CentexAGC Advocates for the Construction Industry
CentexAGC serves as the voice of the construction industry at the local, state, and national levels of government, working to prevent changes that would adversely affect commercial construction. In an 84th Texas Legislature populated by hot button issues, the construction industry quietly collected some huge victories. Those wins for contractors primarily came in the form of billions of dollars in new work, economic development and tax savings.
By comparison, the 85th Texas Legislature was known as the nastiest, most grueling session in anyone’s memory with the second-most bills filed in state history, the fewest number of bills passed since 1995, and the lowest percentage of bills passed in the past 126 years. The construction industry still saw a few bills make it into law while others died awaiting action or were vetoed by the Governor. Stay tuned for the mid-terms, where all 150 house members, half of the senate, and state leadership will be up for grabs. As always, we’ll keep you covered on the happenings at the Capitol!
Construction Successes in the Past Two Legislative Sessions:
AGC-TBB Legislative Day (March 12, 2015) – More than 120 contractors from across the state showed up at the Capitol to champion key construction industry causes, with a focus on higher education construction funding, breach of contract fixes, and statute of repose reform. AGC-TBB met regularly with several groups in session, including ABC of Texas, Texas Construction Association, Texas Building & Construction Trades, Texas Business Roundtable, Texas Taxpayers and Research Association.
Capital Funding – With the passage of the 2016-17 budget, Texas is poised to see roughly $1.7 billion in the construction of new buildings and repair of aging structures over the next two years. The lion’s share of construction funding is contained in the budget for the Facilities Commission, which was granted $1.34 billion in its total budget for the next two fiscal years. That figure is a more than 600-percent boost from its past budget. Most of the Facilities Commission funding is set aside for construction of new state buildings. The rest of the funding is dedicated for health and safety and deferred maintenance projects at state facilities.
Campus Construction Funding – Texas contractors will see $3.1 billion in construction projects at public universities over the next two years under the Legislature’s approved budget. This successful push was in dire need this session, as such a package had not passed since 2006. The final version of the bill funds 64 projects across the state with each capped at $90 million.
Tax Cuts – While both chambers agreed on some form of relief from the state business franchise tax, they had different visions on how to best reduce the tax burden. Eventually, the two sides compromised on a 25 percent across-the board cut to the franchise tax. The franchise tax-cut measure will save Texas businesses more than $2 billion over the next two years and allow more businesses to use a simplified method of computing what they owe under the tax. The bill raises the revenue threshold on the flat-rate portion of the tax from $10 million to $20 million, meaning businesses with revenue levels over $1 million and up to $20 million can claim a lower tax rate of 0.331 percent. Businesses with revenue under $1 million will still avoid the tax altogether.
Other construction issues with definitive change:
Contracting Transparency – As a result of scandals revealed within state agencies such as the Health and Human Services Commission early in the session, ethics reform became a top priority for Gov. Greg Abbott. Three major contracting reform bills passed covering project oversight, disclosure of gifts from a contractor to an official, and disclosure of interested parties when contracts exceed $1 million.
Economic Development – The Center for Alternative Finance and Procurement was established within the Texas Facilities Commission to assist governmental entities in the receipt of proposals, negotiation of agreements, and management of qualifying public-private partnership (P3) projects. The bill is intended to provide an “objective resource” for lawmakers and governmental entities when deciding whether to use alternative financing methods. The bill also prohibits “unsolicited proposals” from private entities for P3 projects.
Insurance & Liability – Two bills passed that affect architects and engineers. The first prohibits a governmental entity’s architect or engineer, or any related entities, from serving as a construction manager-at-risk, whether alone or in combination with another person. The second bill to pass removes from law the obligations of architects and engineers to defend local governments and limits their obligation to repay local governments for liability from negligence or fault. The bill also allows local governments to be insured on the architect or engineer’s general liability policy and establishes a standard of care for architects and engineers to perform services.
Contract Preferences and Bans – Bills were passed that provide preference for American iron and steel in all state and local construction contracts, although there were many loopholes included. A ban on the state requiring an A/E t o indemnify or defend state’s negligence as well as a ban on local govts’ fees on new construction to subsidize affordable housing were signed into law.
Education and Workforce – A whole slew of workforce education/vocational bills were signed into law dealing with the intersection of high school, junior colleges, and higher ed relating to vocational coursework, credits, and funding, including incentives for plumbers and AC/refrigeration certification.