85 th Legislative Session WrapUp Prepared for Halff

85 th Legislative Session Wrap-Up Prepared for Halff Associates June 14, 2017

85 th Legislative Session Wrap-Up BUDGET HIGHLIGHTS

85 th Legislative Session Wrap-Up Noteworthy Budget Items Winners: § § § Higher Education Tx. DOT Texas Parks and Wildlife Texas Department of Public Safety Mental Health Child Protective Services CONFIDENTIAL

85 th Legislative Session Wrap-Up Higher Education Budget cut concerns that did not occur: § § § No mandated tuition freeze No repeal of automatic college admissions law No cut backs in free tuition for veterans and their children Did not eliminate financial aid program for poor students Overall GR sent to universities increased by approx. 1% Significant legislation: § Bill to combat sexual assault on campuses passed § Community colleges allowed to offer bachelor’s degrees in nursing CONFIDENTIAL

85 th Legislative Session Wrap-Up Transportation HB 1140 – amends Chapter 456 of the Transportation Code to define urbanized areas under the current state funded public transportation grant program as "large urbanized area" for an area with a population of 200, 000 or more and "small urbanized area" for an urbanized area with a population less than 200, 000. HB 2557 – would allow certain counties acting through a county commissioner’s court or local government corporation to adopt an order authorizing the county and a navigation district wholly or partly within the county to develop rail facilities as a qualifying public-private infrastructure project. The county could issue bonds for rail facilities secured by a pledge of revenue from the facilities. The bill would apply to a county that had a population of at least 300, 000, was adjacent to a county with a population of at least four million, and had created a rural rail transportation district with an adjacent county (Brazoria County and Fort Bend County). Each county would have to adopt the order for the district to exercise its powers. CONFIDENTIAL

85 th Legislative Session Wrap-Up Transportation $26. 6 billion provided for all functions of the Department of Transportation, including: § $2. 9 billion in funding from anticipated state sales tax deposits to the State Highway Fund (SHF) associated with voter approval of Proposition 7 in November 2015 § $2. 5 billion in funding from oil and natural gas tax-related transfers to the SHF (Proposition 1, 2014) § All available SHF from traditional transportation tax and fee revenue sources (estimated to be $8. 8 billion for the 2018– 19 biennium) CONFIDENTIAL

85 th Legislative Session Wrap-Up Transportation (continued) $23. 0 billion is provided for highway planning and design, right-of-way acquisition, construction, and maintenance and preservation, including: § $9. 7 billion for maintenance and preservation of the existing transportation system § $4. 5 billion for construction and highway improvements § $2. 3 billion from Proposition 7, 2015 proceeds § $2. 5 billion from Proposition 1, 2014 proceeds for constructing, maintaining, and acquiring rights-of-way for non-tolled public roadways § $2. 3 billion for transportation system planning, design, and management § $1. 7 billion for right-of-way acquisition CONFIDENTIAL

85 th Legislative Session Wrap-Up Transportation SB 312 – would continue Tx. DOT for 12 years, until September 1, 2029. (SUNSET, SEE BILL ANALYSIS REPORT FOR ADDITIONAL INFORMATION) SB 975 – amends the Transportation Code to authorize DPS to adopt rules to administer and enforce certain security requirements for high-speed rail operators in a manner that is consistent with federal rules, regulations, and standards. The bill would require DPS to provide certain high-speed rail employees with emergency management training. SB 1877 – amends the Transportation Code to authorize Tx. DOT to send electronically to a designated email address notice of any proposed contracts for highway projects Tx. DOT is required to submit for competitive bids as an alternative method of delivery for such notice. CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Parks & Wildlife Department 27. 8% Budget Increase ▪ Statewide Park Construction and Major Repairs $10, 328, 634 ▪ Wildlife, Fisheries, and Law Enforcement Construction and Major Repairs $1, 753, 599 ▪ Total, Construction of Buildings and Facilities $12, 082, 233 ▪ Total, Bond Proceeds - General Obligation Bonds $12, 082, 233 CONFIDENTIAL

85 th Legislative Session Wrap-Up Construction HB 1140 – amends Chapter 456 of the Transportation Code to define urbanized areas under the current state funded public transportation grant program as "large urbanized area" for an area with a population of 200, 000 or more and "small urbanized area" for an urbanized area with a population less than 200, 000. HB 2557 – would allow certain counties acting through a county commissioner’s court or local government corporation to adopt an order authorizing the county and a navigation district wholly or partly within the county to develop rail facilities as a qualifying public-private infrastructure project. The county could issue bonds for rail facilities secured by a pledge of revenue from the facilities. The bill would apply to a county that had a population of at least 300, 000, was adjacent to a county with a population of at least four million, and had created a rural rail transportation district with an adjacent county (Brazoria County and Fort Bend County). Each county would have to adopt the order for the district to exercise its powers. CONFIDENTIAL

85 th Legislative Session Wrap-Up Border Security $800 million in state funds for border security, including: § § § $97. 1 million to recruit, train, equip, and deploy 250 new troopers and 126. 1 FTE support positions to the border region by the end of the 2018 – 19 biennium $7 million for equipment, including cameras and related technology, associated with Operation Drawbridge $8. 8 million to fund costs for extraordinary operations associated with Operation Secure Texas $3. 2 million to establish a law enforcement operations center in the border region $145. 6 million for a 50 -hour work week for all DPS commissioned law enforcement officers $133. 4 million to fund the full biennial costs of 22 Texas Rangers ($9. 5 million), 250 troopers ($123. 9 million), and 115 support staff added by the 84 th Legislature 2015 CONFIDENTIAL

85 th Legislative Session Wrap-Up Organization Changes Department of Family and Protective Services (DFPS) § HB 5 keeps DFPS as a separate agency instead of being housed within Texas Health and Human Services Commission – includes CPS CONFIDENTIAL

85 th Legislative Session Wrap-Up Child Protective Services § Funding of $3. 5 billion, including $2. 0 billion in GR Funds, is provided for Child Protective Services (CPS) functions at DFPS § $292. 8 million to maintain 828. 8 FTE positions and salary increases provided in FY 2017 to address critical needs in the CPS program § $88. 0 million to support an additional 509. 5 caseworker positions in FY 2018 and 597. 9 in FY 2019 CONFIDENTIAL

85 th Legislative Session Wrap-Up State Facilities § $300 million at HHSC for new construction and repair at state hospitals and other inpatient mental health facilities § $117. 9 million at the TFC for emergency repairs and deferred maintenance at state facilities § $80 million at Tx. DOT for deferred maintenance and Austin campus consolidation § $75 million at General Land Office for the preservation of the Alamo § $66. 2 million at the TPWD, including $49. 2 million for weatherrelated construction and $17. 0 million for maintenance needs at state parks § $40 million at TDCJ and $12. 1 million at the TJJD for health and safety projects CONFIDENTIAL

85 th Legislative Session Wrap-Up Office of the Governor $155. 0 million in Economic Stabilization Funds, including: § § § $110. 0 million for disaster grants $25. 0 million for grants to law enforcement agencies for bullet resistant personal body armor $20. 0 million for Defense Economic Adjustment Assistance Grants to military communities CONFIDENTIAL

85 th Legislative Session Wrap-Up Office of the Governor (continued) Funding in the new Strategy for various economic development programs totals $317. 0 million in All Funds for the 2018– 19 biennium, including the following specific amounts: § § § $86. 0 million in estimated unexpended balances remaining at the end of FY 2017 in the Texas Enterprise Fund for incentive grants, reflecting a decrease of $22. 0 million from the 2016– 17 budget $22. 0 million in GR Funds for Film and Music Marketing $15. 6 million for the Governor’s University Research Initiative, including $10 million in GR Funds and $5. 6 million in estimated unexpended balances remaining at the end of FY 2017 and estimated revenues in the 2018– 19 biennium from the Governor’s University Research Initiative Fund CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Economic Outlook Texas Real Gross State Product (GSP) § Experienced strong growth since the end of the recent recession, averaging 4. 8 percent from FYs 2011 to 2015 § Texas Real GSP growth slowed to 0. 2 percent in FY 2016, coinciding with the slowdown in the oil and gas extraction industry § Growth is expected to pick up to 3. 0 percent in FY 2018 and 3. 1 percent in FY 2019 Employment § The Texas unemployment rate is forecast to remain constant during the 2018– 19 biennium at 4. 5 percent § Job growth is expected to continue at a similar pace during the upcoming 2018– 19 biennium, FY 2019 CONFIDENTIAL

85 th Legislative Session Wrap-Up KEY LEGISLATION OVERVIEW

85 th Legislative Session Wrap-Up Information Technology HB 8 – HB 8 seeks to minimize Texas' vulnerability to cyber attacks by creating an Information and Analysis Center, providing guidelines for cybersecurity training, requiring risk assessments, and providing other best practice guidance. SB 1004 – allows wireless network companies to place network nodes in the public right-of-way (ROW) and would provide rules, regulations, and fee structures to reimburse cities for use of the ROW. Municipalities would retain authority to manage the public ROW to ensure the health, safety, and welfare of the public, and would receive compensation installing network nodes on poles. CONFIDENTIAL

85 th Legislative Session Wrap-Up Information Technology HB 523 – amends the Texas Government Code to require school districts with an enrollment of 10, 000 or more students to make video and audio recordings available on the internet of open meetings that are work sessions or special called meetings in which the board of trustees votes on any matter or allows public comment or testimony. CONFIDENTIAL

85 th Legislative Session Wrap-Up Information Technology SB 533 – specifies that an applicable state agency employee or official involved in agency procurement or contract management is required to disclose any potential conflict of interest specified by state law or agency policy that is known by the employee or official at any time during the procurement process, from the initial request for bids for the purchase of goods or services from a private vendor until the completed final delivery of the goods or services, or during the term of a contract with a private vendor. Prohibits a former state officer or employee of a state agency who during the period of state service or employment participated on behalf of a state agency in a procurement or contract negotiation involving a person from accepting employment from that person before the second anniversary of the date the contract is signed or the procurement is terminated or withdrawn, rather than the date the officer's or employee's service or employment with the state agency ceased. (Supposed to fix the two-year revolving door rule) CONFIDENTIAL

85 th Legislative Session Wrap-Up Contracting Bills HB 89 – prohibits government contracts with companies that boycott Israel and would restrict certain state investments in those companies. SB 1877 – amends the Transportation Code to authorize Tx. DOT to send electronically to a designated email address notice of any proposed contracts for highway projects Tx. DOT is required to submit for competitive bids as an alternative method of delivery for such notice. CONFIDENTIAL

85 th Legislative Session Wrap-Up MUDS HB 1331 – amends the Special District Local Laws Code establishing the Fort Bend County Municipal Utility District No. 224. The district would have authority for road projects. The bill provides detail on the governing body, powers and duties, financial provisions (bonds and taxes), and conditions that must be met regarding the district's exercise of eminent domain power. HB 1440 – creates the Montgomery County Municipal Utility District No 154. The bill would establish the board, the rules governing the election of the board, the duties, powers, bond authority, tax authority, and boundaries of the district. The district would not have eminent domain power. HB 1455 – would amend the Special District Local Laws Code establishing the Harris County Municipal Utility District No. 552. The district would have authority for road projects. The district would have authority to impose operation and maintenance taxes, and establish rates for water and sewer. The district would have authority to issue bonds. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water HB 101 – authorizes certain municipalities to enter into a contract with any person to design, construct, or reconstruct a reclaimed water facility with a capacity of at least 10 million gallons per day. The bill would apply to a homerule municipality meeting certain population requirements (Midland). The contract could be payable from a pledge of the revenues of the water, sewer, or combined system of the municipality or as an operating expense of that system. It would not be payable from property tax revenues. HB 544 – amends the Water Code to expand the uses of funds in the Rural Water Assistance Fund to allow the Texas Water Development Board (TWDB) to contract for planning services to assist rural political subdivisions in obtaining and using financing for certain purposes in addition to outreach, financial, and technical assistance services authorized under current law. The agency has reported that it is not currently contracting out any outreach, financial, and technical assistance activities and that it has not done so in the past. . CONFIDENTIAL

85 th Legislative Session Wrap-Up Water HB 2334 – amends the Water Code adding that a person, in certain counties, commits an offense if the person violates a rule adopted or order issued under the subchapter. The offense would be punishable as a Class C misdemeanor. HB 2377 – amends the Texas Water Code to authorize a Groundwater Conservation District (GCD) located over any part of a designated brackish groundwater production zone to adopt rules to permit the withdrawal of brackish groundwater in a designated brackish groundwater production zone. Permits may be issued either for a municipal project to treat brackish groundwater to drinking water standards or for an electric generation project. The bill would require TWDB review and comment on permit applications and to make recommendations. HB 2378 – amends the Water Code relating to a groundwater conservation district automatically extending permits for ground water transfers out of the district. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water HB 2803 – makes nonsubstantive revisions of certain local laws concerning water and wastewater special districts, including conforming amendments. The bill would take effect April 1, 2019. HB 3987 – amends the Water Code to create the Texas State Water Investment Fund Act, which would allow the TWDB to use funds from the Texas Water Development Fund II No. 371 (Fund 371) for the development of desalination facilities and aquifer storage and recovery facilities. The bill would require that such a facility receiving funding from Fund 371 be included in the state water plan, that TWDB establish a prioritization system for financing such facilities, and that the issuance of bonds for these projects be limited to $200 million. The bill would require the Comptroller to establish a subaccount in Fund 371, and TWDB would be allowed to transfer funds between Fund 371 and the subaccount as needed for eligible projects. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water SB 864 – requires the Texas Commission on Environmental Quality (TCEQ) to include in both the notice given to affected persons and in an issued permit any proposed alternative source of water, other than state water, identified by an applicant in an application for state water. If such an alternative source is given as groundwater from a well located within a groundwater conservation district, the bill would require TCEQ to mail a copy of the notice to the affected groundwater conservation district. SB 1105 – eliminates the used oil recycling account and transfer any remaining funds and future deposits to the water resource management account. The bill also would include the currently allowed uses for money in the used oil recycling account, such as public education with regard to used oil recycling, in the allowed uses for money in the water resource management account. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water SB 1430 – amends the Water Code to establish that a holder of a water right that begins using desalinated seawater after acquiring the water right has a right to expedited consideration of an application for an amendment to the water right if the amendment authorizes the applicant to divert water from a diversion point that is different from or in addition to the point or points from which the applicant was authorized to divert water before the requested amendment, authorizes the applicant to divert from the different or additional diversion point an amount of water that is equal to or less than the amount of desalinated seawater used by the applicant, authorizes the applicant to divert from all of the diversion points authorized by the water right an amount of water that is equal to or less than the amount of water the applicant was authorized to divert under the water right before the requested amendment, authorizes the applicant to divert water from all of the diversion points authorized by the water right at a combined rate that is equal to or less than the combined rate at which the applicant was authorized to divert water under the water right before the requested amendment, and does not authorize the water diverted from the different or additional diversion point to be transferred to another river basin. The bill requires the executive director of TCEQ or TCEQ to prioritize the technical review of such an application over the technical review of applications that are not subject to these bill provisions. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water SB 1511 – amends the Water Code to require TWDB to prioritize State Water Implementation Fund for Texas (SWIFT) projects by regional water planning groups (RWPGs). The bill would additional requirements to be included in the state water plan regarding projects previously given a high priority by TWDB for SWIFT funding. SB 1525 – requires TWDB to conduct three studies. § The bill would require TWDB to conduct a study and produce a comprehensive water resources map of water needs and availability which considers development of additional water resources. The study would also be required to consider potential locations for desalination facilities and the allocation of costs associated with transporting desalinated water. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water § § The bill would direct TWDB to conduct studies of aquifer storage and recovery projects identified in the state water plan or by interested parties. TWDB would be required to work with groundwater conservation districts, regional water planning groups, and potential sponsors of aquifer storage and recovery projects in conducting these studies. TWDB would be required to report the results of each study to regional water planning groups and to interested parties. The bill would also direct TWDB to conduct a statewide survey of the most favorable areas for aquifer storage and recovery and to report on its findings by December 15, 2018. The subsection of the bill related to the statewide survey would expire on January 1, 2019. TWDB would only be required to conduct study (2) on aquifer storage and recovery projects and study (3) on favorable areas if the legislature appropriates money specifically for that purpose. If the legislature does not make such an appropriation, TWDB may, but is not required to, conduct studies using other appropriations available for the purpose. CONFIDENTIAL

85 th Legislative Session Wrap-Up Water SB 2262 – requires the Central Colorado River Authority and Coleman County, not later than December 31, 2017, to enter into a memorandum of understanding that governs the transfer by the authority to the county of the authority's remaining financial assets, after the discharge of any debts of the authority, in the form of cash, investments, and proceeds from the sale of the authority's personal property and real property, and the transfer of the authority's remaining personal property and real property in the event the property does not sell before December 31, 2018. CONFIDENTIAL

85 th Legislative Session Wrap-Up MUDS SB 1198 – would amend the Special District Local Laws Code relating to the conversion of the Hays Caldwell Public Utility Agency to the Alliance Regional Water Authority. The bill provides general provisions of the authority including: authority territory, eligibility for directorship, terms of office, and powers and duties. The authority would have the authority of eminent domain to acquire property and the authority would be prohibited from imposing an ad valorem tax. The authority would be allowed to issue bonds and charge fees, rates and other charges for the debt service of bonds. SB 1261 – amends the Special District Local Laws Code to create the Montgomery County Municipal Utility District No. 157, subject to municipal consent and voter approval at a confirmation election. The bill grants the district the power to undertake certain road projects. The bill authorizes the district, subject to certain requirements, to issue obligations and impose property, operation and maintenance, and contract taxes. The bill expressly prohibits the district from exercising the power of eminent domain if the bill does not receive a two-thirds vote of all the members elected to each house. CONFIDENTIAL

85 th Legislative Session Wrap-Up MUDS HB 1331 – amends the Special District Local Laws Code establishing the Fort Bend County Municipal Utility District No. 224. The district would have authority for road projects. The bill provides detail on the governing body, powers and duties, financial provisions (bonds and taxes), and conditions that must be met regarding the district's exercise of eminent domain power. HB 1440 – creates the Montgomery County Municipal Utility District No 154. The bill would establish the board, the rules governing the election of the board, the duties, powers, bond authority, tax authority, and boundaries of the district. The district would not have eminent domain power. HB 1455 – would amend the Special District Local Laws Code establishing the Harris County Municipal Utility District No. 552. The district would have authority for road projects. The district would have authority to impose operation and maintenance taxes, and establish rates for water and sewer. The district would have authority to issue bonds. CONFIDENTIAL

85 th Legislative Session Wrap-Up High Speed Rail SB 977 Schwertner – Signed by the Governor Interested parties suggest that a recently proposed high-speed rail project in Texas linking two major metropolitan areas not only encroaches on private property rights, but also provides little economic benefit for the communities along the proposed route that would be affected most by the construction of the rail system. Bill prohibits the use of state funds for the construction or operation of a high-speed rail project operated by a private entity, with limited exceptions. SB 975 Birdwell – Sent to Governor on 5 -23 -17 – still not signed Interested parties contend that any future construction and operation of private high-speed rail in Texas will require the legislature and appropriate state agencies to ensure the safe entry, exit, and passage of all passengers and employees during the operation of the rail system, as well as the safety of all communities in and around the rail routes. S. B. 975 seeks to address this issue by requiring a private high-speed rail operator to plan, organize, and implement the necessary measures to ensure the overall safety of those affected by the rail system. CONFIDENTIAL

85 th Legislative Session Wrap-Up Construction SB 754 - would allow a school district to extend a depository contract with a bank for up to three two-year terms, rather than two. If both parties agreed to terms, the depository contract could be modified for each two year extension without being subject to the requirement for a competitive bidding process or request for proposals. It would give school districts and banks more flexibility to extend a depository contract while also making mutually agreeable changes without requiring them to start a new process of competitive bidding or requesting proposals. CONFIDENTIAL

85 th Legislative Session Wrap-Up ARTICLE IX OVERVIEW

85 th Legislative Session Wrap-Up Contingency & Other Provisions Sec. 18. 12. Contingency for House Bill 1492 or Senate Bill 694 Contingent on enactment of HB 1492, SB 694, or similar legislation relating to the creation of the National Museum of the Pacific War Museum Fund, by the 85 th Legislature, Regular Session, $1, 352, 000 in FY 2018 from GR Fund and $1, 352, 000 in FY 2019 from GR Fund. CONFIDENTIAL

85 th Legislative Session Wrap-Up Supplemental Appropriations Bill - SB 2 is the Supplemental Appropriations Bill that basically balances the books/budget for the current biennium – 2016 -2017 FY budget. One item of interest: § Transfer of $3, 500, 000 in capital budget authority within Tx. DOT from Acquisition of Capital Equipment and Items to Transportation Items. CONFIDENTIAL

84 th Legislative Session Wrap-Up AGENCY OVERVIEWS

85 th Legislative Session Wrap-Up Health & Human Services Commission (HHSC) By the numbers ▪ $72, 319, 466, 827 biennial budget; 27. 8% increase ▪ 39, 696. 4 FTEs; 209. 4% increase CONFIDENTIAL

85 th Legislative Session Wrap-Up Health & Human Services Commission (HHSC) Notable capital budget items Project FY 2018 FY 2019 New Construction of State Hospitals and Other Inpatient Mental Health Facilities $150, 000, 000 Facilities Repair and Renovations – State Supported Living Centers and State Hospitals $78, 302, 186 $79, 702, 186 $650, 000 Network, Performance and Capacity $1, 558, 000 MMIS - Medicaid Management Information System $41, 081, 788 $41, 015, 856 $300, 000 $2, 152, 981 $1, 729, 692 Facilities Repairs and Renovations – Waco Center for Youth Application Remediation for Data Center Consolidation Cybersecurity Advancement for HHS Enterprise CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Parks and Wildlife Department By the numbers ▪ $72, 319, 466, 827 biennial budget; 27. 8% increase ▪ 39, 696. 4 FTEs; 209. 4% increase CONFIDENTIAL

85 th Legislative Session Wrap-Up TPWD Bond Project Substitutions and Reporting Requirements. Notwithstanding any other provision of this act governing bond project substitutions, TPWD may substitute bond projects for those previously approved within the same project category described in the table below by submitting a written request for project substitution to the Texas Public Finance Authority and the Legislative Budget Board. Requests within categories for project deletions, reductions, and either new or amended projects in which the total adjustment is less than or equal to $1, 000 shall be considered to be approved unless the LBB issues a written disapproval within 30 business days of the date on which the request is received. Requests for substitutions between categories to substitute projects for those previously approved or in which the total adjustment is more than $1, 000 shall be considered to be approved unless the LBB issues a written disapproval within 30 business days of the date on which the staff of the LBB concludes its review of the proposal to expend the funds and forwards its review to the Chair of the House Appropriations Committee, Chair of the Senate Finance Committee, Speaker of the House, and Lieutenant Governor. Construction of Buildings and Facilities: ▪ ▪ Statewide Park Construction and Major Repairs $10, 328, 634 Wildlife, Fisheries, and Law Enforcement Construction and Major Repairs $1, 753, 599 Total, Construction of Buildings and Facilities $12, 082, 233 Total, Bond Proceeds - General Obligation Bonds $12, 082, 233 CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Water Development Board (TWDB) By the numbers ▪ $370, 578, 345 biennial budget; 27. 6% increase ▪ 329. 1 FTEs; 1. 3% increase CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Water Development Board Notable capital budget items Project FY 2018 FY 2019 Flood Funding: Perform Community Assistance Pursuant to NFIP in General Revenue $850, 000 Floodplain Management Fund No. 330 for flood preparedness and safety activities. $3, 050, 000 Study of Aquifers and Brackish Groundwater. studies related to designating priority zones for the production of brackish groundwater in aquifers throughout the state as identified. $1, 819, 233 $150, 767 Use of Texas Water Resources Finance Authority (TWRFA) Funds for Economically Distressed Areas Program debt service payments. CONFIDENTIAL Governor’s Veto “The Texas Water Governor’s Veto Development Board has already completed several studies on brackish groundwater in various regions of the state. I therefore object to and disapprove of this appropriation. ” $8, 338, 216

85 th Legislative Session Wrap-Up Texas Water Development Board Notable capital budget items Project FY 2018 FY 2019 Regional Drainage and Water Assistance. GR appropriations from Water Resources Planning, Water Project Financing and other funds, plus any unobligated and unexpended balances from GR may be used by TWDB to provide grant funding to the Hidalgo County Drainage District No. 1 to implement a flood control project authorized and designated by the US Army Corps of Engineers (Raymondville Drain). The aggregate amount of funding to be provided for this purpose from all strategies shall not exceed $10 m in each fiscal year of the 2018 -2019 biennium. $10 M max CONFIDENTIAL

85 th Legislative Session Wrap-Up Soil and Water Conservation Board Flood Control Dam Operation, Maintenance, and Structural Repair Included in the amounts appropriated for Strategy A. 2. 1, Flood Control Dam Maintenance & Structural Repair, is $9, 893, 680 for fiscal year 2018 and $6, 984, 430 for fiscal year 2019 out of the General Revenue Fund to provide for operations and maintenance, structural repair, and rehabilitation needs to flood control dams. Any unobligated and unexpended balances from this appropriation as of August 31, 2018 are appropriated for the same purpose for the fiscal year beginning September 1, 2018. CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Department of Public Safety (Tx. DPS) By the numbers ▪ $2, 417, 982, 699 budget; 7. 9% decrease ▪ 10, 504. 5 FTEs; 2% increase Notable capital budget items Project FY 2018 FY 2019 Building Programs New Construction-Multiple Buildings, Rider 27 $7, 274, 348 UB Law Enforcement Operations Center $3, 150, 000 UB Training Facility in Cameron County $3, 000 UB Repair or Rehabilitation of Buildings and Facilities, Deferred Maintenance - Rider 27 $12, 632, 840 UB Repair or Rehabilitation of Buildings and Facilities, Deferred Maintenance and Support $12, 000 UB CONFIDENTIAL Strategic Partnerships, Inc. 49

85 th Legislative Session Wrap-Up Texas Department of Transportation (Tx. DOT) By the numbers ▪ $26, 595, 039, 747 biennial budget; 15. 6% increase ▪ 12, 213. 5 FTEs; 2. 6% increase Notable capital budget items Project FY 2018 FY 2019 Austin Campus Consolidation $30, 000 UB Deferred Maintenance $50, 000 UB Technology Replacements and Upgrades $22, 574, 329 $20, 081, 389 Mainframe Modernization $23, 209, 000 $21, 492, 000 Cybersecurity Initiative Projects $10, 000 UB CONFIDENTIAL

85 th Legislative Session Wrap-Up Texas Department of Transportation (Tx. DOT) Other budget item of interest Item District Discretionary Funds Out of the funds appropriated TXDOT shall allocate a minimum of $2. 5 million for each district to the State District Discretionary Category each fiscal year. TXDOT shall submit to the Legislative Budget Board and the Governor an annual report no later than November 1 st each fiscal year detailing the amount of District Discretionary category funds used by each district for project cost overruns. CONFIDENTIAL FY 2018 FY 2019 $2, 500, 000 minimum

For more information: Gay Erwin Strategic Partnerships, Inc. gerwin@spartnerships. com 512 -531 -3916 Turner Kimbrough Strategic Partnerships, Inc. tkimbrough@spartnerships. com 512 -531 -3953