TWGGA Legislative Update, April 2023

Update: HB 4052 Left Pending by the Texas House Licensing & Administration Procedures Committee

April 5, 2023

HB 4052 was left pending by the Texas House Licensing & Administration Procedures Committee during a hearing this morning. As we alerted you this week, the bill could negatively impact the wine industry, defining a winery to “be a bona fide winery actively engaged in the manufacture of wine.”

Learn more about the bill’s potential impact below.

The Texas Package Stores Association spoke in favor of the bill, while TWGGA members spoke in opposition to the legislation. TWGGA leadership and members in attendance included John Matthews, TWGGA President-Elect and owner of Cassaro Winery & Vineyard; Roxanne Myers, TWGGA Director-at-Large and owner of Lost Oak Winery; Bob Landon, owner of Landon Winery; John Winstead, vice president of Heath Sparkling; Philip Hawkins, vice president of technology for Grape Creek Vineyards; Richard Foster, manager of Invention Vineyards; and Kramer DeLaurentis, production manager for Jenblossom Cellars.

All gave testimony regarding this proposed legislation and how, if passed, it could negatively impact the Texas wine industry and their wineries specifically.

Because the bill has been left pending, this means it is eligible to be brought up for consideration at any future time during the current legislative session and considered and voted on.

Once the hearing concluded, the bill’s author, Rep. Craig Goldman, approached the TWGGA members and expressed his appreciation for their attendance and comments, and assured those in attendance that he would not request the bill be considered for a vote in the future.

Thank you to all the members that advocated in opposition of this bill by calling their representatives and members of the LAP Committee.

The legislative session concludes on May 29. TWGGA will continue to advocate on behalf of grape growers and wine makers across the state. As always, we will connect with you throughout the session to provide you with critical updates and information you can utilize in your advocacy efforts.

Original Post

Call to Action: Contact Your Representatives About HB 4052

HB 4052 will require a winery to “be a bona fide winery actively engaged in the manufacture of wine.” This bill is set for a hearing with the Texas House Licensing & Administrative Procedures Committee this Wednesday, April 5, at 8:00 a.m. This new requirement will be detrimental to the growth of the Texas wine industry because:

• The bill does not clearly define “manufacture of wine” and whether it means production through fermentation, bottling, or another definition.
• The bill would prevent wineries from participating in the “custom crush” model. The Texas wine industry’s growth is tied to the concept of custom crush, which typically involves a custom crush customer who holds a winery permit contracting with another Texas winery to make wine for the customer.
• New wineries will not be able to afford to open if they cannot afford their own production equipment and cannot enter custom crush arrangements.
• Texas grape farmers will lose customers because new wineries cannot open or operate.
• The bill will prevent wineries from opening additional sales outlets, which is an issue because many wineries produce all of their wine in one location and hold winery permits at secondary location for sales only.

Take action today. Here’s what you can do:

• Contact your local representatives via phone or email. Find your representatives here.
• Use the talking points outlined above or the phone call/email template below. Be sure to highlight how the bill would impact you and your business specifically.

Additional Legislative Updates

We have reached the halfway point in the 88th Legislative Session. The House Appropriations Committee has concluded its work on HB 1 (budget), and the bill will head to the House floor to be considered in early April. Although there will likely be considerable debate on the House floor about specific points of contention within the bill, it should pass with minimum changes from what the committee members voted out of the Appropriations Committee last week.

A few highlights in the House version of the bill include:

• Health and Human Services will increase 15.8% to $44 billion.
• Education (Public and Higher) will increase 10.4% to $66 billion.
• Public Safety and Criminal Justice will increase 54% to $18 billion.
• Natural Resources will increase 58% to $4 billion.
• Business and Economic Development will increase 48% to $1.7 billion.

These highlights give just a glimpse of the state priorities and where your tax dollars are spent. The other item of significance that has emerged within the House budget proposals is the House version of “property tax relief.”

Under the Speaker’s proposal, the state would cut school district property taxes by 28%. The more controversial aspect of the plan is to place a tighter cap on how much more school districts can tax property owners each year and expand the benefit to include commercial property owners.

The Senate budget process is a bit more opaque. The Senate considered its version of the budget on Monday, March 27, but won’t have final committee vote until mid-April. The Senate version spends increased state money on community colleges, mental health services, property tax cuts, and raises for current and retired teachers. The Senate Finance Committee also set aside $5 billion for teacher pay raises, other educator programs, and money to offer parents private school vouchers.

The Senate property tax proposal is considerably different than the House version. The Senate version of property tax relief came out in three different bills that have already passed the Senate. The most popular portion of the package is SB 3, which raises the homestead exemption from $40,000 to $70,000. SB 4 would also add an additional $5.3 billion into public schools.

The two proposals are considerably different not the least of which are the proposals to address property tax relief. The Lt. Governor recently announced that he was not going to consider the House version of the property tax relief effort, feeling the Senate version was superior.

The Lt. Governor also recently stated that he had no plans this summer and would be happy to spend his time here on these and other issues of interest to him and the Texas Senate.

Out of the roughly 8,000 bills and resolutions that have been filed, there is only one that must pass, and that is the state budget. Failing to pass the budget during the regular session rarely happens. I can recall only once in the past 30 years or so. Regardless, these initial comments and efforts on both sides have set the stage for a more contentious than usual finish. The regular session ends on May 29, 2023.

—TWGGA Legislative Advocate Kyle Frazier