By: Montford S.B. No. 1271
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the establishment of an intercept program to increase
1-2 the credit rating of certain local government debt and authorizing
1-3 the comptroller of public accounts to withhold local government
1-4 funds to pay such obligations under certain circumstances.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 271, Local Government Code, is amended by
1-7 adding Subchapter E to read as follows:
1-8 SUBCHAPTER E. STATE INTERCEPT TO INCREASE CREDIT RATING
1-9 Sec. 271.091. DEFINITIONS. In this subchapter:
1-10 (1) "Local government" means a municipality, county,
1-11 or hospital district of the State of Texas.
1-12 (2) "Payment" means any sales tax receipts or other
1-13 revenues which are transferred by the state to the local
1-14 government.
1-15 (3) "Paying agent" means the financial institution
1-16 that is designated by a local government as its agent for the
1-17 payment of the principal of and interest on the obligation.
1-18 (4) "Obligation" means bonds, notes, certificates of
1-19 obligation, and other obligations authorized to be issued by the
1-20 local government.
1-21 (5) "Agreement" means the document referred to in
1-22 Section 271.092 and Section 271.094.
1-23 (6) "Board" means the bond review board created by
2-1 Chapter 1078, Acts of the 70th Legislature, Regular Session, 1987
2-2 (Article 717k-7, Vernon's Texas Civil Statutes).
2-3 (7) "Comptroller" means the Texas Comptroller of
2-4 Public Accounts.
2-5 Sec. 271.092. AGREEMENT WITH TEXAS BOND REVIEW BOARD AND
2-6 COMPTROLLER. Prior to the issuance of any obligation, the
2-7 governing body of any local government may notify the board of the
2-8 proposed issuance of an obligation and enter into an agreement with
2-9 the board to authorize and direct the comptroller to withhold from
2-10 such local government sufficient money from any payment to which
2-11 such local government may be entitled and apply so much as shall be
2-12 necessary to pay the principal of and interest on such obligation
2-13 then due and to continue withholding additional payments until an
2-14 amount sufficient to satisfy the amount then due has been met.
2-15 Sec. 271.093. TRANSMITTAL AND AMOUNT ASSIGNED. If the board
2-16 has received the notification from any local government or if at
2-17 any time the board is notified by the paying agent for the
2-18 obligation of such local government that the local government has
2-19 failed to punctually pay the principal of or interest on such
2-20 obligation, the board shall notify the comptroller, who shall
2-21 withhold sufficient money from any payment to which such local
2-22 government may be entitled and apply so much thereof as shall be
2-23 necessary to pay the principal of and interest on such obligation
2-24 then due and to continue withholding payments until an amount
2-25 sufficient to satisfy the amount then due has been met.
3-1 Sec. 271.094. AGREEMENT, NOTICE, AND AUTHORIZATION;
3-2 CONDITIONS. (a) The agreement shall set forth the following:
3-3 (1) the proposed date of issuance of the obligation
3-4 and the name and series of the proposed issuance;
3-5 (2) each payment date with respect to the obligation
3-6 and the principal of and interest on the obligation coming due on
3-7 each such date; and
3-8 (3) the name and address of the financial institution
3-9 serving as paying agent for the obligation to whom any payment by
3-10 the comptroller should be made.
3-11 (b) If for any reason the local government fails to have on
3-12 deposit with the paying agent designated in this agreement
3-13 sufficient money to pay the payment obligation then due, not less
3-14 than five business days before the same is due, the paying agent
3-15 shall notify the board. On notification by the board, the
3-16 comptroller is authorized and directed to transmit to the paying
3-17 agent payments otherwise due or subsequently due to the local
3-18 government in amounts sufficient to pay the obligation then due.
3-19 The board shall cause a copy of any notice given pursuant to this
3-20 subsection to be promptly given to the local government.
3-21 (c) This subchapter does not require or permit the state to
3-22 make an appropriation to any local government and shall not be
3-23 construed as creating an indebtedness of the state. Any agreement
3-24 made pursuant to this subchapter shall contain a statement to that
3-25 effect.
4-1 (6) The agreement terminates at the time the final
4-2 payment of the principal and interest on the obligation is made or
4-3 the obligation is refunded.
4-4 Sec. 271.095. RIGHT TO PLEDGE PAYMENTS. The local
4-5 government may pledge payments to secure any obligation only if the
4-6 amount of payments received by the local government in the fiscal
4-7 year of the state preceding the proposed issuance equals or exceeds
4-8 the amount required in each year to pay the sum of (i) an amount
4-9 equal to two times the principal and interest for the obligation,
4-10 and (ii) the principal and interest on any additional obligation
4-11 for which payments have been pledged. The local government shall
4-12 provide evidence that these requirements are met.
4-13 Sec. 271.096. ADMINISTRATION, RULES, FEES. The board shall
4-14 administer the implementation of this subchapter and may adopt
4-15 rules and set fees necessary for its administration.
4-16 SECTION 2. The importance of this legislation and the
4-17 crowded condition of the calendars in both houses create an
4-18 emergency and an imperative public necessity that the
4-19 constitutional rule requiring bills to be read on three several
4-20 days in each house be suspended, and this rule is hereby suspended,
4-21 and that this Act take effect and be in force from and after its
4-22 passage, and it is so enacted.