As you likely know, the recently concluded regular session of the 88th Texas Legislature ended with some unfinished business per the Governor’s priority issues (i.e., property tax reform, cracking down on human smuggling, and vouchers to name a few) and with the historic impeachment of Texas Attorney General Ken Paxton.
Both outcomes are TBD with the State Senate now tasked with holding the Attorney General’s impeachment trial (likely later this summer) and the Governor having already called the first of what may be many special sessions.
So, here is my wrap-up of the regular session — as the old saying goes “things aren’t what they used to be.” Unlike any other I have ever seen, this session we experienced a tremendous amount of game-playing and in some instances, Vegas-styled poker bluffing by members of the Legislature. For example, we had legislators straddling both sides of the auto-economy fence between supporting Texas auto dealers yet prioritizing special interest lobbying requests by national companies. This is a concerning trend that we will be working hard to address during the interim.
Thus, as we leave the 88th Texas Legislative session in the rearview mirror, we have a lot to digest as we formulate our legislative agenda moving forward.
First the Good News
With more than 1,400 dealerships in 300 towns and cities throughout the state, Texas’ new car dealers are the cornerstone of business endeavors throughout the state. In these local communities, you serve as major employers and generate a significant amount of revenue for local and state governments. You also are leaders in your communities and are the first to step up and provide a helping hand to those in need. Despite your investments in your community and in your employees, the goodwill did not necessarily generate success at the Capitol this session, but it is still a huge advantage for us. Keep up the great work!
TADA was also able to defeat a number of measures that would have harmed Texas franchised dealers and your customers. Additionally, we created a strong Texas business coalition which was actively engaged during the session and will continue throughout the interim to prepare for next session. While I take responsibility for every loss we experienced, I can tell you that it wasn’t for a lack of effort by our team and so many of our Texas dealers who came to Austin throughout the session. Kudos to them!
Now for the Gritty News
The warranty/recall bill, HB 4078, was killed in the House on a Point of Order (POO) by Rep. Cole Hefner. The bill would have done a number of things, including ensuring that a manufacturer or distributor pays the dealer for warranty and recall work at the same rate as a retail customer by establishing a formula for parts similar to the one that exists for labor; not allowing the manufacturer to add surcharges on dealers on the wholesale invoice; making the manufacturer pay the dealer for all actual work done by the dealer related to any over-the-air update; and restricting the ability of the manufacturer to reprice parts prior to the issuance of a recall. The manufacturers opposed the bill and, although several changes were made to address legitimate concerns, the opposition continued and ultimately led to the POO that was called. The challenge was a procedural move, effectively killing the legislation for the session. A win for the manufacturers. A win for big national companies over Texas business owners.
The OEM Parts bill, SB 1083, would have created a preference for the use of an OEM’s part, product, and repair process on a motor vehicle in the first 36 months after purchased new by the insured. While there was a preference for OEM in this time frame, the insured could still have opted-in to the use of non-OEM parts, products, and repair processes by signing a written disclosure allowing for such use prior to the repair. The bill passed out of the Texas Senate 30-1, and although it had overwhelming support in the House, the bill was held in House Insurance by Chairman Tom Oliverson. Dr. Oliverson has supported the property and casualty insurance industry, but our team spent the past 18 months working with him on this issue and we felt he would give the bill a fair hearing. At the hearing, a representative from Ford Motor Credit testified that they required in their contracts the use of OEM parts. Powerful testimony later followed up with a letter from multiple lenders stating the importance of this requirement. Despite giving the bill a hearing, the Chairman was then unwilling to call for a vote on the bill, effectively killing the legislation. A win for the big national auto insurance industry and a loss for Texas business owners and consumers.
The credit card surcharge bill, HB 3615, would have codified current case law by repealing an unconstitutional statutory provision that said merchants could not pass through the surcharge that credit card companies charge them to the credit card user. In 2018, a federal district court held that this statute violated the First Amendment, and since then some, Texas merchants have been passing through the surcharge to consumers despite the previously mentioned prohibition. Opposition to the legislation came from American Express as the bill passed the Texas House. Upon referral to the Senate, a broad coalition of Texas businesses coordinated efforts to support the legislation. Opposition increased too with the Texas Bankers Association joining American Express in their effort to ensure these charges remained hidden from Texas consumers. The opposition used language gymnastics and half-truths to convince several Senate Republicans that the bill would essentially create a “new fee,” and in the end, these senators chose to believe the opposition over their local businesses and killed the bill. Not only did the bill NOT create a new fee, but it also had important requirements for the merchant to disclose prior to the purchase to ensure that consumers would be aware of the pass-through and be able to make an informed buying decision. I will also mention again that the current law is unconstitutional. A win for the major national credit card companies.
At the end of the day, despite strong Republican majorities in both chambers for more than 20 years, there has been a shift in a once reliable Texas Legislature that worked with their local businesses to create a positive business environment in Texas — one that had appropriate regulation, but also one that provided the opportunity for entrepreneurial achievements and protected consumers. The smoke screen of national special interests this past session lobbying our state leaders to favor national interests versus local businesses is not acceptable. Stated differently, Texas auto dealer and consumer legislation should only be measured by one standard, “Is it good for Texas?”
Driving TADA’s Legislative Agenda Forward
I hope you will call our team to learn more about how specific members of the Texas Legislature truly stood on our issues, including their choices between big, national companies versus Texas businesses and consumers. Members need to be reminded that the Texas miracle usually begins and ends in their local communities.
This challenge provides us with an opportunity, but it is not one that any one individual can overcome. We will continue to build our Texas business coalition to work together for Texas businesses and Texans and against major national companies’ special interests. We will have an aggressive interim plan and will be well-prepared for the next session.
Finally, my phone is on; my door is open; and I’m willing to travel and meet with any dealer across our great state as TADA continues to work on the state and federal fronts to promote Texas franchised dealers and protect your customers.
