BILL ANALYSIS

S.B. 3016

By: Creighton

Intergovernmental Affairs

Committee Report (Unamended)

BACKGROUND AND PURPOSE

In the 88th Legislative Session, the Texas Legislature passed the Texas Regulatory Consistency Act, H.B. 2127, to align local ordinances more closely with state law to create a more consistent regulatory framework across Texas. S.B. 3016 seeks to build on the Texas Regulatory Consistency Act by providing for uniformity with respect to municipal boundaries and annexation and the regulation of land use, structures, and businesses. S.B. 3016 amends current law relating to state preemption of municipal and county regulation on land use, structures, businesses, and related activities and municipal boundaries and annexation. Additionally, S.B. 3016 seeks to provide a stronger enforcement mechanism than what was provided in the Texas Regulatory Consistency Act and to grant the attorney general new statutory authority to investigate and bring legal action against municipalities and counties alleged to be in violation of preempted areas of law.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

S.B. 3016 includes legislative findings regarding the following:

· the history of the state being the exclusive regulator of many aspects of commerce, trade, elections, and criminal justice in Texas;

· recent efforts by several local jurisdictions to establish their own regulations of commerce, trade, elections, and criminal justice that are different than the state's regulations; and

· the resulting patchwork of regulations that apply inconsistently across Texas.

The bill establishes that its purpose is to provide additional statewide consistency by returning sovereign regulatory authority powers to the state where those powers belong in accordance with the Texas Constitution, including provisions relating to cities with a population of more than 5,000.

S.B. 3016 prohibits its provisions from being construed to prohibit a municipality or county from building or maintaining a road, imposing a tax, or carrying out any authority expressly authorized by statute or to prohibit a home-rule municipality from providing the same services and imposing the same regulations that a general-law municipality is authorized to provide or impose. The bill expressly does not affect the authority of a municipality or county to conduct a public awareness campaign or to repeal or amend an existing ordinance, order, or rule that violates the provisions of the bill for the limited purpose of bringing that ordinance, order, or rule in compliance with the bill.

S.B. 3016 amends the Local Government Code to prohibit a municipality or county from adopting, enforcing, or maintaining an ordinance, order, or rule regulating conduct in a field of regulation that is occupied by a provision of state law relating to municipal and county regulation of land use, structures, businesses, and related activities and a provision of state law relating to municipal boundaries and annexation. An ordinance, order, or rule that violates those provisions is void, unenforceable, and inconsistent with the applicable provisions.

S.B. 3016 amends the Civil Practice and Remedies Code to establish that a person who has sustained an actual or threatened injury in fact from a municipal or county ordinance, order, or rule adopted or enforced in violation of those prohibitions, or a nonprofit organization or trade association representing the person, has standing to bring an action against the municipality or county.

S.B. 3016 authorizes the attorney general to investigate an alleged violation regarding a municipality or county adopting, enforcing, or maintaining an ordinance, order, or rule in violation of prohibitions against the adoption, enforcement, or maintenance. The bill authorizes the attorney general to bring an action for injunctive, declaratory, or mandamus relief against a municipality or county if the attorney general determines after conducting such an investigation that the municipality or county violated the applicable law.

S.B. 3016 authorizes the attorney general to bring such an action in the county in which all or a substantial part of the events giving rise to the cause of action occurred or, if the defendant is a municipality, a county in which the municipality is located. The bill establishes that during the pendency of such an action, with respect to a municipality or county defending the action, the following applies:

· the comptroller of public accounts is required to withhold payment of any sales and use tax money due to the local government;

· the local government is prohibited from adopting a property tax rate that exceeds the local government's no-new-revenue tax rate, defined by reference as the no-new-revenue tax rate calculated under the Tax Code;

· the municipality or county is prohibited from adopting a budget that exceeds the total expenditures of the budget under which the municipality or county is operating at the time the attorney general brings the action; and

· the municipality or county is prohibited from receiving state grant funds and any pending application for such funds must be denied.

S.B. 3016 authorizes a municipality or county defending an action brought by the attorney general to receive state grant funds for grants provided for the following purposes:

· responding to a disaster declared under the Texas Disaster Act of 1975, if:

o for a municipality, the municipality is located in a county or a county adjacent to a county that includes an area specified in the disaster declaration; and

o for a county, the county or a county adjacent to the county includes an area specified in the disaster declaration; or

· providing financial assistance to a municipal police department, sheriff's department, constable's office, district or county attorney's office, fire department, municipal or county jail, or other municipal or county department providing law enforcement or emergency response services.

S.B. 3016 establishes that a municipality or county defending such an action has the burden of proof to establish that the municipality or county complied with the law that is the subject of the action. The bill requires the trial court to set an action as follows:

· for an initial hearing not later than the 30th day after the date the municipality or county defending the action was served with process for the action; and

· for a trial on the merits not later than the 90th day after the date the municipality or county defending the action was served with process for the action, unless the municipality or county and the attorney general agree to a later date and the court determines that holding trial at a later date is in the interest of justice.

S.B. 3016 establishes that the Fifteenth Court of Appeals has exclusive intermediate appellate jurisdiction of an action brought under the bill's provisions. A party must appeal the action not later than the 30th day after the date the judgment is signed. The bill requires an appellate court to expedite an appeal of such an action.

S.B. 3016 establishes the following if the attorney general prevails in such an action:

· the municipality or county defending the action is prohibited, during the five fiscal years following the year in which the judgment becomes final, from the following:

o adopting a property tax rate that exceeds the local government's no-new-revenue tax rate; or

o receiving state grant funds; and

· the court issuing the final judgment resolving the action is required to provide in the judgment that the state is entitled to recover from the local government defending the action a penalty equal to the balance of the suspense account maintained for the local government that exists on the date the judgment is signed, less the amount the comptroller may retain.

The bill requires the comptroller, on receipt of a copy of the final judgment in an action brought under the bill's provisions, to deposit the balance of the suspense account maintained for the municipality or county defending the action as of the date the judgment is signed to the credit of the general revenue fund. The bill authorizes the comptroller to retain in the suspense account maintained for the municipality or county an amount not to exceed five percent of the balance of the suspense account as of the date the judgment is signed for the purpose of making refunds for overpayments to the suspense account or redeeming dishonored checks and drafts deposited to the credit of the suspense account. The bill requires the comptroller to deposit the balance of that retained amount, if any, to the credit of the general revenue fund not later than the fourth anniversary of the date the comptroller retains an amount in a suspense account.

S.B. 3016 establishes that the exception from consideration as a defunding municipality with respect to the municipality's reduction in appropriation to the municipality's police department on the grounds that the percentage reduction to the appropriation to the municipality's police department does not exceed the percentage reduction to the total budget does not apply to a municipality from which the comptroller is withholding payments in accordance with the bill's provisions or to a municipality subject to a final judgment in an action brought under the bill's provisions for six state fiscal years following the date the judgment is signed.

S.B. 3016 prohibits a county from holding an election to receive voter approval to implement a reduction of funding or resources for certain primary law enforcement agencies if the comptroller is withholding payments from the county or if the county has been the subject of an adverse final judgment in an action brought under the bill's provisions before the sixth anniversary of the date the judgment is signed.

S.B. 3016 requires the comptroller, if a municipality or county prevails in an action brought under the bill's provisions, to immediately send to the municipality or county any balance of the suspense account maintained for the municipality or county as of the date the final judgment resolving the action is signed, including any interest that accrued on the balance of the suspense account during the period the balance was withheld.

S.B. 3016 establishes that its provisions amending the Civil Practice and Remedies Code apply only to a cause of action that accrues on or after the bill's effective date. The Texas Supreme Court has exclusive and original jurisdiction over a challenge to the constitutionality of the bill or any part of the bill and may issue injunctive or declaratory relief in connection with the challenge. Every provision, section, subsection, sentence, clause, phrase, or word in the bill, and every application of the bill's provisions to every person, group of persons, or circumstances, is severable from each other. If any application of any provision in the bill to any person, group of persons, or circumstances is found by a court to be invalid, preempted, or unconstitutional for any reason whatsoever, then the remaining applications of the bill to all other persons and circumstances shall be severed and preserved and shall remain in effect. All constitutionally valid applications of the bill's provisions shall be severed from any applications that a court finds to be invalid, preempted, or unconstitutional, because it is the legislature's intent and priority that every single valid application of every statutory provision be allowed to stand alone. The legislature further declares that it would have enacted the bill, and each provision, section, subsection, sentence, clause, phrase, or word, and all constitutional applications of the bill's provisions, irrespective of the fact that any provision, section, subsection, sentence, clause, phrase, or word, or applications of the bill, were to be declared invalid, preempted, or unconstitutional.

EFFECTIVE DATE

September 1, 2025.