2015 Texas Legislative Summary for nonprofits—Late session report

With four weeks remaining in the 2015 Texas legislative session, bills must be moving to survive and be passed. Procedural rules, long committee agendas and end-of-session deadlines become important and will spell the end of most bills now on file. They can die in committee because they have never moved from there. Bills that are moving can “die by the clock” when they have not moved between the two houses in sufficient time to be reconsidered by the other house or a conference committee.

Floor amendments are common for controversial or disputed bills where issues have not been resolved in committee or privately between legislators or factions. Key provisions of a bill that is not moving through the process can be attached to a bill that is moving and has similar or related caption and content.

The complete May 1, 2015 SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS is available here. Some items of interest:

Special fundraising laws for special groups with friends in the Legislature

HB 975 provides a special status for fundraising by major league sports teams and would create an entirely new chapter in the Occupations Code for professional sports clubs—from the NFL, NBA, MLB, MLS—that maintain §501(c)(3) tax-exempt charitable foundations. They would be permitted to conduct raffles at every home game in their venues to benefit their charitable causes, an exception to the limitations on raffles elsewhere in the law. Along the same lines, SB 31 would permit volunteer firefighter or EMS organizations to hold up to ten fundraising sales or auctions per year that are tax-exempt events, amending Tax Code Section 151.310 that permits fewer events.

What’s the problem with these well-intentioned bills? If enacted, these laws would put certain groups ahead of others in the competition for the public’s donation dollars and have the state giving certain groups a preference, to the exclusion of other charitable groups or causes. If these bills pass (and they appear to be moving through the House and Senate), expect to see other groups with friends in the Legislature asking for their own exceptions to the current Tax Code limits on raffles, auctions and tax-free sales events.

Should state agency fee collections advance charitable donations for preferred groups?

Texans can probably brag that their state has more varieties of auto license plates than all of the governments in the known universe combined. This is because the legislators have permitted add-on fees at the time of the license renewal that offer customized “specialty plates” with an image or message supporting a cause, college or university, public landmark, sports team or lovable creature such as the Texas horned lizard. Three pending bills expand this concept to various state agency forms that citizens use to pay fees by providing extra space on the form for an extra donation to a specified cause. Examples:

  • When registering a vehicle at DMV, use the form to make an additional donation to Special Olympics (HB 2756, SB 272).
  • When applying for a license to carry a concealed handgun or hunting license, check the box to make a donation to a veteran’s assistance fund managed by the state (HB 3710, HB 1584).
  • When applying for a hunting license, indicate an extra amount that goes to a fund to manage the distribution of legally-harvested deer meat to groups that provide food assistance (SB 1978).

Why would any legislator vote against these kinds of proposals? Because they capture a good amount of citizen donation dollars for particular causes or groups only, to the exclusion of other groups. Without more thoughtful policy discussions regarding the fairness of these well-intentioned proposals, the state government likely should not be picking winners and losers among the hundreds of organizations and causes that compete for the public’s dollars. An additional concern is that, in past years, the Legislature has not directed all the donated dollars specified by each license plate donor to the designated cause. Instead, the state has taken substantial amounts from these various funds into the general treasury to cover the state’s general expenditures.

Tax-exemption review and reform bills are D.O.A. again this session

It’s important to note which bills and issues raised in the past have had the same fate this session and will have to wait for another day:

  • HB 1003 would provide that all state tax exemptions, credits or other exceptions would “sunset”, or be automatically repealed, every six years unless re-authorized by the Legislature after a review of the costs and benefits of these tax exemptions and policies. This idea sends chills through the nonprofit sector and charitable organizations and also other special-interest groups in the private sector.
  • SB 868 and SJR 38 would grant the Legislature broad authority to review all state and local “tax preferences”, or require the State Comptroller to periodically review all state and local tax preferences to evaluate their impact. All tax preferences would have a six-year shelf life unless re-authorized.
  • A bill sponsor asserted that more than $40 billion in potential state tax revenue is by-passed each biennium due to current tax exemptions and preferences. These bills received polite committee hearings but have not moved since.

Read the entire May 1 legislative summary here.

© 2015 Richard W. Meyer, All Rights Reserved


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