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Apr 30

April 30, 2020 TML Coronavirus Update #34

Posted on April 30, 2020 at 5:45 PM by TML Staff

Urgent Updates


Once more: Does the governor’s “stay home/work home” order “expire” on Friday?  


No, it does not. In spite of various media headlines about the “governor’s stay home order expiring on Friday (May 1),” his newest order (Executive Order GA-18) has similar stay home/work home language as previous orders:


“In accordance with guidance from DSHS Commissioner Dr. Hellerstedt, and to achieve the goals established by the President to reduce the spread of COVD-19, every person in Texas shall, except where necessary to provide or obtain essential services or reopened services, minimize social gatherings and minimize in-person contact with people who are not in the same household. People over the age of 65, however, are strongly encouraged to stay at home as much as possible; to maintain appropriate distance from any member of the household who has been out of the residence in the previous 14 days; and, if leaving the home, to implement social distancing and to practice good hygiene, environmental cleanliness, and sanitation.”


(Emphasis added.) The highlighted language means that Texans should stay home/work home, unless an exception applies (e.g., accessing essential services or activities, retail-to-go, re-opened businesses, or religious services).


Have additional Texas cities and counties been sued based on their COVID-19 orders?


Yes. State Representative Briscoe Cain (R – Deer Park) and another attorney, on behalf of several businesses (e.g., vape shops, a drag strip, an axe-throwing facility, hair salons, a gym, and a martial arts and yoga studio), two individuals, and all those “similarly situated” filed a “petition for writ of mandamus” with the Texas Supreme Court yesterday (April 29). The lawsuit comes on the heels of others filed by vape shops against the cities of McAllen, San Antonio, and Dallas.


A writ of mandamus is, in plain English, a request to the court to order government officials to stop some action that is alleged to be such an abuse of discretion that immediate, emergency action by the state’s highest court should be taken. Instead of going to a trial court, appealing to an appeals court, and then asking the Texas Supreme Court to review the case, the writ is filed directly with the Texas Supreme Court. That court can then decide quickly whether to issue a command that is binding on local officials.


According to the petition, the plaintiffs “seek a writ of mandamus and injunction to enjoin local authorities from enforcement of vague executive orders masquerading as Texas law, particularly when they are enforced unequally and arbitrarily…many Texans find themselves with the uneasy recognition that they have lost rights held inviolate only weeks ago, and are now threatened by fine and imprisonment for acts that are constitutionally protected.”


The petition alleges that the following local officials, through various enforcement actions that are representative of others across the state, violated the governor’s order, the Texas Disaster Act, and other laws:


Dallas County Judge Clay Jenkins

Dallas Mayor Eric Johnson

Kaufman County Chief Appraiser Sarah Curtis

Cleburne Mayor Scott Cain

Henderson County Judge McKinney

Smith County Judge Nathaniel Moran

Tarrant County Judge Glen Whitney

Hurst Mayor Henry Wilson

Abilene Mayor Anthony Williams

Snyder Mayor Tony Wofford

Scurry County Judge Don Hicks

San Antonio Mayor Ron Nirenberg


The petition also alleges that the governor’s order does not, in fact, order any business to close. Rather, the lawsuit claims, it provides only that people shall avoid those businesses. In addition, it claims that the Texas Disaster Act provisions authorizing a mayor or county judge to control ingress and egress to an area, and to regulate occupancy of premises, are arbitrary and violate state law and the Texas Constitution. As an example, the petition states that:


“Condom Sense is allowed to operate in Dallas and other jurisdictions, albeit by curbside service. The Court is invited and requested to take judicial notice that condoms are available at many grocery stores.”


The lawsuit claims the proper approach to deal with COVID-19 is to call an immediate special session of the legislature to deal with the emergency. Of course, courts in other states, such as one in Michigan just this week, have held that reasonable, emergency pandemic measures are allowable and generally don’t violate constitutional protections against due process and equal protection. 


The League will monitor and report on the case as information becomes available.


Are there any updates on future federal legislation that provides funding to local governments?


Discussions continue in Congress about the general framework of another round of disaster relief legislation, this time to assist state and local governments facing significant budget shortfalls. Although no legislation has yet been filed, the National League of Cities (NLC) has engaged in discussions with the U.S. House of Representatives regarding a proposal for funding local governments. The basic structure of NLC’s draft proposal includes:


-$250 billion in direct funding for local governments nationwide.

-Of the $250 billion, $125 billion would be allocated to counties based on population and $125 billion would be allocated to cities, with 70 percent going directly to Community Development Block Grant (CDBG) entitlement cities using the existing funding formula, and the remaining 30 percent being sent to the governor to be used for all non-CDBG entitlement cities based on population.

-Funding used for all expenses related to COVID-19, including mitigating local government budget shortfalls that result from the economic impacts of COVID-19.

-Clarification that funding previously provided in the Coronavirus Relief Fund under the CARES Act can be used to mitigate local government budget shortfalls.


The NLC proposal would mean over $9 billion in funding for all Texas cities. It should be stressed, however, that at this point the above represents only one proposal discussed by NLC and congressional offices. Only time will tell if this type of a federal funding package gains political traction when Congress reconvenes.


Further Updates


What is the status of Texas beaches under Executive Order GA-18?


According to the Galveston County Daily News and other media sources, “state officials say beaches will open on Friday (May 1).”


The Daily News reported that “County and city officials confirmed they were in direct contact with Abbott’s office and the land office Wednesday [April 29] and learned about the directive around 2:30 p.m. At about 5 p.m., the land office sent directions to beach managers across the state, announcing its stance on opening.”


The League has not yet obtained a copy of the directions, and they aren’t posted on the GLO website, but the Daily News quoted them as stating that:


“The GLO is rescinding its approval for local governments to close beaches due to COVID-19, effective April 30, 2020 at 11:59 p.m.,” the land office letter stated. “The GLO understands that conditions may change, and local governments are required to contact the GLO for prior approval for any future closures of the beach to vehicles or pedestrians, closures of beach access points, time limitations, or restrictions on particular uses or activities on the beach.”


The governor had previously said the opening of beaches would be a part of Executive Order GA-18, but the text of the order did not expressly do so. Galveston business owners then contacted the governor’s office and reported they were told beaches would open. Later, the GLO issued its directions to beach managers.


The beach situation is indicative of confusion surrounding the application of GA-18. Similar confusion arose when one city’s mayor declared restaurant patios open prior to GA-18 becoming effective. According to several media reports, the governor said he understood the confusion and would issue clarifications to resolve the questions about GA-18. 


Does a federal program exist to purchase short-term debt issued by Texas cities to manage cash flow issues stemming from the COVID-19 response?


Yes, at least for some cities. Earlier this week, the Federal Reserve released guidance on the Municipal Liquidity Facility (MLF). The MLF will offer up to $500 billion nationwide in lending to state and local governments to help manage cash flow stresses caused by the pandemic. Eligible cities include cities with populations exceeding 250,000 that maintain at least BBB-/Baa3 bond rating as of April 8, 2020.


Eligible notes under the MLF are limited to anticipation notes payable from taxes, revenue, or bonds, with a maturity date of no less than 36 months after issuance. In Texas, cities have the authority to issue these types of anticipation notes under Chapter 1431 of the Government Code. Anticipation notes can be used to pay operating expenses or to fund a city’s cumulative cash flow deficit, so long as the note matures before the first anniversary after the notes are approved by the attorney general. Tex. Gov’t Code § 1431.009(c).


Eligible cities may use proceeds received from eligible notes under the MLF to “help manage the cash flow impact of income tax deferrals resulting from an extension of an income tax filing deadline; deferrals or reductions of tax and other revenues or increases in expenses related to or resulting from the COVID-19 pandemic; and requirements for the payment of principal and interest on obligations of the Eligible Issuer or its political subdivisions or other governmental entities.”


What about cities under 250,000 in population? Interestingly, the program authorizes the state government to use proceeds received under the MLF program to purchase similar notes issued by political subdivisions of the state. This means that the state could issue an eligible note in order to receive the funding to purchase notes issued by Texas cities. At this point, it is unclear if the state has plans to participate in the program at all, much less issue debt to benefit smaller local governments in Texas. The League will continue monitoring and report on any developments related to the MLF at the state or federal level.


Any city considering issuing anticipation notes pursuant to the MLF program will need to engage bond counsel prior to taking any action.


Where can I find archived issues of the TML Coronavirus Updates?


TML Coronavirus Updates are archived by date here and by subject here.