Governor Greg Abbott has vetoed Senate Bill 2035, a bill which was written in response to the Amarillo Civic Center lawsuit.

Under current state law, taxing entities in Texas are prohibited from issuing certificates of obligation for the same purpose as a failed bond election for three years after the election. Paul Bettencourt (R-Houston) filed SB 2035 to amend this law to extend the moratorium to five years, while also prohibiting the use of anticipation notes in addition to certificates of obligation.

The bill was filed in response to the City of Amarillo's attempt to issue tax anticipation notes to fund renovations to the Amarillo Civic Center, despite the fact that voters had rejected a similar bond-funded proposal in 2020.

The issuance of the notes was halted by a lawsuit filed by businessman Alex Fairly. Following a trial, Judge William Sowder found the city had violated numerous state laws, including the Texas Open Meetings Act when issuing the notes. However, the legality of using tax anticipation notes despite a failed bond election was not directly challenged.

“Senate Bill 2035 has too many loopholes,” said Governor Abbott on a proclamation. “This bill can be reconsidered at a future special session only after property tax relief is passed.”

Abbott did not specify which loopholes he was referring to, though he may have been referring to the number of exceptions included in the bill. These exceptions would have allowed the use of anticipation notes to finance the cleanup, mitigation, or remediation of a natural disaster, to comply with a federal court order, to comply with a federal or state law, rule, or regulation, in a case of public calamity if it is necessary to act promptly to relieve the necessity of the residents or to preserve the property of the issuer, in a case in which it is necessary to preserve or protect the public health of the residents of the issuer, or in a case of unforeseen damage to public machinery, equipment, or other property.

Senate Bill 2035 is only the third bill vetoed by Governor Abbott from this year's regular session.