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Wednesday, March 25, 2015 by Tyler Whitson
Council discusses legislation that targets Austin
With the Texas Legislature’s March 13 filing deadline behind them, city staff are busy tracking the 6,400 or so bills that state legislators have filed this session. They joined City Council at a work session Tuesday for an update on the bills making their way through the 84th Legislature that could directly affect Austin.
Karen Kennard, interim intergovernmental relations officer, said that the city is following “about half” of the bills that legislators have filed. Some of them, she added, are “kind of aimed squarely” at the city, particularly its utilities and local ordinances.
Mayor Steve Adler summed up the major concern that he and others representing Texas cities are bringing to the legislature. “I’ve been in communications with other mayors of other cities and with the (Texas Municipal League), fighting the larger umbrella issue of trying to keep as much local control to the city as is possible,” he said.
Adler noted that thus far he and Council Members Leslie Pool and Greg Casar have testified at the legislature and that there will “probably be additional opportunities” to do so.
Several bills, Kennard said, would pre-empt existing city policies, including the source of income ordinance, the plastic bag ban, temporary transportation network company regulations and local nondiscrimination ordinances.
SB 267, filed by Sen. Charles Perry (R-Lubbock), would pre-empt ordinances like the one Council passed last year prohibiting housing discrimination based on source of income. Kennard noted, however, that Sen. Kirk Watson (D-Austin) attached an amendment to the bill while it was in the Senate Business and Commerce Committee.
The change, Kennard said, would create a grandfather clause for ordinances passed before the beginning of this year, essentially exempting Austin’s ordinance. “We are now working to keep the Watson amendment on the bill as it goes to the Senate floor,” she added.
Another slew of bills filed by Rep. Jason Isaac (R-Dripping Springs) would put pressure on the city’s water utility. These include HB 2073 and HB 912, which Kennard said would limit or block the city’s ability to protest water and wastewater discharge permits at the Texas Commission on Environmental Quality. “These bills are going to be difficult to slow down,” she said.
The two bills that Kennard said are the top priorities for her office to oppose are SB 1945, filed by Sen. Troy Fraser (R-Belton), and HB 3958, filed by Rep. Paul Workman (R-Austin). “The legislative lobby team is spending a lot of time on those,” she said.
Both bills could have substantial financial impact on the city budget by potentially limiting the city’s ability to govern Austin Energy. The municipal electric utility has a $1.44 billion budget this fiscal year out of the $3.5 billion city budget, and transfers $105 million each fiscal year to the city’s general fund, along with tens of millions more in additional support.
SB 1945 would allow a customer or group of customers using more than 25 million kilowatt-hours per year to petition the Public Utility Commission to determine if their rates are “just and reasonable,” or consistent with rates in deregulated areas. If the commission determines that they are not, those customers could buy power on the market or allow the PUC to set their rates.
Kennard said the city’s contracted lobbyists have met with Fraser about the bill. “What we have heard is that he is interested in the city looking into maybe considering how we treat some of our largest customers,” she said. “It’s our understanding that the Texas Manufacturing Association took this bill to him on behalf of some of our large industrial customers.”
The Lieutenant Governor’s office has not yet referred the bill to a Senate committee.
Council Member Ellen Troxclair challenged an assertion from Kennard that the bill could effectively deregulate the utility. “It sounds like it’s not a deregulation, it sounds like there’s more of a process involved,” Troxclair said. “It’s only a certain amount of users and they would have to go the PUC.”
Austin Energy’s concern, Kennard responded, is that the bill would allow large customers to begin “peeling off” of the service or rate structure. “Then you start getting groups. And then, once you know it, it has unraveled the entire customer base of the utility,” she said.
HB 3958 would limit Austin Energy’s general fund transfer, even though Council set a $105 million cap in 2012. “The bill has some very tight definitions of what Austin Energy revenue can and can’t be used for,” Kennard said, noting that Workman “is concerned, and has been for a number of years, about some of the things that are funded from the revenues of Austin Energy.”
The long-running issue has been a hot topic at City Hall this month. Austin Energy General Manager Larry Weis sent a memo to the mayor and Council on March 13 demonstrating that, despite the cap, the overall funding that the utility provides to the city continues to rise. Including the general transfer amount, the utility will chip in nearly $155 million in the current fiscal year.
Kennard said that her team plans to meet with Workman and discuss efforts the city is making to address the issue, such as reducing the funding the utility must contribute to economic development.
Toward the end of the discussion, City Manager Marc Ott offered his own perspective on the efforts that Austin puts into lobbying the state legislature relative to other cities.
“It’s probably a harder challenge here in Austin, given that we are, in fact, the seat of state government, and many of you know the history of Austin being a target when the legislature is in session better than I do. But I certainly have come to recognize that particular peculiarity in my range of experience here,” Ott said.
The 2015 legislative session ends June 1, and the last day for Gov. Greg Abbott to veto bills or line items is June 21.
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Key Players & Topics In This Article
Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.
City of Austin: Our town
Texas Legislature: The state’s legislative governing body composed of the House and Senate.
Texas Public Utility Commission: The state group that regulates public utilities.