Written by  Gary Scharrer

Think Bubble

The on-going struggle with the COVID-19 virus could restrict Capitol access to the public during the upcoming legislative session, when budget problems will likely force the highway construction industry to play defense, some Texas lawmakers told AGC members during the kickoff session of the AGC of Texas virtual conference series on August 20.

The highway construction industry also should expect legislative efforts to restrict aggregate production. But it’s unlikely that legislators will consider the same volume of bills as in past sessions (7,000+ in recent years) simply because of the impact of the corona virus. The focus will stay narrowly on the budget and other priority issues.

“Other stuff will have to wait,” Rep. Chris Paddie, R-Marshall, told AGC members via Zoom.

The Texas Capitol can accommodate 6,000 people, but access will likely be limited, House Administration Chairman Charlie Geren, R-Fort Worth, said. “If the (COVID-19) numbers don’t change, we may not see the crowds in the building.”

The coronavirus has wiped out a projected $2.6 billion budget surplus while creating an estimated $4.6 billion deficit, which Paddie considers “optimistic.” Texas lawmakers significantly increased public education funding last session, leaving a big hole for the next budget. Geren and Paddie agreed that legislators are not likely to retreat from their commitment to public education.

More than 20 bills were filed last session affecting the aggregate business. The same can be expected in the upcoming session, Geren said.

“There’s a bipartisan group against you - and a bipartisan group for you,” he said.

Conference moderator, AGC’s Government Affairs Director Steven Albright asked legislators how AGC of Texas can best engage with policy makers to offer information and facts about aggregate production and other industry matters.

“Every industry has bad actors that cause a lot of this disruption and dissatisfaction amongst our constituents,” Paddie said. “You have to police (the industry) and make sure you do as much as you can to make it right.”

The aggregate business remains essential for construction, and the challenge will require communication between the competing interests to balance those different perspectives, Paddie said.

“Come with solutions and force the other side into a true discussion and negotiations for something folks can agree on,” Paddie said. Taking a “kill the bill strategy is not a productive way to go forward.”

Live Panel

No one wants to see stills of a virtual conference, so we decided to pull pictures of our speakers from more social times. Here, Senator Kelly Hancock (center right) appears in a live panel at 2019’s Management Conference in The Breakers.

And support your friends, Geren urged AGC members. A number of his GOP House colleagues face stiff re-election campaigns as Democrats aim to flip 9 seats necessary to gain control of the 150-member chamber for the first time in 20 years. Both Republican legislators expect their party to maintain control, although Paddie conceded he also expects his side to lose seats. Republicans now have an 83-67 majority.

In a panel discussion with state Sen. Chuy Hinojosa, D-McAllen, and Sen. Kelly Hancock, R-North Richland Hills, moderator Albright noted the highway construction industry had been classified as “essential” and had accomplished more work quicker as traffic dwindled during the pandemic shut-down.

But the pandemic also has caused a significant reduction in traditional highway funding revenue, causing concern that Texas legislators might reduce TxDOT’s budget. One potential target involves Prop 7 funding. The law allows a super majority of legislators to cut up to 50 percent of the $2.5 billion annual general sales tax allocation from Prop 7.

Highway construction workers deserve credit for doing their work in an environment that was “not business as usual,” Hancock noted, and doing it safely without spreading the virus, which would have created newspaper headlines.

“One of the things in favor of the industry is that it’s a critical part of what government does. Our infrastructure is necessary – one of the arteries of our economy,” Hancock said.

But the budget reality means “this is going to be a session of playing defense rather than offense in funding,” Hancock said.

Hinojosa agreed with his colleague, emphasizing the importance of the highway system to the state’s economy, stressing that relieving road congestion remains a priority.

Both senators agreed that automated technology (artificial intelligence) will continue to expand and increase in popularity as people become more comfortable with it. A Honda Civic, for example, can self-park, Hancock noted.

“A.I. will continue to evolve and grow. We have provided a platform for that technology and for that research in Texas. A.I. technology is a way to enhance the safety features in a vehicle,” Hancock said.

Neither legislator could envision tax nor fee increases to support the construction industry. The state gas tax (last increased in 1991) is unlikely to get raised again in Texas because more electric and hybrid vehicles are hitting the highways. At some point, Hancock sees the state transitioning from a gas tax to a road fee based on miles traveled. Legislators discussed a fee on electric vehicles briefly during the 2019 legislative session but took no action.

“There’s no taste in this economy where businesses are trying to survive to be looking at increasing revenue for government,” Hancock said.

Hinojosa said he supports toll roads that help reduce traffic congestion and have community support.

Both expect state lawmakers to discuss coronavirus liability protection for businesses, with much of the debate to focus on details, Hinojosa said.

The state can’t afford to wait on congressional action, they said. “I don’t want any business to come out of the pandemic, having survived it only to be bankrupted by litigation,” Hancock said.

In another conference segment, former U.S. House Ways and Means Chair Kevin Brady, R-Texas, emphasized the importance of liability protection and expressed hope Congress will approve another pandemic-related stimulus bill in the 13 legislative days before the Nov. 3 election.

“We’re not out of the woods yet either on the healthcare side or the economic side,” Brady told moderator Jimmy Christianson from AGC of America. “We don’t need to go on a spending spree, but there’s some things we need to do to help our businesses ride this out make sure they keep their workers.”

Reaching an agreement during the fall election campaign will be difficult, Brady acknowledged, but the need to do more is great, including a need to become more independent in ensuring medical supplies, equipment and medicines. Congress must “act now to be medically independent from China and other bad actors,” he said. Brady and other Republicans favor cutting the business rate in half for companies bringing those jobs and supply chains back to the U.S.

Christianson reminded the veteran congressman that highway contractors need long-term funding because transportation projects require years of planning. The current federal highway funding legislation expires this fall. AGC of American wants a minimum one-year extension with additional funds.

Brady said he prefers a “user fee” to fund transportation: “I also think we need more private capital, not to replace the highway trust fund but to complement it.” Brady is working with the Democratic chairman of the Ways and Means Committee for both an extension and also to help the industry develop its workforce.

“I hope you guys do not get disheartened by this. I know you having been pushing Congress to think long term for an awful long time. What I’ve noticed is more and more people are getting that message,” Brady said.

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