2011 Legislative Session
State budget, taxation & gaming
In 2006, the Legislature approved a reduction in school property taxes that costs $14 billion every two years. But the new business franchise tax approved to replace that money only raises about $5 billion every two years, leaving lawmakers with what many of them have taken to calling a "structural deficit" of $9 billion. Lawmakers have filled that gap with surplus dollars and reserve funds in recent years, but the downturn in the state's economy will make balancing the budget much more difficult in 2011.
The recent recession has cut into state sales tax receipts, the biggest revenue generator for the state, by over 10%. The state faces a $1 billion dollar shortfall on top of the $9 billion needed to replace school property taxes. Increasing the sales tax, mixed beverage tax or franchise tax will all be in the table, but a new funding source, such as taxes generated by casino gambling, will be more attractive to state legislators. How legislators go about finding new revenue will have a profound impact on the next legislative session.
Redistricting
In political terms, redistricting will have an even more profound impact on the legislature next session. The redrawing of the boundaries of all House, Senate and Congressional districts following the census becomes a consuming focus of the legislature, pushing other legislative issues to the back burner. Redistricting can be very contentious, fights over political maps can spill over into the day-to-day business of passing bills, including those sought by our Association.
Sunset
The Texas Department of Insurance, and its Workers’ Compensation Division, will be going through a “Sunset Review” in which the legislature reexamines the functions carried out by these agencies. The process is not intended to be a vehicle for making substantive changes to the underlying laws administered by the agencies under review; however attempts are always made to do so by various interest groups. Trial lawyers, insurance companies and business groups will all be closely watching each other in this process.
Session Outlook
We fully expect to spend the better part of our efforts during the upcoming session fighting off tax and fee increases. Any attempts at major legislative initiatives will have to be carefully managed in the session due to our tax exposure and the effects of redistricting on the political environment.
81st Session TEXAS LEGISLATIVE ROUNDUP
The 81st Session of the Texas Legislature ended on June 1, 2009. The Governor may veto bills through June 21, 2009. Following is a summary of the legislative activities of interest to the industry.
Franchise Tax
Late in the session the legislature increased the small business franchise tax exemption from $300,000 to $1,000,000. This will be in effect for the next two years and then drop to $600,000 for subsequent tax years.
Beer & Wine Permits
There are many restaurants that currently have a beer and wine permit only and are not allowed to have distilled spirits on their premise, even if they want to use the spirit only for cooking purposes. Rep. Mike Hamilton (R-Mauriceville) and Sen. Kirk Watson (D-Austin) passed HB 2237 that would allow a beer and wine permit holder to have distilled spirits on premise as long as it is used for cooking purposed only.
Food Handler Certification
Currently, only cities have had the authority to require employees to be certified in food safety. During the 80th Session we passed legislation creating a state standard for employee food safety training. In an effort promote food safety, this Session Rep. Garnet Coleman (D-Houston) and Sen. Nelson (R-Lewisville) carried and passed legislation that extended the authority to require employees to be certified in food safety to the counties and state.
Culinary Arts Education
All of us in the industry realize the importance of the culinary arts courses that fall under the Career and Technology Education (CTE) programs that many high schools have in place. The TRA Education Foundation has been very instrumental the last few years providing the culinary arts curriculum for many high schools along with training many of the culinary arts teachers. A few months back, Comptroller Susan Combs issued a report (Texas Works 2008: Training and Education for all Texans) that touched on how our public schools push far too many kids down the four-year-college track; therefore, pushing many kids out of school (35% drop-out rate). The report stated that 80% of all Texas jobs do not require a college degree. With a very large group of skilled workers retiring in the near future it is important for our state to make sure we have young skilled workers to replace them. Senator Shapiro (R-Plano) carried S.B. 1313 which would have implemented many different programs that promote and strengthen the CTE courses within high schools; therefore, benefitting many of the students interested in culinary arts. However, while some CTE funding provisions and added course electives were carried in other legislation (H.B. 3646) because of lack of time, S.B. 1313 did not pass.
Smoking Ban
TRA supported the statewide smoking ban again this Session and even though many interest groups and legislators also supported the ban, it did not pass. The past two Sessions we have partnered with the Heart/Lung/Cancer associations in efforts to pass the bill; however, their unwillingness to negotiate something less than a near total ban with members of the legislature has kept the bill from passing. Assuming the TRA board decides to support it again next Session, we may approach the statewide smoking ban with a different strategy.
Wine Bill
SB 2523 would have allowed consumers to bring their own wine into a restaurant if the restaurant owner decided to allow it. This bill did not pass. The TRA Legislative Polity Committee supported this legislation for a variety of reasons, primarily because the legislation changed the gross receipts tax on mixed beverages to a sales tax which is shown on the customer’s receipt. This transparency is a huge advantage for restaurants and for the first time, customers would see that they are paying a 14% tax on their beer, wine or mixed beverage purchase, thus increasing public awareness of the high tax rate.
Additionally:
- Currently, customers are able to bring in their own wine to restaurants that have a beer and wine permit and there has been no adverse impact on these permit holders.
- SB 2523 was a permissible bill. Each restaurant had the option to allow a customer to bring in wine or not.
- SB 2523 would have language that set a per customer limit of two bottles.
- Each restaurant could set the corking fee at whatever amount they’d like.
Before we fully supported this legislation, TRA staff did research other states where the option of bringing in wine is already in place. After talking to other high end restaurants in those states, all of them expressed that the option of bringing in their own wine did not have a negative effect on their business. Many of you may have seen the article in the Nation’s Restaurant News that spoke of how during a slow economy many restaurateurs used the option of charging a corkage fee to allow customers to bring in their own wine at selected times or days as a means to increase volume.
Menu Labeling
While the National Restaurant Association supports the federal menu labeling bill (LEAN Act), we opposed the menu labeling legislation on a state level. Our position was that this legislation might conflict with the LEAN Act which has been filed and is receiving bipartisan support in the U.S. Congress. This bill died in committee.
Immigration
While immigration is basically a federal issue, states can, and have, passed legislation dealing with the issue. There were a few members of the Texas legislature that filed legislation ranging from denying government benefits to illegal immigrants to forcing employers to use the e-verify system. There were 55 immigration related bills filed in which over half of them would have negatively affected our industry. The majority of the Texas Legislature believes that immigration is a federal issue and because of that none of the harmful immigration legislation passed this Session. As many of you know, TRA is part of a coalition of business groups working at both the state and national level to combat legislation detrimental to employers.
Liquor Liability
In response to a 1987 Supreme Court case creating liquor liability, TRA negotiated with trial attorneys to craft the state’s “dram shop” or liquor liability statute. This statute clearly defines the conditions under which liability attaches for the service of alcohol to intoxicated patrons and has remained virtually unchanged for the past two decades. The last two Sessions trial lawyers have attempted to alter this statute to provide for joint and several liability, meaning that the provider could be liable for the entire sum of any monetary award, including that part attributed to the intoxicated patron and both times the legislation did not make it out of committee.
Trans Fat
There has been an increase in the number of cities and states banning the use of trans fats in the preparation of food. Legislation was introduced in both the Texas Senate and House regarding the ban of trans fats. Even though most of the restaurant industry has already transitioned away from using trans fat cooking oil, there were sections of this bill that we had concerns with. The two authors of this legislation did reach out to us in efforts to create a bill that both chains and independents would be happy with. The Senate bill was voted out, but did not make it to the House Floor for a vote.
