Texas Capitol Building | Photo by Noah Dawson

While the City of Amarillo is continuing to appeal its loss in the Civic Center lawsuit, Texas State Senator Paul Bettencourt (R-Houston) has passed SB 2035, which was inspired by the case.

The bill seeks to prevent taxing entities from utilizing anticipation notes for projects if a similar bond-funded project was rejected by voters in the past five years.

It was inspired by the fact that, in 2022, Amarillo City Council approved the use of tax anticipation notes to fund renovations to the Amarillo Civic Center Complex, despite the fact that voters had rejected a similar bond measure in 2020. Businessman Alex Fairly took the city to court over the ordeal and won, with Judge William Sowder finding that the city broke a number of state laws, including several provisions of the Texas Open Meetings Act. Sowder also found that the project did not qualify for tax anticipation notes, as it was not a public work. The City of Amarillo, however, is currently appealing the ruling.

Had the bill been in place in 2022, the city’s action would not have been allowed.

The bill also tightens restrictions on using certificates of obligation for similar purposes. Under current state law, taxing entities cannot issue certificates of obligation for a similar purpose to a failed bond election within 3 years. If passed, taxing entities would be prohibited from using either anticipation notes or certificates of obligation for 5 years after a failed election.

The bill was passed by a 20-10-1 vote, with all Republican members of the chamber voting in favor. Most Democrats voted against, though Juan Hinojosa of McAllen voted in favor, while Royce West of Dallas voted present.

The legislation now moves to the state house, where it will need to be approved before being signed by Governor Greg Abbot.