Dealers' Choice - Fall 2019

86 th TEXAS LEGISLATURE TAKES ACTION ON BIG STATE ISSUES AND FRANCHISED DEALER PRIORITIES U nlike recent sessions that at times derailed over dif- fering agendas and politics, Governor Abbott, Lt. Governor Patrick and ‚rst-term Speaker Bonnen remained publicly united throughout the session on what they determined to be the state’s top priorities. MAJOR STATE ISSUES BUDGET

is now paying 45 percent of the total cost of public education, which is up from 38 percent. However, the Legislature paid for the increase in the state’s share using additional revenue available because the economy has been thriving, thus raising questions about how lawmakers will maintain the new spending in the future, particularly in the event of an economic slowdown. SB 2 lowers the rollback tax rate from the current 8 percent to 3.5 percent for cities and counties. If cities and counties seek additional revenue beyond a 3.5 percent annual increase, an automatic rollback election will take place so the voters can decide if they approve the increase above that amount. No direct tax relief is provided through SB 2, but the bill increases transparency by shedding light on who is raising your taxes and by how much and gives the voters an enhanced tool to limit tax increases going forward. FRANCHISED DEALER ISSUES †e 86th session was a very productive one for franchised dealerships. Under the leadership of TADA Chairman Donnie Buckalew and TADA Legislative Committee Chairman Joe Chastang, TADA bill priorities were passed, and harmful dealer provisions were eliminated in the Texas Department of Motor Vehicles Sunset process. MODERN OWNERSHIP While over 80 percent of TADA’s members are still family- owned private capital businesses, other ownership types have been acquiring franchised dealerships. In addition, organizational structures are becoming more complex across

†e only bill that is constitutionally required to pass in Texas is the appropriations bill that provides for the state budget. †e 86th Texas Legislature passed HB 1, the biennial budget for ‚scal years 2020-2021. HB 1 totals $250.7 billion and represents a 16 percent spending increase over the two-year budget approved during the 2017 legislative session. Additionally, lawmakers provided an additional $6.1 billion from the state’s Rainy-Day Fund for Hurricane Harvey recovery and infrastructure projects through the supplemental budget. SCHOOL FINANCE AND PROPERTY TAX REFORM School ‚nance reform and property tax relief were the top priority of the state’s leadership, and these priorities were addressed in HB 3 and SB 2, respectively. HB 3 allocates $4.5 billion in new funding to public schools, $2 billion in additional teacher compensation, andmore than $5 billion to buy down local property taxes, for a total cost of $11.6 billion in new spending. HB 3 also alters the formula for recapture, also known as Robin Hood. Overall, the state

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FALL 2019