funds for the highway fund in its budget back in January, but this money has been removed in the budget conference committee. The budget still ends "diversions" (funding the Department of Public Safety out of general revenue instead of the highway fund), which is net positive of approximately $600 million annually for roads. On the other hand, both houses have passed legislation suspending the issuance of bonds from the Texas Mobility Fund, which will have negative short-term impact on available funds. So it is critically important that leadership find a way to finish the job on SJR 5.


College Construction

Both houses have passed HB 100, but with differences. HB 100 authorizes over $3 billion in facility construction by the state's colleges and universities. The odds would seem fairly high that this bill will pass, but similar authorizations have fallen apart at the last minute in previous sessions.



Tax Cuts


Governor Abbott, Lt. Governor Patrick, and Speaker Straus have agreed on a tax cut package that includes an increased homestead exemption for homeowners and a 25% reduction in franchise tax rates for businesses.


In addition, both houses have passed legislation supported by ACEC and other professional organizations that repeals the $200 occupational tax paid by P.Es and other professionals. This tax was imposed in 1991 when professionals did not pay the franchise tax, but when the margins tax was put in place the occupations tax was not repealed. HB 7 would repeal it. Since it appears that most firms pay this tax for your P.E. employees, this would be a savings for firms.


High-Speed Rail


A Senate budget rider that would have restricted the development of high-speed rail in Texas has been removed by the budget conference committee.



Project Delivery


Sen. Nichols' bill that restricts TxDOT design-build options has not passed the Senate. The bill would have continued the three project per year limit and raised the threshold to $250 million. However, he has included this language in another bill, HB 20, that is pending in the Senate. In addition, it appears that the budget will contain a rider that also raises the threshold to $250 million.


Issues Still in Play


- State contract reform and related "transparency" issues.

- Disclosure of relationships and conflicts of interest in local government (including MUD) contracts.

- Limits on condo construction defect litigation.

- Improved permitting process for brackish groundwater utilization.



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

  • US House passes temporary fix to keep highway funds flowing.
  • Allen ISD gets $2.5 million for stadium losses.
  • Anti-toll caucus likely to leave session empty-handed.
  • Amtrak: Just how bad is America's infrastructure.
  • Old office buildings getting lots of lover from developers.
  • and much more . . . .


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