January 19, 2024, Number 2

Download the full .pdf version here: TML Legislative Update Number 2

Texas Supreme Court Declines to Hear Case on Eight-Liners

Cities will still have to wait for statewide guidance on the constitutionality of eight-liners. In December, the Texas Supreme Court denied the petition for review in the Fort Worth eight-liner case, meaning the Supreme Court will not hear the case to decide whether eight-liners are unconstitutional lotteries. The eight-liner owners had appealed the Second Court of Appeals’ ruling that determined eight-liner machines were unconstitutional to the Supreme Court.

The League previously reported on the Second Court of Appeals’ decision. The Second Court of Appeals in Fort Worth held that eight-liner machines are unconstitutional under the Texas Constitution’s provision prohibiting lotteries. However, the appellate court did not directly address whether the “fuzzy-animal exception,” which permits the operation of coin-operated machines that dispense only certain small prizes, is unconstitutional or if that exception is valid on its face but not applicable to eight-liners.

Cities in the Second Court of Appeals’ jurisdiction (those in Archer, Clay, Cooke, Denton, Hood, Jack, Montague, Parker, Tarrant, Wichita, Wise, and Young Counties) should follow the decision of the Second Court of Appeals. Cities in the rest of the state should seek advice from their city attorneys regarding how to treat eight-liners. 

Call for Volunteers: Get Involved in TML’s Legislative Process

Texas Municipal League (TML) advocacy efforts are based on a legislative program that is developed by member city officials. The program is essential to the legitimacy of the League’s advocacy efforts. To develop the program, city officials provide input in primarily two ways.

First, member city officials can participate in the League’s Municipal Policy Summit during each interim. The report of the Summit takes the form of a resolution that is submitted to the annual conference. The goal of the committee process is two-fold: (1) it allows input on the legislative program from a broad cross section of cities and city officials; and (2) it educates new city officials to the legislative issues faced by cities. The Summit participants will be appointed by the TML president in early 2024 based on volunteers and others chosen to balance the demographics of the TML membership at large. The report of the Summit will take the form of a resolution that is submitted to the annual conference in interim years.

The Summit is an intensive, two-day workshop during which League staff briefs the participants on the myriad legislative issues faced by cities. Most are issues that arise each session, but several consist of solicited or unsolicited issues brought by city officials. Even if no changes are recommended to the fixed program, which is an unlikely prospect, staff will fulfill its educational goal through continued briefing on the issues. After each subject-matter briefing, the participants make concise recommendations on the issues. Those recommendations are placed into resolution form and submitted to the League’s annual business meeting, discussed next. 

Second, a member city, TML region, or TML affiliate may submit a resolution for consideration at the business meeting of each year’s annual conference. Each city is asked to provide one delegate to serve as its liaison at the meeting. The delegates will be briefed on the content of the resolutions and given a chance to discuss and vote on whether they merit inclusion in the legislative program. The resolutions form the basis of a fixed legislative program, under which – each session – modifications to the program will be made as needed.

The somewhat complex policy development process is necessary to ensure that the League advocates as directed by its members. The League is nothing without the involvement and expertise of its members, and participation in the process is an invaluable part of protecting municipal authority.

The process starts in earnest this spring, and TML President Tito Rodriguez, councilmember of the City of North Richland Hills, is seeking volunteers to provide input. No expertise is needed. Volunteers need only have a willingness to learn and the ability to come to Austin on August 12-13, 2024 for the Municipal Policy Summit.

If you have questions or would like to volunteer for the Municipal Policy Summit, please contact JJ Rocha, TML Grassroots and Legislative Services Manager, at jj@tml.org. Please include your full contact information in your email. Due to space limitations and other considerations, not all those who apply will be appointed but will certainly be considered for future volunteer opportunities.

Reminder: Eminent Domain and Local Hotel Occupancy Reporting Requirements

Eminent Domain Reporting 

Legislation passed in 2015 requires cities to annually fill out a web-based form with the comptroller relating to each city’s statutory eminent domain authority. Instructions for reporting can be found here.

The three-month reporting period began on November 1, 2023 and closes on February 1, 2024. However, reports may be updated at any time throughout the year. The failure to fill out the form could result in a maximum $2,000 penalty against a city.

The entry should be, for almost every city, an update of previously filed information, including whether the city exercised its eminent domain authority in the preceding calendar year by filing a condemnation petition under Section 21.012, Property Code. This was clarified to some degree for certain cities by legislation that passed in 2021. S.B. 157 provides that—for cities under 25,000 population—an annual report must be filed only if the city’s eminent domain authority information has changed from the previous year. If the city’s information has not changed from the previous report, the city must use the comptroller’s reporting tool to confirm the accuracy of the previous information by electronically updating the filed report with the comptroller. Of course, any city that never filled out the form as required should do so now.

Local Hotel Occupancy Tax Reporting

The three-month window for reporting local hotel occupancy tax information opened January 1, 2024. The reporting deadline is March 1, 2024.

The 88th Legislature passed H.B. 3727 and S.B. 1420 which, among other things, update the previous reporting statute to require cities to report all uses of hotel occupancy tax revenue, the amount and percentage of the revenue, and the total unspent revenue.

Cities are required to use the comptroller’s online reporting form to submit all required information. Under the new legislation, a city may use a portion of its local hotel occupancy tax revenue for the costs incurred by the city in making and submitting the report to the comptroller. The total amount a city may use for reporting purposes may not exceed: (1) $1,000 if the city has a population of less than 10,000; or (2) $2,500 if the city has a population of 10,000 or more. For more information see the comptroller’s hotel occupancy tax reporting webpage

The comptroller’s website now consolidates all local government reporting information on one webpage, making it easier to comply with reporting requirements passed in recent sessions. City officials can also access information about special district reporting requirements that generally apply to city-related entities like crime control and prevention districts, municipal development districts, municipal management districts, public improvement districts, and sports and community venue districts.

City officials with questions about the requirements can contact the comptroller’s transparency team by email at transparency@cpa.texas.gov or (844) 519-5676.

Federal Infrastructure Bill Update

In November 2021, the federal Infrastructure Investment and Jobs Act (IIJA) was signed into law. The IIJA is altogether a $1.2 trillion bill that will invest in the nation’s core infrastructure priorities including roads, bridges, rail, transit, airports, ports, energy transmission, water systems, and broadband.

The League will monitor state and federal agencies and work with the National League of Cities (NLC) to access the latest information relating to the IIJA. We will provide periodic updates in the Legislative Update on resources for Texas cities on how to access IIJA funding for local infrastructure projects. 

U.S. Department of Transportation (USDOT)

The USDOT is accepting applications for its Bridge Improvement Program (BIP) grant program. The BIP program seeks to improve bridge conditions and the movement of people and freight over bridges across the country by providing grant funding to state and local governments for existing bridge-related planning and construction projects.

Eligible BIP applicants include state and local governments, metropolitan planning organizations for urban areas with populations over 200,000, and special districts with transportation authority.

The BIP program is broken into three parts:

Part A – Planning Grants

Part B – Bridge Project Grants

Part C – Large Bridge Project Grants*

TML provided information about the Part C Large Bridge Project program in the October 13, 2023 Legislative Update.

The Part A Planning Grant program will provide planning-related funding for Part B- and Part C-eligible projects.

Part B- and Part C-eligible projects are those designed to replace, rehabilitate, preserve, or protect one or more bridges listed on the federal National Bridge Inventory. Part B projects are those whose BIP-eligible costs do not exceed $100 million. Part C projects are those whose BIP-eligible costs exceed $100 million.

Eligible Part B and C project costs include:

  • Development phase activities;
  • Construction, including acquiring real property, replacement, preservation, reconstruction, rehabilitation, and environmental mitigation-related activities;
  • Seismic and scour protection-related costs; and
  • Subsidy and administrative incurred costs necessary to obtain federal credit assistance.

For Part A applications – the USDOT will prioritize Large Bridge-related applications that will likely begin construction within two years of completing the planning process and demonstrate that the applicant cannot start or complete the project without BIP funding.

For Part B and C applications – the USDOT will prioritize applications for projects related to bridges in poor condition or at risk of falling into poor condition within the next three years and demonstrate that the applicant cannot complete the project without BIP funding.

City officials can find more information about the BIP program here. The USDOT will also post a recorded webinar about the BIP program at a future date to be determined.

Interested applicants must submit BIP FY 2023 and FY 2024 applications by:

Part A: 10:59 PM CST on February 19, 2024

Part B: 10:59 PM CST on March 19, 2024

Part C: FY 2023 and FY 2024 application deadlines have already passed.

Interested applicants must submit BIP FY 2025 applications by:

Part A: 10:59 PM CST on October 1, 2024

Part B: 10:59 PM CST on November 1, 2024

Part C: 10:59 PM CST on August 1, 2024

Interested applicants must submit BIP FY 2026 applications by:

Part A: 10:59 PM CST on October 1, 2025

Part B: 10:59 PM CST on November 1, 2025

Part C: 10:59 PM CST on August 1, 2025

Applications must be submitted online at www.ecivis.com/grants.gov.

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.