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Please find a brief update on where things stand as we begin to round the final curve …

Constitutional carry loses steam … before regaining it. As we noted last week, constitutional carry (sometimes called permitless carry because it would allow Texans to carry a firearm without obtaining a state issued permit) passed the House, while companion bills have yet to receive a hearing in the Senate. Early last week, Lieutenant Governor Patrick took the unusual step early last week to say that he lacked the votes in the Texas Senate to pass the measure. Despite the pronouncement, Lt. Governor Patrick later created a new Special Committee on Constitutional Issues and quickly referred the House bill to the new committee. Still, Patrick’s office continued to pour cold water on the bill’s prospect.

House easily passes budget … without much incident. The House unanimously voted to approve a $246 billion budget last Thursday, where debate lingered late into the evening. The budget will now move to conference committee where significant differences will be worked out between the two chambers’ versions. Conference committee this year could take on added significance. All eyes are on the comptroller, who is expected to revise his biennial revenue estimate. The BRE determines how much money appropriators will be able to spend when crafting the budget. We expect the revision to come early next month, shortly after the Comptroller reviews April’s revenue collections. We also expect a significant increase in the amount of available money. Significantly, the budget does not appropriate nearly $17 billion in federal relief that has yet to reach the state. An amendment to the house budget would require a special session to appropriate those dollars.

Symbolic vote on Medicaid Expansion fails. Buried in 200+ prefiled amendments to the House budget was an amendment urging the state to expand Medicaid. While similar amendments periodically are filed, this amendment received more attention given the increased chatter about coverage expansion coming into session and the recent news that the Biden Administration had rescinded the state’s 1115 Waiver renewal (a key source of federal funding that helps pay for uncompensated care and fund the state’s hospital safety net). Because amendments attempting to expand Medicaid face multiple legal questions, the vote was largely symbolic. The vote failed along mostly party line, surprising some given bipartisan support for a much more comprehensive bill aimed at expanding Medicaid. That bill still remains motionless in committee and is unlikely to pass at this point absent a very concerted push by leadership, which we doubt is in the cards. As we have mentioned previously, the politics for expanding coverage in Texas hinged in large degree on the outcome of the 2020 elections and dimmed significantly with the success enjoyed by the GOP. Moreover, we believe the rescission of the Waiver actually creates political headwind for expansion in Texas.

Texas resumes use of the J&J vaccine. On Friday afternoon, state officials told providers they could resume using the Johnson & Johnson vaccine. The state had halted use of the vaccine a couple weeks ago based on guidance from the CDC, which had identified the potential risk of blood clots as side effect of the vaccine. At least one Texas woman had been hospitalized with similar conditions following the vaccine. A nationwide survey conducted prior to resumption of the vaccine showed significant hesitancy towards the J&J vaccine, but it remains to be seen how opinions may shift following last week’s announcement.

Scandal involving lobbyist and legislative staffer comes to light. Over the weekend, revelations that the Department of Public Safety was investigating whether a lobbyist gave a date rape drug to a legislative staffer came to light, prompting universal outcry from legislators. As more facts come to light, we will provide additional updates on the scandal and any ramifications in the legislative session.

Please find a brief update on how things are progressing at the Texas Capitol …

Constitutional carry and other politically polarizing bills make progress. This week saw a tense day on the floor of the House, as the body considered a bill often referred to as “Constitutional Carry”. In essence, the bill would remove the requirement to obtain a permit to carry a firearm. The vote followed party lines for the most part, but about 10% of Democrats did vote for the bill. The bill will move to the Senate with a new political backdrop; yesterday, a former Travis County (Austin) deputy killed three family members in Northwest Austin. The event will also likely impact discussions around bail reform; as the deputy was arrested last June after being accused of sexually assaulting a minor. SB 21, the Senate’s bail reform bill, passed the full chamber this past week. Other politically charged bills on the move this past week included:

ERCOT releases summer forecast as PUC gets new commissioners. ERCOT released a preliminary assessment of resource (generation) adequacy for this summer. It identified nearly 10,000 MW of reserve capacity above predicted peak demand. However, ERCOT did identify three worst-case scenarios that could lead to power outages should those conditions play out. The assessment comes as ERCOT had to issue a request to consumers to conserve energy last week. The request came on an unusually hot spring day; spring is typically when many generators are offline for scheduled maintenance. Two important steps were taken last week to install new leadership at PUC: Commissioner Will McAdams was sworn in and the Governor appointed the chair of the Texas Water Development Board to the PUC, Peter Lake.

Biden Administration rescinds Texas’ 1115 Waiver. On Friday afternoon, the Biden Administration rescinded an extension of Texas’ 1115 Waiver. The extension was pushed through at the end of the Trump Administration. While the Biden Administration has cited procedural problems with the extension, we suspect the Administration has both substantive issues with the extension and that this is in part a reaction to the recent jabs that the Administration has traded with Governor Abbott and other state leaders on issues such as the border and the lifting of COVID restrictions. The waiver, which provides billions of dollars in Medicaid money to the state’s hospital safety net, has long been a political lever in the Medicaid expansion debate. The Texas House did pass a bill to extend coverage to postpartum women to a full 12 months; currently Medicaid coverage ends after 60 days. But other, more comprehensive Medicaid expansion bills have stalled.

Budget night is April 22 in the House. The House’s version of SB 1, the state’s budget, will be considered by the full House this Thursday. We expect the bill to pass easily and move to conference committee, where key lieutenants in both the House and the Senate will work out differences between the two chambers. That discussion is likely to be informed by a revised Biennial Revenue Estimate from the Comptroller. We expect that revision to come in early May – after the Comptroller has the benefit of seeing another month of revenue collections. April collections could be quite robust given three important factors: the lifting of COVID restrictions, stimulus checks, and falling unemployment.

Here’s a brief update …

A pair of election reform bills has thrust Texas into the midst of a national debate on voting laws. Two bills are moving through the Texas Legislature that make changes to Texas voting practices. Senate Bill 7 would limit extended early voting hours (from 6 am – 9 pm), prohibit drive-thru voting and make it illegal to proactively mail out absentee ballot applications, something Harris County attempted this past election. The Senate passed the bill, where it will now head to the House, prompting several high-profile corporations to decry the bill. The public rebuke comes on the heels of MLB’s decision to move the All Star game from Georgia after it passed an election reform bill. This in turn prompted strong responses from Governor Abbott and Lt. Governor Patrick. The Governor declined an invitation to throw out the first pitch for the Texas Rangers in response to MLB’s decision. Speaker Phelan also pushed back on the corporate backlash, suggesting he’d like to go “line by line” with them, noting that last election saw “certain areas of the state creating election law out of thin air”.

Speaker Phelan lays out health care priorities. The Speaker was joined by Republican and Democrats alike at a press conference to lay out his bipartisan health care legislative agenda: “Health Families, Healty Texas”. The package of legislation is highlighted by legislation to expand telemedicine (HB 4), extend Medicaid coverage for postpartum mothers (HB 133), and a bill to fund research regarding brain disorders (HB 15).

A new PUCT commissioner has been appointed. The Governor has made his first appointment to the Public Utilities Commission since the resignation of all three members in the aftermath of Winter Storm Uri. Will McAdams will appear before Senate Nominations later today. While we expect some pointed questions, particularly as it relates to market intervention and re-pricing, we do not expect his nomination to ultimately face substantial objection. McAdams is a veteran of the Capitol, having previously been a policy advisor on electric issues to former Speaker Dennis Bonnen and Senate Business and Commerce Chair Kelly Hancock.

The border crisis continues to be a significant macro-political issue. As the number of apprehensions of migrants reaches all-time highs along the southern border, the Governor’s activity in response has increased. Last month, he launched Operation Lone Star, sending the Department of Public Safety and the National Guard to crack down on Mexican cartels and smugglers in high-threat areas. Last week, he visited Weslaco to check on operations. In addition, after allegations of sexual abuse in a federally run detention center in San Antonio, Governor Abbott launched an investigation into the center and demanded that the federal government close the facility for unaccompanied minors in a letter to Vice President Kamala Harris. You can watch Governor Abbott’s appearance on Fox News Sunday here.

With Committee work still at a frenzied pace, floor action in both chambers has picked up speed. Priority bills begin to crisscross the Capitol. Here’s a sample of some of the major movement this week:

  • Senate Bill 1, referred to House Committee/Set for hearing. This is the state’s budget.

  • Senate Bill 3, referred to House Committee. This bill would require the weatherization of all generation, transmission and natural gas facilities, prohibit retail electric variable rate plans, and establish an energy emergency alert system to ensure notification of potential outages.

  • Senate Bill 5, referred to House Committee. This bill would form a statewide broadband office, require the office to create a statewide broadband plan, and establish a broadband development incentive program.

  • House Bill 5, passed out of the House. This is a near identical companion to SB 5 (mentioned above).

  • House Bill 10, referred to Senate Committee. This bill remakes the ERCOT governing board.

  • House Bill 11, referred to Senate Committee. This bill would require the weatherization of the state’s generation fleet.

  • House Bill 16, referred to Senate Committee. This bill would prohibit retail electric rate plans indexed to the wholesale price of electricity.

  • House Bill 103, passed out of the House. This bill would establish an active shooter alert system.

  • House Bill 1239, passed out of the House. This bill would prohibit local ordinances from closing places of worship.

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