Texas business groups endured unusually bruising legislative session


In sports terms, the game plan for business lobbyist Tony Bennett when he took the field in January at the start of the 85th Texas Legislature was straightforward and offensive-minded: Throw the football downfield in what he viewed as a bid to accelerate job creation in the manufacturing sector and help improve the Texas economy.

Nearly five months later, he’s reeling from a defensive grind he hadn’t anticipated in a state controlled by the traditionally business-friendly Republican Party.

“We are very concerned after this session about what the next session is going to look like, if this is any indication,” said Bennett, president of the Texas Association of Manufacturers. “We spent so much time protecting what we have that we were left with little time” to work on anything else.

Others in the state’s business community are limping away from the just-ended legislative session feeling the same, after some heretofore mainstream Republican business priorities ran headlong into an energized and powerful conservative branch of the GOP that they view as more interested in right-wing orthodoxy and social concerns.

The influence of the right wing was widely felt, from a session-long, time-draining focus on where transgender people use the bathroom to a condemnation of taxpayer-funded incentives for economic development. Representatives of conservative groups that pushed those issues are unapologetic, saying traditional business lobbying organizations never really represented them anyway.

“It just seems like more and more, they follow the big government category,” said JoAnn Fleming, executive director of Grassroots America — We the People, a prominent tea party-aligned advocacy organization that has the ear of conservative lawmakers. “I just think they are on the wrong side of many issues that are very important to Texans.”

To be sure, myriad business interests around the state logged plenty of wins this session. Successes included a measure to rein in lawsuits against property insurers in the wake of natural disasters, new legislation usurping local municipal ordinances regulating ride-hailing companies, such as Uber and Lyft, in favor of a statewide framework, and an effort backed by the construction industry to ban Austin and other cities from charging certain fees on new developments to address housing affordability.

But on the more overarching, business-related issues and debates, the GOP’s right flank called many of the plays.

“This is one of the first sessions where business and social issues have collided,” said Cathy DeWitt, a vice president at the Texas Association of Business, one of the most powerful business lobbying organizations in Texas. “The conversations were much more about bathrooms than how to bring more business to the state.”

The Texas Association of Business came out strongly against the efforts to restrict where transgender people can use the bathroom, calling them discriminatory and highlighting the potential for a national backlash that might hurt the state’s economy. The group has cited the example of North Carolina, which recently softened its efforts to regulate transgender bathroom access after a number of anticipated major corporate expansions went elsewhere and after some high-profile events were canceled.

“It is discriminatory legislation that is just bad for business,” said Chris Wallace, president of the Texas Association of Business. “That is why we are at the table” lobbying against it.

Bennett’s manufacturers group never took a position in the bathroom debate, although Bennett noted that “bathrooms are not a manufacturing priority.”

The so-called bathroom bill did not pass during the regular session. It could still be addressed in a legislative special session, should Gov. Greg Abbott decide to call one.

Both Bennett’s and Wallace’s organizations spent parts of the session on their heels amid the vehemence of the opposition to incentives for economic development.

Serious but ultimately unsuccessful efforts were made during the session to ax the Texas Economic Development Act, a 16-year-old law that allows school districts to waive a portion of a company’s property tax bill for a decade in exchange for a deal to move significant operations within their boundaries.

Some conservative lawmakers also came close to eliminating money in the state budget for the Texas Enterprise Fund — a deal-closing fund the governor uses as the final carrot to lure important corporate relocations or expansions to the state — and for an incentive fund that helps bring in movie, television and video game productions.

“Key economic incentives were attacked this session that we never thought would be attacked,” Bennett said, attributing that to “a combination of ideology and ignorance of how (incentives) fit in with the scheme of things and why we have to have them.”

He said his group spent substantial time and resources fighting the effort to abolish the tax abatement law, to the detriment of its other priorities. The ability to abate taxes is considered important to luring new business investment because Texas has a high property tax rate compared with many other states.

The effort to abolish the property tax abatement law garnered a hearing in a Senate committee but never came up for a vote in the full chamber.

Meanwhile, a last-minute intervention by Abbott managed to secure some funding in the state budget for both the enterprise fund and the film and video game incentives — although at levels well below the governor’s original requests. A total of $86 million has been earmarked for the enterprise fund over the upcoming two-year budget cycle, down from his original request of $108 million, while $22 million has been earmarked for the film and video game incentives, below the governor’s original $72 million request.

Wallace said the money allocated for the incentive funds “is not enough” but better than nothing.

“Both of these funds allow us to kind of stay in the game and be competitive,” he said. “They bring in more jobs to Texans — that’s what it’s all about.”

But Fleming, the tea party leader, views such incentives differently, and it was clear this session that her opinion and those of like-minded conservatives carried more weight than many in the mainstream business community anticipated.

“Government shouldn’t be acting like Santa Claus,” she said. “We certainly support business, but we don’t support business in the framework of corporate welfare.”

Jim Henson, director of the Texas Politics Project at the University of Texas, said at least a portion of the muscle such conservative groups were able to flex this session had to do with the attention they garnered from Republican lawmakers in light of upcoming statewide elections next year.

Among other officeholders, Abbott and Lt. Gov. Dan Patrick — both Republicans — are up for re-election in 2018. Henson said Patrick in particular has courted grass-roots conservatives, although he noted Abbott has as well.

“The statewide elected officials are looking at the looming election, and at each other, and that affects the attention given to groups that are very prominent (within the GOP) and represent highly interested primary voters,” Henson said. “The issue set (that garnered most of the headlines this session) pitted what business wanted against ideas that are very prominent among the conservative primary base of the Republican Party.”

But below those headline issues, Henson said the GOP-controlled Legislature largely lived up to its business-friendly reputation this session. He said mainstream business groups simply aren’t used to sharing the arena with another influential player — but might have to do it more often, depending on how the 2018 elections shake out.

“I think what we may be seeing is the business and trade sectors being not as accustomed to having to fight quite so much for what they want,” Henson said.

One area where many mainstream business organizations and conservative tea party-aligned groups agreed this session was on the effort to eliminate the franchise tax, the state’s main tax on business and the third-largest source of state revenue. However, bills aimed at phasing out the tax died in the final days of the session, leaving the tax in place for now.

The Texas Association of Business backed the effort to eliminate the franchise tax, although Bennett’s manufacturing organization didn’t take a position on it.

Regardless, Bennett said he fears the tenor of the debate on business-related issues during the just-ended legislative session will hurt the state’s economy.

“It’s already impacting investment here,” Bennett said. “There’s no doubt that the actions and rhetoric that we have seen out of some of our more conservative legislators (this session) are very concerning to some of our member companies.”



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