1. Association Highlights Legislative Success, Notes Important Issues to Address in Future
2. Release Date: May 28, 2013

AUSTIN, TEXAS – With the Regular Session of the 83rd Legislature fresh in the rearview mirror, the Texas Association of Manufacturers (TAM) today acknowledged some significant efforts by state lawmakers to strengthen the state’s manufacturing sector but cautioned that a few key policy and regulatory concerns went unaddressed.

“We know 2013 had the potential to be a break-out year for manufacturers. House Speaker Joe Straus put us on the right path by providing unprecedented leadership in naming a special interim committee to study ways to strengthen manufacturing in Texas,” said Tony Bennett, president of the Texas Association of Manufacturers. “Texas lawmakers, on the whole, embraced Speaker Straus’ charge by embracing smart, forward-thinking public policy that will help ensure the manufacturing sector continues to flourish, contributing to a strong Texas economy, and delivering continued job creation.”

Among the legislation that TAM supported during the 83rd Regular Session, House Bill 5(Rep. Aycock/Sen. Dan Patrick) will broaden opportunities for Texas students by providing flexibility to ensure that students can graduate from high school well prepared to take on the challenges of a two-year or four-year college, or to seek out a professional certificate.

“All forms of education are in demand in Texas today given our increasingly competitive, high-tech-driven economy and job market,” said Bennett. “In House Bill 5, Texas lawmakers signaled their understanding that rigor can take many forms and that our education system must be flexible to meet the needs of every student.”

With the passage of House Bill 3390 (Rep. Hilderbran/Sen. Deuell), which extended theTexas Economic Development Act (also known as Chapter 313), lawmakers gave local school districts the tools they need to offer tax incentives to attract economic development projects.

“Incentives made available through Chapter 313 attract the likes of Toyota in San Antonio as well as many other businesses looking to relocate or expand in Texas,” said Bennett. “Chapter 313 is a critical economic development tool that makes Texas communities attractive to employers and the families that depend on them.”

As part of continued efforts to draw investment to Texas, TAM was a founding member of Texans for Innovation, the statewide coalition that advocated strongly in support of aResearch and Development Tax Incentive, which passed in House Bill 800 (Rep. Murphy/Sen. Deuell).

“R&D contributes in significant ways to our larger economy and to the creation of new, good-paying jobs for Texans and their families,” said Bennett. “Strategic incentives aimed at increasing R&D in Texas can be a real game changer, and that’s what makes House Bill 800 so important.”

In other tax matters, the Legislature made permanent the exemption from the state’s general business tax, or “franchise tax,” for companies with less than $1 million in gross receipts. The bill, HB 500 (Rep. Hilderbran/Sen. Hegar), also provides targeted franchise tax relief for many specific sectors such as auto repair shops and moderately reduces the tax rate for all businesses for two years.

Regarding electricity rates, the Legislature passed HB 7 (Rep. Darby/Sen. Williams) which returns the balance of the System Benefit Fund ($800 million) to low-income customers and then does away with the $0.65 per megawatt hour electricity tax all consumers pay. “Returning the balance of the Fund to low-income customers is the right move because it’s in keeping with the Fund’s original purpose,” said Bennett. “Electricity represents a significant cost to businesses and citizens in Texas and the Legislature’s decision regarding the System Benefit Fund is fair to all electric consumers.”

State leaders’ late-session move to ensure adequate funding and infrastructure for water via the Texas Water Plan stood among the priorities for many Texans, including manufacturers. A package of legislation to fund the State Water Plan included HB 4 (Rep. Ritter/Sen. Fraser), HB 1025 (Rep. Pitts/Sen. Williams), and SJR 1 (Rep. Pitts/Sen. Williams).

“Texas was in dire need of a workable solution to address our state’s growing water demands. In the end, our lawmakers stepped up in a big way to ensure that communities and job-creating industries have access to the water they need, even in a drought, and that the infrastructure exists to deliver it. Funding the State Water Plan is a well-spent investment in the future of Texas,” said Bennett.

In the regulatory realm, TAM tracked a number of key measures, including bills dealing with contested case hearings, greenhouse gas permitting, expedited permits and the Public Utility Commission (PUC) Sunset process. The PUC Sunset Bill, HB 1600 (Rep. Cook/Sen. Nichols), strengthened the agency in several key respects, including new cease and desist authority designed to protect consumers and stronger qualification requirements for PUC Commissioners.

“Energy costs and utility rates are critical to the success of manufacturing in Texas. Measures such as those included in HB 1600 will help continue the expansion of manufacturing in the state,” said Bennett.

TAM cited two bills - HB 788 (Rep. Smith/Sen. Hinojosa), regarding greenhouse gas permitting and SB 1756 (Sen. Uresti) regarding expedited environmental permitting - as strong steps in the right direction to improve environmental permitting procedures.

“The Texas Legislature made clear its support for common-sense permitting improvements, which enhance predictability and regulatory certainty for manufacturers in the critical arena of permitting,” said Bennett.

The Legislature failed to pass key legislation - HB 2082 (Rep. Ritter) and SB 957 (Sen. Fraser) - that would have improved the competitive environment by reforming the contested case hearing process. In another shortcoming from the Regular Session, Texas will continue to suffer from ambiguity as it relates to common carrier pipelines (HB 2748, Rep. Lewis).

“Texas had a chance to create a more efficient environmental permitting process to help the state attract and retain more business investment, provide business investors with more predictability and regulatory certainty, while maintaining strong public participation in the permitting process,” said Bennett about the Legislature’s failure to pass HB 2082, HB 2748 or SB 957.

“On the whole, TAM is pleased with the many ways our state leaders stepped up to ensure a strong, productive manufacturing sector that will continue to drive our state’s economy forward,” added Bennett. “There’s still more to be done and we’ll continue to work with state leaders to ensure that we keep taxes low, regulations predictable and energy abunbant and affordable so that manufacturing can flourish here for years to come.”

Media Inquiries: Contact Gretchen Fox, 512-694-4326

Media contact: Gretchen Fox, gfox@gfoxconsulting.com, 512-694-4326