Press Release May 29, 2001

Contact: Reggie James or Rafael Ayuso (512) 477-4431; ext. 118 or 114 Consumers Union Southwest Regional Office

77th Legislative Session Wrap-Up

New fees, tight budget
deal setbacks to Texas consumers

The following statement is being issued by Reggie James, director of the Southwest Regional Office of Consumers Union, publisher of Consumer Reports.

While Texans won't get the final bill for several months, it was neither the best of times nor the worst of times for consumers.

The money was scarce this session. The Legislature addressed problems that embarrassed the state during the presidential elections, including environmental issues and health care for low-income children.

Consumers gained new ground in areas such as making it easier for children to get enrolled in Medicaid, health insurance coverage for teachers and school employees, and even a new health insurance ombudsman.

Hundreds of thousands of Texans who own manufactured homes but live on rented land acquired important new tenant rights. The Legislature took steps to rectify some of the problems that have plagued the state's housing agency.

But the power of the industry lobby was too much to overcome in some sectors. We noted a trend this session that can be summarized as follows: while the public sector giveth, the private sector taketh away. The private sector got away with increasing several fees for consumers that the Legislature probably would not have passed if they were deemed or called 'taxes' instead.

For example, four bills were passed that raise the cost of buying a vehicle in Texas by millions statewide each year. Fortunately, Gov. Perry has vetoed one of them to date: HB 1994. For consumers making these purchases, it doesn't really matter whether these are called taxes or fees. The bottom line is that more money is coming out of their pockets.

In some instances, the Texas Legislature stood up for the little guy to protect against usurious interest rates sought by lender lobbyists. For example, the Legislature closed loopholes that allowed sale-leaseback operators to avoid Texas' usury and consumer protection laws.

The electric power industry flexed its muscle to stop even modest summer refunds of industry profits that rightfully belong to consumers. In the face of record high energy bills anticipated this summer, the Legislature had the opportunity to grant consumers some relief but instead caved in to the will of the electric utilities.

It takes weeks, sometimes months, to get an accurate handle on what the Legislature did. But generally, whether consumers won or lost this session depends on who you are and where your needs or interests reside.

ISSUES AT A GLANCE

Health Care

Health care reforms were one of the more positive aspects of the 77th session. A proposal was passed to simplify the Medicaid enrollment process for most of the 600,000 children who are eligible for Medicaid but not currently enrolled. Unfortunately, the proposal failed to match the 12-month continuous coverage given to CHIP children. Teachers and other school employees will now have a $1.3 billion health insurance plan; the coverage is less than optimal and not all districts were included, but the ball is rolling in the right direction. Important strides toward beginning to get a handle on drug costs were made.

Financial Services

Several bills approaching the Governor's desk will make the cost of purchasing an vehicle will go up. CU applauds the Governor's veto on increasing the documentary fee associated with a vehicle purchase and urges his office to veto the remaining fee and interest rate increases. Texas lawmakers protected consumers in closing a loophole that allowed "sale-leaseback" transactions to escape state usury laws.

Electric

The Legislature missed a golden opportunity to make Texas the first state in the nation to return to consumers a portion of their overpayments under electric deregulation, known as "stranded costs." A watered down version of the bill giving customers of the three largest investor-owned utilities refunds ranging from $58 to $120 was killed in the Senate by a parliamentary maneuver. Consumers did make gains in HB 2806 - The Gas Utility Regulatory Act. This Act establishes a prohibition on disconnection of gas service during extreme weather.

Housing

Families who buy a manufactured home and place it on a rented lot acquired some basic but important tenant rights. HB 557, a bill championed by CU, grants key rights to manufactured home owners who live in mobile home parks, such as the right to an initial six-month lease; a 60-day notice if the lease is not to be renewed, prompt return of security deposits, and proper maintenance and repair of park facilities by the landlord. In addition, new protections were added to address predatory home lending and further study on the matter will ensue over the next year.

Environment

The Legislature took important steps forward in health and environmental protection in the TNRCC Sunset bill. Exemptions for older "grandfathered" industrial facilities that pollute more than modern units were phased out. The plants have until the year 2007 to literally clean up their act. Another improvement requires the agency to develop policies to protect communities from multiple sources of pollution and give priority to monitoring and enforcement in areas where polluting facilities are concentrated However, the House-approved measure to make the public counsel independent of the TNRCC did not survive the Senate and the conference committee.

Privacy

Health care consumers will be better protected against misuse by marketers of their personal health care information. The medical privacy provisions in SB 11 are a step in the right direction, but it exempts employers and financial institutions, among others and more privacy protections will need to be added in the future.

Funerals

Legislation passed this session will allow consumers to keep half of their earnings on pre-paid funeral contracts. Cemeteries and crematories will now be under state regulation.

Telemarketing

Legislation passed that would establish a statewide no call list and close many, but not all, of the loop holes allowing fraudulent and annoying practices in telemarketing.

Other

Sweepstakes will be under tighter monitoring in Texas due to legislation that bars their organizers from telling or implying to potential customers that they've already won. The measure, which imposes civil fines from $5,000 to $50,000 per violation, is aimed at businesses like Publishers Clearinghouse, which has been sued by Texas and 30 other states.

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Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.