1-1 By: Leedom S.B. No. 63 1-2 (In the Senate - Filed December 16, 1992; January 13, 1993, 1-3 read first time and referred to Committee on Intergovernmental 1-4 Relations; February 18, 1993, reported adversely, with favorable 1-5 Committee Substitute by the following vote: Yeas 10, Nays 0; 1-6 February 18, 1993, sent to printer.) 1-7 COMMITTEE VOTE 1-8 Yea Nay PNV Absent 1-9 Armbrister x 1-10 Leedom x 1-11 Carriker x 1-12 Henderson x 1-13 Madla x 1-14 Moncrief x 1-15 Patterson x 1-16 Rosson x 1-17 Shapiro x 1-18 Wentworth x 1-19 Whitmire x 1-20 COMMITTEE SUBSTITUTE FOR S.B. No. 63 By: Leedom 1-21 A BILL TO BE ENTITLED 1-22 AN ACT 1-23 relating to the issuance of anticipation notes by counties and 1-24 municipalities. 1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-26 SECTION 1. Chapter 1, Title 22, Revised Statutes, is amended 1-27 by adding Article 717w to read as follows: 1-28 Art. 717w. ANTICIPATION NOTES 1-29 Sec. 1. DEFINITIONS. In this article: 1-30 (1) "Amount available" includes cash, marketable 1-31 securities, or money in an account that, without legislative or 1-32 judicial action, may be used to pay an issuer's anticipated 1-33 expenditures. The term does not include: 1-34 (A) money in an account that is subject to a 1-35 legislative, judicial, or contractual requirement that the account 1-36 be reimbursed; or 1-37 (B) the proceeds of an anticipation note issued 1-38 under this article. 1-39 (2) "Anticipated expenditure" means an expenditure 1-40 that is payable from anticipated tax or other revenue. 1-41 (3) "Anticipation note" means a note issued under this 1-42 article. 1-43 (4) "Cash reserve" means an amount reasonably required 1-44 by an issuer for the payment of unanticipated expenditures. For 1-45 purposes of this article, an amount equal to one month's 1-46 anticipated expenditures is presumed to be reasonably required as a 1-47 cash reserve. 1-48 (5) "Cumulative cash flow deficit" means, for the 1-49 period for which the amount is determined, the amount by which the 1-50 sum of an issuer's anticipated expenditures plus the issuer's cash 1-51 reserve exceeds the amount available for payment of the anticipated 1-52 expenditures. 1-53 (6) "Governing body" means the board, council, 1-54 commission, court, or other body or group authorized to issue 1-55 anticipation notes for or on behalf of an issuer. 1-56 (7) "Issuer" means a municipality or county. 1-57 Sec. 2. CONFLICT WITH OTHER LAW. If there is a conflict 1-58 between this article and another statute, the issuer may use either 1-59 provision, and it is not necessary for the governing body to 1-60 designate the law under which the action is being taken. 1-61 Sec. 3. PURPOSES FOR WHICH ANTICIPATION NOTES MAY BE 1-62 AUTHORIZED. The commissioners court of a county on recommendation 1-63 of the county auditor or budget officer, if applicable, and the 1-64 governing body of a municipality may authorize anticipation notes 1-65 to: 1-66 (1) pay a contractual obligation incurred or to be 1-67 incurred for the construction of any public work; 1-68 (2) pay a contractual obligation incurred or to be 2-1 incurred for the purchase of materials, supplies, equipment, 2-2 machinery, buildings, lands, and rights-of-way for authorized needs 2-3 and purposes; 2-4 (3) pay a contractual obligation incurred or to be 2-5 incurred for professional services, including services provided by 2-6 tax appraisal engineers, engineers, architects, attorneys, 2-7 mapmakers, auditors, financial advisors, and fiscal agents; 2-8 (4) pay operating expenses or current expenses; or 2-9 (5) fund the issuer's cumulative cash flow deficit. 2-10 Sec. 4. ADDITIONAL AUTHORITY FOR COUNTIES AND CERTAIN 2-11 MUNICIPALITIES. (a) This section applies only to: 2-12 (1) a county; or 2-13 (2) a home-rule municipality that has a population of 2-14 90,000 or more, according to the most recent federal census. 2-15 (b) Notwithstanding anything in this article to the 2-16 contrary, the governing body of an issuer described by Subsection 2-17 (a) of this section may exercise the authority granted to the 2-18 governing body of an issuer with regard to issuance of obligations 2-19 under Chapter 656, Acts of the 68th Legislature, Regular Session, 2-20 1983 (Article 717q, Vernon's Texas Civil Statutes), except that the 2-21 prohibition in that Act on the repayment of an obligation with 2-22 funds derived from ad valorem taxation does not apply to an issuer 2-23 exercising the authority granted under this section. 2-24 Sec. 5. AUTHORIZATION OF ANTICIPATION NOTES BY ORDINANCE OR 2-25 ORDER. Anticipation notes may be authorized by an ordinance 2-26 adopted by the governing body of a municipality or by an order 2-27 adopted by the governing body of a county. 2-28 Sec. 6. RESTRICTIONS ON ANTICIPATION NOTES. (a) Except as 2-29 provided by Subsection (b) of this section, anticipation notes 2-30 issued under this article are subject to: 2-31 (1) Chapter 503, Acts of the 54th Legislature, 1955 2-32 (Article 717k, Vernon's Texas Civil Statutes); 2-33 (2) Chapter 3, Acts of the 61st Legislature, Regular 2-34 Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes); 2-35 (3) Chapter 784, Acts of the 61st Legislature, Regular 2-36 Session, 1969 (Article 717k-3, Vernon's Texas Civil Statutes); 2-37 (4) the Bond Procedures Act of 1981 (Article 717k-6, 2-38 Vernon's Texas Civil Statutes); 2-39 (5) Sections 3.001 through 3.003, Chapter 53, Acts of 2-40 the 70th Legislature, 2nd Called Session, 1987 (Article 717k-8, 2-41 Vernon's Texas Civil Statutes); and 2-42 (6) Chapter 400, Acts of the 66th Legislature, 1979 2-43 (Article 717m-1, Vernon's Texas Civil Statutes). 2-44 (b) Chapter 656, Acts of the 68th Legislature, Regular 2-45 Session, 1983 (Article 717q, Vernon's Texas Civil Statutes), 2-46 governs approval by the attorney general of anticipation notes 2-47 issued under Section 4 of this article. 2-48 (c) A governing body may not issue anticipation notes that 2-49 are to be payable from bonds secured by ad valorem taxes to be 2-50 issued in the future unless the bonds have been approved by the 2-51 voters in an election held by the issuer. 2-52 (d) A governing body may not use proceeds from the sale of 2-53 anticipation notes to repay interfund or other borrowing that 2-54 occurred more than 12 months before the date of the ordinance or 2-55 order authorizing the issuance of the notes. 2-56 (e) Anticipation notes issued for a purpose described by 2-57 Subdivision (1), (2), or (3) of Section 3 of this article must 2-58 mature before the seventh anniversary of the date that the attorney 2-59 general approves the notes. 2-60 (f) Anticipation notes issued for a purpose described in 2-61 Subdivision (4) or (5) of Section 3 of this article must mature 2-62 before the first anniversary of the date that the attorney general 2-63 approves the notes. 2-64 (g) Anticipation notes issued under Subdivision (4) of 2-65 Section 3 of this article may not exceed 75 percent of the revenues 2-66 or taxes anticipated to be collected in the fiscal year in which 2-67 the attorney general approves the notes. 2-68 Sec. 7. PROVISIONS IN ANTICIPATION NOTES. The governing 2-69 body may: 2-70 (1) make the notes payable at the times and places 3-1 determined by the governing body; 3-2 (2) issue the notes in forms and one or more 3-3 denominations, either in coupon form or registered as to principal 3-4 and interest, or both; 3-5 (3) make the notes contain options for redemption 3-6 before the scheduled maturity; and 3-7 (4) make the notes contain other provisions the 3-8 governing body desires. 3-9 Sec. 8. SALE OF ANTICIPATION NOTES. The governing body may 3-10 sell anticipation notes at public or private sale for cash. 3-11 Sec. 9. SOURCE OF PAYMENT. (a) The governing body may 3-12 provide that anticipation notes will be paid from and secured by 3-13 revenues, taxes, or the proceeds of bonds to be issued by the 3-14 issuer. 3-15 (b) The governing body may pledge to the payment of 3-16 anticipation notes revenues, taxes, or the proceeds of bonds to be 3-17 issued by the issuer. If an ad valorem tax to be assessed and 3-18 collected in a subsequent fiscal year is pledged to the payment of 3-19 anticipation notes, the governing body of the issuer shall levy the 3-20 tax in the ordinance or order that authorizes the issuance of the 3-21 notes. 3-22 SECTION 2. This Act takes effect September 1, 1993. 3-23 SECTION 3. The importance of this legislation and the 3-24 crowded condition of the calendars in both houses create an 3-25 emergency and an imperative public necessity that the 3-26 constitutional rule requiring bills to be read on three several 3-27 days in each house be suspended, and this rule is hereby suspended. 3-28 * * * * * 3-29 Austin, 3-30 Texas 3-31 February 18, 3-32 1993 3-33 Hon. Bob Bullock 3-34 President of the Senate 3-35 Sir: 3-36 We, your Committee on Intergovernmental Relations to which was 3-37 referred S.B. No. 63, have had the same under consideration, and I 3-38 am instructed to report it back to the Senate with the 3-39 recommendation that it do not pass, but that the Committee 3-40 Substitute adopted in lieu thereof do pass and be printed. 3-41 Armbrister, 3-42 Chairman 3-43 * * * * * 3-44 WITNESSES 3-45 FOR AGAINST ON 3-46 ___________________________________________________________________ 3-47 Name: Bill Melton x 3-48 Representing: Dallas County 3-49 City: Dallas 3-50 ------------------------------------------------------------------- 3-51 Name: Connie T. Maxwell x 3-52 Representing: GFOAT, TML 3-53 City: Lewisville 3-54 ------------------------------------------------------------------- 3-55 Name: John Longstreet x 3-56 Representing: City of Plano 3-57 City: Plano 3-58 ------------------------------------------------------------------- 3-59 Name: Joe Paniagua x 3-60 Representing: City of Fort Worth 3-61 City: Fort Worth 3-62 ------------------------------------------------------------------- 3-63 FOR AGAINST ON 3-64 ___________________________________________________________________ 3-65 Name: Pasco Parker x 3-66 Representing: Tx assoc. county auditors 3-67 City: McKinney 3-68 -------------------------------------------------------------------